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DRUGS & DEVELOPMENTS
MARKET INTEL by PharmaCompass
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By PharmaCompass
2019-02-21
Impressions: 90 Article
Beleaguered generic drug giant Teva plans to close or divest 11 manufacturing sites this year, four more than what it had shuttered in 2018.
Back in 2015, Teva’s decision to buy Allergan’s Actavis unit pushed it into heavy debt. It also proved to be a bad time for generic drugs, as the market turned southwards. The Israeli drugmaker then brought in Kåre Schultz as its CEO in late 2017 with a mission to revitalize Teva. In January last year, Schultz had announced plans to close or divest between 20 and 25 plants in 2018 and 2019, with the company planning to significantly reduce its manufacturing footprint.
Even with 11 closures planned for 2019, Teva appears to be slightly behind that target. However, the company’s broader restructuring efforts are progressing well. In 2018, the company reduced its expenses by US$ 2.2 billion and hopes to cut another US$ 3 billion in expenses this year.
Teva has also launched a major restructuring that’s trimmed more than 10,000 jobs from the company’s workforce and cut back Teva’s spending on production of its medicines and on operations. Part of those job cuts have come by reducing the number of manufacturing plants Teva operates.
Meanwhile, Teva also plans to turn to high-priced biotech medications in an effort to jumpstart growth. Teva said it will continue to make generic drugs but will begin to shift more of its research and development focus to innovative biologics and biosimilar drugs, which only make up a small portion of its revenue now. The drugmaker said it envisions biologics making up about half of its sales in the future.
Biologic drugs use living cells to target diseases and ailments. Biosimilars are essentially a copycat version of the biologic drug. The market is expected to grow exponentially by 2025.
The company also conceded during the its fourth-quarter earnings report that 2019 would be an even tougher year than analyst expect, since the company’s blockbuster multiple sclerosis drug Copaxone is losing ground to generic competition. Besides, the company’s newer drugs aren’t taking off fast enough to make up for the loss.
The company forecasts 2019 revenues between US$ 17 billion and US$ 17.4 billion, missing consensus forecasts of more than US$ 18 billion.
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