Image source: Teva Pharmaceutical.

What: Shares of Teva Pharmaceutical Industries (NYSE:TEVA), a developer of innovative and generic therapies, sank 11% in February, based on data from S&P Global Market Intelligence. The reason for the drop can be found in the company's fourth-quarter earnings release.

So what: For the fourth quarter, Teva announced $4.9 billion in revenue, down 6% from the prior-year period. However, 5% of the reduction was due to adverse currency fluctuations, meaning on an apples-to-apples basis, Teva's sales fell by 1% from Q4 2014 to Q4 2015. Not surprisingly, adjusted net income dipped 1% as well to $1.1 billion. On an adjusted basis, it reported a profit of $1.28 per share, but Wall Street had been looking for $1.29 in EPS for Q4.

Image source: Teva Pharmaceutical.

However, it wasn't just Teva's $0.01-per-share EPS miss that unnerved the Street. A substantial slump in sales of blockbuster multiple sclerosis injection Copaxone weighed on results. With analysts expecting north of $1 billion in Copaxone sales in Q4, Teva announced just $960 million -- a decline of 14% from the $1.12 billion in sales reported in Q4 2014. As a refresher, the emergence of generic Copaxone has threatened Teva's most important revenue driver, so Teva has been busy pushing physicians and patients to use its new extended-release formulation, Copaxone XR. Based on this sales data, it would suggest some hiccups are being experienced in this transition.

Now what: Despite suffering through a rough month, Teva Pharmaceutical shareholders do have a lot to look forward to.

For instance, Teva is in the process of acquiring Allergan's generic business for $40.5 billion. Teva is already a generic drug giant, but bringing in Allergan's product portfolio will make it the clear No. 1 supplier of generic therapies in the world. Generic drugs may not have the best margins, but drug developers like Teva can make up for that based on sheer volume as generic use increases (especially in the United States).

Last month, Teva announced concessions in the EU amounting to about $1 billion in asset sales in the EU, U.S., and the Middle East. These concessions are expected to appease regulators and allow its purchase of Allergan's generic business to close. Although the closing of the deal may be delayed, as noted by Teva's management during its conference call, the sheer fact that Teva and regulators may be getting on the same page is great news for the long term.

Teva is also sporting a burgeoning innovative drug portfolio that could boost its margins. Sporting a projected P/E in 2016 of just 10 and expected to deliver above $7 in EPS by 2019, I'd suggest this drop in Teva's stock could be a blessing in disguise.

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