By Steven Scheer
JERUSALEM (Reuters) -Teva Pharmaceutical Industries believes it would have to pay around $2.6 billion in cash and medicine to settle thousands of lawsuits alleging it and other drug companies fuelled the U.S. opioid epidemic.
On the heels of two more state settlements this year, Israel-based Teva, the world’s largest generic drugmaker, raised its legal provision for the opioid litigation by $1.1 billion in the first quarter to $2.6 billion, which would be paid out over 15 years.
“It’s the result of a holistic assessment of what’s the effect of (state) settlements we have done so far, (and) what’s the most likely outcome based on our current negotiations,” CEO Kåre Schultz told a conference call of analysts after Teva reported first-quarter profit that met expectations.
Teva in March settled with Florida and Rhode Island, with a bench trial in West Virginia this month and another in San Francisco slated for July. Schultz hopes for a nationwide settlement and there are ongoing negotiations.
“We’re getting closer there,” Schultz said. “I’m slightly more optimistic on the time schedule now. And that’s why I hope that we will see a nationalised settlement before the end of this year.”
He told Reuters such a settlement would avoid many more trials that could take years. “If you want to help people suffering from substance abuse, you sort of have to settle because otherwise as long as you haven’t settled there’s no help coming to people in individual states that have not settled,” he added.
Teva agreed to pay $21 million to Rhode Island plus $78.5 million worth of generic versions of overdose treatments Narcan and Suboxone. In Florida, it will pay $177 million plus $84 million in generic Narcan.
Teva’s preference for contributing medicines over cash has been a sticking point in settlement talks. Some states and counties have raised concerns that long-term distribution agreements could discourage other companies from devising new forms of treatment. They have also questioned the value of the medicine, produced far more cheaply than the prices used in the settlement agreements.
Teva earned 55 cents per diluted share excluding one-time items in the January-March period, down from 63 cents a share a year earlier.
Hurt by lower sales in North America of both generic drugs and its own multiple sclerosis treatment Copaxone, which is facing stiff competition, revenue fell 8% to $3.66 billion.
Analysts had forecast Teva would earn 55 cents a share ex-items on revenue of $3.76 billion, according to I/B/E/S data from Refinitiv.
Amid currency fluctuations, Teva lowered its 2022 revenue estimate to $15.4-$16.0 billion from $15.6-$16.2 billion, after revenue of $15.9 billion in 2021. It reiterated its projection for 2022 adjusted EPS of $2.40-$2.60, versus $2.58 last year.
Sales of the company’s migraine drug Ajovy grew 16% to $36 million and reached a 24% market share, although Schultz said he expects that to rise to 33%. Huntington’s disease treatment Austedo’s sales rose 6% to $154 million, with projections of $1 billion in 2022.
Overall generic drug sales in North America dipped 15% to $899 million due to competition on many products.
Revenue in Europe slipped 5% to $1.16 billion, although sales of Ajovy doubled to $30 million.
Teva’s net debt fell to $20.7 billion and the company continues to use all its cash to pay down debt.
Its New York-listed shares were up 1.2% at $8.64 at midday.
(Reporting by Steven Scheer, additional reporting by Dietrich Knauth; Editing by Louise Heavens, Mark Potter and David Gregorio)
