Shares of Teva are fluctuating after a report from Bloomberg that the company is considering a sale of its active ingredients business. Yahoo Finance Healthcare Reporter Anjalee Khemlani breaks down the story.
Video Transcript
DIANE KING HALL: We're also keeping an eye on shares of Teva this morning. That stock kind of fluctuating a little bit this morning, dipping just 2/10 of a percent. This after the pharma company considering options for a possible sale of its active ingredients business according to Bloomberg. The deal could value its business at about $2 billion. Yahoo Finance's Anjalee Khemlani has the details. Hi, Anj.
ANJALEE KHEMLANI: Hey, Diane. That's right. Teva, an interesting story this morning with the report of the potential sale of the unit. What that covers really is about 400 APIs or active ingredients for the company. And that is an interesting part of the business, which is profitable. The company is already facing so much debt, so this could be a way to kind of leverage all of that. They're facing about $20 billion in debt, including let's not forget that $4 billion in the opioid settlements around the country.
Now what's going on with Teva though, is a little bit of an interesting story because for a long time, it's been known as this generic company. So if it does sell that unit and starts to focus more on innovation, it would kind of switch what the company profile looks like a little bit. But it's following suit of what we're seeing really in the pharma industry.
The industry right now facing pressures from a number of directions, including inflation, of course, but also the Inflation Reduction Act and things that came from there, including Medicare drug pricing as well as penalties for increasing prices. That means that these companies are really looking for more M&A activity to kind of boost their pipeline. They're also facing patent cliffs for some of their blockbusters. Teva has already gone through that.
And so this move could be one of those that kind of helps it fall in line and follow suit in what's going on broadly in the industry. The industry has kind of bucked the trend of slowing deals in the past couple of years. 2021, a record year. Of course, fueled a little bit by the pandemic and interest in the health care sector.
But there has been a little bit of slowdown last year. But there's been forecasts that the industry is not going to necessarily fall in line with the rest of the economy and slow down as much. And just a quick note, Teva upgraded from sell to neutral by this morning on the news of this potential sale, so probably an upside there for the company.
BRAD SMITH: All right, Yahoo Finance's own Anjalee Khemlani. Thanks for breaking that story down for us this morning. Appreciate it, Anj.
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Teva considers sale of its active ingredients unit: Bloomberg - Yahoo Finance
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