Teva topped forecasts in Q4 with revenue of $ 4.5 billion - but stock fell 6.4% in New york

Teva topped market forecasts in the fourth and final quarter of 2020: The pharmaceutical company ended the quarter with revenue of $ 4.5 billion and net income of 68 cents per share. Analysts had expected revenue of $ 4.37 billion and net income of 62 cents a share.
"We are purchasing products in the relatively early stages of development and are building future pipelines, but we will not make large acquisitions and we will not raise capital," said Carr Schultz, CEO of Schultz.
Beyond the lack of growth, which is not currently on the horizon, the nature of the legal cases in which it is involved continues to obscure, especially the painkiller affair, which was already a step towards signing a compromise, but the corona plague caused a delay and added uncertainty. "We are close to a settlement, but there is still no signing in the near future," Schultz said in an interview with analysts. "In order to have a signing, pressure usually has to be created when lawsuits open, but because U.S. courts are closed, that does not happen." The signature, "he explained.
Schultz also took advantage of the conversation to sting American investigators in the second case in which Teva is suspected of involvement in a cartel that coordinated the prices of generic drugs and raised them dramatically. "Price figures have recently been released in the US and Europe showing that generic drugs in the US are cheaper than in Europe, so if we were involved in a price coordination cartel, then this is the worst cartel in history."
Schultz said today that Teva is negotiating with a number of companies developing corona vaccines to aid in production. At this stage, no agreement has been signed yet, but the company explains that these are both companies that have already received FDA approval and those that have not yet. If an agreement is signed, the vaccines will be intended for the global market and not just for the Israeli market. Such an agreement was recently signed between Pfizer and Novartis, a major pharmaceutical manufacturer that is supposed to help meet global demand for the vaccine. However, in terms of impact on Teva's business performance, this will not be a material event.
"Our key growth engines have yielded promising results and milestones. Our performance at Generica has received a boost from the successful launch of generic versions for HIV-1 Truvada® and Atripla® in the U.S.," said CEO Carr Schultz. "Looking to the future, we will continue to optimize our operating chain, portfolio and product portfolio, improve profitability and generate cash as we continue on the path as planned, repay our debt and meet long-term financial targets," the CEO added.
Teva ended the entire 2020 with revenue of $ 16.6 billion, similar to 2019, and net income totaled $ 2.57 per share.
At the same time, Teva continues to stabilize at the operational level with free cash flow, which in 2021, similar to the last two years, will reach a rate of just over $ 2 billion. By nature, this flow should allow it to meet the debt repayment schedule two years ahead without difficulty. Teva closed 2020 with a debt of $ 25.9 billion, a decrease of only $ 1 billion compared to the end of 2019.
The company explained that the relatively small reduction is due to currency fluctuations, since a large part of the debt is denominated in euros, which has strengthened significantly against the dollar in the past year. In fact the company repaid almost $ 2 billion but the debt was only reduced by $ 1 billion. However, since Schultz took office in 2017, Teva's debt has shrunk by $ 10 billion. The improvement is due to streamlining processes that are expected to continue this year and will include the closure of 11 production sites around the world, so that the company should reach 61 production sites compared to 80 it had three years ago.
Schultz said today that the intention is to continue the process further and reach only 50 factories. Schultz's extensive austerity program since taking office as Teva's CEO, which also included the layoffs of thousands of employees in Israel, brought the company back to a 28% operating profit margin, similar to what it had in the absence of generic competition for Copaxone. Only 25% of revenue.
Schultz estimated that the generic activity, which includes, still without a breakdown at this point, even the new biosimilar drugs the company has launched in the past year, will continue to be stable and give an annual cushion of $ 4 billion in revenue to nature. "The generics are not a melting ice bucket as they used to say, but maybe an ice machine that produces ice regularly and stably. I'm not saying we will go up there to $ 6 billion, but we will not go down to $ 2 billion either. Despite price erosion, activity will grow at a single-digit rate In the near future".
According to Schultz, Troxima, a biosimilar version, which is a kind of more sophisticated generic designed to treat several cancers, has reached a 24% share of the prescriptions in the market and it predicts that the share will grow despite the addition of new generic competitors. Nature currently has about ten more biosimilar products in various stages of development.
The company estimates that it will end 2021 with revenue of $ 16.8-16.4 billion and earnings per share of $ 2.7-2.5 per share. Free cash flow is expected to stand at $ 2-2.3 billion. The forecast reflects an expectation of another similar year in nature, without a significant breakthrough on the one hand, but on the other hand balancing the loss of Copaxone revenue by the new drugs.
Teva predicts that Copaxone revenue will drop to $ 1 billion next year from $ 1.3 billion in 2020, Austden will also approach $ 1 billion compared to $ 638 million in 2020 and Ajobi is expected to generate revenue of $ 300 million, almost double compared to 2020 which disappointed in the field