Teva and its fellow generics giant--slash former hostile takeover target--Mylan are both at two-year lows--and it’s no coincidence.
Mylan, of course, is suffering following a public lambasting over its price hikes for lead product EpiPen--and the fallout that’s come in the wake of the scandal, including backlash over CEO Heather Bresch’s paycheck. But Teva, which still owns Mylan shares dating back to 2015’s buyout effort--which it abruptly dropped in favor of a $40 billion transaction for Allergan’s generics unit--is now feeling its rival’s pain, Wells Fargo analyst David Maris pointed out in a Wednesday note to clients.
Currently, Teva’s share price is 35% below its July 2015 peak, according to Israeli newspaper Globes--and only 10% higher than it was when CEO Erez Vigodman took the reins in early 2014. Mylan, for its part, currently boasts a market cap of $20.3 billion, with shares hovering around $38. That’s less than half the $82-per-share Teva was offering during its pursuit, Globes notes.
Teva can’t blame its whole slide on Mylan, though. As Maris--who cut his Q3 EPS estimate for the drugmaker to $1.26 from $1.42--pointed out, the Petah Tivka-based company is also facing investor concerns over generic pricing; an ongoing trial over the patent on the long-acting version of star med Copaxone; a recently filed lawsuit against the founders of its Mexican generics buy Rimsa, who Teva says misled it in its due diligence of the company; and more.
Vigodman and his fellow Teva execs, though, have recently been working hard to dispel any concerns investors may have. Early in September, they laid out generics growth predictions of 5% per year, despite the volume decline and price erosion that are hurting companies across the copycat industry. Teva plans to post that figure through 1,500 product launches per year that expand revenue by about 10%.
That plan may be easier said than done, though, as Bernstein’s Ronny Gal pointed out at the time. “Teva is 18% of the U.S. generic business, and it is hard to outrun the industry trend when ‘you are the industry,’" he wrote in a research note.
- get more from Globes
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