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What Are Teva’s Long-Term Prospects?

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Apr. 9 2015, Published 7:09 p.m. ET

Product pipeline

Teva’s (TEVA) long-term prospects seem bright due to a focused product pipeline in its specialty and generics segments. Teva expects to deliver 27 submissions between 2015 and 2019, primarily in the therapeutic areas of central nervous system (or CNS) and respiratory in its Specialty Medicines segment.

In its Generic Medicines segment, Teva has 120 registered products with a sales potential of $86 billion in the United States in 2014, awaiting FDA approvals. This includes 29 tentative approvals as of January 22, 2015. Of these applications, 87 were Para IV filings. The company was first to file for 42 of these products, which had a market potential of more than $31 billion in the United States in 2014.

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Complex products

In the long term, Teva plans to drive its growth by focusing on the following complex products:

  • complex generics – Teva intends to increase the share of complex generics more than 50% by 2017.
  • development of new specialty products through a new therapeutic entities (or NTE) process, with a focus on key therapeutic areas – Teva expects to generate revenues in the range of $1.0–$1.5 billion in 2018 and $3 billion in 2020 from new products from the NTE process.

Here are a few products Teva plans to develop through its NTE process:

  • Opioids are medication for chronic pain. Teva is working to expand in the area of chronic noncancer pain by developing a portfolio of abuse-deterrent (or AD) opioids, including tablets and a patch. From 1999 to 2011, opioid sales in the United States increased by 300%. Teva has initiated an NDA (New Drug Application for extended-release tablets expected to be launched by the end of 2015.
  • Schizophrenia affects ~2.2 million people in the United States. Risperidone is the most prescribed long-acting injection (or LAI) for schizophrenia. The current dosage regimen of every two weeks has significant limitations. Teva intends to develop a once-a-month or once-a-quarter LAI.

Teva’s growth can be monetized through ETFs such as the iShares U.S. Healthcare ETF (IYH). Actavis (ACT), Hospira (HSP), Mallinckrodt Plc (MNK), and Perrigo (PRGO) make up about 5.38% of the fund’s total holdings.

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