Teva's Q2 sales top forecasts, though results overshadowed by CFO departure, provision for opioid litigation

Headline results for the second quarter:

Revenue

$4.3 billion (forecasts of $4.25 billion)

-8%

Loss

$689 million

Versus $241 million

Note: All changes are versus the prior-year period unless otherwise stated

What the company said:

"Portfolio optimisation and new launches stabilised our North American generics business, Copaxone performed above expectations and Austedo achieved a very strong growth rate," remarked CEO Kåre Schultz, adding "we continue to focus our efforts on growth for Ajovy in the US and are excited by the early momentum of the product's recent launches in the EU."

The executive added "we are on track to achieve the targets of our two-year restructuring plan and based on our good results for the first half of the year we are reaffirming our full-year guidance."

Teva also announced Wednesday that chief financial officer Michael McClellan will step down from his role "due to personal reasons requiring him to be located near his family." McClellan, who was appointed to the position in November 2017, will remain in the job through the reporting of third-quarter results.

Other results:

  • North America: $2.1 billion, -8%, with higher sales from Ajovy, Austedo, Qvar and the Anda unit partially offsetting declines for Copaxone, Treanda/Bendeka and certain other specialty products  
    • US: $1.9 billion, -10%
    • Generic drug sales in North America: $946 million, flat versus prior year, with new generic product launches being offset by market dynamics, including product mix and price erosion in the US
    • Copaxone sales in North America: $274 million, -41%, mainly attributable to generic competition in the US, but above estimates of around $218 million
  • Europe: $1.2 billion, -11%, primarily due to lower sales of Copaxone as a result of generic competition and the termination of a joint venture with Proctor & Gamble, partially offset by new generic drug launches  
    • Generic drug sales in Europe: $844 million, -7%, with new product launches partially offsetting volume declines caused by specific market conditions
    • Copaxone sales in Europe: $107 million, -24%, mainly caused by price cuts in response to the entry of generic competitors, missing forecasts of about $114 million
  • International markets: $741 million, -6%, fuelled primarily by lower sales in China, partially offset by higher revenue from Russia
  • Austedo: $96 million, +117%
  • Ajovy: $23 million

Looking ahead:

Teva reaffirmed that it expects revenue this year of between $17 billion and $17.4 billion, while earnings per share are predicted to be in the range of $2.20 to $2.50. Analysts anticipate per-share earnings of $2.37 on about $17.1 billion in revenue.

The company also noted that it set aside $646 million in the second quarter to help pay legal expenses, with the majority related to ongoing litigation in the US over the marketing of opioid drugs. "We deny liability and will continue to vigorously defend ourselves," Teva said Wednesday, adding "we maintain our defences while also exploring responsible and comprehensive alternatives." 

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