IBI: This is the moment Teva has feared

Teva Photo: Reuters

IBI analyst Steven Tepper says Mylan's generic Copaxone approval earlier than expected will hit cash flow as Teva tries to cut debt.

Following Mylan's announcement that the US Food and Drug Administration (FDA) has approved its generic versions of Copaxone, IBI investment house pharmaceutical and biotech analyst Steven Tepper said, "This is undoubtedly the symbolic moment that everybody has waited for in fear. It marks the end of the Copaxone story or at least the beginning of its erosion."

The main question, he said, was how much this had already been priced into the market. He believes that the market had taken into account that there could be a generic version of Copaxone at any moment although there was a consensus that it would likely happen in 2018 near the start of the second quarter. In other words, the approval has been received six months earlier than expected. He said, "Even if it has been taken into account there is the psychological aspect."

He continued, "On the face of it, this competition six months earlier than expected doesn't seem so terrible but it is significant because it means less cash flow that would have enabled Teva to reduce its debt."

Teva is weighed down by $35.1 billion in debt taken on to acquire Actavis last year.

"This is an event that has pure economic significance on every parameter and every number. In effect, all the numbers are lowered for its forecasts. It lowers the numbers for 2017 and dramatically lowers the numbers for 2018 and 2019. Ultimately Teva is "subject to the mercy" of its two new products: AUSTEDO (to treat Huntington's), which is already being sold but it is not yet know what sales it will generate, probably not very much, and there is a lot of uncertainty surrounding it; and its Migraine product, which has a very large market and should receive approval in 2018 but won't be relevant until 2019 and afterwards. It will have competition but it is a market with potential for many billions of dollars. These are the two main products and at the same time we will see a strong rate in the fall of Copaxone than previously estimated."

Published by Globes [online], Israel business news - www.globes-online.com - on October 4, 2017

© Copyright of Globes Publisher Itonut (1983) Ltd. 2017

Teva Photo: Reuters
Teva Photo: Reuters
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018