Bank Hapoalim

today reiterated its Buy rating for giant drug manufacturer

Teva Pharmaceuticals


Analyst Rakefet Levison set a price target of $74, 29% above the share's price in Tel Aviv today.

Teva released its results for the first quarter of 2001 on May 1. Levison called Teva's results impressive, with marked improvement in sales and profits against the comparable quarter of 2000.

Levison does foresee the U.S. Food and Drug Administration approval Teva got for two doses of Famotidine tablets lifting its results significantly. Twelve generic drug makers also received the FDA nod to make the drug.

Famotidine's U.S. market was worth $585 million in 2000. But now that the patent has expired, she expects its market to be worth maybe a tenth of that sum, and it isn't as though Teva will hold sole sway there.

More specifically, she calculates that Teva's revenues from Famotidine 20 mg, 40 mg, and 10 mg tablets (the latter dosage has yet to be approved) will only be $15 million to $20 million a year.

Famotidine is the generic equivalent of Pepcid, manufactured by

Merck & Co

(NYSE:MRK). The drug is used for the treatment of ulcers, gastroesophageal reflux disease and pathological hypersecretory conditions.

Lisinopril could be more significant

The tentative approval Teva got for Lisinopril/Hydrochlorothiazide 10mg/12.5mg, 20mg/12.5mg and 20mg/25mg tablets could be significant if no other company received permission to produce it when the patents expire.

Lisinopril is the generic equivalent to Merck's Prinzide for the treatment of hypertension.

The combined U.S. brand sales of these strengths came to $235 million in 2000.

Levison expects 2001 to be a record year for drug patent expirations in the U.S.

Teva currently has no less than 51 drugs in the pipeline awaiting FDA approval. Fourteen have been tentatively approved, pending patent expiration.

All 51 together should generate $16 billion a year based on the price of the original drugs.

Levison notes that Teva potentially has exclusive six-month marketing rights for 25% of these drugs, with an aggregate market of $3 billion. During those six months, the price of the generic drug can comprise 70% of the price of the proprietary drug.

Once Teva's exclusivity expires, the price will drop as a function of competition.

Levison expects Copaxone sales to rise

Levison says Copaxone, a proprietary Teva drug used in the treatment of multiple sclerosis, as achieved a market share of 30% in the U.S.

She also says that 60% of the Copaxone prescriptions were given to new users, supporting the view that the Copaxone sales are likely to continue rising in the near future.

Copaxone generated sales of $300 million a year in 2000 in the U.S. Levison believes Europe will prove a major strategic goal form 2002, but not beforehand.

Meanwhile, Teva is working on developing other proprietary drugs. One is an oral version of Copaxone, currently under Phase 3 limited and broad clinical tests on humans. This test is being conducted under the Promise program, the largest study ever done in primary and progressive multiple sclerosis.

This development of the drug is intended for the primary-progressive stage of multiple sclerosis, for which today there is no treatment.

Insofar as is known, Teva is the only drug company involved in an advanced stage of drug development for the primary-progressive stage of multiple sclerosis.

Phase 3 of oral Copaxone is expected to be completed at the end of 2003. Levinson says that 10% to 15% of multiple-sclerosis patients are in the primary-progressive stage, creating a market worth $1 billion a year.

Contribution of Novopharm

Levison says that Novopharm generated half of Teva's 76% sales increase in the U.S., and more than half of its sales increase in the first quarter of 2001.

Teva began consolidating its results with Novopharm in the second quarter of 2000.

Levison sees pressure on Teva to buy another company intensifying to avoid reliance on internal growth. She believes Teva is likely to target a West European company in order to take advantage of the growing European market.

Levison believes that 37 is an appropriate earnings multiple for Teva for the coming year. She accordingly reiterates a Buy rating and price target of $74.

Teva is the world's biggest generic drug maker. It also makes proprietary drugs such as Copaxone. Teva maintains manufacturing, research and marketing centers in Israel, North America and Europe. Only 15% of its sales are in Israel. Europe and North America are its main markets. Teva shares are traded in New York, Tel Aviv, Frankfurt, and London.