Teva's stock passes a value of 10$ due to it's settlement worth $ 4.25 billion with authorities


by Ifi Reporter Category:Health Aug 4, 2022

The share of the pharmaceutical giant Teva jumped on the New York Stock Exchange in the past weeks  by more than 40 percent. This follows the compromise agreement in principle in the opioid crisis in the United States, according to which it will pay compensation in the amount of more than four billion three hundred million dollars.
The compromise settlement will bring to an end the legal discussions in the case of the painkillers and Teva emphasizes that there will be no admission of wrongdoing.
Trading ended last night at the New York Stock Exchange with significant price increases. This is due to the Central Bank's decisionto raise the interest rate by three quarters of a percent. The Dow Jones industrial stock index rises today and passes 10$, a value it didn't reach for a long time. 

Teva has reached a non-final settlement worth 4.25 billion dollars to settle its part in the case of narcotic pain relievers (opioids), which caused the death of 500 thousand Americans from addiction in the last 20 years. Following the settlement, Teva shares, which are managed by Carr Schultz, jumped 17.6% in late trading on the New York Stock Exchange.
Teva was sued by more than 3,000 American government entities, who claimed that Teva's aggressive marketing policy underestimated the risk of addiction associated with taking opioids while trying to cause the use of painkillers to expand beyond their original purpose - which was to treat excruciating pain in terminally ill patients.
As part of the agreement, Teva agreed to pay $3 billion in cash and $1.2 billion in a donation of Narcan drugs to immediately treat the effects of an overdose of the painkillers, such as breathing disorders.
The American Indian tribes - who have been disproportionately affected by the opioid epidemic, and have filed separate lawsuits against opioid manufacturers and distributors, including Teva - will receive an amount of $100 million as part of the settlement. Teva stated that this amount includes $650 million that Teva has committed to pay in partial agreements reached in the past. The amount to be paid, if the tentative agreement becomes a binding agreement, will be spread over 13 years.
The agreement will end Teva's exposure to lawsuits over its part in the production of its two original painkillers: Actiq and Fentora. The agreement, which does not include an admission by Teva of any of the charges against it, is conditional on Actavis, which was purchased from Allergan in August 2016 for $40 billion in cash, reaching a similar agreement.
The amounts in the agreement are significantly higher than those in the original agreement that Teva signed in October 2019 to settle all claims by government bodies against it in the opioid case, according to which Teva was supposed to donate drugs for the immediate treatment of opioid overdose symptoms worth $2.3 billion and pay $250 million in cash over 10 years . This agreement was rejected by most of the plaintiffs mainly due to the negligible cash component in it.
The agreement will increase Teva's net financial liability, which amounted to $20.7 billion as of the end of the first quarter of 2022.
Teva stated in a statement about the agreement that it does not include recognition of the company's responsibility for the painkiller epidemic in the US and that "our main interest is to put the affair behind us and focus on the patients we serve every day."
The state of New York is not part of the settlement and the lawsuit in the case is still ongoing - although both the representatives of the lawsuit and Teva recently updated that the talks about a separate deal in the state are ongoing. If an agreement is not reached, the lawsuit that is already underway in New York will advance to the next stages.
The hurdle that still remains for Teva is a backlog that it carries from the purchase of Allergan's generic operations in 2016. In order for Teva's arrangement to take effect, Allergan must also reach its own arrangement
Kerr Schultz, CEO of Teva, noted upon publication of the statement: "We are happy to have reached an agreement with the authorities that ends all the expensive legal proceedings and will provide updated strategic and financial goals for Teva until 2027 at the conference call on Wednesday. We are now in an excellent position to take advantage of opportunities in the market and generate long-term growth range
Following the settlement, Teva Mokam published its financial statements earlier than expected and updated a number of basic assumptions regarding its financial performance. The company recorded revenues of 3.8 billion dollars in the second quarter which were higher than forecasts, but the profit line was a significant surprise for the better with a profit of 68 cents per share. The company's activities generated a flow of 123 million dollars and the free cash flow reached 300 million dollars.
However, Teva slightly lowers the annual forecast mainly as a result of lower revenues from Copaxan which will amount to $700 million compared to the previous forecast of $750 million. Teva's revenues are now expected to be 15.6-15.0 billion dollars, slightly less than the early expectation of 16.0-15.4 billion dollars. However, from the point of view of the investors, the main importance is surely that the arrangement is created and that from now on allows the pharmaceutical company to make business moves to encourage growth.



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