Kåre Schultz, chief executive officer of Teva Pharmaceutical Industries.
Christopher Goodney/BloombergTeva Pharmaceutical Industries is among the largest global players in the generic-drug business, a sector that drew unprecedented investor interest last week when the U.S. government said it was considering a $765 million loan to Eastman Kodak to set up a domestic generic-drug-ingredient manufacturing business.
Effectively, there is no manufacturing in the U.S. of what are known as active pharmaceutical ingredients, and the possibility of Kodak (ticker: KODK) reinventing itself as a maker of those chemicals has thrilled investors. The shares jumped more than 200% on July 28, and more than 300% the next day. Circumstances of the announcement have reportedly sparked an investigation by the Securities and Exchange Commission.
In an interview on Wednesday, Teva CEO Kåre Schultz said that simply awarding a large loan doesn’t make the manufacturing of active pharmaceutical ingredients, or API, in the U.S. viable, given high labor costs, health, safety, and compliance costs.
“Getting a loan from the government to start manufacturing of course does not make it profitable or sustainable, unless those structural changes happen,” Schultz said. “We’ve been discussing with the government the changes that you could make, structural changes, by putting demands on other countries that would be similar to the demands in the U.S.…in which case it would be sustainable to do API manufacturing in the U.S.”
The bulk of the world’s active pharmaceutical ingredients come from India and China, an issue that drew a lot of attention in the early weeks of the Covid-19 pandemic as experts worried first that plant shutdowns in China would imperil the world’s drug supply, and later that foreign governments would ban the export of scarce ingredients.
Those weeks of worry appear to have sparked a new push to bring API manufacturing back to the U.S. Teva (ticker: TEVA) manufactures its own active pharmaceutical ingredients at plants spread around the world, including in Europe. Schultz said he would be happy to do more manufacturing in the U.S.
“We’d love to have it, but it has to be on sustainable economic terms, and borrowing money doesn’t really solve that issue,” he said.
Schultz spoke hours after Teva released its financial results for the second quarter of the year, slightly beating Wall Street expectations with earnings of 55 cents per share, 2 pennies better than the S&P Capital IQ consensus. The company’s American depositary receipts rose 7.4%, as Teva reaffirmed its guidance for the 2020 fiscal year, despite the pandemic. Teva shares are up 28.3% this year as the company tries to reverse a years-long slide. That far outstrips the 3% year-to-date gain for the S&P 500.
Some of that slide was attributable to worries over the litigation brought by local and state governments against Teva and other opioid manufacturers over their alleged role in the opioid crisis. Although those worries have faded from the headlines, the litigation remains unresolved. The company reached a deal last fall to settle the suits against it for $250 million in cash and $23 billion worth of drugs that are used to treat opioid addiction, but that deal hasn’t been finalized.
“Not much has happened,” Schultz said of the opioid litigation over the past few months. “We’ve had good collaboration with the [attorneys general]…We’ve been working on some language, some practicalities…But we haven’t really been pushed to a final conclusion.”
Schultz attributes that to the Covid-19 pandemic and to the postponement of a key opioid trial in New York. “I’m still very optimistic that it will happen in the end,” he said, but that the timeline remains difficult to predict.
As for the pandemic as a whole, Schultz said that the company has been able to avoid serious supply-chain disruptions. “We are very happy we’ve been able to show resilience and keep things moving during this rather challenging time. I think we’re in good shape.”
Write to Josh Nathan-Kazis at josh.nathan-kazis@barrons.com
"ingredients" - Google News
August 06, 2020 at 03:47AM
https://ift.tt/3i4mjkC
Teva CEO Has Doubts About Making Generic-Drug Ingredients in the U.S. - Barron's
"ingredients" - Google News
https://ift.tt/2Qstat1
Shoes Man Tutorial
Pos News Update
Meme Update
Korean Entertainment News
Japan News Update
Bagikan Berita Ini
0 Response to "Teva CEO Has Doubts About Making Generic-Drug Ingredients in the U.S. - Barron's"
Post a Comment