* Q3 EPS $1.00 down from $1.31
* Generics margins under pressure
* Lowers year EPS, revenue forecasts
* Shares down as much as 20 percent
* New CEO says debt reduction a key priority (Releads, adds chairman/CFO comment, updates share reaction)
JERUSALEM, Nov 2 (Reuters) - Teva Pharmaceutical Industries , the world's biggest generic medicine maker, came under investor and market pressure on Thursday after saying it would miss 2017 profit forecasts.
Shares in the Israeli-based company dropped by as much as 20 percent after it issued the profit warning, which it said was due to falling prices of generics in the U.S. market and weakening sales of its multiple sclerosis drug Copaxone, which fell 7 percent in the third quarter in the United States.
Investors are pushing Teva, which is battling narrowing profit margins, a nearly $35 billion debt burden that could lead to a credit rating downgrade, for clarity on its future.
Foremost among their questions is whether Teva will remain a company with both generics and specialty drugs, split in two or divest totally from lower-margin generics. Generics accounted for 54 percent of its third-quarter sales, with 36 percent for specialty medicines.
Teva's management said nothing about its future beyond 2017 and its new chief executive Kare Schultz, who took the reins this week, left most of the talking to other executives, but underscored Teva's debt woes.
"It will be an absolute priority for me that we stabilize the company's operating profit and cash flow in order to improve our financial profile," Schultz said on an analyst call.
Pressure on Teva's shares was increased by U.S. shareholder Allergan's announcement on Wednesday that it would begin selling down its 10 percent stake in the company.
While Chairman Sol Barer said he was confident the new CEO could turn the company around, Schultz needs to convince restive investors that Teva can boost growth while also cutting the debt it took on to finance its $40.5 billion purchase last year of generics business Actavis from Allergan.
His predecessor stepped down in February after criticism for a string of acquisitions and delayed drug launches.
Teva's shares slid 19 percent in Tel Aviv, and were 15 percent lower in New York, taking their losses to more than 60 percent since August,
Berenberg analyst Alistair Campbell said in a note he did not expect the stock to recover until Schultz outlined his strategy and gave "a steer on the 2018 outlook", which he said would be challenging due to the roll-out of cheap, copycat competitors to Copaxone.
As well as U.S. competition and Copaxone's troubles, Teva said a lower-than-expected contribution from new generic launches in the United States and a lower contribution from Venezuela had also taken their toll.
"We are now facing two headwinds - continued pressure in U.S. generics and in our own Copaxone," interim chief financial officer Mike McClellan said.
With Copaxone prices falling around 10 percent in the third quarter and generic competition starting sooner than expected, Teva again cut its 2017 estimates, while McClellan said only that it was "working on a 2018 plan and evaluating all options".
Teva cut its 2017 earnings per share (EPS) forecast, excluding special items, to $3.77-$3.87 from $4.30-$4.50 and its revenue forecast to $22.2-$22.3 billion from $22.8-$23.2 billion. Analysts had been expecting full-year EPS of $4.19 on revenue of $22.6 billion, Thomson Reuters I/B/E/S data showed.
Its third-quarter adjusted EPS sank to $1.00 from $1.31 and missed a consensus estimate of $1.02.
Teva had planned to pay down $5 billion of debt in 2017 and was working to sell off non-core assets to that end, but McClellan said debt payments would only be $3.5-$4 billion.
In September, Teva said it would sell the remaining businesses in speciality womens health for $1.38 billion. . It said that in all, it expected $2.3 billion in net proceeds from asset sales in 2017.
"We will be doing a review to see if there's additional non-core assets that it would make sense to monetize," McClellan said, adding that Teva had "some important decisions to make" to retain its investment grade credit rating.
He said raising more equity would be considered, although there was no plan to do so at present.
Despite its challenges, Teva said it will pay a quarterly dividend of 8.5 cents a share, unchanged from the second quarter when it cut the payout by 75 percent. (Additinal reporting by Tova Cohen; Editing by Jason Neely/Mark Potter/Alexander Smith)