Teva Pharmaceutical Industries
2018 revenue: $18.85 billion
2017 revenue: $22.39 billion
Headquarters: Petah Tikva, Israel
Teva has been battered by pricing pressure in its crucial generics segment for years. That pressure, combined with generic competition to its important multiple sclerosis drug Copaxone, has made new CEO Kåre Schultz's turnaround campaign a tough one.
After joining Teva in late 2017, Schultz quickly kicked off an effort to cut $3 billion in annual costs by implementing 14,000 layoffs and closing dozens of plants. The reorg hasn’t been popular with employees, but last summer, less than a year into Schultz's tenure, then-Goldman Sachs analyst Jami Rubin praised him for his “action-oriented” leadership.
There’s still a ways to go in the turnaround. In 2018 results released in February, the company said sales fell nearly 16% to $18.85 billion. And looking ahead, sales are set to sink lower this year. Teva rolled out 2019 sales guidance of $17 billion to $17.4 billion, missing analyst estimates.
On the company's fourth-quarter conference call, Schultz said the “drag on revenue … is from continued reduction in Copaxone sales.” The key MS drug has been under generic pressure since 2017 and generated $2.4 billion globally last year, a 36% fall from 2017’s $3.8 billion. After launching its generic at a modest discount in 2017, Mylan last year introduced an even steeper discount for its product, forcing Teva to offer bigger rebates. Sales for Copaxone are set to further slip next year to $1.5 billion, Teva executives said.
Copaxone isn't the only problem at Teva. U.S. generics are still suffering, and the dynamic has hit Teva and its generic competitors. In January, though, Schultz said generic prices seem to be stabilizing. Referring to the price erosion as “a classical negative death spiral," he told an audience at the J.P. Morgan Healthcare Conference that, “we no longer have this death spiral.”
While the company has several issues to work over, there are a couple bright spots heading into 2019. Teva last year won an FDA approval for CGRP migraine prevention med Ajovy. The drug carries peak sales estimates of $500 million and should provide much-needed new revenue for Teva. But the drug is in a crowded field, competing against offerings from Amgen and Eli Lilly. Payers have been able to pit the companies against each other for better pricing.
Another new launch, Austedo—approved to treat both chorea associated with Huntington's disease and tardive dyskinesia—remains on the upswing. Teva rolled out the drug in 2017; last year, it pulled in $204 million. Executives predict $350 million in Austedo sales in 2019.