Teva Reports Double-Digit Revenue Declines But Says Restructuring On Track
Teva Pharmaceutical Industries has reported a revenue decline of 10%, in its first-quarter results, mainly related to the performance of its US generics business and lower sales of its top-selling specialty product, Copaxone (glatiramer acetate), a drug to treat multiple sclerosis. Despite the revenue declines, Kåre Schultz, Teva’s President and Chief Executive Officer, said the company’s previously announced restructuring program is proceeding on target.
Teva reported first quarter 2018 revenues of $5.1 billion, a decrease of 10%, or 15% in local currency terms, compared to the first quarter of 2017. Revenues from its North America segment in the first quarter of 2018 were $2.5 billion, a decrease of $709 million, or 22%, compared to the first quarter of 2017. The company attributed the decline due to market dynamics in the US generics market, a decline in Copaxone revenues due to generic competition, and the loss of revenues from the sale of its women’s health business. Revenues in the US, the company’s largest market, were $2.4 billion in the first quarter of 2018, a decrease of $719 million, or 23%, compared to the first quarter of 2017.
Generic products revenues in Teva’s North America segment in the first quarter of 2018 decreased by 23% to $1.1 billion, compared to the first quarter of 2017, which Teva attributes to lower volumes and price erosion. Copaxone revenues in Teva’s North America segment in the first quarter of 2018 decreased by 40% to $476 million compared to the first quarter of 2017, mainly due to generic competition in the US. The US Food and Drug Administration (FDA) approved generic versions of both Copaxone formulations (20 and 40 mg/mL) from Novartis and Momenta Pharmaceuticals separately in 2015 and 2018. In addition, in October 2017, Mylan’s generic of Copaxone was approved by the FDA.
“2018 is off to a solid start,” Schultz said in a May 3, 2018 company statement. “Our restructuring program is proceeding well, and we are on track to meet our cost reduction targets of $1.5 billion in 2018 and $3.0 billion by the end of 2019. During this quarter, our strong cash flow allowed us to continue to reduce our outstanding debt, and together with our recent debt issuance and covenant amendment, has placed Teva on a more stable financial footing. We have also benefited this quarter from the durability of Copoxane and a steady flow of generic launches in the US. Our strong first quarter performance, along with our confidence in executing the restructuring program, gives us a solid foundation to raise our guidance for the year.”
GAAP (generally accepted accounting principles) gross profit was $2.3 billion in the first quarter of 2018, down 17% compared to the first quarter of 2017. GAAP gross profit margin was 46.4% in the first quarter of 2018, compared to 50.2% in the first quarter of 2017. GAAP net income attributable to ordinary shareholders was $1.1 billion in the first quarter of 2018, compared to $580 million in the first quarter of 2017.
As of March 31, 2018, Teva’s total gross debt was $30.8 billion, compared to $32.5 billion as of December 31, 2017. The decrease was mainly due to $6.5 billion in debt prepayments, partially offset by its March 2018 issuance of an aggregate principal amount of $4.4 billion of senior notes, as well as exchange-rate fluctuations. The portion of total debt classified as short-term as of March 31, 2018 was 4%, compared to 11% as of December 31, 2017.
Source: Teva Pharmaceutical Industries