Generic drug maker Teva Pharmaceutical Industries Ltd. (TEVA) on Tuesday posted higher profit for the third quarter, boosted by strong sales of its multiple sclerosis drug Copaxone and Albuterol inhaler ProAir. Per share earnings, however, declined from last year on higher share count.
Q3 Results
The Petach Tikva, Israel-based company's GAAP net income attributable to Teva was $649 million, up from $631 million in the year-ago quarter. However, per share earnings dropped to $0.72 from $0.77 reported in the same quarter of last year.
On a non-GAAP basis, net income attributable to Teva advanced 28% to $806 million, from $630 million in the prior-year quarter. Non-GAAP earnings per share grew 16% to $0.89 from $0.77 in the comparable quarter of the previous year.
On average, 20 analysts polled by Thomson Reuters expected the company to post earnings of $0.88 per share. Analysts' estimates typically exclude special items.
The recent quarter non-GAAP results exclude amortization of purchased intangible assets and inventory step up of $147 million; restructuring charges of $47 million; impairment of assets of $37 million; legal settlements of $13 million; and a related tax benefit of $87 million. The prior-year non-GAAP results excluded a settlement payment from an institution in connection with its auction rate securities portfolio, offset by amortization of purchased intangible assets, acquisition of in process R&D, impairment of financial assets, inventory step-up, and a related tax effect.
Teva stated that the share count used for the diluted earnings per share for the third quarter of 2009 increased by about 78 million shares versus last year due, primarily, to the shares issued in connection with the acquisition of Barr.
Operating income, on a GAAP basis, for the latest quarter increased to $753 million from $622 million in the third-quarter of 2008. Non-GAAP operating income was $997 million, an increase of 42%, compared to $700 million a year ago.
Quarterly net sales totaled $3.55 billion, 25% higher than the previous year's net sales of $2.84 billion, but fell shy of the $3.63 billion revenue consensus estimate of nineteen analysts polled by Thomson Reuters.
The company noted that the acquisition of Barr contributed to the growth in sales in all of Teva's geographies, particularly in the U.S., Russia, Poland, Germany, and Croatia.
Exchange rate differences negatively impacted sales in the latest quarter by about $160 million or 6%, versus prior year, resulting primarily from the strengthening of the U.S. Dollar relative to the Hungarian Forint, Russian Ruble, Euro, British Pound, Polish Zloty and Israeli Shekel in the third quarter of 2009.
Shlomo Yanai, Teva's President and Chief Executive Officer, said, "This was another very strong quarter for Teva, with record-breaking financial results across the board. In fact, for the first time, we crossed the billion dollar mark in quarterly cash flow from operations. All of our business units and geographies continued to grow during the quarter, with especially strong sales of Copaxone, which continued to strengthen its position as the world's leading therapy for the treatment of multiple sclerosis, and of ProAir, the leading Albuterol inhaler in the U.S."
Segmental Analysis
On a geographical basis, sales from North America increased 33% to $2.23 billion from $1.68 billion last year, and European sales, including EU member states, Switzerland and Norway, rose 14% to $830 million from $729 million in the year-ago quarter. International sales advanced 14% to $492 million from the prior-year's sales of $433 million.
Pharmaceutical sales totaled $3.41 billion, an increase of $27% from $2.69 billion in the same quarter of last year. During the most recent quarter, pharmaceutical sales in North America grew 34% to $2.16 billion, accounting for 63% of total pharmaceutical sales, driven by the launch of generic versions of Ortho Tri-Cyclen Lo and Eloxatin in the quarter, as well as continued strong sales of generic versions of Lotrel, Adderall XR, Yasmin, and Protonix launched in previous quarters. The quarter's sales also reflected continued strong sales of Copaxone and ProAir.
Pharmaceutical sales in Europe totaled $787 million, up 15% from last year, and accounted for 23% of total pharmaceutical sales. International pharmaceutical sales grew 17% year-over-year to $463 million, accounting for 14% of total pharmaceutical sales. In local currencies, international sales grew 33%, led by increased sales in Russia, Croatia and Israel as well as in certain countries in Latin America.
Global in-market sales of Copaxone, which continues to be the leading MS therapy in the U.S. and globally, was $776 million, up 38% year-over-year. In the U.S., in-market sales climbed 53% to reach $540 million from 2008. In-market sales outside the U.S. totaled $236 million, up 12% year-over-year. In local currencies, in-market sales of Copaxone outside the U.S. grew 23%.
Global in-market sales of Azilect amounted to $64 million, an increase of 39% over the prior-year quarter. In local currencies, global in-market sales of Azilect rose 45%. During the recent quarter, Azilect continued to increase its market share in the major European markets and the U.S.
Teva's global respiratory business reached sales of $243 million, up 37% from $177 million in the third quarter of 2008, primarily due to strong ProAir sales in the U.S. Teva's respiratory sales in the U.S. totaled $166 million, a jump of 66% from the comparable quarter of 2008.
The company's API sales to third parties dropped 8% to $136 million from $148 million reported in the three months ended September 30, 2008. In local currencies, API sales to third parties declined 10%.
In the quarter, GAAP gross profit margin rose to 54.3% from 52.5% a year ago. Non-GAAP gross profit margin increased to 58.2% from 54.0% last year, reflecting higher contributions as a percentage of sales of innovative and branded products, including Copaxone, ProAir, Azilect and women's health products, as well as improved gross margins of the U.S. generics base business.
Year-To-Date Highlights
For the nine-month period, the company reported GAAP net income attributable to Teva of $1.62 billion or $1.81 per share, higher than $1.30 billion or $1.59 per share in the year-earlier period.
Non-GAAP net income attributable to Teva was $2.18 billion or $2.43 per share, up from $1.83 billion or $2.23 per share in the corresponding period of the previous year.
Year-to-date net sales increased to $10.1 billion from $8.24 billion reported in the nine months ended September 30, 2008.
Dividend
At a meeting on November 2, 2009, the company's Board declared a cash dividend for the third quarter of 2009 of NIS 0.60 or about 15.9 cents according to the rate of exchange on November 2, 2009, per share. The dividend would be paid on November 26, to the shareholders of record on November 11, 2009. Tax will be withheld at a rate of 20%, the company added.
Peer Review
Among Teva's rivals, Watson Pharmaceuticals Inc. (WPI) is scheduled to release its third-quarter results on November 4, with analysts forecasting earnings of $0.65 per share on revenues of $688.18 million. While reporting second-quarter numbers, Watson revised its 2009 GAAP earnings estimate to a range of $2.13 - $2.21 per share, from its previous forecast range of $2.15 - $2.27 per share. Adjusted earnings per share is now expected to range between $2.50 and $2.58, compared to its prior outlook range of $2.40 - $2.52 per share.
Stock Quotes
Teva Pharma's shares, which have been trading between $39.75 and $54.95 in the past 52 weeks, closed Monday's trading session at $51.19, up 71 cents or $1.41%, on a volume 5.59 million shares.
For comments and feedback: editorial@rttnews.com