Teva Pharmaceuticals (TEVA) is one step closer to selling its morning-after pill, Plan B One-Step, to women of all ages. The US government had previously opposed the sale of the drug without an age restriction, but yesterday filed a letter in federal court granting a petition to make the emergency contraception available without point-of-sale age limitations. This means Teva will be able to finalize labeling for Plan B One-Step, and soon sell it over-the-counter. Further boosting Teva's position in this niche market is the possibility of exclusive rights to sell the drug.
While Teva may see a boost from the long awaited launch of Plan B One-Step, the company is not necessarily the top performer among drug manufacturers. We decided to compare Teva to some of its industry peers. These competitors may not be selling a morning-after pill, but are well placed to develop products treating other high-profile and hot-button health issues.
To create this list, we began by searching for drug manufacturers with positive trends in accounts receivable, comparing growth in revenue to growth in accounts receivable. Since accounts receivable is the portion of revenue not yet received, and there is no guarantee the money will ever be received, the smaller the portion of revenue made up of receivables the healthier the company's total revenue.
We screened our list for stocks seeing faster growth in revenue than accounts receivable year-over-year, as well as accounts receivable comprising a smaller portion of current assets over the same time period.
Few companies met this requirement, so we decided to take a closer look at their performance over the last week, quarter and year-to-date, their levels of debt as well as their earnings-per-share trends. Finally, we included the same figures for Teva.
For an interactive version of this chart, click on the image below. Average analyst ratings sourced from Zacks Investment Research.
Do you see growth potential among these stocks with faster growth in revenue? Or do you think Teva can capitalize on its new product? Use the list below as a starting point for your own analysis.
1. Novartis AG (NVS): Engages in the research, development, manufacture, and marketing of healthcare products worldwide.
- Market cap at $196.39B, most recent closing price at $72.57
- Performance over the last week: 1.37%
- Performance over the last quarter: 5.19%
- Performance year-to-date: 19.01%
- Total debt to equity ratio: 0.31
- EPS this year: 2.94%
- EPS next year: 6.08%
- EPS next 5 years: 5.47%
- Revenue grew by 2.11% during the most recent quarter ($14,206M vs. $13,913M y/y). Accounts receivable grew by -1.14% during the same time period ($10,484M vs. $10,605M y/y).
- Receivables, as a percentage of current assets, decreased from 41.13% to 39.13% during the most recent quarter (comparing 3 months ending 2013-03-31 to 3 months ending 2012-03-31).
- Returns since 5/13/13: -2.79%; compared to Sanofi (SNY) (-2.81%) and Johnson & Johnson (JNJ) (-0.08%).
NVS has completed phase III trials of its drug Afinitor, designed to treat human epidermal growth factor receptor-2 positive (HER2+) advanced breast cancer. Combined with Roche's (OTCQX:RHHBY) Herceptin and vinorelbine (both of which treat cancer), Afinitor reduced the risk of disease progression by 22%, compared to a placebo with the same combination. The drug is already available in the US and EU to treat HR+/HER2- advanced breast cancer in combination with Pfizer's (PFE) Aromasin, in postmenopausal women whose cancer has returned or progressed post-treatment. Sales of Affinitor already came close to $800M in 2012, and approval for its use in other may further boost NVS's income.
2. Lannett Company, Inc. (LCI): Develops, manufactures, packages, markets, and distributes generic pharmaceutical products sold under generic chemical names in the United States.
- Market cap at $342.44M, most recent closing price at $11.94
- Performance over the last week: 0.25%
- Performance over the last quarter: 22.21%
- Performance year-to-date: 140.73%
- Total debt to equity ratio: 0.05
- EPS this year: 1442.71%
- EPS next year: -2.44%
- EPS next 5 years: 25.00%
- Revenue grew by 27.14% during the most recent quarter ($39.02M vs. $30.69M y/y). Accounts receivable grew by 6.16% during the same time period ($39.81M vs. $37.5M y/y).
- Receivables, as a percentage of current assets, decreased from 37.66% to 33.47% during the most recent quarter (comparing 3 months ending 2013-03-31 to 3 months ending 2012-03-31).
- Returns since 5/13/13: 1.70%; compared to Allergan Inc. (AGN) (-3.49%) and Merck & Co. Inc. (MRK) (4.96%).
LCI specialized in generic drugs, and after a backlog at the FDA in 2011 limited the company's new approvals, 2012 saw eight of the company's new products receive approval for sale (PDF). And already in 2013 LCI's Butalbital, acetaminophen plus caffeine, met FDA requirements for approval. Among its R&D efforts, LCI is conducting studies on a chemotherapy drug, Thalidomide. Introducing a product for the market treating cancer could potentially lead to a large pay off.
3. Novo Nordisk A/S (NVO): Engages in the discovery, development, manufacture, and marketing of pharmaceutical products in Denmark and internationally.
- Market cap at $72.46B, most recent closing price at $163.75
- Performance over the last week: 1.52%
- Performance over the last quarter: -5.50%
- Performance year-to-date: 2.29%
- Total debt to equity ratio: 0.01
- EPS this year: 29.55%
- EPS next year: 15.70%
- EPS next 5 years: 16.80%
- Revenue grew by 12.57% during the most recent quarter ($19,983M vs. $17,751M y/y). Accounts receivable grew by -14.96% during the same time period ($11,410M vs. $13,417M y/y).
- Receivables, as a percentage of current assets, decreased from 36.91% to 31.87% during the most recent quarter (comparing 3 months ending 2013-03-31 to 3 months ending 2012-03-31).
- Returns since 5/13/13: -5.61%, compared to Forest Laboratories Inc. (FRX) (7.52%) and Pfizer Inc. (-3.40%)
NVO is pursuing a much bigger niche market than TEVA's target with Plan B One-Step - the company is pursuing the millions of Americans who are overweight or obese, with its weight loss drug liraglutide (PDF). Marketed as a satiety hormone which can reduce appetite and food intake, liraglutide is currently available at low doses, 1.2 and 1.8mg once-daily in the US, for type 2 diabetes only. But NVO is conducting further trials at 3mg once-daily specifically for people who are obese or overweight, one of the largest health issues Americans face today.
Teva Pharmaceutical Industries Limited : Develops, produces, and markets generic drugs; and proprietary branded pharmaceuticals in various therapeutic categories and active pharmaceutical ingredients worldwide.
- Market cap at $37.76B, most recent closing price at $40.00
- Performance over the last week: 3.90%
- Performance over the last quarter: 0.18%
- Performance year-to-date: 8.87%
- Total debt to equity ratio: 0.56
- EPS this year: -27.22%
- EPS next year: 8.76%
- EPS next 5 years: 7.10%
- Returns since 5/13/13: 2.75%
TheStreet upgraded TEVA from hold to buy this week, despite the company's low growth, and perhaps partly due to the good news regarding Plan B One-Step. Analysts see strength in TEVA's current valuation, expanding profit margins and increase in stock price. And TEVA's debt-to-equity ratio is considered reasonable - it may be higher than that of NVS, LCI and NVO but it is still below the industry average.
*Accounting data sourced from Google Finance, all other data sourced from Finviz.