It's often difficult to compare generic-drug makers on a year-over-year basis. Their revenues go on roller-coaster rides with exclusive sales that make apples-to-apples comparisons difficult. For Teva Pharmaceuticals' (Nasdaq: TEVA ) most recent quarter, it was more like comparing simple little apples with a big apple pie.
Year-over-year revenues for the third quarter rose only 4%, but the third quarter of last year was dominated by exclusive sales of generic versions of Merck's (NYSE: MRK ) Zocor, Pfizer's (NYSE: PFE ) Zoloft, Wyeth's (NYSE: WYE ) Effexor, and Bristol-Myers Squibb's (NYSE: BMY ) Pravachol. If you subtract out the $400 million bonus from the three largest products in the comparable 2006 quarter, sales climbed a much more impressive 25%.
That increase was driven by the launch of more than 25 new products this year, as well as a 24% year-over-year increase in Teva's branded multiple sclerosis (MS) drug Copaxone. The drug, which is marketed with Sanofi-Aventis (NYSE: SNY ) , has quietly become the U.S. market leader for treating MS, with competitors having demonstrated that the drug is more efficient than high-dose interferons in head-to-head trials.
The increase in branded sales is having a nice positive effect on gross margins, although they still dropped year over year because of the loss of the exclusive sales. Add to that an increase in selling, general, and administrative expenses as the branded sales require a larger sales force, and net income dropped 13% year over year. Not great, but at least the company saw it coming.
While this quarter didn't contain any major contribution from drugs from the coveted six-month exclusive sales period, Teva appears to have a few more apple-pie quarters in its future. The company believes that it has 43 first-to-file Abbreviated New Drug Applications (ANDAs) pending with the FDA. That should be enough for one serious bake sale.
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