Teva, Mylan shares at 2-year lows

Erez Vigodman and Heather Bresch
Erez Vigodman and Heather Bresch

Teva's share price is 35% below its July 2015 peak, and only 10% higher than its level when Erez Vigodman became CEO in February 2014.

Following the Rosh Hashanah holiday break, the Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) and Mylan N.V. (Nasdaq: MYL; TASE: MYL) shares have dragged down the Tel Aviv 25 index, of which they constitute a considerable part. The Teva share has lost 7% of its value on the New York Stock Exchange since last Thursday, while the Mylan share has fallen 5.6% on Nasdaq.

The two companies' shares are now at two-year lows. The Teva share is now at $45.30, reflecting a $41.4 billion market cap, 35% below its July 2015 peak, and only 10% higher than its level when Erez Vigodman became CEO in February 2014.

The Mylan share is at $38, reflecting a $20.3 billion market cap. For the sake of comparison, 15 months ago, Teva was attempting a takeover of Mylan at $82 a share, more than double the current market price. Teva abandoned the attempt when it acquired Actavis, the generic division of Allergan, for nearly $40 billion ($35.5 billion net), close to Teva's current market cap following the merger with Actavis.

Both Teva and Mylan are the victims of the negative attitude towards pharmaceutical sector shares. One of the prominent issues in the US presidential elections is the cost of drugs. Mylan is in the eye of the storm with its EpiPen, a syringe for treating life-threatening allergies, the price of which has skyrocketed in recent years.

Mylan CEO Heather Bresch has had to attend a hearing of the House of Representatives Oversight and Government Reform Committee, while the company published a profit report for the drug. The published figures also aroused comment about the way the company reported its taxes.

In recent days, committee members sent Bresch a letter demanding additional documents concerning the company's tax rate, profit, discounts etc. Senate Judiciary Committee chairman Charles Grassley sent a letter asking for particulars about incorrect classification of the drug in the Medicaid program resulting in higher reimbursements for Mylan than the company was entitled to. Reports last week said that Democratic presidential nominee Hillary Clinton had called Mylan a "bad corporate actor."

More than $1 billion offered for Teva's UK business

There have been no special events at Teva since the company filed a lawsuit against Mexican company Rimsa, which Teva acquired for $2.3 billion. Teva is now alleging that the sellers committed fraud against it, and that "Rimsa was engaged in a years-long scheme to sell defective and unlawful products and to conceal those violations from Mexican regulators."

The only news during the holiday was the completion of Teva's acquisition of distribution company Anda, and reports of the expected sale of Teva's generic assets in the UK and Ireland. Two months ago, Teva announced its acquisition of Anda, the fourth largest generic distributor in the US, from Allergan for $500 million. "The acquisition reflects our position that there are external and internal growth opportunities in the generic industry in general, and for our expanded distribution chain in particular," Teva Global Generic Medicines Group president and CEO Sigurdur Olafsson said.

At the same time, as part of its acquisition of Actavis from Allergan, Teva is being required to sell some of its business in the UK in order to prevent damage to competition. According to reports in India, Indian companies Aurobindo and Intas are competing for the acquisition, along with Mylan, Novartis, and private equity funds, with bids in excess of $1 billion.

Published by Globes [online], Israel business news - www.globes-online.com - on October 5, 2016

© Copyright of Globes Publisher Itonut (1983) Ltd. 2016

Erez Vigodman and Heather Bresch
Erez Vigodman and Heather Bresch
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