Teva projects lower 2015 revenue due to generic competition for Copaxone, exchange rates

Teva on Thursday disclosed its 2015 revenue outlook, which assumes that Copaxone (glatiramer acetate) will begin facing generic competition in the US from two drugs as of next September. That month is the original patent expiry date for the multiple sclerosis drug, prior to a US Court of Appeals decision that had pushed the expiration forward to this year, but "earlier entry by generics could reduce operating income by $30 million to $50 million per month," the company said.

Teva estimated that compared to 2014, its earnings-per-share outlook for 2015 will range from $5 to $5.30 on revenue between $19 billion and $19.4 billion, while analysts expect per-share earnings of about $5.06 and revenue of $20.1 billion. The drugmaker further indicated that currency fluctuations could adversely affect revenues by $700 million and lower operating income by $60 million to $70 million.

The US Supreme Court has agreed to hear Teva's arguments against the federal appeal's court ruling, although it refused to impose an injunction on the launch of generic Copaxone pending its decision in the case, which is due by late June. Meanwhile, Supreme Court Justices recently expressed mixed views on the validity of Teva's appeal.

Generic versions of Copaxone are under development by Novartis' Sandoz unit in collaboration with Momenta Pharmaceuticals, as well as by Mylan's partnership with Natco Pharma. Several drugmakers, including Mylan, have applied for authorisation to market a generic version of Teva's three-times-weekly formulation of the MS therapy, which was approved by the FDA in January. For related analysis, see ViewPoints: Generic Copaxone landscape shifts again as slew of ANDAs filed for 3TW version.

Teva also revealed in its financial forecast that compared to 2014, new competition for its generic version of AstraZeneca's asthma therapy Pulmicort (budesonide) could cut revenue by as much as $400 million to $500 million, and profit by between $100 million and $200 million next year. However, Teva CEO Erez Vigodman said the Israeli drugmaker, which recently announced it was pulling out of research into women's health and oncology in order to focus on its core areas of central nervous system and respiratory diseases, expects approvals for four specialty products next year, while regulatory submissions are planned for five additional therapies. For additional analysis, see ViewPoints: Teva sharpens focus, but stays on the sidelines.

The company also indicated plans to repurchase between $1 billion and $1.2 billion in shares in 2015. Commenting on the company's outlook, BMO Capital Markets analyst David Maris stated "Teva seems to be capping off the year with good and reasonable guidance," adding "2015 will be a pivotal year as Teva continues to rebuild and find its footing in what will be the" post daily-Copaxone era.

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