Teva Pharmaceutical Industries Ltd. (TEVA) recently presented an update on its long-term goals and stated that it is looking to double its revenues by 2015 and achieve net income margins of 22%. Teva expects to achieve revenues of $31 billion and net income of $6.8 billion, or 22% of revenues, by 2015.
The company expects its core business — generics — to drive growth, with support from its branded business. About 70% of total revenues are expected to come from the generics business in 2015. Teva currently has a 22% share of the US generics market. The company aims to grow its market share in the US to 35% by 2015.
We believe that the growing demand for generics will help drive growth of Teva’s generics business in both the U.S. and other territories. A major portion of this growth should come from those European and international markets that currently have lower generic penetration rates.
Moreover, branded products representing sales worth $150 billion are scheduled to lose exclusivity over the next five years. As of October 23, 2009, the company had 210 abbreviated new drug applications (ANDAs) pending approval at the US Food and Drug Administration (FDA), representing more than $113 billion in branded sales. About 136 of these ANDAs are paragraph IV filings, most of which should be resolved over the next few years. Teva estimates it was first-to-file on about 83 of these products, representing more than $54 billion in branded sales. As such, the company is well-positioned to gain a significant share of the generics market.
Meanwhile, bio-generics should also be another important growth driver going forward. Teva is working on building its portfolio of biopharmaceutical and bio-generic products, which represent a new and significant area of growth for the company. The company’s 2008 acquisition of CoGenesys, Inc. has not only helped Teva expand its biopharmaceutical pipeline but has also provided it with access to albumin fusion technology, which enables the development of long-acting biological drugs and additional protein-based medicines across broad therapeutic areas.
Additionally, Teva’s joint venture with Lonza Group Ltd. for the development, manufacture and marketing of several affordable, effective and safe biosimilar versions of a selected portfolio of biologic pharmaceuticals should help the company advance in its efforts to establish a leading position in the bio-generics market.
We currently have an Outperform recommendation on Teva. We expect the company to continue posting strong revenues and earnings thanks to new product launches, both generic and branded.
Read the full analyst report on “TEVA”
Zacks Investment Research
