Momenta Pharmaceuticals, Inc. (MNTA)

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As Teva's share price plunges to a 15-year low, Leader Capital Markets analyst Sabina Levy provides some perspective.

October 16 - Excerpts:

The fall in the price of Copaxone, Teva Pharmaceutical Industries Ltd.'s (NYSE: TEVA; TASE: TEVA) drug for treatment of multiple sclerosis, has been steeper than expected, and the company's battered share plunged further late last week. The share price ended the week's trading on Wall Street at under $15, a 15-year low, and reflecting a market cap of just over $15 billion.

Although Teva previously predicted that there would be no generic version of Copaxone on the market in 2017, the company added that should such competition materialize, it would decrease the company's fourth quarter profit per share by $0.20-0.25. When Mylan announced that it had received approval for its generic product, Teva said its profit would go down by $0.25 per share ($269 million). It now appears that the earlier estimates are liable to prove overly optimistic. Mylan launched its generic version of Copaxone at a 25-30% discount on the price of the original drug, and Teva quickly responded by cutting its prices.

Levy writes that the current estimates of the price erosion is double - 25-30%. According to her analysis, a 25% drop in the price and a 25% loss in market share will push Teva's profit per share down by $0.29, while a 30% drop in the price and a 30% loss in market share will cost Teva $0.33 per share in profit.

"What is happening is that the market is seeing more aggressive competition than it expected, and there is concern that the estimates for the fourth quarter will prove to be over-optimistic. The market is anxious about additional damage in the quarter, and of course we do not know what will happen in 2018. In any case, there is no doubt that these developments will have a further negative effect on Teva's results," she adds.

http://www.globes.co.il/en/article-teva-unlikely-to-remain-priced-below-mylan-1001207936