Israel’s Teva Pharmaceuticals said on Wednesday that a two-year restructuring has enabled the world’s largest generic drugmaker to finally turn a corner, as it reported slightly better than expected fourth-quarter results.
Its shares surged as much as 8.5% in New York trade but then settled back to more modest gains as the debt-laden company also said it expected strong growth in two key drugs – migraine treatment Ajovy and Huntington’s treatment Austedo – in 2020.
CEO Kare Schultz said 2019 was a tough year for earnings. “We’ve seen that stabilization happening,” he told a post-earnings conference call.
Teva said it earned 62 cents per diluted share excluding one-time items in the October-December quarter, up from 53 cents a year earlier. Revenue rose 1% to $4.5 billion, mainly due to an increase in sales of Austedo and Ajovy, as well certain respiratory products. That was partially offset by lower revenue from multiple sclerosis drug Copaxone in North America.
Analysts had forecast Teva would earn 61 cents per share excluding one-offs on revenue of $4.35 billion, according to I/B/E/S data from Refinitiv.
“In 2019, we made great strides towards positioning Teva for renewed growth by completing our two-year restructuring plan, reducing our cost base by more than $3 billion, and reducing our net debt by more than $9 billion,” Schultz said.
Teva has closed down 13 manufacturing sites, with another 10 sites in the process of being closed or divested, and has cut its workforce by 13,000 to around 40,000.
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Teva is looking to Ajovy and Austedo to boost revenue and help it pay down its huge debt load, which at the end of 2019 stood at $26.9 billion. Its debt soared after it paid more than $40 billion in 2016 to buy Allergan’s generic drugs business.
Ajovy generated revenue in North America of $25 million in the quarter, while sales of Austedo doubled to $136 million. Copaxone sales fell 26% to $264 million in North America due to generic competition.
Teva’s generic products revenue in North America in the fourth quarter increased 3% to $1.1 billion mainly due to new product launches.
Teva said a framework for a U.S. settlement on opioids was still being examined. Attorneys general of four U.S. states agreed last year on a proposed settlement under which Teva would provide $23 billion worth of generic Suboxone and pay $250 million in cash over 10 years. “I am still cautiously optimistic it will result in an actual settlement,” Schultz said.
Deaths in the United States linked to opioids have soared over the last two decades, driving a wave of litigation against drugmakers and distributors.
For 2020 Teva forecast adjusted EPS of $2.30-$2.55 and revenue of $16.6 million to $17.0 billion. Analysts are forecasting EPS of $2.47 on revenue of $17.2 billion.