* Shares tumble after second quarter earnings slide
Rivals also hit by fears over market for generics
* Teva says to take time over CEO appointment (Adds details from conference call, analyst quote)
By Steven Scheer and Ari Rabinovitch
JERUSALEM, Aug 3 (Reuters) - Teva Pharmaceutical Industries said it was facing accelerating price erosion in the United States, hurting he Israeli drugmaker's profits and driving down its U.S. shares more than 20 percent.
The company said its U.S. customers have been consolidating and negotiating lower prices for generic drugs. It said a deal it reached with a group consisting of drug distributor McKesson Corp and Wal-Mart Stores Inc hit its bottom line particularly hard during the second quarter.
The world's largest generics drugmaker posted a steeper than expected drop in its second-quarter earnings, slashed its dividend by 75 percent and cut its 2017 forecast.
Teva officials offered little in the way of hope for a turnaround on a conference call with analysts, saying the company expects the fall in U.S. generic drug prices to accelerate in the second half of 2017 and into 2018.
"The board understands our shareholders' disappointments," said Chairman Sol Barer. "We understand that significant change is required and we all have a sense of urgency."
Shares in Teva, which is currently without a permanent chief executive, tumbled 18 percent in Tel Aviv. Its New York stock was equally weak, down 24 percent at $23.86 in afternoon trade - the lowest level since 2004. Shares in other drugmakers, including Mylan and Impax, also fell on fears of a worsening market for generic medicines.
"We think it would be unwise for investors to think that buying groups flexed their muscle in 2017 and now are done," Wells Fargo analyst David Maris said in a research note. "We think there have been structural changes in the industry that may make the 25 percent plus operating margins the sector has seen a thing of the past."
Barer was asked when Teva would announce a new CEO, Erez Vigodman having stepped down in February after a series of missteps, but did not offer a timetable. He said there would be no rush and the right candidate must have "significant CEO level experience at major pharmaceutical companies."
Teva has had meetings with a number of candidates, Barer noted. "We have made significant progress and it has been positive so far," he said, also deflecting questions from analysts on the prospects of splitting the company into two, comprising generics and specialty drugs.
Teva's chief financial officer has also stepped down, leaving it up to new management to restore investor confidence.
AstraZeneca CEO Pascal Soriot had been named by Israeli media as a likely to successor to Vigodman but the boss of the British drugmaker, which faces its own challenges, said last week he was not a "quitter."
DIVIDEND, OUTLOOK CUT
Teva said it earned $1.02 per share excluding one-off items in the second quarter, down from $1.25 a share in the same period last year. Revenue rose 13 percent to $5.7 billion on lower prices in the United States and drug launch delays.
It cut the quarterly dividend payout to $0.085 per ordinary share from $0.34, a move Teva officials said was needed to help pay down $5 billion of debt this year and invest in its business.
Teva, which bought Allergan's generics business for $40.5 billion in August, was expected by analysts to have earned $1.06 per share on revenue of $5.72 billion, according to Thomson Reuters I/B/E/S Estimates. Synergies and cost cuts from the merger are expected to reach $1.6 billion in 2017, it said.
"By end of 2017, will have reduced our head count by about 7,000 people since the closing of Actavis (Allergan) generic deal. That's about 2,000 above our initial plan," said acting CEO Yitzhak Peterburg, adding that 15 plants will be closed or divested by the end of 2018.
Global sales of Teva's best-selling multiple sclerosis drug Copaxone - down to 18 percent of revenue from 23 percent last year - fell 10 percent in the quarter to $1.02 billion.
As a result the company has cut its full-year earnings forecast to $4.30-$4.50 a share from $4.90-$5.30 previously on revenues now expected to total $22.8-$23.2 billion, down from its previous forecast of $23.8 billion-$24.5 billion.
"This adjusted outlook takes into consideration the impact of increased price erosion in our U.S. generics business, which is expected to be in a high single-digits rate through the remainder of the year, and delays in generic launches in the U.S.," Teva said.
It added that the outlook for the business also reflected the continued deterioration in political and economic conditions in Venezuela, but it assumed no generic competition to its Copaxone 40mg version in the United States in 2017.
Teva said that at least one Copaxone 40mg competitor would impact the bottom line by 20 to 25 cents.
Earlier the company also said it would continue to pursue a breach of contract suit against the former owners of its Rimsa plant in Mexico after a New York judge rejected Teva's claim of fraud. (Additional reporting by Ben Hirschler in London and Michael Erman in New York; Editing by Greg Mahlich and Bill Trott)