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Teva Active on the Generics Front

Zacks Equity Research

Teva Pharmaceutical Industries Ltd. (TEVA) has been pretty active on the generic product launch front with the company launching several generic products in the last few weeks. Among recently launched generic products are Teva’s generic versions of Sanofi’s (SNY) high blood pressure drugs, Avapro and Avalide, AstraZeneca’s (AZN) schizophrenia treatment, Seroquel, and Forest Laboratories’ (FRX) Lexapro.

While Teva will enjoy a 180-day period of marketing exclusivity where the generic launches of Avapro, Avalide and Lexapro are concerned, we note that other generic players like Dr. Reddy’s Laboratories (RDY) and Mylan (MYL) have also launched their generic versions of Seroquel.

As per IMS data, annual US sales of Avapro, Avalide, Seroquel, and Lexapro were $464 million, $124 million, $4.6 billion and $2.9 billion, respectively.

Teva also launched its authorized generic of version of Provigil. The branded product is marketed by Teva’s subsidiary, Cephalon, Inc. As per IMS data, Provigil’s annual sales were $1.1 billion in the US.

US Generics Picking Up

Teva’s US generics business, which had been performing below expectations in the past few quarters, showed signs of reviving during the fourth quarter of 2011 with sales benefiting from the exclusive generic launch of Eli Lilly’s (LLY) Zyprexa. Teva has partnered with Dr. Reddy’s Laboratories for Zyprexa.

Another important product launch was that of a generic version of Pfizer’s (PFE) Lipitor. Teva has an agreement with Ranbaxy regarding generic Lipitor.

The performance of the US generics segment should continue improving - the company expects $650 million in new launches in 2012. The company is guiding towards US generics segment sales of $5 billion, with sales slated to benefit from patent expirations and product launches. However, competition in the generics market will be tough.

We currently have a Neutral recommendation on Teva, which carries a Zacks #3 Rank (short-term ‘’Hold’’ rating).

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