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Teva Pharmaceuticals

(TEVA) - Get Teva Pharmaceutical Industries Limited American Depositary Shares Report

released its results for the third quarter of 2000. Teva had an impressive quarter on the public markets and ended the third quarter with reasonable results.

Under the stewardship of Eli Hurvitz, Teva posted record sales of $450 million, up a hefty 40% from the comparable quarter of 1999. Some analysts had predicted higher sales, such as

Merrill Lynch

, which forecast third-quarter sales of $484 million, way above the actual result.

Most of the increase in Teva's sales, however, was due to consolidation with

Copley Pharmaceuticals

and the Canadian company


, not internally-generated growth. The importance of the two acquisitions, carried out in late 1999, is evident in that North American sales comprise 59% of Teva's total third-quarter revenues and was the only sector that grew.

Until this year, the European market had been almost as important to Teva as the American one. In the third quarter, sales in Europe decreased by 2%, mainly because of the weak euro. European sales comprised only 22% of Teva's total sales in the third quarter of 2000. However, sales in Israel climbed by 9% to $63 million, comprising 13% of all Teva's third-quarter sales.

Teva's EPS Met Forecasts But How?

Teva netted $46.6 million, or 36 cents per share. The company's earnings per share roughly met forecasts, but many predictions for its net were higher.

Merrill Lynch, for example, predicted that Teva would net $48 million, but it also predicted an EPS of 36 cents. The explanation evidently has to do with the way Teva calculated its EPS, which isn't clear. Dividing its net profit of $46.6 million by its number of shares -- $134.9 million -- results in an EPS of 34.5 cents.

Whatever its actual EPS, one thing is certain:


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, Teva's

drug for the treatment of multiple sclerosis, continues to be its dominant product. Sales reached $66 million in sales-price terms, up 59% from the comparable quarter of 1999. But the surprise isn't overwhelming: Forecasts had Teva selling just under $65 million of the drug.

Teva received only half the proceeds from its Copaxone sales. The other half went to the company's marketing partner,



. Sales of the drug began with a limp, but they've taken off in the last year and are growing faster than any other drugs used in treating MS. Copaxone is now in second place after



Avonex and has passed

Schering Plough's



During the third quarter, Teva received permission to market Copaxone in the United Kingdom after a tortuous three-year process that began when the company got the U.S.

Food & Drug Administration's

approval in March 1997. Teva thought the U.K. market would give it an immediate entrance into the European Union, but no such automatic permit was forthcoming. But it can be expected in the fourth quarter.

Steady Operating Profit Margins

Teva maintained steady operating profit margins of 40%, mainly due to improved margins in its U.S. sales. The improvement helped offset a decline in margins in the U.K. and the

European Union

, due to government restrictions on drug prices. Teva explained in its announcement that the weak euro had dragged down its European sales.

As for the shaky European currency, Teva says its EU sales would have risen by 10% against the parallel quarter, whereas in reality they declined by 2%.

But Teva says that the euro's drag on its net was minor, because its expenses in Europe are also paid in euros. Teva maintains production facilities on the Continent in Hungary, England and Italy.

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