Monday was quite the day for Teva. In addition to naming new CEO Kåre Schultz, the company unveiled the first of the asset sales it’s promised to help pay down debt.
Late in the day, the embattled Israeli drugmaker said it had struck a pact with CooperSurgical to unload its Paragard intrauterine copper contraceptive for $1.1 billion in cash. Along with it will go a manufacturing facility that produces the product exclusively.
Paragard generated revenues of about $168 million between June 30, 2016 and June 30, 2017, Teva said—but the company is much more in need of the cash. Thanks to last year’s ill-fated, $40.5 billion purchase of Allergan’s generics unit, Teva expressed doubts earlier this year about meeting its debt agreements.
But the Paragard divestiture is a step in the right direction, and the company swears there’s more to come. Teva “continues to actively pursue additional divestiture opportunities,” it said in a statement, adding that those include a sale of its remaining women’s health assets and its European oncology and pain businesses. When all is said and done—which should be by the end of the year—it expects to pocket at least $2 billion.
It’ll be up to the company’s new helmsman, though, to see the project through. After seven months of searching, Teva publicly tapped Schultz—the current CEO of Lundbeck—as head honcho, highlighting the turnaround job he’s done at the distressed Danish drugmaker.
For now, shareholders will likely appreciate the Paragard move, Wells Fargo analyst David Maris predicted. “In addition to a good price for the asset ... the recent share decline has been likely due in part to investor worries that the debt burden is high, and in cases like this, asset sales tend to assuage investor anxiety,” he wrote in a Tuesday note to clients.
Rumors around Teva’s women’s health unit began swirling in April, and the company officially announced the following month that the business was on the block. In August, Bloomberg reported interest from various U.S. healthcare and consumer companies—including Cooper Cos.—and European and Asian companies and private equity outfits, noting that Teva could sell the women’s health lineup in multiple pieces.