Teva forecasts drop in 2018 sales, as fourth-quarter revenue slides 16 percent

Teva announced Thursday alongside its fourth-quarter financial results that it expects sales this year of between $18.3 billion and $18.8 billion, down from $22.4 billion in 2017, which was an increase of 2 percent on the prior 12-month period. Analysts predict annual sales of $19.3 billion, with the company's shares falling as much as 12 percent on the news.

Meanwhile, the drugmaker said that earnings per share in 2018 are estimated to be in the range of $2.25 to $2.50, below analyst forecasts of $2.94 per share. CEO Kåre Schultz said "2017 was a challenging year for Teva. Starting 2018 we are focused on meeting our financial obligations and ensuring a much more solid and sustainable business model going forward."

Teva announced in December plans to cut 14 000 jobs, or more than 25 percent of its global workforce, over the next two years as part of a restructuring initiative designed to reduce costs by $3 billion.

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In the fourth quarter, sales plunged 16 percent year-over-year to $5.5 billion, but overhauled analyst expectations of $5.3 billion, as revenue from specialty medicines fell 19 percent to $1.8 billion, with sales of Copaxone down by the same percentage to $821 million. Mylan started selling a generic versions of the three-times weekly formulation of Copaxone in the US in October last year, with Momenta Pharmaceuticals recently indicating that its versions of the product will likely gain FDA clearance in the first half of 2018.

Teva explained that "during the fourth quarter…we noted further deterioration in the US generics market and economic environment, further limitations on our ability to influence generic medicines pricing in the long term and a decrease in value from future launches." In the three-month period, revenue from Teva's generics unit dropped 16 percent to $3.1 billion, with sales in the US down 15 percent to $1.2 billion.

The company noted that it recorded a quarterly loss of $11.6 billion, wider than a loss of $1 billion in the year-ago period. For the full year, Teva posted a loss of $16.3 billion, down from a profit of $329 million in 2016, with the drugmaker explaining that last year it realised goodwill impairments totaling $17.1 billion, mainly with respect to its US generics unit.

Commenting on the news, Barclays analyst Douglas Tsao remarked "the biggest question remains in how the company can navigate through a revenue hole," adding "…the guidance strikes us as an achievable and likely beatable."

Meanwhile, Evercore ISI analyst Umer Raffat stated "my takeaway is that Teva management is leaving a healthy room in there for surprising to the upside…either on more realised cost cuts…or on lesser Copaxone erosion."

Teva also disclosed Thursday that an FDA warning letter recently issued to Celltrion will likely delay approval of the migraine therapy fremanezumab. In December last year, Teva said that it expected to launch the anti-CGRP product in the US for the prevention of migraine in 2018 after the FDA granted the company's marketing application fast track designation. However, Teva noted that fremanezumab's active pharmaceutical ingredient is manufactured solely by Celltrion, adding that it is in "active dialogue" with the FDA.

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