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A Teva pharmaceutical factory in Israel
Photo:
Tsafrir Abayov / Associated Press
Investors in generic drugs had an unknown start to the week: good news that led to a rebound in equities.
Teva Pharmaceutical Industries
announced Friday night that he had obtained approval from the Food and Drug Administration for his new antimigraine drug, Ajovy. Teva's shares were up 5% at noon on Monday in New York.
Sales in Ajovy will neither make nor break Teva's fortune. Preventive treatment of migraine is a growing but competitive market.
Novartis
and
Amgen
got the FDA approval for a similar drug in May, while
Eli Lilly
has a competing product that may soon come onto the market. Analysts at Leerink Partners anticipate Ajovy's annual revenue of $ 629 million by 2023, a small fraction of Teva's projected annual sales.
Teva, unlike generic competitors, benefits from a hybrid model with some original drugs like Ajovy. Profit margins will be higher than most of Teva's product portfolio, helping to offset the effects of the drop in generic prices. This trend weighed on Teva's profit margins and, consequently, on its price, which is down 70% from its peak of 2015. The increase in profit margins should also help to reduce the debt by 30% more quickly. billions of dollars from Teva.
Beyond the immediate financial impact, news is a great victory for General Manager Kare Schultz, who took the lead last fall. Teva had too often disappointed investors in recent years. The missing guidelines for key operational and financial forecasts had become the norm. The regulatory approval of Ajovy was anything but certain that the market reaction is justified. During the summer, the FDA identified several problems when inspecting a plant owned by Teva's manufacturing partner.
This time, however, Teva managed to deliver. Schultz's reconstruction efforts are in their infancy, but investors can report tangible progress.
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