Earnings: Teva's profits slow on exclusivity loss

Loses rights to sell generic versions of two cholesterol medicines, Bristol-Myers Squibb Co.'s Pravachol and Merck & Co.'s Zocor.

August 2, 2007 10:22
teva logo 88

teva 88. (photo credit: )

Teva Pharmaceutical Industries Ltd., the world's biggest maker of generic drugs, reported the slowest profit growth in five quarters as the company lost exclusive rights to make copies of two cholesterol treatments. Net income in the second quarter rose 5.3 percent to $515 million, or 63 cents a share, from $489m., or 59 cents, a year earlier, Teva said Wednesday. That's the smallest increase since the first quarter of 2006, when it reported a net loss. Sales gained 10% to $2.4 billion, a quarterly record. Teva lost exclusive rights to sell generic versions of two cholesterol medicines, Bristol-Myers Squibb Co.'s Pravachol and Merck & Co.'s Zocor. Chief Executive Officer Shlomo Yanai said earnings per share would come in at about $2.30 this year, unchanged from his previous forecast. "I'd suspect they're being conservative,"said Richard Gussow, who follows Teva at Excellence Nessuah. Profit beat the $460.6m. median estimate of nine analysts surveyed by Bloomberg. Analysts had expected Teva to report earnings per share of 56 cents, 13% lower than the actual result, said Ori Hershkovitz, an analyst at Sphera Fund. The company said it wants to step up research into biopharmaceutical development and is in the final stages of clinical trials on laquinimod, an oral multiple sclerosis treatment licensed from Sweden's Active Biotech AB. Revenue from Teva's proprietary Copaxone treatment for multiple sclerosis increased 23% to $436m. Teva also benefited as competitors such as Watson Pharmaceuticals Inc. dropped out of the US market for Oxycontin copies. The company was cleared to sell its copy of Novartis AG's Lotrel heart medicine after a US judge struck down an injunction in June. "To show growth over the second quarter of 2006 is impressive," said Yisca Erez, an analyst at Clal Finance Batucha in a telephone interview. "Lotrel was very successful, and Oxycontin has better prices. Those are the main drivers of growth." The drugmaker "took the risk of placing three months of product in the marketplace even before Novartis managed to obtain a restraining order preventing the move," she said in a note to investors. Teva had 40% of the US market for generic Lotrel at the end of July, she said. Teva is now the only major supplier of a generic version of Purdue Pharma LP's Oxycontin narcotic pain reliever. Teva controls 56% of US sales, according to research by FTN Midwest Securities Corp. in New York. Alvarion boosts profit outlook Alvarion posted a second-quarter profit, the first in more than two years, as demand for WiMax products led a 31 percent increase in sales. Net income reached $136,000, or nil per share, compared with a loss of $27.6 million, or 45 cents, a year earlier, when it took a charge on its wireless unit, the Tel Aviv-based company said Wednesday. Revenue rose to a record $57.5m. from $52.1m. a year earlier. "Based on our performance during the first half, and the positive outlook for the balance of the year, we are raising our target for revenue growth in 2007 to 25% to 30% over 2006, versus our previous target of 15% to 20%," Chief Executive Officer Tzvika Friedman said. The maker of mobile broadband technology is counting on WiMax, a wireless broadband technology that can transmit radio signals with a range of about 48 kilometers, to lift sales and earnings based on partnerships with Cisco Systems Inc., the world's biggest maker of computer-networking equipment; Intel Corp., the world's largest semiconductor maker; and Taiwan's Accton Technology Corp. Excluding stock-compensation and one-time costs, the company had a profit of 3 cents a share in the quarter. That compares with a median of 2 cents forecast by six analysts surveyed by Bloomberg. For the third quarter, Alvarion forecast earnings of between nil and 2 cents a share on sales of $58m. to $62m. Not counting stock-compensation and one-time costs, earnings may reach 3 cents to 5 cents, it said. That compares with a median of 2 cents forecast by 12 analyst surveyed by Bloomberg. RBC Capital Markets analyst Daniel Meron raised his price target for Alvarion, saying the company's New York-traded shares will trade at $12 in 12 months, up from a previous forecast of $11. They closed Tuesday at $10.26 in the US. Revenue may grow 28% this year to $233m., $10m. more than previous forecast, Meron said in a note. Earnings will reach 13 cents a share, up from a previous estimate of 9 percent, he said. Shipments of its BreezeMax products reached $34m. in the second quarter, bringing the number of deployments by the end of June to 170 from 150 at the end of March. Sales of non-WiMax products rose 10% from a year earlier, Alvarion said, without providing figures. Nice profits rise in Q2 Nice Systems Ltd., a maker of digital-recording products, said its second-quarter net income rose, helped by sales of products that gauge the performance of call centers and branch offices. The company raised its revenue and profit forecasts for the year. Net income climbed to $11.2m., or 21 cents a share, from $10.8m., or 21 cents, a year earlier, the Ra'anana-based company said. Revenue rose 29% to $126.2m. Nice announced four major orders during the quarter, including a seven-year, $69m. contract with the US Federal Aviation Administration for air traffic recorders. A month ago, the company agreed to buy Actimize Ltd., whose software detects fraud, for $280m. in cash and shares to bolster sales in financial services. "We intend to continue complementing Nice's organic growth with acquisitions, to further extend our global reach, expand our technology and solutions, broaden our customer base and increase our distribution channels," Chief Executive Officer Haim Shani said. Not counting acquisition and other costs, profit rose to 36 cents a share from 28 cents a year earlier. The median estimate of seven analysts surveyed by Bloomberg was 35 cents a share on sales of $124m. Nice raised its estimate for full-year earnings after stock-compensation and one-time costs to a range of $1.36 to $1.44 a share, compared with a previous range of $1.31 and $1.42. It said revenue will probably reach $511m. to $520m., up from a previous top estimate of $514m. For the third quarter, Nice said profit will be 36 cents to 40 cents a share after stock-compensation and one-time costs, with revenue of $127m. to $131m. Operating costs rose 38%, faster than Nice's revenue increase, to $64.8m., Nice said. Still, operating profit widened to 51.4% of sales from 48.2% a year earlier. Gross profit increased to 60.3% of sales in the three months from 58.2%. Lower costs lift ECI Telecom profits ECI Telecom Ltd. said its second-quarter profit rose as lower manufacturing costs offset a 3.5% drop in sales. Net income climbed to $24.8m., or 20 cents a diluted share, from $9.6m., 8 cents, a year earlier. Revenue fell to $164m. from $170m., the Petah Tikva-based maker of telecommunications equipment said.

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