Jones Lang LaSalle
Teva Reports Record Sales and Net Income for the Fourth Quarter and Full Year 2005
JERUSALEM, Israel, February 28, 2006 - Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported financial results for the fourth quarter and full year ended December 31, 2005.
Net income for the fourth quarter of 2005 was $305 million or $0.45 per share, an increase of 9% and 10%, respectively, over the same period in 2004. For the full year of 2005, net income was $1,072 million or $1.59 per share. On a standard U.S. GAAP basis, after taking into account certain charges in 2004 relating principally to the acquisition of Sicor, 2005 net income and net income per share increased 223% and 218%, respectively, over 2004. Excluding such charges from 2004, 2005 net income and net income per share increased 11% and 12%, respectively, over the full year of 2004. Teva believes that excluding the 2004 items represents a better indicator of the underlying trends in the Company's operations.
Net Sales for the fourth quarter of 2005 increased 6% over the comparable quarter last year to $1,401 million. For the full year of 2005, net sales reached $5.3 billion, an increase of 9% over 2004.
Israel Makov, Teva's President and CEO, commented: "I am proud to report that 2005 was a challenging year for our industry was was an excellent year for Teva. In fact, it was a record-breaking year for us, not only financially, but strategically as well. We enhanced our leadership both in the global generics industry overall, and in many specific markets around the world. And our innovative product Copaxone? became the leading therapy for multiple sclerosis in the U.S."
Mr. Makov added, "Our acquisition of Ivax will allow us to achieve even more, both financially and strategically. And as our global teams work hard to integrate Ivax into the Teva family, we are becoming even more excited about the unique role we believe Teva can play in the transforming health-care industry."
North American pharmaceutical sales (including Copaxone? accounted for 62% of the Company's fourth quarter 2005 total pharmaceutical sales, reaching $776 million. A combination of higher Copaxone? sales and newly launched generic products, including Azithromycin and Fexofenadine, more than offset erosion of Teva's base business during the quarter. North America generic revenue quarter over quarter remained essentially flat.
Teva's U.S. generic pipeline, including products acquired through the Ivax acquisition, is currently comprised of 160 product applications (including 38 tentative approvals) relating to products with total annual brand sales exceeding $94 billion. Of these product applications, 88 were submitted under Paragraph IV. Teva believes that 49 of these Paragraph IV filings, with total annual brand sales exceeding $37 billion, may be "first to file", thereby potentially providing Teva with periods of exclusivity.
Pharmaceutical sales in Europe accounted for 28% of the Company's fourth quarter 2005 total pharmaceutical sales and increased 13% over the comparable quarter of 2004 to $360 million. This increase was primarily due to sales of products that were not sold in the comparable quarter, including Alendronate in the U.K. and The Netherlands, as well as some newly launched products in the U.K. such as Lansoprazole and Sertraline and higher Copaxone? sales.
Global in-market sales of Copaxone? reached $323 million in the fourth quarter, an increase of 24% over the comparable quarter of 2004. For the full year of 2005, global in-market sales of Copaxone? reached $1,176 million, an increase of 26% over 2004. U.S. in-market sales in the fourth quarter of 2005 increased 26% over the fourth quarter of 2004 to $220 million. For the full year of 2005, U.S. Copaxone? sales increased 25% to $782 million compared to 2004.
According to IMS data, Copaxone? continued to strengthen its position in the U.S. as market leader reaching an all-time record of 34.3% in TRx share and 35.2% in NRx share in December 2005.
For the fourth quarter of 2005, in-market sales of Copaxone? outside the U.S., mainly in Europe, increased by 19% over the comparable quarter of 2004, to $103 million. For the entire year, sales outside the U.S. increased by 27% to $394 million.
Azilect?- During the fourth quarter, Azilect? was introduced in Norway and Poland, raising to eight the number of EU countries in which the product is now available. In the U.S., Teva continues to work with the FDA to resolve the remaining issues regarding final marketing approval of Azilect? in the United States.
API sales, including internal sales to Teva's pharmaceutical businesses, in the fourth quarter totaled $295 million, an increase of 20% from the fourth quarter of 2004. Sales to third parties amounted to $141 million in the fourth quarter of 2005, an increase of 24% over the comparable quarter of 2004.
Teva's gross profit margin reached 48.3% for the fourth quarter of 2005 and 47.2% for the full year of 2005, as compared to 46.6% in the fourth quarter of 2004. The quarter to quarter variation reflects new product launches, higher Copaxone? sales and a different product mix.
Gross Research and Development (R&D) expenses for the fourth quarter reached $102 million or 7% of sales, and grew by 4% over the comparable quarter of 2004.
Net R&D expenses (after participations) represented 7% of net sales for the fourth quarter of 2005, and grew 6% over same period in 2004. The increases in R&D expenditures quarter over quarter primarily reflected increased innovative R&D activities.
Selling, General and Administrative (SG&A) expenses amounted to $218 million, representing 15.5% of net sales.
Teva's Financial Expenses during the fourth quarter amounted to approximately $10 million, compared to $17 million of financial income in the comparable quarter resulting primarily from hedging activities.
The tax rate provided for the full year 2005 was 18% compared with an annual estimated tax rate of 19.6 % provided three months ago. Most of the adjustments made in the fourth quarter for the annual tax rate actually resulted from the quarter's product and geographical mix. Thus, the tax rate provided in the fourth quarter was 13.7%.
Cash flow generated from operating activities for the fourth quarter of 2005 amounted to $259 million. Cash flow generated from operating activities for full year of 2005 amounted to $1,370 million compared to $1,249 million generated in the full year of 2004.
Shareholders' Equity at December 31, 2005 reached exceeded $6 billion, an increase of $475 million from September 30, 2005. This increase mainly reflects net income for the quarter and share issuances upon conversion of debentures, offset by dividends paid during the quarter.
Share Count - As of the fourth quarter of 2005, the share count for the fully diluted EPS calculation was 682 million shares. Going forward, for the purpose of calculation of Teva's market capitalization the share count is currently 753 million shares.
Dividend
The Board of Directors, at its meeting on February 27, 2006, declared a cash dividend for the fourth quarter of 2005 of NIS 0.34 (approx. $ 0.07 according to the rate of exchange on February 27, 2006) per ADR, an increase of 12% over the previous quarter. The record date will be March 8, 2006, and the payment date will be March 23, 2006. Tax will be withheld at a rate of 17%.
Conference Call
Teva will host a conference call to discuss the Company's full year results on Tuesday, February 28, 2006 at 08:30 a.m. EST. The call will be webcast and can be accessed through the Company's website at www.tevapharm.com. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's website. Alternatively, a replay of the call can be accessed until March 7, 2006, midnight (EST) by calling ++1-(877)-660-6853 in the U.S. or 1- (201)-612-7415 outside the U.S. The account number is: 3055, and the access code to access the replay is 191430.
Teva Pharmaceutical Industries Ltd., headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. Close to 90% of Teva's sales are in North America and Europe.
Teva Reports Record Sales and Net Income for the Fourth Quarter and Full Year 2005
JERUSALEM, Israel, February 28, 2006 - Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA) today reported financial results for the fourth quarter and full year ended December 31, 2005.
Net income for the fourth quarter of 2005 was $305 million or $0.45 per share, an increase of 9% and 10%, respectively, over the same period in 2004. For the full year of 2005, net income was $1,072 million or $1.59 per share. On a standard U.S. GAAP basis, after taking into account certain charges in 2004 relating principally to the acquisition of Sicor, 2005 net income and net income per share increased 223% and 218%, respectively, over 2004. Excluding such charges from 2004, 2005 net income and net income per share increased 11% and 12%, respectively, over the full year of 2004. Teva believes that excluding the 2004 items represents a better indicator of the underlying trends in the Company's operations.
Net Sales for the fourth quarter of 2005 increased 6% over the comparable quarter last year to $1,401 million. For the full year of 2005, net sales reached $5.3 billion, an increase of 9% over 2004.
Israel Makov, Teva's President and CEO, commented: "I am proud to report that 2005 was a challenging year for our industry was was an excellent year for Teva. In fact, it was a record-breaking year for us, not only financially, but strategically as well. We enhanced our leadership both in the global generics industry overall, and in many specific markets around the world. And our innovative product Copaxone? became the leading therapy for multiple sclerosis in the U.S."
Mr. Makov added, "Our acquisition of Ivax will allow us to achieve even more, both financially and strategically. And as our global teams work hard to integrate Ivax into the Teva family, we are becoming even more excited about the unique role we believe Teva can play in the transforming health-care industry."
North American pharmaceutical sales (including Copaxone? accounted for 62% of the Company's fourth quarter 2005 total pharmaceutical sales, reaching $776 million. A combination of higher Copaxone? sales and newly launched generic products, including Azithromycin and Fexofenadine, more than offset erosion of Teva's base business during the quarter. North America generic revenue quarter over quarter remained essentially flat.
Teva's U.S. generic pipeline, including products acquired through the Ivax acquisition, is currently comprised of 160 product applications (including 38 tentative approvals) relating to products with total annual brand sales exceeding $94 billion. Of these product applications, 88 were submitted under Paragraph IV. Teva believes that 49 of these Paragraph IV filings, with total annual brand sales exceeding $37 billion, may be "first to file", thereby potentially providing Teva with periods of exclusivity.
Pharmaceutical sales in Europe accounted for 28% of the Company's fourth quarter 2005 total pharmaceutical sales and increased 13% over the comparable quarter of 2004 to $360 million. This increase was primarily due to sales of products that were not sold in the comparable quarter, including Alendronate in the U.K. and The Netherlands, as well as some newly launched products in the U.K. such as Lansoprazole and Sertraline and higher Copaxone? sales.
Global in-market sales of Copaxone? reached $323 million in the fourth quarter, an increase of 24% over the comparable quarter of 2004. For the full year of 2005, global in-market sales of Copaxone? reached $1,176 million, an increase of 26% over 2004. U.S. in-market sales in the fourth quarter of 2005 increased 26% over the fourth quarter of 2004 to $220 million. For the full year of 2005, U.S. Copaxone? sales increased 25% to $782 million compared to 2004.
According to IMS data, Copaxone? continued to strengthen its position in the U.S. as market leader reaching an all-time record of 34.3% in TRx share and 35.2% in NRx share in December 2005.
For the fourth quarter of 2005, in-market sales of Copaxone? outside the U.S., mainly in Europe, increased by 19% over the comparable quarter of 2004, to $103 million. For the entire year, sales outside the U.S. increased by 27% to $394 million.
Azilect?- During the fourth quarter, Azilect? was introduced in Norway and Poland, raising to eight the number of EU countries in which the product is now available. In the U.S., Teva continues to work with the FDA to resolve the remaining issues regarding final marketing approval of Azilect? in the United States.
API sales, including internal sales to Teva's pharmaceutical businesses, in the fourth quarter totaled $295 million, an increase of 20% from the fourth quarter of 2004. Sales to third parties amounted to $141 million in the fourth quarter of 2005, an increase of 24% over the comparable quarter of 2004.
Teva's gross profit margin reached 48.3% for the fourth quarter of 2005 and 47.2% for the full year of 2005, as compared to 46.6% in the fourth quarter of 2004. The quarter to quarter variation reflects new product launches, higher Copaxone? sales and a different product mix.
Gross Research and Development (R&D) expenses for the fourth quarter reached $102 million or 7% of sales, and grew by 4% over the comparable quarter of 2004.
Net R&D expenses (after participations) represented 7% of net sales for the fourth quarter of 2005, and grew 6% over same period in 2004. The increases in R&D expenditures quarter over quarter primarily reflected increased innovative R&D activities.
Selling, General and Administrative (SG&A) expenses amounted to $218 million, representing 15.5% of net sales.
Teva's Financial Expenses during the fourth quarter amounted to approximately $10 million, compared to $17 million of financial income in the comparable quarter resulting primarily from hedging activities.
The tax rate provided for the full year 2005 was 18% compared with an annual estimated tax rate of 19.6 % provided three months ago. Most of the adjustments made in the fourth quarter for the annual tax rate actually resulted from the quarter's product and geographical mix. Thus, the tax rate provided in the fourth quarter was 13.7%.
Cash flow generated from operating activities for the fourth quarter of 2005 amounted to $259 million. Cash flow generated from operating activities for full year of 2005 amounted to $1,370 million compared to $1,249 million generated in the full year of 2004.
Shareholders' Equity at December 31, 2005 reached exceeded $6 billion, an increase of $475 million from September 30, 2005. This increase mainly reflects net income for the quarter and share issuances upon conversion of debentures, offset by dividends paid during the quarter.
Share Count - As of the fourth quarter of 2005, the share count for the fully diluted EPS calculation was 682 million shares. Going forward, for the purpose of calculation of Teva's market capitalization the share count is currently 753 million shares.
Dividend
The Board of Directors, at its meeting on February 27, 2006, declared a cash dividend for the fourth quarter of 2005 of NIS 0.34 (approx. $ 0.07 according to the rate of exchange on February 27, 2006) per ADR, an increase of 12% over the previous quarter. The record date will be March 8, 2006, and the payment date will be March 23, 2006. Tax will be withheld at a rate of 17%.
Conference Call
Teva will host a conference call to discuss the Company's full year results on Tuesday, February 28, 2006 at 08:30 a.m. EST. The call will be webcast and can be accessed through the Company's website at www.tevapharm.com. Following the conclusion of the call, a replay of the webcast will be available within 24 hours at the Company's website. Alternatively, a replay of the call can be accessed until March 7, 2006, midnight (EST) by calling ++1-(877)-660-6853 in the U.S. or 1- (201)-612-7415 outside the U.S. The account number is: 3055, and the access code to access the replay is 191430.
Teva Pharmaceutical Industries Ltd., headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the leading generic pharmaceutical company. The company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. Close to 90% of Teva's sales are in North America and Europe.
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