FDA approves a generic version of Teva Pharmaceutical's best-selling drug; company shares tumble

Teva Pharmaceutical Industries, grappling with a tough pricing environment for its generics business and planned layoffs of 7,000 employees worldwide, received a major blow Wednesday.

The Food and Drug Administration approved rival Mylan Labs' generic version of Teva's best-selling multiple-sclerosis drug.

Teva is the world's largest maker of generic pharmaceuticals, but its branded medicine Copaxone is the company's best seller, accounting for $1.02 billion of a total $5.63 billion global sales, or 18.1 percent, in the second quarter of this year.

Mylan shares closed up 16.2 percent, or $5.27, to $37.80, while Teva's stock fell 14.59 percent, or $2.74, to $16.08 on Wednesday.

"Lightning has struck," pharmaceutical analyst Ken Cacciatore of Cowen & Co. wrote in a client note. "Mylan has achieved what it had been unable to do over the last seven years, which was garner an approval for Copaxone."

Mylan said in a statement that shipping was imminent for its generic Glatiramer Acetate 40-milligram three-times-a-week injection and its 20-milligram once injection.

Multiple sclerosis is a chronic disease of the central nervous system and affects an estimated 400,000 Americans.

The approvals "mark another significant milestone for our company," said Mylan CEO Heather Bresch in a news release, "and reinforces our proven capabilities in bringing complex and difficult to manufacture products to market."

Teva responded that "any launch by Mylan of a generic version of Copaxone 40-milligram prior to final resolution of the pending patent appeals and other patent litigation should be considered an 'at-risk' launch, which could subject Mylan to significant damages among other remedies."

Teva's interim president and CEO, Yitzhak Peterburg, said Teva has planned for the eventual introduction of a generic competitor.

"We remain confident in patient and physician loyalty to Teva's Copaxone due to its recognized efficacy, safety, and tolerability profile," he said, "and we will continue to promote and support the product." Teva said it was "too soon to officially comment on any change to our full-year business outlook."

Israel-based Teva's North America headquarters are in North Wales, Montgomery County. Teva employs more than 2,000 at five locations in Pennsylvania.

Mylan Labs is based in Canonsburg, Pa. The FDA said on Monday that it planned to introduce new measures to speed up bringing generic versions of complex drugs to market, as the government agency tries to deal with the rising cost of prescription medicines in the United States.

In a statement, Teva said it has two appeals that will be argued before a panel of judges on the U.S. Court of Appeals for the Federal Circuit. Teva said its early assessment of generic glatiramer acetate product launches is that its shares could be impacted "by at least 25 cents a share in the fourth quarter ending Dec. 31." Teva said it will provide additional details on its third-quarter earnings conference call on Nov. 2.

In a client note, Cacciatore said "the approval of Mylan's 20 and 40- milligram Copaxone is the long-feared scenario that has now come true." At the same time, another drugmaker, Momenta/Sandoz, is seeking approval of its 40-milligram generic version of Copaxone. "It will also eventually come, whether later next year or in early 2019," the analyst wrote.

Teva last month named a permanent CEO, Kare Schultz of Denmark's Lundbeck A/S, who was hired to engineer a turnaround as Teva grapples with a tough generic pricing environment.

Teva earlier announced a restructuring after spending $40.5 billion in 2015 to buy out Allergan's generic business, a move that has proven to be a drag on earnings.