U.S. Lawsuits Drag Teva Down

With a massive lawsuit over price fixing hanging over it, the Israel-based pharmaceutical giant Teva was downgraded by the Swiss investment bank UBS, Globes reported on Tuesday.

UBS revised its recommendation on Teva from “Buy” to “Neutral” and reduced its target price per share from $22 to $12, which is still nevertheless a 10.4 percent premium on the company’s current share price.

Teva was one of several generic drug manufacturers named in a Connecticut suit for price fixing. UBS analyst Navin Jacob pointed also to the Oklahoma opioid settlement, which will cost Teva $85 million for its role in promoting addiction to the painkillers.

Jacob estimates that Teva could incur legal penalties of as much as $4.1 billion for these lawsuits in the U.S., much higher than a previous estimate of $1 billion. He estimates Teva could have to pay between $606 million and $3.2 billion for the price fixing (average $1.9 billion) and between $154 million and $4.25 billion for the opioids (average $2.2 billion).

The UBS analyst said that Teva’s management has told him that the company expects the price fixing lawsuit to drag on for several years, and that an internal investigation in November 2017 found no evidence of price fixing.