In an investor note, global ratings agency Standard and Poor’s (S&P) has placed Teva Pharmaceuticals on “creditwatch with negative implications,” meaning it is considering lowering the Israeli drugmaker’s BBB- corporate credit rating depending on upcoming earnings release.
“The CreditWatch reflects our belief that further downward revisions to our 2018 expectations are likely, as well as our view that Teva's business is more volatile and difficult to predict than we previously believed,” the note said.
Teva has had a turbulent time of late and has begun a global restructure of its operations in efforts to make $3bn in cost-savings in response to pressure from generic price erosions. This will include the closure of 20 to 25 API and drug manufacturing plants over the next two years.
But S&P also noted the increased threat from competition on Teva’s bestselling multiple sclerosis drug Copaxone (glatiramer acetate injection). The product has face generic competition in its 20 mg/mL version since Sandoz and Momenta Pharmaceuticals launched Glatopa in July 2015, and last year the US FDA approved a second generic, along with a 40mg/L version marketed by Mylan.
And now a second 40mg/L generic is on the verge of being launched after the US Food and Drug Administration (FDA) upgraded the facility where the fill and finish work for the generic takes place.
The Mcpherson, Kansas plant – operated by Pfizer’s contract manufacturing business CentreOne – received a warning letter in February 2017, delaying the regulatory approval of Glatopa 40mg/L. But an upgrade to Voluntary Action Indicated (VAI) has put the generic on track for launch in the first half of 2018, Momenta Pharmaceuticals last week.
“Based on these developments, we see significant risk that we will revise our 2018 and 2019 forecasts lower, and that our repeated downward revisions over the past 18 months are indicative of a business that is less stable and predictable than we previously believed,” S&P said.