Teva Reports 28% Rise in Q3 Profits, Driven by Higher Sales

Yet Another Successful Quarter for Teva

Israeli generic giant Teva's sales for the three months ending 30 September 2009 stood at US$3.5 billion, up year-on-year (y/y) by 24.9%. Formulation revenues contributed to 96% of overall revenues driven by the firm's strong foothold in the North American market. New product launches in the United States drove North American revenues up y/y by 34% over the quarter in question. Europe was next in terms of revenue contribution to Teva's formulation business, driven by strong sales in Germany, Span, and Poland. International formulation sales contributed the remaining 14% to total formulation revenues over the period in question, with increased sales in Croatia, Israel, and regions such as Latin America leading the quarter's growth rate of 17% y/y. The active pharmaceutical business contributed US$136 million to total sales over the three months being assessed, a shrinkage of 8% y/y.

Cost of sales, selling and marketing expenses, and general and administrative expenses grew y/y by 20%, 36%, and 36% respectively over the third quarter of 2009. However research and development (R&D) expenses declined y/y by 12%. This was a factor of the impact of acquired in-process R&D in the third quarter of 2008. When this is excluded, R&D over the period actually grew by 0.5% y/y. Operating profit for the quarter stood at US$850 million, up by an impressive 37% y/y. Meanwhile net income (US$806 million) excluding reconciled items such as restructuring expenses, impairment of assets, and amortisation grew by 28% y/y (3% y/y including these items).

Teva's Product-Wise Revenues

Teva's revenues over the quarter have been boosted by its leading revenue generator, Copaxone (glatiramer acetate) and respiratory drug ProAir (albuterol sulphate). Copaxone's total revenues over the indicated period stood at US$776 million, an increase of 38% y/y. The U.S. market contributed 69.6% of the drug's revenues, while the markets outside the United States cumulatively contributed to 30.4% of Copaxone revenues. ProAir revenues stood at US$166 million, contributing 68.3% of Teva's respiratory portfolio sales.

Azilect (rasagiline) sales stood at US$64 million, up by 39% y/y. Finally, the newly acquired women's health business—after the acquisition of Barr Labs (U.S.)—has sales of US$103 million, primarily driven by contraceptive drug Plan B (levonorgestrel).

Outlook and Implications

Teva has enjoyed a third good quarter in a row. As indicated, new product launches in the United States have been a large revenue generator, with Teva entering the generic Ortho-Cyclen (norgestimate/ethinyl estradiol) and Eloxatin (oxaliplatin) markets in the United States. Although, the firm may continue to benefit from sales of its generic Eloxatin—as it has so far not been requested to stop shipments of the drug in spite of French firm Sanofi-Aventis' patent being validated—the firm has withdrawn the former from the market owing to a deal with proprietor Johnson & Johnson (J&J; U.S.).