Teva to finalize opioid deal by year-end – CEO

Teva Canada"s facility in Markham, Ontario, Canada.

JHVEPhoto/iStock Editorial via Getty Images

Teva Pharmaceutical Industries (NYSE:TEVA) expects to finalize a nationwide opioid settlement by the end of the year and begin payments next year, Chief Executive of the generic drugmaker, Kare Schultz, said Sunday.

In July, the Israel-based TEVA announced the deal under which the U.S. states will receive $4.25B, and Native American tribes will receive $100M over 13 years.

At a press conference held at the company's new Tel Aviv headquarters, Schultz said that TEVA is currently working on the legal wording of the settlement, which should be complete by the end of September. Then states and subdivisions need to approve the deal.

"When they opt in, once that is all done ... then it goes into force and that means the first payments happen next year and go on for 13 years," Schultz noted.

"So, by the end of the year, you should have this clarification that it all comes together and we will start paying next year."

Schultz also said he was unlikely to stay as CEO when his contract expires on November 1, 2023, as he turns 62 by then. However, he announced plans to remain on the company's board.

He also revealed the company's plans to cut costs by closing some manufacturing sites. Since 2017, TEVA has reduced the number of production plants to 53 from 80, and the company intends to close another 10 within the next few years.

Commenting on TEVA's valuation, Schultz said the stock is trading at a price-earnings ratio of ~3.5 instead of the normal rate of 10.

"Teva has one of the lowest P/E ratios of any share I know, and the business is actually very stable, that will grow long term and generate cash - so it's very good for long term investors," he added.

"Right now we are worth a third of what you will see the normal value if we didn't have these risk factors."

Schultz attributed the underperformance mainly to opioid uncertainty and high debt, which he said has come down to $20B from $34B.

Read: Seeking Alpha contributor Nathan Aisenstadt expects TEVA to outperform as Fed raises interest rates in the U.S.

Recommended For You

Comments (31)

To ensure this doesn’t happen in the future, please enable Javascript and cookies in your browser.
Is this happening to you frequently? Please report it on our feedback forum.
If you have an ad-blocker enabled you may be blocked from proceeding. Please disable your ad-blocker and refresh.