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IVAX Deal Crimps Teva's Profits

Posted on: Thursday, 11 May 2006, 12:07 CDT

By John Dorschner, The Miami Herald

May 11--Teva Pharmaceutical Industries lost $1.009 billion in the first quarter because of costs related to its purchase of Miami-based IVAX, but the Israel-based firm said the absorption of IVAX's operations is proceeding smoothly.

"It is progressing well and very much according to our plan," Teva Chief Executive Israel Makov told analysts on a conference call.

Makov estimated the company will save $100 million this year through cost cuts as the two firms consolidate.

He said the integration of the companies' Mexico operations has been going exceptionally well. Four plants had been closed around the world. He provided no other details.

Earlier this month, Teva said it planned 60 layoffs at an IVAX facility in northern Miami-Dade.

The first-quarter loss, mostly due to one-time charges connected with the IVAX purchase, works out to about $1.40 a share, the company said.

Revenue was $1.67 billion, compared to $1.3 billion for the first quarter of 2005. These are combined figures for IVAX and Teva. IVAX financials were integrated into Teva's for February and March only.

Excluding one-time costs, Teva executives expect an adjusted 2006 profit of $1.5 billion, or $1.82 to $1.90 in earnings per share.

If the Food and Drug Administration approves Teva's claim, it is entitled to six months' exclusivity on a generic of the cholesterol drug Zocor, the company said profits per share could then grow by another 20 to 25 cents.

Generic Zocor was one of the properties Teva obtained with IVAX.

Teva bought Miami-based IVAX to strengthen the company's share of the $58 billion worldwide market for generic drugs. IVAX contributed $329 million in sales in the quarter.

Sales of Copaxone, one of two products developed by Teva, increased 29 percent to $329 million, making it the best-selling multiple sclerosis treatment in the United States, the company said last week.

Excluding the IVAX deal's costs, Teva said net income was $286 million, or 37 cents a share. On that basis, the firm was expected to earn 41 cents a share, according to the mean estimate of 18 analysts surveyed by Thomson Financial.

Yisca Erez, an analyst at Clal Finance Investment Management Ltd. in Tel Aviv, told Bloomberg News the earnings were "weak" and called the contribution to sales by IVAX products "disappointing."

This report was supplemented with material from Bloomberg News.

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TEVA,

Source: The Miami Herald

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