Dive Brief:
- In its first quarter earnings call yesterday, troubled Israeli generics company Teva Pharmaceutical said it is looking to sell its global women's health business, and the oncology and pain businesses in Europe to help pay down its hefty $35 billion in debt.
- Teva reported $5.6 billion in revenues during the first three months of 2017, up 17% from a year prior mostly due to the inclusion of the Actavis business Teva acquired from Allergan last year. But sales of the company's top-selling multiple sclerosis drug Copaxone (glatiramer) fell 4% year over year.
- Teva continues to struggle establishing a new leadership team after ousting former CEO Erez Vigodman in February. Current CEO Yitzhak Peterburg is currently serving on an interim basis, and Michael McClellan will take up the role of interim CFO due to the planned exit of current CFO Eyal Desheh.
Dive Insight:
It is not getting easier for Teva, as the company works to reverse a steady slump in its share price over the past year.
Interim CEO Peterburg is working with the board and management team to identify non-core assets for divestment. This includes the global women's health business, and the oncology and pain businesses in Europe, and Teva expects to complete the sale of both business by the end of the year.
"We believe that the proceeds from the sale of both businesses as well as additional asset sales will be significantly in excess of our previously identified target of $1 billion," said Peterburg.
Teva will retain the U.S. oncology business, which Rob Koremans, president and CEO, Global Specialty Medicines, described as "a very important business for us."
"Bendeka is doing extremely well with almost a 98% conversion. We have an important deal with Celltrion where we will be launching two biosimilars in 2018 and 2019, and it fits perfectly with us," Koremans said. "We have a different portfolio in Europe than in the U.S. and we just don’t have enough of a pipeline to be able to feed the oncology products [or] the pain products."
"These should be very attractive assets to divest," added Eyal Desheh, the outgoing CFO.
Teva's debt soared after it paid $40.5 billion to acquire Allergan's Actavis business, cementing its position as the largest generics maker. But generics prices have been falling in the U.S. and Teva now expects net prices to erode by 7% instead of the previously expected 5%.
Adding to its headaches, the U.S. Department of Justice is currently in the midst of what looks to be a wide-ranging investigation into suspected price collusion among generic drugmakers, including Teva.
Outside of generics, Teva hopes its recent approval and launch of Austedo (deutetrabenzine) can take some of the sting off Copaxone's falling sales. Teva has said entry of generic 40 mg Copaxone copies could cut as much as $1.3 billion off of 2017 revenues if launched this year.
Chair Sol Barer said on the earnings call the board's search to find a permanent CEO is ongoing. "The process is moving along very well. We have interviewed a number of excellent candidates from all over the world."
Asked about waiving the requirement for a CEO to live in Israel, Barer added: "We are looking around the world for the absolute best candidate for Teva. We are committed, once we find that candidate, to bring that candidate to Teva and we will do what it takes to make that happen."
The new CEO, once in place, will play a role in finding an new CFO to replace Desheh. Until then, Michael McClellan will act as interim CFO.