Loss-making Teva Progresses Turnaround
Troubled Israeli generics giant Teva Pharmaceuticals is making "strong progress" on its turnaround plan, despite an even higher loss – approaching $12 billion – in the 2017 fourth quarter, new CEO Kåre Schultz said in an interview with the Associated Press news agency.
Despite a challenging outlook for 2018, the Danish national who took the helm last autumn, said he remains confident about the company's long-term prospects over the next two years. After 2020, he forecast a "clear move upward."
On Dec. 14, 2017, Teva announced plans to slash 14,000 jobs, about a quarter of its workforce, with most of the layoffs expected to occur during 2018. Roughly half of the layoffs should be complete by July, with the remainder taking place by the end of 2019, Schulz said.
The company also has shed some of its generic drugs portfolio, along with its women's health business, while at the same time lowering debt, the chief executive confirmed. “Everything is on plan. Everything is on target,” he told the AP.
In Q4 2017, Teva posted a loss of $11.54 billion, compared to a loss of $973 million, for the same quarter of 2016. Sales revenue plunged to $5.46 billion from $6.49 billion. The outlook for 2018 is for revenue to settle out at $18.3-18.8 billion, down from $22.4 billion in 2017, Schultz said.
The drugmaker blames in major part the weak US generics market, which has exerted enormous downward pressure on prices recently. Along with price pressure and competition in its core generic business, the loss of patent protection on its blockbuster multiple sclerosis drug Copaxone and a more than $30 billion debt burden stemming from its acquisition of the generics business of Allergan have hit the company hard.
Last year, Teva has lost its investment grade credit rating, was forced to restructured lending covenants and was placed on CreditWatch by Standard & Poors.
Schultz said in the interview the company expects both Copaxone and the generics business to stabilize in the coming years as three new brand-name drugs pick up momentum.
Austedo, a treatment for movement disorders such as Huntington disease and tardive dyskinesia, was introduced in 2017 and should deliver some $200 million in sales this year, the CEO said.
In the second half of 2018, Teva aims to introduce a migraine treatment, fremanezumab.
Although its launch date could be delayed due to problems at a manufacturing facility in Korea, Schultz said the company is working with the FDA to resolve the problem as quickly as possible.
Teva also is in late-stage development of fasinumab, a pain treatment, that could boost results several years down the road.
Going forward, Schultz said he expects the company's earnings to continue to rely roughly 50:50 on generics and brand-name drugs from its own pipeline, like Copaxone and Austedo