Teva gains over 50% of US Zocor market
Citigroup: Zocor�s patent expiration is shaping up to be one of the fastest genetic switches in history.
Gitit Pincas 25 Jul 06 18:44
Teva Pharmaceutical Industries Ltd.�s (Nasdaq: TEVA; TASE: TEVA) launch of generic Zocor on June 23 has broken records and set a historic milestone. This is because Zocor is the largest drug for which the patent has expired to date. There has never before been a launch of an original or generic drug for which the ethical drug had $5 billion in sales.

According to IMS Health Global Services, Teva has won 55% of new prescriptions and 50% of all prescriptions for Zocor for the week ending July 14. Teva has a 77% market share for new prescriptions and 72% of total prescriptions for Simvastatine (generic Zocor). Dr. Reddy�s Laboratories Ltd (NYSE: RDY; BSE: 500124), which markets the authorized generic version of Zocor with Merck & Co. (NYSE: MRK), has the other 28%. Merck held the patent to original Zocor, which expired in June.

What to analysts think about these results? What is the effect on Teva? Citigroup Global Markets analysts Robert Bonte-Friedheim and Andrew Swanson said, �Initial prescription data suggests Teva is on track to meet our forecasts of $274 million Simvastatine sales in 2006, and net earning per share of $0.17.� ($133 million.) The analysts add, �Zocor�s patent expiration is shaping up to be one of the fastest genetic switches in history.� Citigroup kept its �Buy� recommendation for Teva with a target price of $46.

Lehman Brothers analyst Richard Silver is even more positive than his colleagues at Citigroup, and raised his forecast for Teva as a result of its marketing exclusivity for generic Zocor and the successful launch. He predicts that Teva will post earnings per share of $0.44 for the second quarter ($343 million), $0.06 more than in his previous forecast. He predicts that the company will post earnings per share of $2.07 for 2006 as a whole ($1.6 billion), up from his previous forecast of $1.98. Silver added that the revised forecasts could turn out to be conservative.

Lehman Brothers also concluded that Teva would raise its guidance for the rest of the year. Teva�s current guidance for 2006 predicts earnings per share of $1.82-1.90, of which $0.20-0.25 will come from generic Zocor sales. Silver believes that this guidance is low and should be changed, and predicts that Teva�s generic Zocor sales will reach $375 million in 2006.

Silver says, �Regardless of the strength of the second quarter earnings report, we do not expect it to be a major stock catalyst. Instead, we see much more focus on the 2007+ outlook, which is something we will likely have to wait another quarter to gain additional clarity from management.� Teva will publish its financial report for the second quarter on August 8.

Lehman Brothers has kept its target price of $47 for Teva, 55% above the current price on Nasdaq.

Published by Globes [online], Israel business news - www.globes.co.il - on July 25, 2006