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Teva's Mixed Bag

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Not bad, Teva Pharmaceuticals (Nasdaq: TEVA  ) , not bad at all. The generic drug giant saw sales grow 12% year over year in the first quarter, despite a 32% drop in U.S. generic drug sales.

Because of the nature of the U.S. generics market, launches of new generic drugs tend to bring in a lot more revenue than generic drugs that have been on the market for a while. Without many launches over the past year, Teva's seen the U.S. generic drug sales crumble.

Fortunately, Teva purchased Ratiopharm at just the right time. The generic drug additions in Germany, France, Spain, and Italy helped propel European sales up 66%. Organic growth in Europe was a measly 3%.

Copaxone, a branded multiple sclerosis product, also helped save the revenue line. Sales were up 14%, which sounds impressive until you realize the company increased the U.S. price by 15% in January. On one hand, it's great that the company can take price increases -- three in the last 13 months -- even in the face of competition from oral offering Gilenya from Novartis (NYSE: NVS  ) and injectable medications such as Biogen Idec's (Nasdaq: BIIB  ) Avonex and Rebif, which is sold by Merck KGaA and Pfizer (NYSE: PFE  ) . But how long can it keep the price increases going?

Maybe it won't really matter. By the time Copaxone slows down, the U.S. generic sales will pick up again. And Teva will have additional branded products coming in thanks to its purchase of Cephalon (Nasdaq: CEPH  ) and over-the-counter products through its partnership with Procter & Gamble (NYSE: PG  ) .

That's the joy of diversification and what makes Teva a solid play. You're not going to get overnight doubles like you would from a biotech, but it should provide a lot more growth than you'll get from a big pharma.

Keep track of Teva. Click here to add it to My Watchlist, which will help you keep track of all our Foolish analysis on Teva.

Pfizer is a Motley Fool Inside Value selection. Novartis and Teva are Motley Fool Global Gains picks. Procter & Gamble is a Motley Fool Income Investor selection. The Fool owns shares of Teva. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. The Motley Fool has a disclosure policy.

Read/Post Comments (4) | Recommend This Article (7)

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  • Report this Comment On May 12, 2011, at 3:32 PM, gabbigirl wrote:

    Been long TEVA since 4/10 when I purchased @ $63.00. It's been beaten down for no good reason. Still holding and staying long.

  • Report this Comment On May 12, 2011, at 4:03 PM, Maximizese wrote:

    I've been holding too for the same time period, which I bought with my IRA contribution. I've since added to my position four times in $600 increments. My average cost is $54.32. I thought TEVA would profit from healthcare form. We'll see where it moves from here.

  • Report this Comment On May 12, 2011, at 5:53 PM, energysystems wrote:

    I'm long TEVA. Buying on dips below 50$, most recently added to my IRA literally the day before the big drop on the Biogen oral ms results(I believe I bought at 48.50ish). But this is a strong company, personally I'm thrilled with the idea that P&G/Teva came up with, and that will pay immensely in the future. It's been beaten down, but with the growth it has had over the past decade(and I believe it will continue), this stock is a steal right now. If there is another bump in the road, I'll again add to my position.

  • Report this Comment On May 13, 2011, at 4:28 AM, louchios50 wrote:

    Bought in at 46.14 when MF said it was gonna pop, thanks MF.

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