While the worst of the patent cliff is over for the pharma sector, there are still some companies that are slated to lose exclusivity for key products and face generic competition in the coming years. One such company is AstraZeneca (AZN) – the first generic version of its blockbuster heartburn drug, Nexium delayed-release capsules has been approved by the FDA.
Teva Pharmaceutical Industries Ltd. (TEVA), which gained FDA approval for its generic version of Nexium (treatment of the symptoms of gastroesophageal reflux disease), expects to launch the product shortly.
As per IMS data, Nexium delayed-release capsules recorded annual sales of approximately $6 billion in the U.S. as of Nov 2014.
The upcoming launch of generic Nexium will boost Teva’s generics business further. We note that Teva’s U.S. generics business generated revenues of $3.2 billion in the first nine months of 2014 compared to approximately $3 billion in the first nine months of 2013. Meanwhile, 2015 is expected to be eventful for the company with multiple U.S. and international generic launches lined up.
We note that late last year, Teva had guided towards 2015 generic revenues in the range of $9.1 billion to $9.5 billion, including U.S. generic revenues of $4.2 – $4.6 billion.
Meanwhile, Teva continues to face headwinds in the form of new competition for branded products, particularly Copaxone. Teva continues to work on delaying the entry of generic versions of Copaxone. Last week, the company received a favorable Supreme Court ruling related to Copaxone 20 mg/ml.
The earlier-than-expected entry of generic versions of Copaxone would be a major setback for the company. The company estimates that the introduction of AB-rated generic competition before Sep 2015 could reduce operating income by $30–$50 million per month.
We expect investor focus to remain on the generic Copaxone situation and the company’s fourth quarter and full year 2014 results, scheduled for Feb 5.
Teva currently carries a Zacks Rank #2 (Buy). Some better-ranked stocks in the health care sector include Impax Laboratories Inc. (IPXL) and Mallinckrodt plc (MNK). Both carry a Zacks Rank #1 (Strong Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Be the first to comment