In a blow to Teva, US approves competitor's drug

October 6, 2017 00:46

Mylan NV received the green light to produce a copycat version of Teva’s blockbuster drug, Copaxone, which is already on its way to American patients.

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In a blow to Teva, US approves competitor's drug

A building in Jerusalem belonging to generic drug producer Teva. (photo credit: REUTERS/BAZ RATNER)

Teva Pharmaceutical Industries took a huge financial hit on Wednesday when the US Food and Drug Administration approved a competitor’s generic version of its highly profitable multiple sclerosis drug.

Mylan NV received the green light to produce a copycat version of Teva’s blockbuster drug, Copaxone, which is already on its way to American patients.

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The 40-milligram Copaxone, which is one of Teva’s biggest moneymakers, garnered $1.02 billion in sales during the second quarter of 2017, according to its financial statements.

The financial blow comes as the pharma giant is struggling to pay off a hefty loan debt of more than $30b. after purchasing a generic pharma division of Allergan for $40.5b. in 2016. The company generated some $22b. in sales revenue last year.

The price of generic drugs has plummeted due to greater competition from the Far East and changes in how American regulators approve copycat drugs.

On Monday, the FDA said that it would seek to expedite approvals for complex generic drugs to market in order to stave off the steadily rising cost of pharmaceuticals in the US.

The markets embraced the news because both Teva and Mylan have a large pipeline of new drugs. But few anticipated that just two days later, the FDA would shake things up by hitting at Teva’s cash crop.

“It hits Teva at its worst,” analyst Sabina Levy of Capital Markets told The Jerusalem Post. “They [Teva] probably thought that Mylan’s copycat wasn’t good enough and that their chances to approve it weren’t so high.”

Mylan couldn’t even secure FDA approval for its 20mg. version, she said.

“It [the drug’s approval] caught us all a bit by surprise somehow,” she said, adding that Teva had not expected generic drugs to hit the market until the second half of 2018.

Some 60% of Teva’s revenue stream is from specialty drugs, which includes Copaxone.

Upon hearing the news, market traders bought up Mylan NV shares, raising the share price by 14% to $37.80.

The company will be offering the only generic option for Copaxone for some six months, as it was the first to file and other competitors have had issues with production.

US listed shares of Teva as down by 15% to $16.02 by midday Thursday. The company responded by appealing both a US patent trial appeal board and a US district court decision, which invalidated a few of its Copaxone patents and allowed Mylan to proceed.

Last month, the troubled firm, which is headquartered in Petah Tikva, appointed a new CEO, Kare Schultz, – the first non-Jew to take the helm of the company – in response to the collapsing generic drug market.

Teva employs 6,800 Israelis and 57,000 worldwide, and announced layoffs last month of some 230 Israelis and 7,000 internationally. The struggling company has come under shareholder pressure to split into two: its generic drug business and its patented specialty medicines.

Teva’s hefty debt load has forced rating agencies to downgrade its credit rating.

The company is expected to release updated financial figures in November.

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