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Wyeth to cut costs as Teva ships generic Protonix
2007-12-24
Wyeth (WYE.N) said on Monday it expects to revise its business plan and initiate cost cuts after Teva Pharmaceuticals Industries Ltd (TEVA.O)(TEVA.TA) launched a generic rival to Wyeth's ulcer drug Protonix. Wyeth, whose shares fell more than 3 percent, said it plans to sue the Israel-based company for lost profits and damages, claiming Teva's product infringes a Wyeth patent. Wyeth said it expects a trial to begin in the second half of next year. A U.S. district court denied Wyeth's motion for a preliminary injunction on September 6 in defense of the Protonix intellectual property. "We assume Wyeth will not prevail and that generic Protonix will remain on the market," said Jon LeCroy, an analyst at Natixis Bleichroeder. As a result of expected lower Protonix revenue, LeCroy said he is lowering his earnings per share estimate for 2008 to $3.52 from $4.03. Wyeth executives said on a conference call that Teva, the world's largest generic drugmaker, has agreed to cease shipments of its drug for 30 days while the two companies try to negotiate a settlement. Meanwhile, Wyeth said it has been examining every aspect of the company's business to cut costs to offset the impact of a generic launch of Protonix, which generated sales of about $1.4 billion in the first nine months of the year. "We will look at every area of investing and spending," Bernard Poussot, Wyeth chief operating officer, told analysts on a conference call. That includes sales and marketing, research and development and manufacturing, he said. In addition, the company will consider entering into partnerships or alliances, he said. The news comes on the same day Wyeth announced that the U.S. Food and Drug Administration declined for a second time to approve its experimental drug for the prevention of post-menopausal osteoporosis until certain conditions are met. The drug, bazedoxifene, is a selective estrogen receptor modulator. The FDA previously asked the company for more information, but Wyeth said the agency was not fully satisfied with its response. "The FDA has requested further analyses and discussion concerning the incidence of stroke and venous thrombotic events," the company said in a statement. The FDA has not asked for new clinical trials, Wyeth said. Wyeth's shares, which ended the day at $45.45, down $1.41, have fallen nearly 24 percent since reaching a year high in May. That compares with a decline of 5.6 percent in the American Stock Exchange Pharmaceutical Index. Teva shares closed up nearly 3 percent at $46.48 on the Nasdaq. The company also said it was increasing its forecast for 2007 fully diluted earnings per share to between $2.34 and $2.36, up from $2.30 to $2.30. Wyeth said it is also seeking approval for its experimental depression drug Pristiq, but trial results have proven mixed, raising doubts among some analysts that it will be as commercially viable as they had once hoped. (Additional reporting by Chris Reiter in New York, Tova Cohen in Tel Aviv; editing by Mark Porter, Leslie Gevirtz)
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