ANI Pharmaceuticals (ANIP)

[nutsyprofessor]

El Principe,

Go to this TEVA link blow:
http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-reportsAnnual

Look for the Excel document about half way down the page called "Historic Sales by Branded Products", open it up and you will see that TEVA's generics have been steadily declining: 2011 Y/Y growth of 3%; 2012 Y/Y growth of 2%; and after 3 quarters in 2013 the Y/Y growth is 0%.

That's why TEVA is dumping these generics and they will probably continue to unload some others. NOTE: keep in mind these are SALES figures, NOT, net profit figures!

But just for the sake of argument and to not be totally negative here, go to this TEVA link

http://www.tevapharm.com/Products/Pages/default.aspx

You will note under the section called, "Generic Products", TEVA claims to have approximately 20% of the generic market in the US. If we now assume that TEVA had 20% of the $860 million market that would be equivalent to about $172 million market for these 31 generics. However, we know that TEVA will get royalties and so if we use a reasonable 25% royalties goes to TEVA, leaves a market of $129 million as the BEST CASE scenario of market share to ANIP.

I say that this is best case because we are assuming that TEVA had 20% of the market for these 31 generics but in reality it was probably a bit lower as my assumption is that TEVA would unload its lower market share generics while keeping the higher market share generics. A more reasonable estimate would probably be 10%-20% and after removing the 25% royalty would leave ANIP with an estimated peak revenue of $64 million to $129 million before costs, taxes, etc.

Now, the fact that TEVA's latest 2013 Y/Y sales growth for generics was 0% means these products are probably stagnant and there's no more growth left in them. Also, keep in mind that generics are much less profitable than branded drugs and so it is likely that these specific generic products were probably amongst TEVA's lowest profitable generics.

This is all imo but I think this is a reasonable analysis and we haven't even talked about the amount of funding that ANIP will need to get all 31 generics out the door!