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|July 29, 1999 10:24 a.m.|
|Teva Pharmaceutical Industries Ltd. announces 1999 second quarter and six month financial results; net income up 82%, sales of copaxone increase 92% VS. 1998 second quarter|
| Declares Regular Quarterly Cash Dividend |
Jerusalem, Israel, July 29, 1999 - Teva Pharmaceutical Industries Ltd. (NASDAQ: TEVIY) today reported financial results for the second quarter and six months ended June 30, 1999.
Reported net income for the second quarter ended June 30, 1999, rose 82% to $31.1 million, or $0.49 per ADR, as compared to $17.1 million, or $0.28 per ADR, reported for the second quarter of 1998. During the quarter, Teva's profit margin improved to 11% from 7% in the second quarter of 1998.
Total sales for the 1999 second quarter rose 19% to $293.7 million, compared to $247.1 million in the second quarter of 1998. An increase in the sales of Copaxone®, increased sales of Active Pharmaceutical Ingredients (API), and the inclusion of sales generated by Teva's Dutch subsidiary, Pharmachemie, whose results were not included in the comparative quarter last year, all contributed to the strong performance.
Net income for six months ended June 30, 1999, rose 41% to $59.4 million, or $0.95 per ADR, compared to $42.2 million, or $0.69 per ADR, in the comparative period last year. Sales for the first half of 1999 reached $581.4 million, as compared to $515.7 million, for the first six months of 1998, an increase of 13%.
In the second quarter 1999, global in market sales of Copaxone® are being reported for the first time in US$. Net in market sales of Copaxone® in the 1999 second quarter amounted to $38.1 million, compared to $19.8 million in the corresponding quarter last year, and $31.7 million in the first quarter of 1999, reflecting increases of 92% and 20%, respectively. Net in market sales for the first six months of 1999 totaled $69.7 million, compared to $33.4 million in the first six months of 1998, an increase of 109%. US sales account for 85% of total Copaxone® sales, with Europe representing the majority of the balance.
The sales figures include the same U.S. sales for the relevant period that were used in the calculation of the U.S. Index of Copaxone® sales, published by Teva to date. In the second quarter of 1999, the index reached 297, compared to 155 for the corresponding quarter last year, and 249 in the first quarter of 1999. The strong increase in Copaxone® sales in the first half of 1999 is indicative of market share growth in the US, as Copaxone®'s share of new prescriptions reached approximately 23%, accounting for 20% of total prescriptions, as reported by IMS.
Copaxone® sales are recorded in Teva's books at the transfer price to Hoechst Marion Roussel and others.
In May 1999, Copaxone® was granted its first Western European approval for marketing clearance in Switzerland. Teva now has approvals for Copaxone® in 14 countries and is awaiting additional marketing approvals in Europe.
The following table analyzes total group sales by geographical area.
Pharmaceutical sales in the second quarter of 1999, which represent about 83% of Teva's total sales, grew 21% from the comparable period last year to $244.8 million.
Sales in North America during the second quarter of 1999, were $112.1 million, 16% higher than the comparable quarter of 1998, accounting for 46% of total pharmaceutical sales. This increase is attributable to higher Copaxone® sales, as well as stronger generic sales, in contrast to an especially slow quarter a year ago.
At the end of the second quarter of 1999, Biovail received tentative approval from the FDA to manufacture and market Nifedipine CC 30mg and 60mg, the generic version of Adalat® CC, produced by Bayer Corporation. Current annual sales of Adalat CC are estimated at $357 million. Teva has an exclusive US distribution agreement with Biovail for a number of generic products utilizing controlled release technology. The market introduction of Nifedipine CC's two strengths will depend upon the settlement of legal and patent issues. Pursuant to FDA regulations, the Company will be entitled to 180 days of marketing exclusivity on the 60mg dosage. The thirty month period for this dosage should end October 2000, but the Company hopes to be able to start marketing the product earlier.
During the second quarter, Teva started to market Verapamil, the generic form of Verelan®, which is also included in the Biovail-Teva agreement. Verapamil addresses a $90 million market.
In July, Teva received tentative approval from the FDA to manufacture and market Sotalol, the generic version of Betapace®, prescribed for the treatment of anti-arrhythmia. The estimated innovator market is $110 million and market exclusivity is due to expire in October 1999.
Teva currently has 20 products -- 14 of its own filings and 6 of Biovail's -- awaiting FDA approval, certain products, several of which are significant, should enjoy a 180 day marketing exclusivity consequent upon being the first to file an ANDA. Collectively, the innovative product markets of these 20 generic submissions have estimated annual sales of approximately $7 billion.
Pharmaceutical sales in Europe, representing 29% of Teva's total pharmaceutical sales this quarter, grew to $72.2 million , an increase of 84% compared to the second quarter of 1998. Excluding Pharmachemie's sales, which were not included in the comparable quarter last year, the increase in sales would be 19%, mainly due to higher sales recorded by Teva's United Kingdom subsidiary APS/Berk.
Pharmaceutical sales in Israel declined 6% from the second quarter of 1998 to $52.5 million, representing approximately 21% of total pharmaceutical sales. The primary reason for this decrease was an 11% devaluation of the Israeli Shekel between quarters. This decline was partially offset by price increases and unit growth of certain products, although this growth was negatively affected by a decrease in inventory levels of the General Health Fund.
Active Pharmaceutical Ingredients (API) sales for the second quarter of 1999 grew 15% over the comparable quarter of 1998, to $43.1 million. In addition, the API division manufactured $27.5 million of raw materials for Teva's pharmaceutical division, which represented an increase of 25% over the $22.0 million recorded in the comparative quarter of 1998.
The consolidated gross profit margin reached 41.1% in the second quarter of 1999, a substantial increase over the 35.9% margin achieved in the second quarter of 1998. Increased sales of Copaxone®, which carry higher margins, typical of innovative products, along with improved API margins, as well as increasing cost savings arising from the rationalization program initiated last year, were the primary contributors to this increase.
Gross R&D expenses in the second quarter of 1999 amounted to $22.3 million, an increase of 22% compared to the same quarter in 1998. The increase of R&D expenses reflects higher generic R&D expenses for the US, increased innovative R&D expenses and the inclusion of Pharmachemie's R&D expenses. Net R&D expenses totaled $21.3 million, 31% higher than comparable quarter last year. The increase reflects a decrease in grants received from Israel's Office of the Chief Scientist (OCS).
SG&A expenses totaled $54.8 million in the reported quarter, as compared with $48.9 million in second quarter 1998, an increase of 12%. This increase mainly reflects the inclusion of Pharmachemie, including the amortization of goodwill arising from its acquisition last year. Despite the increased costs, SG&A as percentage of sales declined to approximately 18.7%, as compared to 19.8% in the comparable quarter last year.
The tax rate for the second quarter of 1999 was 25%, as compared with 23% in second quarter of 1998.
The Company's global rationalization program continues to proceed according to plan both in Israel and abroad. During the quarter, Biogal, Teva's Hungarian subsidiary continued to absorb the production lines of the APS/BERK's UK facility. The sterile oncological production is being consolidated at Pharmachemie in Holland. Both the Haarlem and the Jerusalem plants are also continuing to absorb the production transferred from the Zaandam plant in Holland, subsequent to its sale. The globalization program has contributed positively to the second quarter of 1999, and Teva expects to see further contribution to the bottom line in coming quarters.
The Company has declared its regular second quarter cash dividend for 1999 of NIS 0.30 (approximately 0.07 cents) per ADR. The record date for this dividend will be August 23, 1999, and the payment date September 6, 1999. Tax at the rate of 25% will be deducted at source.
Teva Pharmaceutical Industries Ltd., is Israel's largest pharmaceutical company, with 80% of its sales outside Israel, mainly in the United States. The Company develops, manufactures, and markets generic and branded human pharmaceuticals, active pharmaceutical ingredients, medical disposables and veterinary products.
Safe Harbor Statement: This release contains forward-looking statements which express the beliefs and expectations of management. Such statements are based on current expectations and involve a number of known and unknown risks and uncertainties that could cause the Company's future results, performance or achievements to differ significantly from the results, performance or achievements expressed or implied by such forward-looking statements. Important factors that could cause or contribute to such differences include the impact of pharmaceutical industry regulation, the difficulty of predicting FDA and other regulatory authority approvals, the regulatory environment and changes in the health policies and structure of various countries, acceptance and demand for new pharmaceutical products and new therapies, the impact of competitive products and pricing, the availability and pricing of ingredients used in the manufacture of pharmaceutical products, uncertainties regarding market acceptance of innovative products newly launched , currently being sold or in development , the impact of restructuring of clients , reliance on strategic alliances , fluctuations in currency, exchange and interest rates , operating results , the impact of the year 2000 issue and other factors that are discussed in the Company's Annual Report on Form 20-F and the Company's other filings with the US Securities and Exchange Commission.