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Teva Pharmaceutical Is Facing These Challenges in 2019

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Copaxone’s revenue erosion

On its first-quarter earnings conference call, Teva Pharmaceutical (TEVA) reaffirmed its 2019 global sales guidance of $1.30 billion for its Copaxone franchise. The company reduced its US sales guidance for Copaxone from $1.0 billion to $800 million. It expects a YoY (year-over-year) revenue reduction of ~45% for its Copaxone franchise in the coming years.

In the first quarter, Copaxone reported revenue of $194 million. According to Teva’s first-quarter earnings investor presentation, at the end of the first quarter, Copaxone’s total prescription share in the US multiple sclerosis market was 17.9%, lower than its share of 21.8% at the end of 2018. At the end of March 2019, Copaxone 40 mg accounted for a ~67% share of the 40 mg glatiramer acetate market, lower than its 75% share at the end of December 2018.

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According to Teva’s first-quarter earnings conference call, the drop in market share of the Copaxone franchise at the end of the first quarter was mainly attributable to the resetting of managed care contracts on January 1. Additionally, wholesalers and retailers also reduced their inventory levels of Copaxone based on expectations of lower sales volumes. This change coupled with pricing pressures affected the sales of the Copaxone franchise in the US market.

On April 1, Teva Pharmaceutical issued a press release announcing a favorable response from the European Patent Office regarding Copaxone 40 mg’s patent EP 2 949 335. According to the company, this ruling will enable it to earn higher revenue from the Copaxone franchise in the European market than it earned in 2018.

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Opioid litigation

Teva Pharmaceutical and its subsidiaries are facing multiple lawsuits related to improper marketing and distribution practices for branded and generic opioid products. Unfavorable court rulings could have an adverse impact on the company’s future profitability.

Debt

At the end of the first quarter, Teva Pharmaceutical had net debt of $26.7 billion on its balance sheet. The company’s net debt-to-EBITDA ratio is 5.45x.

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