Investment bank HSBC lowered its target price for Teva under the price adjustment affair, assuming that Teva would have to pay $ 3 billion in cash in the affair.
This is a preliminary market assessment of legal proceedings that increased last weekend as 44 US states filed a lawsuit against 20 companies in the US generic market, headed by Teva, on suspicion of price fixing. Teva's share is more than 80% off the peak of 2015. The bank's investment analyst, Steve McGarry, lowered its target price to $ 10 per share, compared with the previous target price of $ 13. This is lower than the market price of the share.
"Teva, which is currently facing litigation in the United States about the marketing of opioid drugs in an apparently inappropriate way, the new litigation, which is more broadly based on generic drug pricing, clearly increases the risk profile. Another risk to Teva is that any litigation about the pricing of generic drugs or opioid-related marketing are high-profile issues, and court cases may generate persistent negative headlines. "" The main impact on Teva will be in 2019 and 2020, and although the group is expected to achieve The goals of its cost savings, it will be difficult to generate growth. We estimate that a $ 3 billion figure is reasonable, but as with many legal cases in the field of pharma, the margin could be from zero to two billion dollars, "said McGarry.
Teva has to deal with a case at its center that could cost it billions of dollars. More than 40 US states filed a lawsuit against generic drug manufacturers claiming a large-scale conspiracy, claiming that the Israeli company significantly raised the price of 112 generic drugs and coordinated the price of at least 86 drugs with its competitors. More than 1,000%, according to the lawsuit: "Teva has regularly taken part in the conspiracies."
Bloomberg news agency reported that more than a dozen past and present executives of leading generic companies, including Meilan and Pfizer, were sued on Friday. The lawsuit was filed by Connecticut Attorney General William Tong.
"We have solid evidence that generic drug companies have plotted billions of dollars in fraud against the American people," Tong said in a statement yesterday. "We all wonder why our health insurance, especially prescription drugs, is so expensive in this country - and that's the main reason." The lawsuit accuses manufacturers of inflating prices of more than 100 types of drugs, marking a significant expansion in relation to the complaint filed in 2016.
In addition to the plaintiffs' countries, the Anti-Trust Division of the Ministry of Justice also opened a criminal investigation. The head of the division said last week that charges would be filed, but did not say when.
The plaintiffs claim that the companies conspired to coordinate prices in order to raise prices and thus avoid competition. Senior officials, who used meals, parties and golf games to coordinate, also made direct phone calls, according to the prosecution. It mentions the names of specific divisions in the pharmaceutical companies, such as Novartis' Teva and Sandbus.
The senior executives whose names are mentioned in the lawsuit with Maureen Cabano, former senior vice president of nature who currently works for Lant, are: James Nesta, Vice President of Sales and Sales, and David Carnitiller, former Teva vice president of sales at Apotex. Meilan's president, Rajiv Malik, is mentioned in another lawsuit filed in 2017. This claim is still underway.
Representatives from the companies did not respond, as did the senior officials mentioned in the lawsuit.
About six months ago Teva was one of 16 generic drug manufacturers suspected of creating a cartel to determine prices. "This is probably the biggest cartel in US history," said Joseph Nielsen, assistant attorney general in Connecticut. In the documents submitted to the court, Teva argued that allegations of conspiring to set prices "are completely speculative and based on no facts."
The investigation revealed that senior company executives had created a code language to describe their conduct. For example, the "sandbox" referred to the market for generic prescription drugs. A "fair share" talked about the distribution of the sales pie so that each company enjoyed continuous profits, while "dirty the market" meant that one company ignored the unwritten rules and sold the drugs at a lower price than agreed. The officials were so friendly that they set up an alphabetical round to decide who paid the bill for the meals.
Teva is in the center of the conspiracy, after 19 months from 2013 to 2015, it significantly increased
A suspicious nature that raised the price of 112 generic drugs and matched the prices of at least 86 drugs with its competitors. In some cases, prices are raised by more than 1,000%. "Teva has regularly taken part in the conspiracies described in the lawsuit, and its conduct is extensive and spreads across the industry," the lawsuit states.