Standard & Poor's Ratings Services has revised its outlook on Teva Pharmaceutical Industries Ltd. to positive from stable. At the same time, Standard & Poor's affirmed its 'BBB-' corporate credit and senior unsecured debt ratings on Teva.
The action reflects the generic drug maker's strong sustained operating performance as well as Standard & Poor's increasing confidence in the company's ability to cope with financial uncertainties.
"The investment-grade ratings on Israel-based generic drug maker Teva reflect the company's position as one of the largest generic drug manufacturers in the world and its growing specialty-pharmaceutical franchise, factors partially offset by the company's aggressive efforts to expand its market presence," said Standard & Poor's credit analyst Arthur Wong.
Teva is one of the largest generic drug makers in the world based on sales and number of prescriptions. The company is also one of the most geographically diverse generic drug makers, deriving 62 percent of sales from North America, 23 percent from Europe, and 15 percent from the rest of the world. Israel itself accounts for 10 percent.
Earnings prospects for generic drug makers are favorable. There is an increasing focus in the US on controlling drug spending. In addition, drugs representing $44 billion in 2002 sales will lose US patent protection in the next five years.
While the generic drug industry remains highly competitive, Teva, as one of the largest producers, is well positioned to benefit. The company has one of the broadest drug pipelines, with 60 abbreviated new drug applications (ANDAs) filed and awaiting FDA approval. More importantly, Teva estimates that it is the first to file for 15 of these products, which means that it may benefit from 180-day generic market exclusivity.
Teva's large size and broad product offering also help it obtain supply contracts, as drug sellers are increasingly wanting to deal with fewer suppliers. In addition, Teva's generic portfolio is diverse, with no one product accounting for a significant portion of total annual sales. — (menareport.com)
© 2003 Mena Report (www.menareport.com)
