Teva Fourth-Quarter Profit Rises on Cephalon Purchase

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By Naomi Kresge - Wed Feb 15 11:18:29 GMT 2012

Teva Pharmaceutical Industries Ltd. (TEVA) said fourth-quarter profit rose 23 percent as last year’s acquisition of Cephalon Inc. shifted the company further away from its original identity as a generic-drug maker.

Earnings excluding some costs climbed to $1.4 billion, or $1.59 a share, from $1.1 billion, or $1.25, a year earlier, the Petach Tikva, Israel-based company said in a statement today. Profit matched the average estimate of $1.59 a share from 25 analysts surveyed by Bloomberg.

Teva, the world’s biggest maker of copied medicines, bought Frazer, Pennsylvania-based Cephalon for $6.5 billion last year in a bid to broaden a portfolio of brand-name drugs that has been dominated by the multiple sclerosis treatment Copaxone. In May, Teva will replace Chief Executive Officer Shlomo Yanai with Jeremy Levin, a Bristol-Myers Squibb Co. (BMY) executive known for overseeing the U.S. drugmaker’s “string of pearls” strategy of small acquisitions and partnerships.

“I hope that in May he knows exactly what he wants to do because he doesn’t have time to waste,” Gilad Alper, a Tel Aviv-based analyst for Excellence Nessuah Brokerage, said in a telephone interview today. “Whatever Levin wants to do, he’ll need a lot of money. He needs the goodwill of lenders, and that will decline rather quickly if Copaxone market share declines.”

Pipeline

Teva has a strong pipeline of branded drugs, Yanai said at a press conference in Tel Aviv today. The company is in “advanced talks” with U.S. Food and Drug Administration officials to craft a study to enable it to win approval for multiple sclerosis pill laquinimod, he said. The drug failed in one trial last year and yielded disappointing results in a second.

“I am optimistic about the continued growth of Teva in the branded products sector,” Yanai said.

Earnings excluding some costs this year will be $5.48 to $5.68 a share, while revenue will reach about $22 billion, Teva said in December. The company said then it may not meet its long-term target of $31 billion in sales by 2015, which Yanai described as an “aspirational goal.”

Teva rose 2.4 percent to 167.80 shekels at 1:17 p.m. in Tel Aviv. The company’s American depositary receipts have lost 15 percent in the past year including reinvested dividends on the Nasdaq Stock Market, compared with a 17 percent return for the Bloomberg Europe Pharmaceutical Index.

Narcolepsy

Sales rose 28 percent to $5.7 billion, as revenue from brand-name drugs soared 68 percent to $2.3 billion with the inclusion of Cephalon’s products. Sales of generic drugs in the U.S. fell 5 percent to $1.2 billion.

Cephalon’s top-selling drug, Provigil, loses patent protection in April, Natali Gotlieb, a Tel Aviv-based analyst for Israel Brokerage & Investments Ltd., said in a telephone interview today. The narcolepsy treatment had sales of $350 million in the fourth quarter.

“Everyone already has 2012 in their mind,” Gotlieb said.

Teva and U.S. partner BioSante Pharmaceuticals Inc. (BPAX) won U.S. clearance to sell Bio-T-Gel, a testosterone replacement therapy for men, the Food and Drug Administration said late yesterday. BioSante estimates the U.S. market for male testosterone products exceeds $1.2 billion.

Copaxone Peak

Fourth-quarter revenue from Copaxone, which faces competition from newer treatments, increased 11 percent to $927 million. Teva has said sales will probably peak at $3.8 billion this year.

The company reported profit that doesn’t meet generally accepted accounting principles because it excludes costs linked to acquisitions such as Cephalon. On a net income basis, Teva earned $506 million in the quarter, 34 percent less than the $771 million in the year-ago period.

Teva increased its quarterly dividend 25 percent to 1 shekel a share. The company will hold a conference call with analysts at 8:30 a.m. New York time today.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net

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Teva Fourth-Quarter Profit Rises on Cephalon Purchase