Teva Pharmaceutical Industries Ltd.’s (TEVA:US) second-quarter profit fell 8.9 percent as the company introduced fewer new generic medicines.
Earnings excluding some costs declined to $1.02 billion, or $1.20 a share, from $1.1 billion, or $1.28, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Profit matched the average estimate of $1.20 a share from 22 analysts surveyed (TEVA:US) by Bloomberg.
The results underscore the challenge facing Chief Executive Officer Jeremy Levin. Even as generic drug sales drop, the company is trying to reduce its dependence on the branded multiple sclerosis drug Copaxone, which makes up about 20 percent of revenue and a larger portion of profit.
Sales fell 1.4 percent to $4.92 billion, versus an average estimate of $4.95 billion. Revenue from generic drugs in North America fell 8 percent to $970 million, while European generic sales declined 5 percent to $860 million.
Trading in Teva shares was halted in Tel Aviv. Teva’s American depositary receipts have returned 8 percent this year (TEVA:US), closing yesterday at $39.70. The Bloomberg Europe Pharmaceutical Index returned 19 percent.
Sales of generics dropped as Teva and other generic-drug makers had fewer opportunities to introduce new medicines because patents expired on fewer blockbusters. Last year Teva benefited from copies of Pfizer Inc.’s Lipitor and AstraZeneca Plc’s hypertension treatment Atacand. Teva expects generic opportunities to grow in the second half of this year.
Analysts predict Copaxone sales will fall each of the next five years as the relative ease of new oral pills lures patients from the injection. The drug also faces potential generic competition as early as next year after a U.S. court decision last week.
Revenue from Copaxone climbed 9 percent to $1.1 billion. Teva raised the price of the injection by 9.9 percent in January. Biogen Idec Inc.’s oral MS drug Tecfidera received U.S. approval in March, adding to the competition Copaxone already faced from Novartis AG’s (NOVN) Gilenya pill.
Tecfidera, which gave Biogen $192 million in second-quarter revenue, captured 42 percent share of new written prescriptions, according to a Barclays Plc report July 24.
Levin said in November revenue for 2013 will be between $19.5 billion and $20.5 billion while earnings excluding some costs will be $4.85 to $5.15 a share.
Results may come in at the lower end of Teva’s forecast if a court ruling allows competition to its generic version of Pulmicort Respules treatment for asthma, said Jonathan Kreizman, an analyst at Clal Finance Batucha Brokerage Ltd.
With no immediate replacement for the expected decline in Copaxone revenue, Levin has pledged to cut as much as $2 billion of costs in the next five years.
Teva will hold a conference call with analysts at 8 a.m. New York time.
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