Salomon Smith Barney analyst Robert Bonte-Friedheim was evidently unimpressed by the excellent first quarter results tabled by

Teva Pharmaceuticals

(Nasdaq:TEVA). Despite the management's optimism Bonte-Friedheim believes the growth of Copaxone sales in the U.S. is likely to slow, and he remains more pessimistic than the consensus among analysts.

Last week Bonte-Friedheim downgraded Teva a week ago from Outperform to Neutral and cut its price target from $64 to $49. The company's results are not inducing him to change his view.

Teva reported revenue of $491 million, presenting 46% growth against the comparable quarter of 2000. Its earnings climbed to 40 cents per share, beating the consensus forecast by 2 cents, but right on the dot of SSB's forecast. Teva also reported climbing sales in the United States and record sales in Europe.

It also presented 50% growth against the parallel in sales of Copaxone, its treatment for multiple sclerosis. But despite the management's optimism, this is exactly where Bonte-Friedheim has reservations.

Copaxone sales jumped to $74 million in the first quarter of 2001, falling short of SSB's forecast by $2 million because of slower than expected sales outside the U.S.

Bonte-Friedheim foresees Copaxone sales slowing for two main reasons. For one thing, the American market for MS treatments almost entirely stopped growing in January, and for another, Copaxone's share of the MS drugs market has frozen at 26% after growing steadily since 1999.

He says these effects have not yet been evident in Teva's reports, partly because it lifted Copaxone's price by 9% last year.

Bonte-Friedheim believes that the market for MS treatments is nearing saturation. Copaxone's market share is stagnating because its competitor, Biogen, which manufactures rival drug Avonex, has stepped up its marketing efforts subsequent to successful clinical trials of its product.

Moreover, another powerful rival is poised to leap into the American MS treatments market: Rebif, made by the European biotechnology giant Serono. Right now Rebif is the fastest-growing MS drug in the world, but it has yet to receive marketing approval in the States from the Food & Drug Administration.

On May 8, the American Neurological Academy will be publishing the results of studies examining the efficacy of Rebif versus Avonex. If the tests show that Rebif is significantly more efficient than Avonex, Serono is expected to petition the FDA to bring approval forward from mid-2003 to 2002.

Bonte-Friedheim expects the growth of Copaxone sales to slow to 20% a year in 2002 and 2003, which would substantially drag down Teva's results. Copaxone is its only proprietary product. As such it is sold for a hefty profit and is responsible for much of the company's income.