* Seeks to be less dependent on one product for high portion
of profit
* Has 15 drugs in late stage development
* Will focus on new uses, alterations of existing medicines
* Shares off 1.6 percent
By Bill Berkrot
NEW YORK, Dec 11 (Reuters) – Teva Pharmaceutical Industries’
new Chief Executive Jeremy Levin promised on
Tuesday to reshape the company into “the most indispensable
medicines company in the world” and to provide significant value
to its shareholders along the way.
At a meeting in New York with investors and analysts, Levin,
who took over as CEO in May, said Teva would sustain “profitable
growth” through 2017 and beyond despite numerous challenges,
such as the looming 2015 patent expiration of its most important
branded product, the multiple sclerosis drug Copaxone. It
accounts for about 20 percent of Teva sales and some 50 percent
of its profits.
Teva said it would continue to return money to shareholders
through its dividend and $3 billion share buyback program, but
it did not announce increases to either.
By 2017, Levin said, “Teva will be a reshaped company,” and
one that will be more transparent and accountable to Wall Street
and its investors than it has been in the past. The Israel-based
company provided more details about its cost-cutting plans,
areas of focus going forward and new product development.
Investors were not immediately convinced and Teva shares
were down 1.9 percent just ahead of the market close in New
York.
Levin said that in the future he does not want Teva to be so
dependent on one product for a significant portion of its
profits, in part through growth of branded generics in emerging
markets and through its joint venture with Procter & Gamble Co
on over-the-counter consumer products.
But Levin, a former executive of Bristol-Myers Squibb Co.
, said the world’s largest maker of generic drugs would
increasingly focus on bringing new medicines to market in its
core areas of expertise, such as central nervous system
disorders and respiratory diseases.
He said it also would focus on what Teva is calling new
therapeutic entities, or NTEs. Those could be new uses,
formulations, delivery methods or combinations of existing
products.
Levin said China represents an enormous opportunity for
future sales of respiratory disease products. “We haven’t yet
scratched the surface of how to get into that part of the
world,” he said.
NEW DRUGS
Teva has 15 drugs in late-stage development and another 13
programs in mid-stage trials, but has discontinued 12 other
products in its pipeline to focus on core areas of expertise.
The company has $10 billion available for business
development over the next five years.
It took a step toward adding to its portfolio of branded
medicines earlier on Tuesday by announcing a deal for worldwide
rights to an experimental pain drug being developed by Xenon
Pharmaceuticals, a biotech company founded by Michael Hayden,
Teva’s new chief scientific officer .
Hayden said NTEs, as they come from proven effective
medicines, would provide high returns with much lower risks than
developing new molecules. He said the company set a goal of
approving development of 10-15 NTEs in 2013 and getting them to
market beginning in 2016.
Hayden was particularly enthused by the prospects for Teva’s
experimental multiple sclerosis drug laquinimod, a
neuroprotective medicine with potential to address progressive
as well as relapsing MS. It could hit the European market next
year, but U.S. regulators have asked for another Phase III study
before considering the drug for the world’s largest market.
Teva also sees the possibility of combining laquinimod with
Copaxone, which works through a different anti-inflammatory
mechanism, to better treat MS as well as address other
neurodegenerative disorders such as Alzheimer’s disease, ALS and
Parkinson’s disease.
The company sees prospects for extending Copaxone use beyond
the patent expiration with a new, more convenient,
three-times-a-week version compared with its current daily
formulation. That could reach the market in 2014.
Teva is testing the sleep disorder drug Nuvigil, which it
acquired with its $6.5 billion purchase of Cephalon last year,
for bipolar disorder – a use that could substantially boost
sales. The company sees 2013 Nuvigil sales of $280 million to
$320 million, with a possible bipolar approval coming in 2014.
MIS-SIZED OR SMALL DEALS
While Teva was built through a series of large acquisitions,
Levin reiterated his desire for mid-sized or small transactions,
whether through licensing deals, acquisitions or strategic
alliances with large pharmaceutical companies.
The company, whose shares have badly underperformed those of
its smaller rivals during the last two years, said on Nov. 30
that it would streamline operations and cut costs by $1.5
billion to $2 billion during the next five years, with most of
the savings realized in 2014 and 2015.
Teva provided details on Tuesday of where it would find much
of the savings, including $400 million to $700 million by
centralizing global purchasing power rather than local
procurement of goods. It sees another $150 million to $175
million in savings from shifting away from many small production
facilities and instead relying on larger, more efficient
manufacturing sites.
A move to centrally controlled supply chain inventory levels
could save another $110 million to $140 million, the company
said.
Levin said Teva would also continue to divest non-core
assets, a process it began by selling its U.S. animal health
business to Bayer for up to $145 million.
“We have a plan that’s reasonable and achievable,” Teva
Chairman Phillip Frost said.
