Why Is Teva Falling? Competition

Shares of Teva Pharmaceutical Industries Ltd (ADR) TEVA were under heavy selling pressure Wednesday morning after the U.S. Food and Drug Administration granted approval for a rival product.

The FDA granted approval to Mylan N.V. MYL to sell a generic version of Teva's Copaxone for the treatment of patients with relapsing forms of multiple sclerosis (MS), a chronic inflammatory disease of the central nervous system.

Most Important Asset

Copaxone is considered by some analysts to be Teva's most important asset, which will now be challenged by Mylan. Analysts for the most part had little doubt that ultimately Mylan's generic version of Copaxone would be approved although the timing of approval was less certain.

"Mylan has invested tens of millions of dollars over many years to bring this important medicine to market," said Mylan CEO Heather Bresch. "Providing patients, healthcare providers and caregivers with treatment options is very important when it comes to selecting the right therapy for relapsing forms of multiple sclerosis. Our commitment to the MS patient community extends beyond bringing generic versions of these products to market."

Analyst Reax

Oppenheimer's Derek Achilla commented in a downgrade note in early August that the introduction of a generic competition to Copaxone would result in a "meaningful step down" in Teva's sales.

Citi's Liav Abraham commented in a research report on Wednesday that the approval of a generic version of Copaxone is "important" for Mylan and validates its pipieline. At the same time, the financial benefit to Mylan, given Copaxone's U.S. annual sales of $3.8 billion, is "not material."

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