Hapoalim: Teva to make acquisition in H1 of 2010

Gilad Sarig: There is little chance that generic Copaxone will hit the market before 2012.

Bank Hapoalim analyst Gilad Sarig gives Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) an "Outperform" recommendation with a target price of $57 per share. He predicts that Teva will report earnings per share of $0.89 on $3.68 billion revenue, but also predicts that the company will beat the analysts' consensus, as it is wont to do.

Teva is due to publish its financial report on November 3. The analysts' consensus is earnings per share of $0.88 on $3.63 billion revenue.

Sarig notes the rising threat against Teva's multiple sclerosis drug, Copaxone, as two competitors, including Mylan Inc. (NYSE: MYL), have already submitted to the US Food and Drug Administration (FDA) applications for generic versions of the drug. The first company to obtain marketing certification will get marketing exclusivity for the cheaper generic version. This will hurt Teva, as Copaxone accounts for about a third of its total revenue. Teva argues that its Copaxone patents are valid through 2014, and has already sued Mylan for patent infringement, which has blocked FDA approval for 30 months, or until a court decision, whichever comes sooner. Sarig says, "There is little chance that generic Copaxone will reach the market before 2012."

In response to rumors that Teva might acquire Protalix Biotherapeutics Inc. (AMEX:PLX), Sarig said that the combination of Teva's large cash reserves ($1.8 billion at the end of June) and the economic crisis, which is forcing some companies to sell assets, has created acquisition opportunities for Teva.

"We believe that Teva is constantly scanning the market in order to find the most suitable candidates for it," says Sarig, and cites Germany's RatioPharm GmbH as an example, because Teva needs to strengthen its presence in Germany. "2011 is shaping up to be a challenging year in terms of opportunities. We therefore believe that the company will make an acquisition in the first half of 2010 in order to support subsequent profit growth in the long term too."

Published by Globes [online], Israel business news - www.globes-online.com - on October 27, 2009

© Copyright of Globes Publisher Itonut (1983) Ltd. 2009

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