Friday, October 30, 2015
Teva Pharmaceutical Industries beat profit forecasts and raised its outlook on Thursday, as it set out plans for funding the purchase of assets from a rival that will reinforce its status as the world's top generics drugmaker.
Teva agreed in July to pay $40.5 billion - $33.75 billion in cash and $6.75 billion in stock - for Allergan's Actavis generics business.
Predicting the deal would close in the first quarter of 2016, the Israel-based firm said on Thursday it would raise the cash from a combination of debt and equity.
Chief financial officer Eyal Desheh told a conference call it would raise $7 billion through a combination of common shares and mandatory convertible preferred shares. "Given market conditions, and they look reasonable, we will do it before the end of this year," he said.
Teva will also sell $22 billion of bonds, mostly dollars but also euro and pounds, in a number of markets and raise another $5 billion from three- and five-year bank loans.
Some 100 million Teva shares will be issued to Allergan at a price of $67.30 each.
Teva's New York-listed shares, which have gained 9 percent in 2015, were down 0.5 percent at $61.90 in morning trade.
The firm, which is also in the process of buying Mexico's Rimsa for $2.3 billion, earlier reported earnings of $1.35 per share excluding one-time items in July-September, up from $1.33 a year earlier.
Revenue slipped 5 percent to $4.8 billion, though excluding foreign exchange fluctuations it grew 3 percent.
Teva was forecast to earn $1.28 on revenue of $4.76 billion, according to Thomson Reuters I/B/E/S.
Global sales of its best-selling multiple sclerosis drug Copaxone fell 2 percent to $1.09 billion. The drug accounts for about 20 percent of revenue and 50 percent of profit and is now facing competition.
Sandoz, part of Swiss drugmaker Novartis AG, and Momenta Pharmaceuticals in June launched a once daily 20 mg version called Glatopa.
To stem the tide of generic competition, Teva has been moving patients to a three times a week 40 mg version of Copaxone, which the company said accounted for 76 percent of total Copaxone prescriptions in the United States.
Though the patent of the high dose expires in 2030, investors fear it will be challenged in court and possibly nullified as early as 2017.
As a result, chief Executive Erez Vigodman said Teva was preparing for a scenario where there will be generic competition in 40 mg Copaxone in two years. Assuming two competitors, the hit to net revenues will be $1.2 billion and 65 cents to profit in 2017, he said.
For now, Teva raised its full year-2015 earnings estimate to $5.40-$5.45 from $5.15-$5.40 and revenue to $19.4-$19.6 billion from $19.0-$19.4 billion.
It said it would pay a quarterly dividend of 34 cents a share.
reuters.com
