Question:
What is happening to Teva Pharmaceutical Industries, Ltd. ADR (NASDAQ: TEVA)?
Answer:
Teva, a global pharmaceutical company that develops, produces and markets generic drugs, is down near 10% year-to-date, and down 4% for the one-year period. It is down 23% from its high, which to us indicates a buying opportunity. It has been down in part because exchange rates impacted sales by $122 million on a year-over-year basis and speculation for a generic competitor to Copaxone, its branded drug treatment for multiple sclerosis. However, the company reported $1.30 in earnings per share for the third quarter, beating expectations by four cents. Revenue increased 20% year over year, but that was generally in line with expectations. We believe the poor stock price performance is due to the uncertainty of potential increases in government regulations.
We like Teva as a holding because it is a solid company with more than 200 generic applications in the pipeline. Teva’s management has also stated it feels the threat of a generic Copaxone is low because the company is developing a new formulation of the drug. The company recently submitted new clinical data to the the U.S. Food and Drug Administration. This will likely trigger an extension of the review period, and may provide Teva with a three-year exclusivity period for the product.