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Teva Provides 2014 Financial Outlook

Stocks in this article: TEVA

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) provides its current outlook for non-GAAP financial performance for the full year ending December 31, 2014.

In an effort to enhance investor understanding of the business performance of the company, and to provide more clarity and transparency regarding its projections for 2014, given the significant uncertainty concerning possible generic competition to Copaxone ® in the U.S., the Company is providing two alternative scenarios for its current non-GAAP financial outlook for the year:

  • the "Generic Copaxone" scenario assumes the launch of at least two AP-rated generic competitors to Copaxone ® in the U.S. on June 1, 2014; and
  • the "Exclusive Copaxone" scenario assumes no generic competition to Copaxone ® in the U.S. during 2014.

Both scenarios assume the launch of Copaxone ® 40mg three-times-a-week in early 2014 and exclusive sales of the generic version of Pulmicort ® in the U.S. throughout 2014. The outlook provided is organic, and neither alternative includes the potential impact of any business development activities.

Below is a table summarizing the non-GAAP financial outlook for the two scenarios:

  Generic   Exclusive
Copaxone Copaxone
Net Revenues ($ b) 19.3-20.3 19.8-20.8
GP (%) 57%-59% 58%-60%
R&D ($ b) 1.3-1.45 1.3-1.45
S&M ($ b) 4.0-4.1 4.0-4.1
G&A ($ b) 1.2 1.2
OP ($ b) 4.8-5.1 5.35-5.65
 
Finance Expenses ($ m) 310-350 310-350
Tax (%) 20%-21% 19%-20%
Number of Shares (m) 840-850 840-850
EPS ($) 4.20-4.50 4.80-5.10
 
Cash Flow from Operations ($ b)

2.7

3.0
 

Teva estimates that each month of delay in the launch of generic competitors to Copaxone ® in the U.S. will contribute on average approximately $78 million to net revenues and $0.08 to non-GAAP diluted earnings per share.

“2014 will be a pivotal year for Teva and a year of major transitions across the company", stated Eyal Desheh, Acting President and CEO of Teva. "We will continue to make significant progress in implementing our strategy. We will focus our efforts on our generics business and core R&D programs, including high-value complex generics, promising specialty medicines and New Therapeutic Entities. In our specialty business, we anticipate six important launches and the potential submission of ten additional medicines for approval. At the same time, we are focused on increasing our organizational effectiveness through our cost reduction program to ensure Teva’s leadership position, growth and sustainable profitability.”

Detailed financial outlook:

  • Net Revenues:
       
Generic Exclusive
Copaxone Copaxone
U.S. $ in billions
Generics inc. API 9.8 - 10.5 9.8 - 10.5
Specialty: 7.3 - 7.7 7.8 - 8.2
OTC & Other*: 2.0 - 2.2 2.0 - 2.2
Total Net Revenues 19.3 - 20.3 19.8 - 20.8
 

*Including OTC, distribution & other

  • Net Revenues by Geographies:
       
Generic Exclusive
Copaxone Copaxone
U.S. $ in billions
United States 9.5-9.9 10.0-10.4
Europe*: 5.7-6.2 5.7-6.2
Rest of the World: 3.8-4.2 3.8-4.2
Total Net Revenues 19.3 - 20.3 19.8 - 20.8
 

*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries

  • Generics (including API) Net Revenues:
  U.S. $ in billions
United States 4.1 - 4.5
Europe*: 3.1 - 3.5
Rest of the World: 2.3 - 2.6
Total Generics Net Revenues 9.8 - 10.5
 

*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries

  • Key Specialty Medicines Net Revenues:*All members of the European Union, Switzerland, Norway and certain South Eastern Europe countries
  Generic   Exclusive
Copaxone Copaxone
U.S. $ in millions
 
Copaxone® 3,100-3,200 3,600-3,700
Treanda® 750
ProAir® 510
Azilect® 390
Qvar® 380
Nuvigil® 350
 
  • Other net revenues of $2.0-$2.2 billion, which include net revenues from Teva's share in PGT Healthcare, our joint venture with Procter & Gamble, of $1.0-1.1 billion, and approximately $0.2 billion of OTC contract manufacturing in the U.S.Overall in-market revenues of PGT Healthcare will be approximately $1.7 billion. This amount represents sales of the combined OTC portfolios of Teva and P&G outside of North America.
  • Profit margins:
    Other   Generic   Exclusive   OTC &
Generics   Specialty   Copaxone   Copaxone   Other
Total Revenues ($ b) 9.8-10.5 4.2-4.5 3.1-3.2 3.6-3.7 2.0-2.2
GP (%) 41%-44% 83%-85% 88%-91% 88%-91% 32%-34%
R&D ($ b) 0.45-0.50 0.8-0.9 0.1 0.1 -
Total S&M ($ b) 1.7-1.8 1.4 0.6-0.7 0.6-0.7 0.3
OP before G&A ($ b) 2.0-2.3 1.15-1.55 2.0-2.1 2.55-2.65 0.35-0.5
% of Teva Total OP before G&A* 33% 21% - 39% 7%
 

* Mid-range compared to "Exclusive Copaxone" scenario (approximate)

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