Teva's first quarter financial are disappointing, mainly because of weak Copaxone sales and a challenging business environment in Europe, says Clal Finance analyst Jonathan Kreizman. The generic drugs giant published its first quarter results today. Kreizman sticks with a "Market perform" rating for Teva, setting a price target of $46 for the share, 3% above the price on Wall Street.
"While the generics picture in the US is improving, we see no reason for recovery in Europe in the foreseeable future, as Teva's weakness in Europe is part of a broad trend affecting the entire industry," Kreizman writes. Clal Finance and Meitav are the only Israeli investment houses with, in effect, "Hold" ratings for Teva.
Keizman writes that Teva's original MS treatment Copaxone had a weaker than expected quarter, with sales of $909 million, compared with $838 million in the first quarter of 2011.
Kreizman sees several risks for Teva, among them greater competition in MS treatments with the introduction of orally administered drugs from 2013; a possible generic version of Copaxone before 2014; lack of success for important drugs in the innovative portfolio acquired with the acquisition of Cephalon; a fall in generic drug prices, particularly in Europe, in view of the need of governments to cut health spending; and ethical drug companies' generic versions of their own products to prevent generic competition.
"Teva is in a transition period between a business model highly dependent on Copaxone and generic sales in the US, and a model based more on new original drugs (the Cephalon acquisition) and the development of biogenerics (2015 onwards).. With the expected decline in 2013 in sales of Coapxone and generic drugs in the US, in our view, until the new opportunities mature, Teva will have difficulty in generating substantial organic growth after 2011," Kreizman concludes.
Published by Globes [online], Israel business news - www.globes-online.com - on May 9, 2012
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