In a surprise move, U.S. regulators approved a generic version of Teva Pharmaceutical’s (TEVA) Copaxone multiple sclerosis drug earlier than investors expected. And the decision portends big changes not only for Teva — Copaxone is a key contributor to its sales and profits — but also for generic companies more broadly, as far as some Wall Street wags are concerned.
The approval creates a heightened challenge for Teva, which is already in disarray. Two months ago, the drug maker — which is the world’s biggest purveyor of generics — missed earnings estimates, lowered its profit guidance for the year, cut its dividend by 75 percent, and disclosed plans to axe another 1,000 jobs and close 15 manufacturing plants. Then there’s its $35 billion debt load.
Now, Teva must cope sooner than expected with competition from Mylan for Copaxone, which is not only its key brand-name medicine, but also accounted for 19 percent of sales and as much as 50 percent of operating profit in 2016, according to Credit Suisse analyst Vamil Divan. Not surprisingly, Teva stock is diving on the news. Copaxone is a $3.4 billion brand in the U.S., noted Wells Fargo analyst David Maris.
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