Transcript Slide 1
Teva Pharmaceuticals Garrett Hoffman S Agenda S Company Overview S Drivers and Trends S Valuation S Recommendation S WOOF Discusion Company Overview S Industry: Pharmaceuticals S Market Cap : $45.63 billion S 2009 Revenue: $14.8 billion S 2009 Earnings: $2.5 billion S Number of generic drugs: >400 in US with >200 awaiting approval, >150 in Europe with >240 awaiting approval Company Overview S No. 1 Generic-Drug maker S Filled 599 million prescriptions in 2009, 22% of generic prescriptions written S Also makes brand name drugs such as, Copaxone (Multi Sclerosis) and Azilect (Parkinson’s) Revenue by Product Line Sales By Channel Revenue by Geography Company Overview S Acquisitions S Acquired Ivax Pharmacueticals in 2006 S Acquired rival generic drug manufacturer Barr Pharmaceuticals second half of 2008 S Acquired Ratiopharm in August 2010 becoming the largest generic manufacturer in Europe S Acquired Merck KGaA’s women’s health unit Theramax in October 2010 Industry Drivers S Health care reform S More people will have access to healthcare S More money will be spent on healthcare S Healthcare insurers often force consumers to use generic drugs vs. brand name drugs as a means to cut costs S Women’s Healthcare reform under Obamacare Industry Drivers S “Patent Cliff ” S Biggest brand named drugs are losing patents Company Drug – 2009 Revenue Patent Cliff Ell Lilly Gemzer - $1.4 billion Zyprexa - $4.9 billion Cymbalta - $3.1 billion Nov. 2010 Oct. 2011 2013 Pfizer Lipitor - $11.4 billion Xalatan - $1.7 billion Viagra - $1.9 billion 2010 2011 2012 Merck Cozaar/Hyzaar - $3.6 billion Singulair - $4.7 billion 2010 2012 Teva Drivers S Teva has already launched generic versions of Cozaar/Hyzaar S Has resources and capabilities to be first to file applications for generic versions of these drugs S First to file application gets a 180 day window of being only generic supplier S FDA study showed first generic-drug competitor averages about 94% of full branded price, when two generics in market average about 52%, with five generics in market average 33% Teva Drivers S Looking to expand other lines of business S Women’s Health S Recent acquisition of Merck’s Theramax S Respiratory S Waiting for approval on 10 drugs, 6 completely new brands, by 2015 S Expect to see revenues up to $2.4 billion in 2015 Risks S Lose Copaxone Patent in 2014 S Litigation and Lawsuits S Unpredictable political atmosphere in Israel Financials 2010 thus far Basic Chart Competition TEVA Market Cap Mylan, Inc. (MYL) Watson Pharmaceuticals Pfizer Inc. (WPI) (PFE) Industry $45.63B $6.27B $6.29B $139.71B $7B 18.05 28.02 22.88 16.46 24.4 Operating Margin 27.05% 15.20% 15.97% 32.42% N/A ROE 13.76% 11.05% 9.07% 10.88% 9.9% Div Yield 1.40% N/A N/A 3.10% 0% P/E DCF Value of Operating Business 67,578,620 Add: Cash 1,995,000 Less: Debt 7,017,000 Equity Value Common Shares Outstanding 62,556,620 898,000 Implies Fair Value Per Share 69.66 Current Share Price 50.81 Undervalue by 37.10% Summary Winner Recommendation S Purchased 200 shares purchased at $56.33 October 3, 2009 S Recommendation: Average down. Purchase 100 shares at $50.81, increasing position by $5,081 WOOF - VCA Antech, Inc. S Industry: Animal Health Care S Market Cap: $1.82B S 2009 Rev: $1.3B S 2009 Earnings: $131M WOOF - VCA Antech, Inc. S Animal Hospitals segment operates animal hospitals, which offer a range of general medical and surgical services S Laboratory segment operates veterinary diagnostic laboratories that provide testing and consulting services in the detection, diagnosis, and prevention S Medical Technology segment sells digital radiography and ultrasound imaging equipment; and offers related computer hardware Financials 2010 thus far WOOF - VCA Antech, Inc. S SIF purchased 100 shares at $28.70 S Currently trading at $20.95 S Average price target about $22.50 S Recommendation: Close position on WOOF and use proceeds of sale towards Averaging down on TEVA.