Israel-headquartered Teva's fourth-quarter 2015 results show a 6% y/y decline in revenues and a 14% reduction in global sales of the company's leading product, the daily-dose version of the multiple sclerosis treatment Copaxone (glatiramer acetate).
IHS Life Sciences perspective | |
Implications | Teva posted a 6% year-on-year (y/y) revenue decline in the fourth quarter of 2015. Currency fluctuations had a significant impact on revenues in the quarter. Revenues declined by 1% y/y when foreign-exchange fluctuations are excluded from the results. |
Outlook | Fourth-quarter sales of Teva's generics and speciality medicines business segments declined by 9% and 6% y/y, respectively. Teva did not issue full-year financial guidance for 2016, pending the completion of its USD40.5-billion acquisition of Allergan's generics arm. The Israeli firm warned that the completion of the Allergan deal was now likely to be pushed back into the second quarter (probably April) rather than the first, as originally expected. |
The Israeli pharmaceutical major Teva has released fourth-quarter and full-year financial results showing revenues of USD4.88 billion and USD19.6 billion, respectively. The fourth-quarter results represented a 6% year-on-year (y/y) decline in revenues against the equivalent quarter in the 2014 financial year.
A sales decline of 9% y/y in the company's generics business was the largest contributing factor in the weaker-than-expected financial results. In addition, Teva's traditionally strong speciality medicine segment posted a revenue decline of 6% y/y during the period. The full-year revenue picture was slightly more positive, albeit overall revenues were still down 3% y/y, with gross profit up 1% to USD12.2 billion.
A copy of Teva's full financial result can be accessed here.
Teva: Q4 financial highlights | ||
USD, mil. | Y/Y, % change | |
Net revenues | 4,881 | -6% |
Generic medicines | 2,257 | -9% |
Speciality medicines | 2,114 | -6% |
Cost of goods sold | 2,034 | -11% |
Sales and marketing | 916 | -9% |
R&D expenditure | 395 | +14% |
General and administration expenses | 291 | -9% |
Legal settlements | 100 | -327% |
Restructuring | 163 | -43% |
R&D as % of net sales | 8.1 | Compared with 6.7% in Q4 2014. |
Net income | 498 | - |
Source: Teva | ||
Currency fluctuations were a key theme throughout the financial results statement, with sizeable differences in growth/declines in local currency terms and the reporting currency. Overall, Teva suggested that the impact of volatile currency fluctuations over the course of the full financial year resulted in a hefty USD1.3-billion reduction in revenues. Exchange rate differences contributed to a USD259-million reduction in revenues in the fourth quarter.
Teva: fourth quarter and full year sales by segment | ||||
Product segment | Q4 2015 (USD, mil.) | Q4 2015 | FY 2015 | FY 2015 |
Generic medicines | 2,257 | -9% | 9,546 | -3% |
- API | 202 | +13% | 748 | +3% |
Speciality medicines | 2,114 | -6% | 8,338 | -3% |
CNS | 1,274 | -12% | 5,213 | -6% |
- Copaxone | 960 | -14% | 4,023 | -5% |
- Azilect | 80 | -26% | 384 | -10% |
- Nuvigil | 100 | -5% | 373 | -4% |
Respiratory | 326 | +29% | 1,129 | +18% |
- ProAir | 148 | +23% | 549 | +15% |
- Qvar | 119 | +55% | 392 | +37% |
Oncology | 318 | -5% | 1,201 | +2% |
- Treanda | 198 | -12% | 741 | -3% |
Women's health | 107 | -7% | 461 | -9% |
Other speciality | 89 | -1% | 334 | -3% |
All others | 510 | +12% | 1,768 | -7% |
OTC | 316 | +39% | 994 | N/A |
Other revenues | 194 | -15% | 774 | -14% |
Total | 4,881 | -6% | 19,652 | -3% |
Source: Teva | ||||
Global fourth-quarter sales of Copaxone dropped to their lowest level in 2015 at USD960 million. US sales of the drug fell 9% y/y to USD760 million. The MS drug is set to remain Teva's best-selling product in 2016 (accounting for about 20% in revenues). However, it is facing generics competition from Sandoz (a subsidiary of Novartis, Switzerland), which launched a once-daily generic version marketed as Glatopa in June 2015.
Teva also posted figures showing declining sales in its cholesterol-controlling medicine Lovaza, a generic version of GlaxoSmithKline's (GSK, UK) omega-3-acid ethyl esters capsules, USP. There were also notable sales declines for the Crohn's disease treatment Pulmicort (budesonide inhalation) and the chemotherapy drug Xeloda (capecitabine) as well as the relatively low-selling Parkinson's disease drug Azilect (rasagiline). These sales declines were partially mitigated by a reasonably robust sales increases Teva's respiratory product portfolio.
Teva: FY 2015 revenues by geographical region | |||
FY 2015 | FY 2014 | Y/Y, % change | |
Generic medicines | |||
- United States (50.2%) | 4,793 | 4,418 | +8% |
- Europe* (28.3%) | 2,706 | 3,148 | -14% |
- Rest of the World (21.4%) | 2,047 | 2,248 | -9% |
Total generic medicines | 9,546 | 9,814 | -3% |
Speciality medicines | |||
- United States (77.2%) | 6,442 | 6,110 | +5% |
- Europe* (18.2%) | 1,518 | 1,898 | -20% |
- Rest of the World (4.5%) | 378 | 552 | -32% |
Total specialty medicines | 8,338 | 8,560 | -3% |
Other revenue | |||
- United States (0.7%) | 14 | 106 | -87% |
- Europe* (37.6%) | 666 | 777 | -14% |
- Rest of the World (61.5%) | 1,088 | 1,015 | +7% |
Total other revenues | 1,768 | 1,898 | -7% |
Total revenues | 19,652 | 20,272 | -3% |
Source: Teva *All member of the EU, Switzerland, Norway, Albania, and all countries of former Yugoslavia. | |||
Outlook and implications
Teva is forecasting revenues of between USD4.7 billion and USD4.9 billion in the first quarter of 2016. The company's main strategic focus in the period will be on completing and integrating the acquisition of Allergan's generics arms (Actavis) and Rimsa (Mexico), which together are likely to significant enhance the company's core therapeutic areas. Delays in the anti-trust review process are likely to mean that the completion of the Allergan deal will be pushed back into the second quarter of 2016 (probably April 2016). In a statement, Teva indicated that the "company remains confident in completing the transaction" and confirmed that despite the delays there had not been "any surprises during the process".
Looking ahead, Teva forecast further price reductions this year from generics competitors would hurt the revenue performance of the business segment. In a statement Teva said, "We expect the same in 2016. Nothing points to a significant change in the generic pricing environment." Elsewhere, Teva revealed that it had planned for USD3 billion in financial firepower for a handful of new "more selective" merger and acquisitions deals in 2016.