Teva Pharmaceutical Industries Limited (TEVA) Warns Legal Costs Over Generic Protonix May Hit $2 Billion
2/14/2013 8:10:40 AM
Teva Pharmaceutical Industries Ltd. (TEVA) may be on the hook for up to $2.1 billion in damages because it sold generic copies of Pfizer Inc.'s (PFE) heartburn reliever Protonix before the drug's U.S. patent exclusivity expired in 2011. The Israel-based generic-drug maker already booked a $670 million provision for the third quarter of 2012 to cover a potential Protonix loss. Now, in its 2012 annual report filed Tuesday with the U.S. Securities and Exchange Commission, Teva has disclosed that its management estimates the "ultimate resolution of this matter could result in a loss of up to $1.4 billion in excess of the amount accrued." It would be one of the highest tabs for damages from a so-called "at-risk" launch of generic drug before litigation over the branded drug's patent is resolved. In comparison, last year Apotex Inc. paid $442 million to Bristol-Myers Squibb Co. (BMY) and Sanofi (SNY) for having sold generic copies of anti-clotting drug Plavix in 2006, before the patent was ultimately upheld. Damages in that case were capped by a prior agreement among the companies. The potentially hefty bill looms as Teva is trying to reduce annual costs by up to $2 billion under the leadership of a new chief executive, Jeremy Levin, who recently said costs were bloated after years of acquisitions. Teva's total revenue was $20.3 billion last year, and it had $3.1 billion in cash, cash equivalents and marketable securities as of Dec. 31.