Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) share price rose 1% on the New York Stock Exchange on Friday, after reaching a new low point on Thursday. The price was still below $8, however, giving Teva a market cap of only $8.7 billion.
Teva's share price lost 14.5% of its value on Wall Street last week. Only four years ago, in July 2015, Teva's share price reached an all-time high of $67 (adjusted to dividends since distributed), reflecting a $61 billion market cap. Teva's share price has since plummeted 88%, carving $52 billion from its market cap.
Last week's decline in Teva's share price was sparked by increased concern about the results of legal proceedings concerning opioids - pain relievers marketed in the by drug companies (including Teva and Actavis, acquired by Teva) that caused addiction among users.
A large number of such legal proceedings are currently underway in the US. Teva has already settled the proceedings against it in Oklahoma for $85, without admitting any culpability. A larger legal proceeding is scheduled to begin in Cleveland in October.
100 fatalities in 2006-2012
Last week, the US Drug Enforcement Administration (DEA) published figures showing a 50% increase in marketing of these pain relievers in 2006-2012, and that use of opioids caused more than 100 fatalities in the US during this period. The figures were published in the course of the legal proceedings in Ohio.
One case published by "The New York Times" shows that extent of the phenomenon. 3,271 bottles of Oxycodone were shipped to the town of Port Richey in one month, although the town's population is only 2,831.
"The New York Times" and Fox News reported that in the proceedings in question, Teva had no system for monitoring suspicious orders of opioid pain relievers, as required by the regulator) until 2012, and the company reported only six suspicious orders out of 600,000 in 2013-2016. Teva told Fox News in response, "Teva has not conspired, failed to report suspicious orders or contributed to the abuse of opioids in the US. We maintain a comprehensive and robust system to prevent suspicious orders from ever entering the market."
Teva is exposed to two different legal proceedings, and analysts estimated the likely combined damage to Teva from them at $1.4 billion. In addition to opioids, Teva is among the companies suspected of fixing prices in the US generic drug market.
These proceedings are arousing concern that Teva will have trouble reducing its debt, which amounted to $26.7 billion at the end of the first quarter ($28.6 billion in gross debt). Teva's cash flow continues to shrink as a result of falling Copaxone sales, while its new original drugs, which were to have compensated for lower Copaxone sales, have yet to gather steam.
Published by Globes, Israel business news - en.globes.co.il - on July 21, 2019
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