Is Teva the Ultimate Buy Right Now?

Teva Pharmaceuticals TEVA is one of the few pharmaceuticals that struck when the time was right when Lipitor expired. Pfizer's PFE drug brought in approximately $7.8 billion, and revenues are almost guaranteed to decline significantly as a result of patent protection.

Teva Pharmaceuticals is poised to profit handsomely from Lipitor simply because of its plans with the drug. It will be targeting markets in the US, Europe, and Asia. This gives it significant revenue streams and effectively diversifies its geographical risk. By that, if Teva does not profit very much from the American market - as a result of other Lipitor generics available - it will still have revenues coming in from Europe and Asia.

Teva is also cutting down on costs by outsourcing some of the work to a company called Ranbaxy Laboratories, a prominent pharmaceutical in India. By minimizing its costs in one of its target markets, it is able to further mitigate risk associated with the drug. This is especially handy, since costs are bound to be high in the American market, regardless of low or high sales from the drug.

If Teva successfully markets its drugs, it could add $1 billion to its top line per year. While this does not necessarily add a lot to its income numbers, it is a sign that it has successfully marketed a wildly popular drug in the face of many other competitors. Further considering that Teva is down over 20% for the year, investors may want to consider adding to their positions and take advantage of the operational advantages that its latest move will present.

Investors need to remember that nothing is confirmed. While Lipitor was extremely successful, there are no guarantees that Teva will be able to market their generic version successfully, especially considering the multitude of competitors who are trying to do the same. However, investors should also remember that Teva is going to be selling it in various international markets, thereby increasing the chances of success.

Teva Pharmaceuticals is currently trading at about $39.75, down about 23.5% for the year.