‘Price Erosion’: Teva Sells Assets to Settle Debt

The Israeli pharmaceutical company Teva has decided to sell its U.S. contraceptive business Paragard to the American subsidiary Cooper Companies for $1.1 billion as part of its efforts to reduce its massive debt.

This marks Teva’s first step towards the announced sale of non-core assets, with the proceeds, according to a statement released on Monday, to be used for repaying debt on loans.

The Israeli company, owner of the Croatian Pliva, has accumulated $35 billion in debt, and its stock value has halved since August when it reported weaker results in the second quarter due to “accelerated price erosion” in its U.S. generic drug business and “continued deterioration” in Venezuela.

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Excluding one-time items, Teva closed the second quarter with earnings per share of $1.02, compared to $1.25 in the same period last year. Their revenues increased by 13 percent to $5.7 billion, thanks to the acquisition of Actavis.

“Price Erosion”

They have also lowered their annual earnings estimate excluding one-time items from $4.90 to $5.30 per share to $4.30 to $4.50 per share due to expected further “price erosion” in the U.S. business.

Yesterday, they reported that they have decided to sell the manufacturing facility for intrauterine devices Paragard to the American subsidiary Cooper Companies. The facility is located in Buffalo, New York.

Cooper estimates the value of the U.S. intrauterine device market, known as IUDs, at $1 trillion, with growth rates of four to six percent.

Paragard generated approximately $168 million in revenue over the 12-month period ending in late June, according to Teva’s statement.

Teva notes that it will continue to manufacture and sell Paragard IUDs in the U.S. until the transaction is completed, which is expected by the end of the year.

They also emphasize that they continue to seek opportunities to sell parts of the business that do not fall within their core activities, including the remainder of assets in the women’s health segment, as well as their European business related to oncology and pain relief.

They expect to generate at least $2 billion from the sale of these assets, adding that their list of assets intended for sale is not yet exhausted.