JERUSALEM (Reuters) - Teva Pharmaceutical Industries profits fell in the second quarter, hurt by a decline in U.S. and European generic drug sales, and its near-term outlook looks bleak in the face of prospective competition for multiple sclerosis drug Copaxone.
Teva, the world’s largest generics drugmaker, said it plans to appeal a decision from a U.S. appeals court that last week invalidated some patents and could lead to generic versions of Copaxone appearing from competitors in May 2014, a year sooner than expected.
“We have been preparing for a generic launch of Copaxone,” Jeremy Levin, Teva’s chief executive, told a conference call of analysts. “We are not sure of a generic timing or approval.”
Copaxone accounts for about 20 percent of sales and some 50 percent of Teva’s profit. Global sales of the drug grew 9 percent to $1.1 billion in the second quarter including a rise of 17 percent to $817 million in the United States.
Levin said Teva is banking on U.S. Food and Drug Administration approval of a three times a week version of the MS drug in early 2014 to boost sales, with the company aiming to move patients taking its current daily drug to the new offering.
“If approved, we’re prepared with an aggressive launch strategy for the first half of 2014,” he said.
Investors are mostly downbeat on Teva, viewing the company as in a rebuilding phase as Levin transforms it from a mostly generics firm to one developing its own drugs.
“This is a work in progress,” said Randall Stanicky, an analyst at Cannacord Genuity. “They are headed in the right direction but they have headwinds to face.”
Its New York-listed shares were down 1.6 percent at $39.08 at midday. Its gains of just 5 percent so far in 2013 have underperformed peers, especially those in the United States.
Teva earned $1.20 per share excluding one-time items in the second quarter, compared with $1.28 a year earlier and analysts’ forecasts of $1.20 a share. Revenue dipped 1 percent to $4.92 billion versus a forecast $4.94 billion.
Levin said the third quarter should be similar to the second with a stronger fourth quarter. He added that Teva should end 2013 at the midpoint of its outlook of $19.5-$20.5 billion in revenues and adjusted earnings per share of $4.85-$5.15.
“Investors will remain nervous about Copaxone and with few catalysts in the second half, we would remain on the sidelines,” UBS analyst Marc Goodman wrote in a note to clients.
In the coming weeks, Teva and partner AstraZeneca could lose patent protection on $600 million a year asthma drug Pulmicort.
It is looking at so-called new therapeutic entities (NTEs) to ultimately offset losses from generic competition for Copaxone. So far, eight NTEs have been approved for development and Levin sees sales possible in 2016.
“These are low investment, high-potential opportunities,” he said, noting that each product could sell up to $500 million a year. “If we are fortunate and one or two take off, we expect them to be very substantial.”
Stanicky estimates revenue from NTEs of $6-$7 billion by 2018, which would be more than Copaxone.
Teva declared a quarterly dividend of 1.15 shekels (32 cents) a share, unchanged from the first quarter.
(Corrects 12th paragraph to show CEO said expects stronger fourth quarter, not stronger 2014)
Reporting by Steven Scheer; editing by Patrick Graham