Teva Pharmaceutical Industries Ltd. (TEVA) plans to double respiratory-treatment sales to $2 billion in the next five years, part of a strategy for countering a revenue decline from its best-selling Copaxone multiple sclerosis drug.
Teva will submit regulatory applications for 13 new inhalation products to compete in a $20 billion industry, the Petach Tikva, Israel-based company said in a Web presentation led by Chief Scientific Officer Michael Hayden. Teva’s American depositary receipts rose (TEVA:US) as much as 2.2 percent at $39.45, the highest intraday price since Aug. 20, and was trading up 0.7 percent at 12:19 p.m. in New York.
“Teva’s already got a pretty big franchise in this area, and the idea is now to take advantage of the expertise and infrastructure and build upon it,” said John Park, co-portfolio manager at Jackson Park Capital LLC’s Oakseed Opportunity Fund, of which Teva shares make up about 5 percent of assets. “There’s going to be all sorts of generic opportunities and chances to use their platforms to deliver existing products in a different way.”
The company’s respiratory-drug sales totaled $856 million in 2012, driven by the ProAir and Qvar products, according to Bloomberg data. Teva said today that its respiratory business may quadruple to $4 billion in a decade. That would about match annual revenue from Copaxone, which may generate less in sales starting in 2014 because of competition from newer oral drugs as well as possible generic products.
The Spiromax respiratory device provides several opportunities to improve on competitors’ treatments for conditions such as asthma and chronic obstructive pulmonary disease, the company said. Other options include copying existing drugs, such as GlaxoSmithKline Plc’s blockbuster Advair drug, which would require replicating Glaxo’s device.
“Teva has been given limited credit, despite having close to $1 billion in sales,” Ronny Gal, an analyst at Sanford C. Bernstein & Co., wrote in a note before the investor presentation. “This is probably Teva’s most under-appreciated asset, and it is not surprising this would be the first vertical discussed by management.”
The new estimates represent the first time Teva has specified forecasts for a business unit under new Chief Executive Officer Jeremy Levin. The targets are conservative compared with the strategy outlined by his predecessor, Shlomo Yanai, who predicted in 2010 that respiratory-division sales would account for $2.4 billion in revenue in 2015, out of a group total of $31 billion.
Teva plans to hold webcasts discussing research and development strategy about once every other month. The next program, scheduled for Dec. 5, will focus on the New Therapeutic Entities business.
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