Teva Pharm to stay as unified drugmaker, sees big interest in API business, says CEO

[February 20, 2024]  By Steven Scheer

TEL AVIV (Reuters) -Teva Pharmaceutical Industries will remain a single company for generic and branded drugs, and expects to see significant interest in its active pharmaceutical ingredients business that it plans to divest, its head said on Tuesday.

There has been speculation that Israel-based Teva - the world's largest generic drug maker - would split into two companies handling both the increasingly competitive generics business and its own branded drugs.

However, the company will stay unified, and "from an infrastructure point of view, (the two businesses) complement each other incredibly well," Chief Executive Richard Francis said at a news briefing.

The generics side "allows us to fund a lot of research and development we are doing in our innovative business," he said, citing Teva's collaborations on R&D with Israeli universities.

Those partnerships mean "we don't have to go out and seek funding to drive some of this innovation, which many other companies do."

Teva last month reported strong fourth-quarter earnings and forecast lower profit but higher sales this year, adding a deal to sell its API business would be completed in 2025.

Teva API - dealing with active ingredients contained in medicines - is a $1 billion business in an $85 billion global market. Francis believes that as a standalone business, it should perform "far greater" than its annual growth so far of 6%.

"Businesses like this don't often come on the market. So I do believe this will affect a significant amount of interest," he said. "That will lead us to get a fair valuation."

Richard Francis, Chief Executive of Teva Pharmaceutical Industries, looks on during a press conference at the company headquarters in Tel Aviv, Israel, February 20, 2024. REUTERS/Dylan Martinez

Teva is in the process of recovering from loss of exclusivity to its multiple sclerosis drug Copaxone and a spate of lawsuits, and is betting that a trio of its branded drugs - Austedo, migraine product Ajovy and schizophrenia drug Uzedy - will help it bounce back.

Teva has several biosimilars - copies of high-priced drugs - and net debt is down to $16.6 billion.

High debt from a failed acquisition in 2017 has held Teva back from further M&A deals, Francis said. In the meantime, Teva has been licensing products.

"As our debt goes down, then we have the opportunity to do M&A, but it will be thoughtful and appropriate M&A," he said.

Francis added that since the Israel-Hamas war began, Teva has been training hundreds of therapists to help with a trauma crisis likely to affect millions of Israelis.

(Reporting by Steven Scheer; Editing by Kirsten Donovan and Bernadette Baum)

[© 2024 Thomson Reuters. All rights reserved.]This material may not be published, broadcast, rewritten or redistributed.  Thompson Reuters is solely responsible for this content.