* Q4 non-GAAP EPS $1.25, vs consensus $1.29
* Q4 sales $4.4 billion, vs consensus $4.6 billion
* Record Q4 Copaxone sales of $938 million
* Sees 2011 rev $18.5-$19 bln, non-GAAP EPS $4.90-$5.20
* Raises dividend, shares down 6 percent
(Adds 2011 forecast, more analyst quotes, Nasdaq share price)
By Tova Cohen
TEL AVIV, Feb 8 (Reuters) - Teva Pharmaceutical Industries, the world's biggest maker of generic drugs, reported a one-third rise in adjusted quarterly earnings that missed expectations and a profit outlook falling short of forecasts.
Shares in the Israel-based company, which posted a 5-percent fall in U.S. generic drug sales in the fourth quarter, tumbled in early Nasdaq trading on Tuesday.
Teva posted strong sales of its branded multiple sclerosis (MS) drug Copaxone, which raked in a record $938 million in the quarter, up 26 percent year-on-year.
Copaxone, given by injection and the leading MS therapy, now faces competition from Novartis's new pill Gilenya.
"Copaxone will be with us for many years and it will be profitable," chief executive Shlomo Yanai said. "It won't last forever because technological advances bring new products, including Laquinimod."
He said Laquinimod, Teva's MS pill being developed with Swedish group Active Biotech, would complete clinical trials in the summer and would be fast-tracked at the U.S. Food and Drug Administration for approval.
"Somewhere in mid-2012 we expect to get approval," he said.
Chief financial officer Eyal Desheh said a little more than half of the sales gain for Copaxone was due to higher quantities sold with the rest due to price increases.
Generic sales in the United States fell 5 percent to $1.29 billion in the quarter as Teva pushed back launches of generic versions of blood thinner Lovenox and cancer drug Gemzar. It launched generic Gemzar last month.
Yanai said the market needed to look at the overall trend in the U.S. generics market and not at one quarter.
"The U.S. generics market is strong," he said. "It is enough that we moved two products to later quarters and you get the answer (why sales fell)," he said.
Gilad Alper, an analyst with the Meitav brokerage, said the problem with the U.S. generics business was structural.
"Competition is strong and the macroeconomics are a problem -- when people get poorer it's not that generics benefit, it's that everyone consumes less drugs," Alper told Reuters. "The organic growth rate of Teva is declining."
Credit Suisse analyst Michael Faerm said in a note the weakness in the U.S. generics business was concerning because "this is typically the most reliable business."
2011 OUTLOOK
Yanai said Teva's revenue in 2011 would rise about 17 percent to between $18.5 billion and $19.0 billion while earnings before certain items would reach $4.90-$5.20. Teva said the 2011 outlook was "back-end loaded", with the second half expected to be stronger than the first six months.
Analysts were expecting revenue of $18.98 billion and adjusted EPS of $5.30, according to Thomson Reuters I/B/E/S.
Teva shares fell 6 percent to $51.66 on Nasdaq while in Tel Aviv they closed down 4.3 percent.
Fourth-quarter net income before certain items was $1.25 per share, up 33 percent on the 2009 period, on sales up 16 percent at $4.4 billion. Analysts expected Teva to earn $1.29 a share on revenue of $4.64 billion.
Exchange rate differences resulting from the strengthening of the dollar against European currencies hit sales by $140 million and reduced operating income by $51 million.
($1 = 3.68 shekels) (Additional reporting by Steven Scheer in Jerusalem, Sakthi Prasad in Bangalore and Ben Hirschler in London; Editing by David Cowell)