Teva Pharmaceutical on Thursday said 2018 results might be weaker than expected due to difficult conditions inside U.S. generics market as well as fierce competition facing its branded multiple sclerosis drug.
Israel-based Teva, the earth’s largest generic drugmaker, will be facing cost erosion, increased competition as well as a consolidating customer base, particularly inside United States.
the idea also carries a hefty debt load which company executives said might be tackled inside near term.
CEO Kare Schultz attributed half of the expected revenue decline in 2018 to its multiple sclerosis blockbuster Copaxone, which began to face competition last year.
Persistent cost pressure inside U.S. generics market, lower revenue following the sale of several businesses as well as expected competition to its ProAir inhaler inside second half of 2018 also hurt its outlook, he said on an earnings call.
Schultz said Teva might no longer comment on expected cost developments, noting such estimates were leading to steeper declines.
Teva’s brand new York-listed shares fell more than 6 percent in early trade, having been indicated down 13.7 percent before the market opened. They fell nearly 50 percent last year.
The INDXX global generics as well as brand new pharma index will be down 1.1 percent This kind of year after a 17.5 percent rise in 2017.
Teva earned 93 cents per share, excluding one-time items, inside fourth quarter of 2017, down through $1.38 a year earlier. Revenue fell 16 percent to $5.5 billion. Analysts had forecast Teva might earn 76 cents a share ex-items on revenue of $5.3 billion, according to Thomson Reuters I/B/E/S.
Teva has already announced a restructuring to combine its generic as well as specialty medicine businesses, cut more than a quarter of its workforce as well as close many of its factories.
The plan, announced in December, aims to reduce costs by $3 billion by the end of 2019 through about $16.1 billion in 2017.
Generic drug sales inside fourth quarter fell to $3.1 billion through $3.7 billion. Sales of Copaxone fell 19 percent to $821 million. Teva forecast Copaxone sales of $1.8 billion in 2018.
“We noted further deterioration inside U.S. generics market as well as economic environment, further limitations on our ability to influence generic medicines pricing inside long term as well as a decrease in value through future launches,” Teva said.
For 2018, Teva forecast revenue of $18.3-$18.8 billion, down through $22.4 billion in 2017, as well as EPS ex-items of $2.25-$2.50, down through $4.01. Analysts were expecting EPS of $2.94 on revenue of $19.3 billion.
Teva had been saddled with about $35 billion in debt since acquiring Allergan’s Actavis generic drug business for $40.5 billion. Debt fell by $2.2 billion inside fourth quarter to $32.5 billion as well as by a further $1.1 billion so far in 2018.
Teva said the idea expects to pay off at least $3.5 billion in debt This kind of year.
“Starting 2018 we are focused on meeting our financial obligations as well as ensuring a much more solid as well as sustainable business style,” Schultz said.
Chief Financial Officer Mike McClellan said Teva might look at more divestitures. The company has closed six plants since December as well as expects to announce another six This kind of year.
Last week, the company said the idea planned to raise $5 billion in debt securities. In December, the idea announced the suspension of its dividend.