Teva laid out its outlook for its newly bolstered generics business on Friday. And the way the company sees things, thanks to its pipeline, the road ahead is a rosy one.
Post-Allergan generics buy, Teva expects its copycat business to grow 5% per year, despite the volume decline and price erosion that are taking a toll on the industry, generics CEO Siggi Olafsson said on the call. And the company will secure those expansion numbers by launching 1,500 products per year that grow yearly revenue by about 10%.
That’s, of course, a pretty large number, representing four launches for every day of 2017, Olafsson noted. “We cannot miss a beat in that,” he told investors.
But Teva believes it has some key advantages over its competitors that’ll help it push full steam ahead in the pipeline department. The company argues that it’s more inclined than its competition toward first-to-file and first-wave products, which make up two-third of its portfolio. And for that reason, the FDA’s plan to accelerate approvals of first generics will be more beneficial than risky, the company figures.
As for right now, Teva has 320 products under FDA review and 325 in development; with those candidates, it’s taking aim at $200 billion in branded sales. It’s whether those pan out to that 5% growth rate that remains to be seen, Bernstein’s Ronny Gal pointed out in a note to clients.
On the other side of the coin, Teva’s also well-positioned to compete with its already marketed products, execs said, given its beefed-up scale and level of diversification. The $40 billion-plus buy strengthened Teva’s market position in key countries including the U.S., Canada, Russia and the U.K., and now, “buyers can’t avoid Teva,” Gal wrote.
Plus, “with the size of our portfolio, with the flexibility of our manufacturing network, with the industry leading position in the market, we are more shielded” from price fluctuations, Olaffson told investors.
But that doesn’t mean industry challenges won’t take their toll. “Teva is 18% of the U.S. generic business, and it is hard to outrun the industry trend when ‘you are the industry,’" Gal said. Teva’s industry projections are also optimistic, as Evercore ISI analyst Umer Raffat flagged in his own note to clients, calling them “meaningfully higher” than consensus estimates.
One thing’s for sure: With top-seller Copaxone under serious pressure from other knockoff-makers, Teva could use all the generics revenue it can get. Last week, the U.S. Patent and Trademark Office’s review board invalidated the third patent of three that have so far come up for its review on Teva’s new, long-acting version of the multiple sclerosis blockbuster. And while Teva still has a chance to defend itself in an upcoming court battle, some analysts--including Credit Suisse’s Vamil Divan--see the company as “more likely to lose than win.”
- download Teva's presentation
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