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Pharmaceutical giant Teva's shares crash 17.5% on opening of Tel Aviv market

Israeli Teva is already the world's largest manufacturer of generic drugs -- non-branded, cheaper alternatives to branded drugs that have lost their patent
Jack Guez (AFP/File)
The company already lost 24% of its value over a two day period at the end of last week

Shares in beleaguered Israeli pharmaceutical company Teva Pharmaceutical Industries took another hit on Sunday morning when they plummeted 17.5% at the opening of the Tel Aviv Stock Exchange (TASE).

The drug-maker dragged the TASE down with it, Globes reports, with the Tel Aviv 35 index losing 1.53% on Thursday and a further 1.06% fall on Sunday to 1402.23 points.

The company announced on Thursday it would be firing 7000 employees worldwide and ceasing operations in 45 countries after reporting massive Q2 losses. As a result, the company lost 24% of its value over a two day period.

Moody’s Investors Service downgraded the company to a Baa3 from Baa2, saying it "reflects slower deleveraging than we anticipated."

According to Bloomberg, the company’s net debt has risen to 4.56 times its earnings before interest, tax, depreciation and amortization, an increase on the first quarter's level of 4.49.

Teva issued a statement on Thursday stating that it would be adjusting its outlook.

"We have lowered our outlook for 2017 Non-GAAP results to revenues of $22.8 - $23.2 billion, from a previously expected range of $23.8 - $24.5 billion. Non-GAAP EPS for 2017 is now expected to be $4.30 - $4.50, based on a weighted average number of shares of 1,076 million, down from a previously expected range of $4.90 - $5.30."

Acting Teva CEO Dr. Yitzhak Peterburg addressed the reports, explaining that the company had not expected such poor results and pointed to the crisis in Venezuela as part of the problem.

"Second quarter results were lower than we anticipated due to the performance of our US generics business and the continued deterioration in Venezuela. These factors also led to a lowering of our outlook for the remainder of the year. All of us at Teva understand the frustration and disappointment of our shareholders in light of these results… In our US generics business, we experienced accelerated price erosion and decreased volume mainly due to customer consolidation, greater competition as a result of an increase in generic drug approvals by the US FDA, and some new product launches that were either delayed or subjected to more competition."

In July, the pharma giant announced its chief executive officer Erez Vigodman was stepping down after just three years amid reports of a loss of investor confidence.

The surprise move came after the value of Teva Pharmaceutical Industries, the world's largest maker of generic drugs, decreased dramatically over the past year.

Teva appointed its chairman, Yitzhak Peterburg, as interim CEO.

Teva, meanwhile, is among six drug makers named in a civil lawsuit filed earlier this month by twenty American states for allegedly entering into illegal conspiracies to raise prices on two common generic drugs.

Also in July, European Union regulators filed antitrust charges against Teva for colluding to delay a cheaper generic version of modafinil, a blockbuster sleep drug.

The European Commission said in a statement that it had informed Teva of its "preliminary view" that an agreement concluded with rival Cephalon was in breach of EU antitrust rules.

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