Value Buy on the generics market

Drug prices continue to rise, driving up healthcare costs. Pharmaceutical companies typically raise drug prices at the beginning of each year. In January 2024, the average price increase for over 700 brand-name drugs was 5.4%. Their generics are alternatives to brand-name drugs that are available at significantly lower prices. For this reason, insurers, payers and government health plans prefer generics and biosimilars.

TEVA

Teva Pharmaceutical Industries

15,80 €

-0.56 (-3.42%)

(As of 09.07.2024 ET)

52-week range

$7.80

▼

17,69 €

Target price

17,00 €

Teva Pharmaceuticals Industries Ltd. NYSE: TEVA is a leader in the generic drug industry. While the company sells over 500 generic drugs at a discount (compared to the branded ones), its stock is also selling at a discount. The company trades at just 7.25 times forward earnings. Value investors may want to snap up the shares while they’re still cheap.

Teva Pharmaceutical operates in the medical sector and competes with Sandoz Group AG OTCMKTS: SDZNY, AbbVie Inc. NYSE: ABBV, Merck & Co. Inc. NYSE: MRK And Dr. Reddy’s Laboratories Ltd. NYSE: RDY.

Teva has the largest portfolio of generics

Teva is the world’s largest generics company. Its portfolio includes over 500 generics, most of which are essential. The company is committed to its first-to-file, first-to-market strategy. It has built a huge distribution network and expanded its global reach to numerous countries around the world, so that 200 million people take their medicines every day. The company also has the capacity to produce generics and branded medicines in large quantities. At the end of May 2024, Teva and Alvotech NASDAQ: ALVO Launched Simlandi, a generic version of Humira. Humira is AbbVie’s blockbuster arthritis drug.

The company has announced that it plans to sell its active pharmaceutical ingredients (API) business, called TAPI, as part of its pivot-to-growth initiative to focus on its core business. Specific buyers or prices have not been disclosed, but it is estimated that the deal could be worth as much as $2 billion.

Teva also develops its own branded drugs

Teva is best known for its generic drugs, but also develops and produces its own branded drugs. AUSTEDO is one of its main branded drugs. It is used to treat chorea associated with Huntington’s disease. AJOVY is a migraine medication for adults.

TEVA stock is in a descending triangle pattern

The daily candlestick chart of TEVA shows a descending triangle pattern. The descending trend line formed at the swing high of $17.69 on June 12, 2024 and acted as an upper trend line resistance until the flat lower trend line support at $16.16. The daily relative strength index (RSI) has turned lower again and dropped to the 47 band. Pullback support levels are at $16.16, $15.62, $15.00, and $14.54.

Teva’s sales growth in Q1 2024 driven by generics and AUSTEDO

On May 8, 2024, Teva Pharmaceuticals reported Q1 2024 earnings per share (EPS) of 48 cents, missing consensus estimates by 3 cents. Revenue increased 4.3% year-over-year to $3.82 billion, beating consensus estimates of $3.73 billion. Growth was led by the generics business and AUSTEDO. Generics saw growth across all regions, up 9% in local currency. AUSTEDO saw 67% year-over-year growth in the U.S. as the company reiterated its 2024 revenue guidance of $1.5 billion. AJOVY revenue increased 18% year-over-year to $113 million. The company received FDA approvals for generic drugs SIMLANDI and SELARSDI, which are generic versions of Humira and Stelara, respectively.

For the full year 2024, Teva Pharmaceuticals reiterated its revenue guidance of $15.7 billion to $16.3 billion. Adjusted EBITDA is expected to be between $4.5 billion and $5 billion. Diluted earnings per share (non-GAAP) is expected to be between $2.20 and $2.50. Free cash flow is expected to be between $1.7 billion and $2 billion.

Optimistic CEO comments on the first anniversary of Teva’s refocusing on growth strategy

TEVA CEO Richard Francis said the company is off to a great start, driven by growth of its generics business across all regions and robust sales of its branded medicines AUSTEDO and AJOVY. The company has made significant progress on its Pivot to Growth strategy. Phase 3 efficacy results for olanzapine LAI (once monthly) met their primary endpoint, indicating it is a well-tolerated treatment option for schizophrenia. The Pivot to Growth strategy focuses on accelerating growth drivers, namely the branded medicines AUSTEDO, AJOVY and UZEDY, as well as late-stage generics in the pipeline.

CEO Francis commented: “We are excited to be able to launch our biosimilars Humira and SIMLANDI in the second quarter and we are receiving great interest from payers, PBMs and the channel. We are also excited that our biosimilar Stelara is also approved and we will launch it in February 2025.”

Analyst ratings and price targets for Teva Pharmaceuticals are at MarketBeat.

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