Update Teva Pharmaceuticals (TEVA)

All it took on December 9 to pop shares of Teva Pharmaceutical Industries (TEVA) was good news on the Phase III study on oral laquinimod for multiple sclerosis. The two-year study found that patients experienced a statistically significant reduction in relapse rate and a significant reduction in the progression of the disease. Additional results of the study will be released by Teva and its partner Active Biotech (ATVBF).

Shares of Teva finished December 9 up 6.8%. Shares of Active Biotech were up almost 80% on the day.

Laquinimod received Fast Track designation from the U.S. Food and Drug Administration in February 2009. A second Phase III trial is still in progress with results anticipated in the third quarter of 2011. The companies expect to submit the drug to regulators in the United States and the Europe Union shortly after that. Teva, the world’s largest maker of generic drugs, submitted a patent application for laquinimod after the test results were released.

Needless to say the successful development of laquinimod would be a huge boost for Teva’s ambitions to become a developer of new drugs as well as the leading generic drug company. Read more

Buy Abbott Laboratories (ABT)

At current prices I think you’re getting two of Abbott Laboratories (ABT) most interesting growth opportunities at a deep discount.

Abbott is a good mainstream pharmaceutical company. Abbott’s blockbuster drugs include Humira (for rheumatoid and psoriatic arthritis: $5.5 billion in 2009 sales), Kaletra (for HIV/AIDS: $1.4 billion in 2009 sales), the TriCor/Triplex combination (for cholesterol and cardiovascular disease: $1.3 billion in 2009 sales) and Lupron (for prostate cancer: $800 million in 2009 sales) The patent on Humira doesn’t expire until 2016. Pharmaceuticals accounted for 53% of operating revenue in 2008.

Abbott’s vascular products unit—9% of operating revenue—is on a new product roll with the release of its new Xience drug-coated stent. Launched in 2008, Xience is the market’s leading drug-coated stent in the U.S. market for coronary and carotid stent.

My guess, though, is that most investors aren’t as familiar with Abbott’s nutritional and emerging market/generic businesses. And I don’t think the current stock price fully reflects the growth prospects in those areas of the company.

Nutritionals made up about 17% of Abbott’s sales in 2009. Products include infant formula (Similac and Isomil are the brands) and adult nutritionals (Ensure and Prosure.) This business segment grew revenue by 7.3% from 2008 to 2009 and I think growth could actually accelerate. Rising income levels are driving sales of infant and adult nutritionals in emerging markets and Abbott has been increasing its penetration, especially in China, South East Asia, and Latin American through moves like the 2009 acquisition of the nutritional business of India’s Wickhardt Ltd.

The other unrecognized part of Abbott’s business is epitomized by its acquisition of Solvay Pharmaceuticals Read more

Update Teva Pharmaceutical Industries (TEVA)

It’s great earnings for the second quarter (announced on July 27) versus long-term worries for Teva Pharmaceutical Industries (TEVA) right now. With an assist from sell on the good news, long-term worries are winning at the moment.

For the second quarter earnings climbed to $1.08 a share. That was an increase of 30% from the 83 cents a share in the second quarter of 2009. The Wall Street consensus had projected earnings of $1.04. 

In its conference call the company raised its guidance for the year to $4.50 to $4.60 a share, up from the prior forecast of $4.40 to $4.60.

Oddly enough for the world’s largest maker of generic drugs, the long-term worries focus on a proprietary Teva drug, Copaxone. Read more

Update Teva Pharmaceutical Industries (TEVA)

Shares of Teva Pharmaceutical Industries (TEVA) plunged almost 8.6% on Friday on news that a competitor Momenta Pharma (MNTA) had beaten Teva and would be the first company to get U.S. Food and Drug Administration approval for a generic version of Sanofi Aventis’ (SNY) Lovenox, a drug used to combat blood clots to prevent deep vein thrombosis. Lovenox sales came to $2.billion in 2009.

This bad news follows pretty closely on the heels of other bad news. Read more

In the drug sector go where the growth is: generics and emerging economies

If you can‘t beat ‘em, join ‘em.

After years of worry that generic drug makers were going to destroy the profits of big U.S. drug makers, Big Pharma has figured out a solution: Buy them. Especially if the generic maker has big market share in a rapidly growing market such as India.

The latest deal has Abbott Laboratories (ABT) buying Piramal Healthcare’s generics business. The deal will make Abbott the largest drug maker in India. India is the second fastest growing drug market in the world, behind China. Piramal sells 350 branded generics in India. Annual revenue from that business is about $500 million annually and has been growing at about 20% a year.

 The Indian market for drugs, now $8 billion, is projected by IMS Health to grow by 16% a year through 2014. The $300 billion U.S. market is projected to grow at a 3% annual rate.

Abbott isn’t alone. Japan’s Daiichi Sankyo (DSKYY) bought 64% of Ranbaxy Laboratories (RBXLF), India’s largest drug maker in 2008.

But the company seems almost uniquely determined to break into generics among U.S. drug makers. In March Israel-based generics superpower Teva Pharmaceutical Industries (TEVA) beat out Pfizer (PFE) to buy Ratiopharm , Germany’s second largest maker of generic medicines—and the sixth largest generic drug company in the world. The German market is the second-largest market for generics in the world next to the United States.

The advantage that an Abbott, Daiichi or Teva has over the biggest of U.S. Big Pharma is size. Read more