Analysts have weighed in on Teva Pharmaceutical Industries' (Nasdaq: TEVA; TASE: TEVA) announcement yesterday of the launch of generic Protonix, and the subsequent hedging of that announcement in a conference call later in the day.
Psagot Ofek Investment House analyst Limor Gruber says, "Protonix was launched earlier than the market had predicted, and it will make a substantial contribution in the first two quarters of 2008. I estimate that Protonix sales will contribute to Teva a net profit of $42 million ($0.05 per share) on $50 million in Protonix sales in the first week. Teva will earn a profit of $75-83 million ($0.09-0.10 per share) on $250 million in sales during the six-month exclusivity period.
"I think that Protonix is responsible for most of the 2007 guidance increase. India's Sun Pharmaceuticals Ltd. (BSE: 524715) has not yet announced a launch of the drug, but in a look forward, I took into account a launch that will share in the exclusivity. As for the compensation that Wyeth (NYSE:WYE) has sued for, I think that Teva has taken the correct legal position, which is sufficiently founded and cautious, and does not rule out a possible settlement between the companies."
Gruber raised her target price for Teva from $46 to $52.
IBI Investment House analyst Noa Weissberg says, "Teva already obtained final approval [for generic Protonix] in August, and the moment that it did not launch the product, there were assessments that the company believed that its legal case was weak or that it was trying to reach a settlement. The nice thing here is that a week before the end of the year, when it has only five work days left, it raised its guidance so sharply. This once again emphasizes how much the exclusive launch of a large product is important for the company."
Weissberg predicts that Teva will earn a net profit of $75 million ($0.09 per share) on $325 million in Protonix sales during the exclusivity period. "It's hard to give a precise estimate, but it seems that, in the first week, it will fill the stores and pharmacies with a three-month supply of the drug," she added.
Clal Finance Batucha analyst Yisca Erez says, "Since September, we have waited for one of two scenarios: either a launch at risk or a settlement. Protonix is a very important drug, and in view of the joint exclusivity with Sun Pharmaceuticals, the launch will add a net profit of $250 million ($0.25-30 per share) on $350-400 million revenue during the exclusivity period.
"I believe that Teva tried to reach a compromise with Wyeth and reduce the legal risk of a launch, but since this didn’t happen, Teva decided to launch, and there is no accountancy or other reason for it to launch a week before the end of the year. In any case, I believe that Teva would have beaten its guidance with $2.30 earnings per share, and Protonix gave it the security to raise the guidance. It's now clear that Teva will beat its 2008 guidance of $2.50 earning per share."
Published by Globes [online], Israel business news - www.globes-online.com - on December 25, 2007
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