Tuesday November 15, 2011
by John McCamant, editor The Medical Technology Stock Letter
We continue to believe that Teva Pharmaceutical (TEVA), the world’s leading generic company with an increasing foothold into proprietary pharmaceuticals, is very well positioned to capture future growth.
The company recently reported solid earnings as well as a positive discussion regarding their joint venture with Proctor & Gamble called PGT Healthcare that will market over-the-counter health products.
The partnership between P&G and Teva, which was first announced in March, will also seek to develop new OTC brands for the North American market. The move should also help the companies expand in China and other emerging markets.
The partnership will start with a base of approximately $1.3 billion in annual OTC product sales, and have the potential to grow significantly to $4 billion in annual sales towards the end of the decade.
These are impressive numbers and illustrate the potential when the world’s largest consumer products maker, P&G, and the world's largest generic drug maker, TEVA, join forces.
Importantly, the new partnership is more about creating new markets rather than taking market share from other companies.
Meanwhile, we've heard whispers that TEVA has gotten its hand into the Lipitor cookie jar. It appears that Ranbaxy Pharmaceuticals, the Indian company with rights to exclusively sell copy-cat Lipitor for six months starting November 30, isn’t up to the task.
This could lead to additional revenue for TEVA by allowing the company to get in early on the atorvastatin game.
Overall, investors have begun to come back to the TEVA story as its broad diversification is counter balancing laquinimod’s recent failure to delivery exciting Phase III data.
This broad diversification is a large part of why we did not panic and exit TEVA’s stock after the Phase III problems.
We believe management has multiple back-up plans in place to ensure that they meet their growth targets.
The company’s diversified mix of drug offerings combined with a shrewd management team make us happy owners of TEVA’s stock. TEVA is a buy under $52.
Learn more about this financial newsletter at John McCamant's The Medical Technology Stock Letter.