Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has announced that it will dispose of Paragard, a contraceptive brand, to a Cooper Cos unit at a price of $1.1 billion. This was on the same day that Kare Schultz was named as the chief executive officer of the Israeli pharmaceutical giant.
Selling Paragard constitutes one of the first steps Teva is making as it gets rid of non-core assets. Proceeds from the sale of such assets will be used in repaying debt. Currently the generics drugmaker has debt amounting $35 billion. After the twin announcements shares of the pharmaceutical firm went up. Since Teva cut its forecasts last month, the U.S.-listed stock of the generics drugmaker has fallen by half.
“Investors will like this news, as in addition to a good price for the asset, and the recent share decline has been likely due in part to investor worries that the debt burden is high,” wrote David Maris, an analyst at Wells Fargo Securities in a client note.
While making the announcement of the sale of Paragard, Teva said that divestiture opportunities would continue to be assessed and this included selling the assets that remain from its worldwide women’s health business. It is also considering selling its pain and oncology businesses in Europe. According to Teva the sale of these assets as well as other assets would generate about $2 billion. These sales are expected to have been concluded by the end of this calendar year.
New York plant
In the Paragard sale, Teva’s New York manufacturing facility which makes the contraceptive exclusively will also be part of the deal. Revenues from Paragard in the fiscal year which ended three months ago amounted to $168 million. Before the deal is concluded Teva would keep on manufacturing and selling the contraceptive in the U.S.
After the divesting efforts have ended, Teva will focus on Respiratory and CNS as the key therapeutic areas globally. The generic drugmaker has a strong portfolio and pipeline globally in these areas and will keep on investing in the creation of long term value.
On Monday shares of Teva Pharmaceutical Industries jumped by 19.35% to close the day at $18.50.