Last week, Teva Pharmaceutical Industries Ltd. (NYSE: TVA) divested more than $1.1 billion of assets in response to increasing financial pressure. Just this August, Credit Suisse lowered its rating on Teva’s stock from neutral to underperform, citing industry-wide pricing pressure for generic drugs. Credit Suisse’s announcement follows Teva’s acquisition of Allergan’s (NYSE: AGN) generic division, Anda Inc., just a year ago, for $500 million.
Teva is looking to pay down more than $35 billion in debt–an amount that exceeds its market value. To do so, the Israeli drug maker has pursued divestiture opportunities for its global Women’s Health business, as well as its Oncology and Pain businesses in Europe.
Its first divestment announcement came on September 11, 2017. CooperSurgical Inc., a privately-held medical device company focused on women’s healthcare, acquired PARAGARD®, an intrauterine copper contraceptive product within Teva’s global Women’s Health business. According to Teva’s annual report, revenue from its women’s health portfolio has declined for three years in a row, down to $458 million in 2016.
The deal had a cash value of $1.1 billion, and PARAGARD® had revenues of approximately $168 million for the trailing twelve month period ending June 30, 2017, producing a revenue multiple of 6.6x. This transaction includes Teva’s manufacturing facility in Buffalo, New York, which produces PARAGARD® exclusively.
Teva expects to generate at least $2 billion in total proceeds from the sale of these businesses, as well as additional asset sales to be executed by year end 2017. Teva has warned investors that it risks breaching its debt covenants this year if it doesn’t reap the expected $2 billion from the asset sales.