Buy Teva Pharmaceutical Industries Ltd (ADR) (TEVA) Only If You Are Willing to Wait

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has had good news over the last few days, which boosted the stock to all-time highs. Teva appointed Kare Schultz as its new CEO. Mr. Schultz has served as COO of Novo Nordisk. He is also famous for turning around H. Lundbeck, a Denmark-based pharmaceutical company. Schultz is known for successful restructuring operations. He turnaround Lundbeck when the company was facing hefty losses amid a steep decline in sales of its major products. Also, FDA approved New Drug Application for Teva’s TRISENOX in combination with ATRA for patients with promyelocytic leukemia. We believe that the stock will remain under pressure in the coming weeks. However, it’s an excellent investment for long term gains as a turnaround has practically started.

Investors also welcomed Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) decision to sell its Paragard contraceptive device business to CooperSurgical for $1.1 billion. Paragard is a device that is placed in the uterus to prevent pregnancy for up to 10 years. The device’s revenue in the 12-month period ending June 30 is $168 million. The deal immediately reduces Teva’s debt to $33.3 billion. The company is also open to selling the remaining parts of its women’s health business and oncology business. The company is eyeing to meet a target of $2 billion in asset sales by the end of 2017. However, it should be noted that after Paragard sale, the company will lose $168 million per annum revenue potential.

Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has been under pressure for quite a while now. Nearly half of the stock’s value has been lost since the start of 2017. Teva took a hit last month after Allergan announced that it plans to sell 10% of its stake in the company. Analysts think that Teva’s problems will continue as the company will suffer the incoming price reductions amid a pressure from FDA and increasing competition in the generic drugs industry.

Teva Pharmaceuticals has a huge debt load of $35 billion, most of which is the result of the company’s borrowing to fund its acquisition of Allergan’s generics business in 2016.

Last month, Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) posted a weak quarter and announced to cut its dividend by a whopping 75%. Much of the problems for Teva stem from the declining sales of its key drug, Copaxone. The drug is under pressure from Momenta’s (NASDAQ:MNTA) Glatopa and similar versions from Mylan and other companies. Teva’s other key drugs including Azilect and Nuvigil are also losing exclusivity. However, the company has about 330 products awaiting approval in the US and Europe, and 600 products awaiting approval in emerging markets. Analysts also expect growth from the recently approved Chorea and Austedo.