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Teva's 2014 Outlook Depends on Copaxone Exclusivity

Tue, 12/10/2013 - 8:25am

 

JERUSALEM--(BUSINESS WIRE)--Dec 10, 2013--Teva Pharmaceutical Industries Ltd.  provides its current outlook for non-GAAP financial performance for the full year ending December 31, 2014.

In an effort to enhance investor understanding of the business performance of the company, and to provide more clarity and transparency regarding its projections for 2014, given the significant uncertainty concerning possible generic competition to Copaxone ® in the U.S., the Company is providing two alternative scenarios for its current non-GAAP financial outlook for the year:

  • the "Generic Copaxone" scenario assumes the launch of at least two AP-rated generic competitors to Copaxone ® in the U.S. on June 1, 2014; and
  • the "Exclusive Copaxone" scenario assumes no generic competition to Copaxone ® in the U.S. during 2014.

Both scenarios assume the launch of Copaxone ® 40mg three-times-a-week in early 2014 and exclusive sales of the generic version of Pulmicort ® in the U.S. throughout 2014. The outlook provided is organic, and neither alternative includes the potential impact of any business development activities.

Below is a table summarizing the non-GAAP financial outlook for the two scenarios:

    Generic   Exclusive
    Copaxone   Copaxone
Net Revenues ($ b)   19.3-20.3   19.8-20.8
GP (%)   57%-59%   58%-60%
R&D ($ b)   1.3-1.45   1.3-1.45
S&M ($ b)   4.0-4.1   4.0-4.1
G&A ($ b)   1.2   1.2
OP ($ b)   4.8-5.1   5.35-5.65
         
Finance Expenses ($ m)   310-350   310-350
Tax (%)   20%-21%   19%-20%
Number of Shares (m)   840-850   840-850
EPS ($)   4.20-4.50   4.80-5.10
         
Cash Flow from Operations ($ b)  

2.7

  3.0
         

Teva estimates that each month of delay in the launch of generic competitors to Copaxone ® in the U.S. will contribute on average approximately $78 million to net revenues and $0.08 to non-GAAP diluted earnings per share.

“2014 will be a pivotal year for Teva and a year of major transitions across the company", stated Eyal Desheh, Acting President and CEO of Teva. "We will continue to make significant progress in implementing our strategy. We will focus our efforts on our generics business and core R&D programs, including high-value complex generics, promising specialty medicines and New Therapeutic Entities. In our specialty business, we anticipate six important launches and the potential submission of ten additional medicines for approval. At the same time, we are focused on increasing our organizational effectiveness through our cost reduction program to ensure Teva’s leadership position, growth and sustainable profitability.”

Detailed financial outlook:

  • Net Revenues:
             
    Generic       Exclusive
    Copaxone       Copaxone
    U.S. $ in billions
Generics inc. API   9.8 - 10.5       9.8 - 10.5
Specialty:   7.3 - 7.7       7.8 - 8.2
OTC & Other*:   2.0 - 2.2       2.0 - 2.2
Total Net Revenues   19.3 - 20.3       19.8 - 20.8
             

*Including OTC, distribution & other

  • Net Revenues by Geographies:
             
    Generic       Exclusive
    Copaxone       Copaxone
    U.S. $ in billions
United States   9.5-9.9       10.0-10.4
Europe*:   5.7-6.2       5.7-6.2
Rest of the World:   3.8-4.2       3.8-4.2
Total Net Revenues   19.3 - 20.3       19.8 - 20.8
             

*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries

  • Generics (including API) Net Revenues:
    U.S. $ in billions
United States   4.1 - 4.5
Europe*:   3.1 - 3.5
Rest of the World:   2.3 - 2.6
Total Generics Net Revenues   9.8 - 10.5
     

*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries

  • Key Specialty Medicines Net Revenues:*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries
    Generic   Exclusive  
    Copaxone   Copaxone  
    U.S. $ in millions  
           
Copaxone®   3,100-3,200   3,600-3,700  
Treanda®   750  
ProAir®   510  
Azilect®   390  
Qvar®   380  
Nuvigil®   350  
           
  • Other net revenues of $2.0-$2.2 billion, which include net revenues from Teva's share in PGT Healthcare, our joint venture with Procter & Gamble, of $1.0-1.1 billion, and approximately $0.2 billion of OTC contract manufacturing in the U.S.

    Overall in-market revenues of PGT Healthcare will be approximately $1.7 billion. This amount represents sales of the combined OTC portfolios of Teva and P&G outside of North America.
  • Profit margins:
        Other   Generic   Exclusive   OTC &  
    Generics   Specialty   Copaxone   Copaxone   Other  
Total Revenues ($ b)   9.8-10.5   4.2-4.5   3.1-3.2   3.6-3.7   2.0-2.2  
GP (%)   41%-44%   83%-85%   88%-91%   88%-91%   32%-34%  
R&D ($ b)   0.45-0.50   0.8-0.9   0.1   0.1   -  
Total S&M ($ b)   1.7-1.8   1.4   0.6-0.7   0.6-0.7   0.3  
OP before G&A ($ b)   2.0-2.3   1.15-1.55   2.0-2.1   2.55-2.65   0.35-0.5  
% of Teva Total OP before G&A*   33%   21%   -   39%   7%  
                       

* Mid-range compared to "Exclusive Copaxone" scenario (approximate)

Non-GAAP gross profit margin excludes amortization of intangible assets of approximately $1.1 billion.

Non-GAAP selling & marketing expenses exclude amortization of intangible assets.

Non-GAAP total expenses are exclusive of approximately $900 million of restructuring expenses due to cost reduction programs

  • Figures for Cash flow from operations are after deduction of payments of approximately $2 billion in 2014 for legal settlements and payments related to our cost reduction program.

Note: items not expressed in this press release in the form of ranges are approximate and may vary +/-5%.

These estimates reflect management`s current expectations for Teva's performance in 2014. Actual results may vary, whether as a result of FX differences, market conditions or other factors. In addition, the non-GAAP figures exclude the amortization of purchased intangible assets, costs related to certain regulatory actions, inventory step-up, legal settlements and reserves, impairments and related tax effects. The non-GAAP data presented by Teva are the results used by Teva's management and board of directors to evaluate the operational performance of the company, to compare against the company's work plans and budgets, and ultimately to evaluate the performance of management. Teva provides such non-GAAP data to investors as supplemental data and not in substitution or replacement for GAAP results, because management believes such data provides useful information to investors.

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