Teva's Promising New Drugs Add to Earnings as Cash Cow Declines

(Bloomberg) -- Teva Pharmaceutical Industries Ltd. edged past first-quarter earnings estimates as the company’s new products helped compensate for erosion of its aging best-seller Copaxone.

Profit excluding some costs was 60 cents a share, aided by sales of Ajovy for migraine headaches and Austedo for Huntington’s disease, according to a statement Thursday from the Israeli drugmaker. The results beat analysts’ estimates by 1 cent.

Revenue from those drugs, which exceeded estimates, are an early sign that the indebted generic-drug maker may be nearing a turning point. When Chief Executive Officer Kare Schultz took over in November 2017, Teva was struggling to survive. The world’s largest producer of knockoff medicines was crushed under enormous debt, and its ability to repay those loans was diminishing with its long-time cash cow -- the multiple sclerosis drug Copaxone -- fading against cheaper competition.

Teva’s fundamental problems remain: debt still dwarfs the value of the company, while first-quarter sales of Copaxone, the multiple sclerosis injection that at one point accounted for a fifth of overall revenue, dropped faster than anticipated. Sales of generic drugs in North America, which account for roughly a quarter of company revenue, fell 11 percent in the quarter.

But some of Schultz’s designs are bearing fruit. Analysts have said that the ascent of Teva’s twin potential blockbusters ought to mitigate the decline of Copaxone. Teva has cut $2.5 billion of costs since Schultz took over, closing in on the target he set for the company for the end of the year. And Schultz has said that the market for knockoff medicines is stabilizing after years of narrowing profit margins.

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