For a company that was supposedly in serious trouble not long ago, Teva
For the second quarter, Teva reported that sales jumped 77% to more than $2 billion. Though that figure was above expectations, what really stood out was the 53.9% gross margin (55.4% if you make certain adjustments) and the growth from last year's 47.4% level. When all was said and done, this Israeli generics giant produced profits more than double the year-ago level.
When it comes to what went right, take your pick. Copaxone sales were up 22% and the company still has about one-third of the MS market. Moreover, the introductions of simvastatin (the generic of Merck's
Looking on ahead, I have a hard time seeing how Teva wouldn't continue to succeed. The reintroduction of Elan's
Moreover, for all of the talk about more aggressive competition from Big Pharma, Teva still has a few aces up its sleeve. First, it has a huge pipeline with 148 applications on file at the FDA. Second, I just don't believe that the U.S. government is going to let pharmaceutical companies push generics companies around too much. Say what you will about free markets and capitalist competition, but the government has a vested monetary (and voting) interest in making sure that cheaper generics are available.
Investors who bought on the recent downswing are already sitting pretty, but there's no reason to sell out now. After all, if economic times get tougher, this is a good place to be -- health care is an evergreen market, especially when you offer lower-cost treatment alternatives.
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Fool contributor Stephen Simpson has no financial interest in any stocks mentioned (that means he's neither long nor short the shares).