{"id":10545,"date":"2023-05-18T15:29:09","date_gmt":"2023-05-18T19:29:09","guid":{"rendered":"https:\/\/ifintechworld.com\/markets\/teva-to-slim-down-generic-drug-business-as-it-seeks-turnaround-the-stock-is-up\/"},"modified":"2023-05-18T15:29:10","modified_gmt":"2023-05-18T19:29:10","slug":"teva-to-slim-down-generic-drug-business-as-it-seeks-turnaround-the-stock-is-up","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=10545","title":{"rendered":"Teva to Slim Down Generic Drug Business as It Seeks Turnaround. The Stock Is Up."},"content":{"rendered":"
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\n Teva Pharmaceutical Industries,<\/span>
\n one of the world\u2019s largest generic drugmakers, said Thursday it will cut back on its core generic drugs business while focusing on its pipeline of new treatments.<\/p>\n

The new corporate strategy, Teva said, aims to deliver a \u201cpivot to growth.\u201d Teva (ticker: TEVA) earnings have dropped steadily over the past decade, to $2.52 per share in 2022 from $5.35 per share in 2013. The company\u2019s American depositary receipt is down more than 85% from its high watermark in mid-2015, and as of Wednesday, had fallen nearly 30% from a 2023 high.<\/p>\n

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Teva\u2019s ADR was up 2% to $8.30 in Thursday afternoon trading, after gaining as much as 7.75% earlier in the session. <\/p>\n

The drugmaker has been struggling since a series of ill-advised acquisitions a decade ago, notably the decision to buy Actavis Generics for $40.5 billion in 2016.<\/p>\n

Debts from the deal crippled the business, and Actavis\u2019s sales of generic opioids in the U.S. made Teva a major target of lawsuits brought by states and local governments over the opioid crisis. Teva is currently finalizing a $4.3 billion settlement of its opioid liabilities. The company has admitted no wrongdoing.<\/p>\n

Now, under a new CEO, Teva is looking to turn the page with a new strategy that emphasizes the company\u2019s pipeline of novel therapeutics\u2014and aims to slim down its core generics portfolio to improve that segment\u2019s profit margins. While the pharmaceutical\u2019s generic drugs provide important, inexpensive alternatives to high-price branded medicines, margins in that business can be very thin.<\/p>\n

A New York Times report on Wednesday highlighted generic drug shortages, which the report stated are at near-record levels, and have caused the White House and the U.S. Congress to turn their attention to the generic drug market.<\/p>\n

In an interview with Barron\u2019s<\/em> on Thursday afternoon, CEO Richard Francis said any discontinuations of generic products will be done in a way that won\u2019t cause shortages. He suggested that a smaller portfolio of generic drugs would be more resilient to shortages.<\/p>\n

\u201cWe\u2019d like to think that a manufacturing network, which is designed and set up in a way to sell and manufacture the molecules we really are committed to allows us to create more capacity and flexibility in our supply chain,\u201d Francis said.<\/p>\n

At a news conference Thursday morning, Francis had said Teva\u2019s pullback from some generic drugs won\u2019t affect the generic drug supply.\u00a0<\/p>\n

\u201cThe reason why these products are low-margin is because there are many manufacturers who are supplying these medicines,\u201d Francis said. \u201cI think when we step out of these markets, we\u2019ll be replaced very quickly by the many other manufacturers who are delivering and supplying these products.\u201d<\/p>\n

The company\u2019s generic drug pipeline instead will focus on \u201chigh value products,\u201d Francis said, and Teva will now focus its generics research and development on 60% of products that lose patent protections, down from 80%. The company will work mainly on complex generics\u2014specifically drug device combinations and long-acting injectables.<\/p>\n

\u201cAs we look across our portfolio, there are some molecules which are supplied by many manufacturers,\u201d Francis said. \u201cBecause of that, it\u2019s very much a low-margin business; there\u2019s an oversupply of those products. And because of that, we\u2019re going to remove those from our supply chain. And that takes time. That\u2019s something that we\u2019ll have to do over a number of years.\u201d<\/p>\n

The company said it plans to reduce its generics manufacturing footprint to between 40 and 44 sites, from 52 sites currently. While Teva currently spends about 40% of its R&D budget on generics, it plans to spend only 10% to 20% of its R&D budget on generics by 2027, as it reallocates to its innovative medicines R&D.<\/p>\n

In addition to changing its generic offerings, Teva said it plans to focus on the branded, nongeneric drugs it currently sells\u2014including Uzedy, a newly-approved treatment for schizophrenia. It also plans to expand its pipeline of new drugs, with a focus on neuroscience and cancer.<\/p>\n

While the company said it is \u201ccommitted to continue serving its debt,\u201d it will also allocate resources to \u201cfund growth.\u201d The company had $18.5 billion in debt in the first quarter of this year, or 4.25 times Ebitda, or earnings before interest, taxes, depreciation, and amortization. It says it aims to have net debt of 2 times Ebitda by 2027.<\/p>\n

\u201cWe clearly know where we have to focus our capital and our attention,\u201d Francis said. \u201cAnd if we do that, and we\u2019re successful, I believe we\u2019ll grow our business in the short, medium and long term, top and bottom line.\u201d<\/p>\n

Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com<\/p>\n<\/p><\/div>\n<\/div>\n

Read the full article here<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Teva Pharmaceutical Industries, one of the world\u2019s largest generic drugmakers, said Thursday it will cut back on its core generic drugs business while focusing on its pipeline of new treatments. The new corporate strategy, Teva said, aims to deliver a \u201cpivot to growth.\u201d Teva (ticker: TEVA) earnings have dropped steadily over the past decade, to […]<\/p>\n","protected":false},"author":1,"featured_media":10546,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"gallery","meta":{"footnotes":""},"categories":[241],"tags":[83],"class_list":["post-10545","post","type-post","status-publish","format-gallery","has-post-thumbnail","hentry","category-markets","tag-featured","post_format-post-format-gallery"],"yoast_head":"\nTeva to Slim Down Generic Drug Business as It Seeks Turnaround. 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