Forget Teva, Buy These 5 Drug Stocks Instead

Israel-based generic drug maker, Teva Pharmaceutical Industries Limited (TEVA - Free Report) , saw its shares decline 9.4% last week with the company suffering a fresh setback in the form of FDA approval of a generic version of the company’s top-selling branded drug, Copaxone (multiple sclerosis). Mylan NV (MYL - Free Report) gained FDA approval for its generic version of the 40 mg (thrice weekly) dosage as well as the once-daily 20 mg formulation of Copaxone. With Mylan being among the first applicants to challenge the 40 mg patent, the company could enjoy 180 days of exclusivity. Mylan has launched both products. Mylan also gained approval for the 40 mg dose in the EU.

The FDA approval of generic Copaxone is a major blow for Teva which is currently facing a whole lot of challenges. Teva issued a statement saying that the launch of the 40 mg formulation before the final resolution of pending patent infringement lawsuits with Mylan will be treated as an “at-risk” launch – this means Mylan would have to pay significant damages if the court upholds the patents protecting the drug.

Copaxone brought in total sales of $1.99 billion in the first half of 2017. At the end of the second quarter of 2017, Copaxone 40 mg accounted for more than 85% of total Copaxone prescriptions in the United States.

The entry of the 40 mg formulation and the entry of a second generic version of the 20 mg formulation (Sandoz and Momenta have been on the market for quite a while with Glatopa, a generic version of the 20 mg dose) is expected to cut Teva’s 4Q earnings by at least 25 cents per share. Additional details should be out when the company announces third quarter results on November 2. The entry of generic Copaxone just adds to the existing list of problems being faced by Teva.

Generic pricing erosion remains a huge issue for generic companies like Teva. The sharp decline in generic drug prices, while a blessing for patients, is proving to be a major challenge for generic drugmakers as well as drug distributors.

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Disclosure: contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any ...

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