Teva records second-quarter loss on litigation charges

Teva on Thursday posted a second-quarter loss of $452 million, versus a profit of $863 million in the year-ago period, after recording charges of about $1.5 billion, mainly related to the settlement of a patent dispute involving Pfizer and Takeda's proton pump inhibitor Protonix. Sales in the quarter slipped 1 percent to $4.9 billion, hurt by revenue declines for generic drugs in the US and Europe, but nonetheless were in line with analyst estimates.

Overall sales of generic products fell 8 percent to $2.4 billion, which included an 8-percent drop in US revenue to $970 million due to a decrease in sales of a generic version of Forest Laboratories' Lexapro, for which Teva had exclusive rights in the second quarter of 2012, as well as the absence of royalties related to the sales of the generic equivalent of Pfizer’s Lipitor. European revenues slipped 5 percent to $860 million, mainly due to lower sales in Italy and Spain, while in the rest of the world, revenue from generic drugs slipped 11 percent year-over-year to $581 million, due primarily to lower sales in Japan and Canada.

For the three-month period, sales of specialty drugs climbed 5 percent to $2.1 billion, in part because of a 9-percent uptick in Copaxone sales to $1.1 billion. This included a 17-percent rise in sales in the US to $817 million due to price and volume increases, which offset a decline of 10 percent outside the US that Teva attributed to the timing of tenders in Russia. However, analysts warn that Copaxone could face generic competition as early as next year after a US court last week shortened the multiple sclerosis drug's patent protection term. Meanwhile, sales of Treanda rose 27 percent in the quarter to $177 million, which helped to offset a 19-percent drop in sales of Nuvigil to $74 million, while sales for Provigil, which began facing generic competition in the US last year, posted a 60-percent reduction to $19 million.

Teva is currently eight months into a restructuring programme that seeks to cut $2 billion in costs in the next five years. CEO Jeremy Levin described Teva as being "a different company than it was one year ago… We are building a strong and diverse business, as well as a robust pipeline that positions Teva to achieve a high level of performance and growth." He added that "in the short- to mid-term, we are especially excited by the positive momentum of our US generics business, progression in our R&D portfolio…and by the expected launches of key generic and specialty medicines."

In November, Levin predicted that full-year per-share earnings would be $4.85 to $5.15 on revenues of between $19.5 billion and $20.5 billion, but Clal Finance Batucha Brokerage analyst Jonathan Kreizman suggested that results may come in at the lower end of Teva's forecast depending on the outcome of US litigation that could allow competition to its generic version of AstraZeneca’s Pulmicort Respules.

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