Key Implications Of Teva’s Commentary For Indian Companies
Teva Pharmaceutical Industries, one of the largest generic drug makers, ended down close to 10 percent in U.S. post its earnings and commentary for the second quarter of calendar year 2018. While the results will have no direct impact in India, the commentary and trajectory will have an impact on Indian stocks that cater to the U.S. markets and also those companies which have common products.
Key Highlights From Teva's Financial Results
U.S. Business
Teva's U.S. business dropped 29 percent over last year and 13 percent over last quarter highlighting ongoing challenges in U.S. business.
Impact on Indian companies: Concerns will persist for large Indian companies like Sun Pharma, Aurobindo Pharma, Lupin etc. which have a large exposure to the U.S. markets.
Pricing
Teva is seeing increasing signs of stabilisation in U.S. generics pricing. Even though stable pricing was not visible in the second quarter, the company expects a more mature and stable market in the second half of the year.
Impact on Indian companies: Read through should be taken positively for Indian companies as they have been seeing massive degrowth and weakness due to pricing concerns in the U.S. markets.
Copaxone
Teva has guided for 35 percent decline in Copaxone sales in second half of calendar year 2018 to come in at $1.5 billion. This includes an assumption on both volume decline and price decline and it shows that price decline by Mylan. Credit Suisse believes that Copaxone market in the US now has declined to $1.4-$1.5 billion versus $3.2 billion to start with.
Impact on Indian companies: Copaxone is relevant for Dr. Reddy and Biocon in India. None of the companies have the approval currently and are awaiting approval. The high pace of drop in market size indicates opportunity miss by Indian companies.
Portfolio Optimisation
Teva mentioned that portfolio optimisation process in generics is complete. This means that Teva is focusing on limited high value products and give up on the high volume drugs.
Impact on Indian companies: Marginal benefit for Indian companies. Macquarie states that Jubilant Lifesciences with higher overlap with Teva's portfolio and a relatively small U.S. generics business have benefitted from Teva's rationalisation exercise.
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