Teva Is Quick Out of the Gate

06/04/2010 4:22 pm EST

Focus: STOCKS

Jim Jubak

Founder and Editor, JubakPicks.com

It’s a busy month for drug announcements at Teva Pharmaceutical Industries (Nasdaq: TEVA), with news on Copaxone, Azilect, and Gianvi—and it’s only June 4.

Of these, Gianvi is the biggie—at least for now.

The drug is a generic version of Bayer’s (OTC: BAYRY) oral contraceptive, Yaz. Sales of Yaz came to $780 million in 2009. The contraceptive has been especially popular among younger women, since taking it produces less water retention than some other contraceptives and works to reduce acne.

But sales of Yaz have dropped recently to an annual rate of about $600 million as Bayer has cut back on advertising and promotion. (Bayer’s newest contraceptive Natazia was approved for sale in May.)

Teva’s launch of Gianvi comes about 13 months ahead of schedule (Wall Street was expecting a 2011 launch), and because Teva is first to file for generic rights, the company will get 180 days of marketing exclusivity.

Gianvi will add about ten cents a share to annual earnings at Teva and with some of that already in the price, I’d estimate, I don’t see any reason to raise my target price of $66 a share by October 2010. (It traded above $53 late Thursday—Editor.)

This kind of quick-to-market approach represented by the launch of Gianvi should remind us why Teva is the generic stock in Jubak’s Picks. (For more on generics and the increasing importance of emerging economies to drug makers, see this post.)  

Full disclosure: I own shares of Teva Pharmaceutical Industries in my personal portfolio.

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