Sector News

Teva, amid massive restructuring, closes in on $3B cost-cutting goal

May 2, 2019
Life sciences

When Kåre Schultz joined Teva as CEO back in November 2017, the drugmaker was in a world of hurt. It was saddled with debt, costs were high and sales were falling. Now, Teva is in the second year of a two-year cost-cutting campaign, and so far the drugmaker has chopped billions in annual expenses.

As Teva reported first-quarter results, Schultz said the restructuring has “not been an easy exercise.” A lot of “good people”—around 10,000—have already left the company, the CEO said on Thursday’s conference call with analysts. More will leave this year. The restructuring has included site consolidation for both manufacturing and administrative locations.

So far, the company has cut about $2.5 billion in costs out of a $3 billion goal. Teva’s 2017 expenses were $16.3 billion, and management wants to get the figure to $13.3 billion this year.

While the drugmaker pushes ahead with its massive restructuring, Schultz and his exec team had some other updates for investors and analysts Thursday, and some weren’t pretty. For one, the company is guiding for lower Copaxone sales after a rough first quarter.

During the period, multiple sclerosis drug Copaxone continued its freefall under generic pressure and turned in $208 million, down 56% from $476 million during the same period last year. Now, Teva expects U.S. Copaxone sales to come in at $800 million this year, versus prior expectations of $1 billion. Globally, the drug should pull in $1.3 billion in 2019, execs said.

But Copaxone’s sharper-than-expected slide isn’t entirely a bad thing, Schultz said on Thursday’s call, as if putting forth a silver lining. He expects 2019 to be Teva’s “trough year” in earnings and possibly sales, so a lower Copaxone base will make it easier to grow in 2020.

“The faster you get out of it, the easier it is to get away from it,” Schultz said.

Meanwhile, the company has been streamlining its generics portfolio and paring drugs that it used to sell at a loss. Schultz said Teva has seen continued “stabilization” of the business; Teva’s North American generics business is now pulling in about $1 billion per quarter.

While industry watchers have been focusing on struggling areas in the business, Teva had new launches to highlight as well. New migraine med Ajovy and Austedo, a treatment for tardive dyskinesia and chorea associated with Huntington’s disease, are expected to chip in much-needed growth as they gain steam. The company expects the meds to contribute $150 million and $350 million this year, respectively, and grow “substantially” in future years.

But even as Teva presses ahead in migraine prevention with Ajovy, the company won’t be able to grow in cluster headache after pulling its FDA application in the use. The setback gives Eli Lilly’s Emgality the pole position in the indication after its drug scored a priority review.

In all, Teva turned in first-quarter revenues of $4.3 billion, a decrease of 15%. Sales in the U.S. slipped 20% during the first quarter. The company reaffirmed its 2019 guidance after the first-quarter performance.

For his work in the turnaround, Schultz has been compensated handsomely. His $33 million pay package for 2018—his first full year on the job—tops the list for biopharma CEOs based on available proxy filings.

By Eric Sagonowsky

Source: Fierce Pharma

comments closed

Related News

September 19, 2021

From Pfizer to Argenx: A look at potential blockbusters awaiting FDA decisions this year

Life sciences

This year has already witnessed a handful of memorable FDA approvals. But the race isn’t over yet. Looking to close out 2021 with FDA approvals stand four potential blockbusters from the likes of Argenx, UCB, Pfizer and Roche, according to Evaluate Pharma. Those meds combined are worth roughly $7.1 billion in sales cumulatively by 2026, according to Evaluate’s estimates.

September 19, 2021

Horizon partners with MIT for crowdsourced rare disease solutions, narrows to 5 finalists

Life sciences

Getting started is often the most difficult part—and that’s especially true in rare diseases and diagnoses. Patients and families often spend many years searching for their diagnosis starting point. For Horizon Therapeutics’ first innovation challenge, it took that struggle to heart and asked for technology-based rare disease solutions that result in faster or more accurate diagnoses.

September 19, 2021

Research identifies possible link between antibiotic use and breast cancer growth

Life sciences

Researchers from the Quadram Institute and the University of East Anglia (UEA) discovered that treating mice with broad-spectrum antibiotics increased the rate at which their breast cancer tumours grew.

Send this to a friend