Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Investor Day (February 2009)
51 slides from Teva Pharmaceutical Industries's investor day presentation, Feb 18, 2009
Slide 1: Forward Looking Statements
Forward Looking Statements TODAY’S PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS, WHICH EXPRESS THE CURRENT BELIEFS AND EXPECTATIONS OF MANAGEMENT. SUCH STATEMENTS ARE BASED ON MANAGEMENT'S CURRENT BELIEFS AND EXPECTATIONS AND INVOLVE A NUMBER OF KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT COU
Slide 2: Teva Investor & Analyst Meeting
Teva Investor & Analyst Meeting Shlomo Yanai President and CEO February 18th, 2009
Slide 3: 2008 at a glance; The future of generics; Biogenerics; Outlook
2008 at a glance The future of generics Biogenerics Outlook
Slide 4: 2008 – An Extraordinary Year: Strong Financial Results
2008 – An Extraordinary Year Strong Financial Results 2007 2008* Change Sales 9,408 11,085 +18% $m Net income 1,952 2,374 +22% $m EPS 2.38 2.86 +20% $ * Net income and EPS are non-GAAP results
Slide 5: 2008 – An Extraordinary Year
2008 – An Extraordinary Year Record Record sales, net income & EPS Financial Record cash flow from operations: $3.2bn Results Record free cash flow: $2.2bn Extending US: Increased market share 2008: Global an extraordinary year International: Exceptional growth Leadership Europe: Improved market pos
Slide 6: 2008 – An Extraordinary Year: Strategic Achievements
2008 – An Extraordinary Year Major Barr acquisition Strategic Spain: Bentley acquisition Achievements Japan: Strategic alliance with Kowa Lonza joint venture Biogenerics CoGenesys acquisition Tevagrastim: 1st Biosimilar launched in EU
Slide 7: 2008 at a glance; The future of generics; Biogenerics; Outlook
2008 at a glance The future of generics Biogenerics Outlook
Slide 8: World Population Growing And Aging
World Population Growing And Aging World population by age bracket in billions 9.1 6.5 60+ 40 to 59 20 to 39 0 to 19 Source: UN, World Population Prospects: The 2002 Revision; World Urbanization Prospects: The 2006 Revision
Slide 9: Healthcare Spending Growing Faster Than GDP
Healthcare Spending Growing Faster Than GDP Healthcare spending as % of GDP, U.S. example Source: NCHC; OECD
Slide 10: Increasing Generics Penetration
Increasing Generics Penetration Generics penetration Cost saving estimation by volume, 2007 $ 8bn $ 18bn $ 20-25bn $400bn Source: IMS
Slide 11: Growing Acceptance Of Generics
Growing Acceptance Of Generics “…increasing the use of generic drugs in public programs, and taking on drug companies that block cheaper generic medicines from the market.” - Obama Administration Health Care Policy QuickTime™ are decompressor needed toand seeathis picture. “These data suggest no evi
Slide 12: Generics Growth Driven By Patent Expirations
Generics Growth Driven By Patent Expirations Sales by patent expiration, $ bn SOURCE 2008-2012: IMS Health, MIDAS, MAT Jun 2008; IMS Therapy Forecaster, Jun 2008; IMS Market Insights Oct 2008 Source 2013-2015 Company estimates (including Biologics)
Slide 13: 2008 at a glance; The future of generics; Biogenerics; Outlook
2008 at a glance The future of generics Biogenerics Outlook
Slide 14: Biogenerics – The Opportunity
Biogenerics – The Opportunity World-wide sales of biologics by patent expiration year, $bn Number of 1 3 4 2 3 9 7 16 45 molecules Source: Mckinsey
Slide 15: Biogenerics: Barriers to Entry
Biogenerics: Barriers to Entry Technology barriers – development and production Unclear regulatory path and go-to-market model High cost and capital intensive
Slide 16: Biogenerics – Teva’s Vision
Biogenerics – Teva’s Vision Provide biopharmaceuticals Generics that are: Value - safe Proposition - effective - affordable Become the Market global leader Leadership in biogenerics
Slide 17: Teva And Lonza: Highly Complementary Capabilities
Teva And Lonza Highly Complementary Capabilities Global leader Best in class in Financial strength biologics development and manufacturing Outstanding clinical, IP Existing high-level and RA capabilities infrastructure Expertise in many go-to Unmatched know-how market models and experience
Slide 18: Teva and Lonza: Highly Complementary Capabilities
Teva and Lonza Highly Complementary Capabilities Benefits Global leader Best in class in Strong financial biologics •Shorten time to poistion development and market manufacturing Outstanding Existing high-level •Lower clinical, IP and RA infrastructure capabilities investment & development cost Expe
Slide 19: Teva and Lonza JV Fundamentals
Teva and Lonza JV Fundamentals 50 / 50 joint venture Targeting $30bn in brand value JV’s contribution as early as 2014
Slide 20: 2008 at a glance; The future of generics; Biogenerics; Outlook
2008 at a glance The future of generics Biogenerics Outlook
Slide 21: Barr Integration
Barr Integration Cost Over $400m vs. initial estimate Synergies of $300M Q3 2009 vs. initial estimate Accretion of Q4 2009 Financial Financial leverage to return to Strength pre-Barr level in 1 year
Slide 22: Outlook
Outlook Sales $14.1bn - $14.6bn 2009 EPS* $3.20 - $3.40 *Non-GAAP
Slide 23: Outlook: 2010 Initial Projections
Outlook Initial projections: 2010 EPS growth of 30%-35% over 2009 projected EPS Major sources of growth include: •Take back of Copaxone in North America •Venlafaxine (Effexor XR®) launch •Paragraph IV Opportunities •Realization of greater Barr synergies
Slide 24: Teva Investor & Analyst Meeting
Teva Investor & Analyst Meeting Bill Marth President and CEO, Teva North America February 18th, 2009
Slide 25: Leadership in U.S. generics
Leadership in U.S. generics % of total Rx’s, full year, generics only 2008 Rx’s 2007 thousand ! 598 " 307 # $ 223 % & 189 " '( % 95 ) * 93 +, $ 90 $ ~1.6 million Rx’s ~1.6 million Rx’s per per day day 82 )' ! $ 50% more 50% more than than #2 #2 78 -, 61 Source: IMS National Prescription Audit MAT De
Slide 26: But also leading the total pharma market
But also leading the total pharma market % of total Rx’s, full year, branded and generics 2008 Rx’s 2007 thousand ! 620 " 307 . ! $ 250 # $ 223 /& 215 " '( 98 " '( % 95 ) * Further 93 Further expanding expanding our our leadership leadership position, position, 90 +, $ 0.7% 0.7% share share gain gai
Slide 27: Teva has the most valuable pipeline
Teva has the most valuable pipeline Number of ANDAs pending, U.S., February 5, 2009 201 other 123 119 first-to-file >60 0 ! 12 % & " # $ Source: Investor earnings call transcripts and company statements
Slide 28: Large market coverage of pipeline
Large market coverage of pipeline Market coverage of Teva development pipeline $290bn Opportunity 40% - $116bn 1 in 4 products in Teva – in development 22% - $64bn development have not established market yet 60% Teva - pending approval 38% - $110 bn 3 ( Source: IMS, Teva estimates
Slide 29: U.S. Generic Launches – 2008 and 2009
U.S. Generic Launches – 2008 and 2009 2008 - Launched 28 products with brand value of $12.5 billion Total potential launches in 2009 – Approximately 40 potential launches representing brand value greater than $32 billion 2009 potential brand value represents 30% of Teva’s U.S. generic filed pipeline
Slide 30: Broadest product portfolio
Broadest product portfolio Number of products +90% Source: Investor earnings call transcripts and company statements
Slide 31: The legislative landscape
The legislative landscape 2009 - a new administration, a focus on healthcare reform Impact of increased role of government as payer of Rx drugs will influence policymaking 25th anniversary of Hatch-Waxman – legislation, that saved consumers billions of dollars Biogenerics legislation will open the m
Slide 32: Biologics in the U.S.
Biologics in the U.S. STATUS OF ISSUES Broad agreement that the regulatory pathway should be: - science driven Top of legislative - led by FDA agenda in 2009 – 2010 - without unnecessary delays Strong consensus for Need for a process to resolve patent disputes, generic biologics Teva wants a streaml
Slide 33: Broader government affairs issues
Broader government affairs issues Patent settlements Drug quality and foreign inspections FDA Funding Patent reform
Slide 34: Teva Investor & Analyst Meeting
Teva Investor & Analyst Meeting Eyal Desheh CFO February 18th, 2009
Slide 35: A very good year
A very good year All figures $bn, except EPS, $ Operating Sales +18% Gross profit +22% +13% Net income +20% EPS +20% profit * Operating income, Net income and EPS are non GAAP results for 2006 and 2008
Slide 36: Global business – 10X in 10 years
Global business – 10X in 10 years 100% = $1.1 bn $9.4 bn $9.4 bn $11.1$11.1 bn bn Israel International Europe North America
Slide 37: Foreign exchange rate effect – quarterly
Foreign exchange rate effect – quarterly $ million unless stated otherwise Q4 Q4 FX FX real growth 2008 2007 effect effect growth Total sales 2,848 2,576 +11% -130 -5% +16% Operating profit 704 661 +7% -28 -4% +11% North America 1,652 1,435 +15% -17 -1% +16% Europe 668 664 +1% -88 -13% +14% Internat
Slide 38: Foreign exchange rate effect – full year
Foreign exchange rate effect – full year $ million unless stated otherwise FX FX real 2008 2007 growth effect effect growth Total sales 11,085 9,408 +18% +227 2% +15% Operating profit 2,675 2,395 12% -65 -3% 14% North America 6,139 5,162 +19% +7 0% +19% Europe 2,782 2,462 +13% +146 +6% +7% Internati
Slide 39: Cash generation
Cash generation 969 806 746 710 Cash from operations 545 Net asset purchase Dividends distributed Free cash flow Q4 2007 Q1 2008 Q2 2008 Q3 2008 Q4 2008 $410m $366m $4,387m acquisitions acquisitions acquisitions
Slide 40: Balance sheet
Balance sheet $ bn ASSETS LIABILITIES 12/31/2007 12/31/2008 12/31/2007 12/31/2008 Cash and investments 2.9 1.9 Short-term debt 1.8 2.3 Inventory, receivables 6.0 8.1 Convertible debentures 1.4 0.6 Other short-term assets 1.0 1.5 Other short-term liab. 2.1 5.6 Short-term assets 9.9 11.5 Short-term li
Slide 41: Dividend – 33% increase
Dividend – 33% increase NIS $ million per share 140 0.65 0.60 0.60 120 0.55 0.50 100 0.45 0.45 0.40 80 0.40 0.34 127 0.35 106 60 95 97 90 0.30 75 79 72 73 0.25 40 56 59 59 0.20 20 0.15 Q1-06 Q2-06 Q3-06 Q4-06 Q1-07 Q2-07 Q3-07 Q4-07 Q1-08 Q2-08 Q3-08 Q4-08 12% of net income 15% of net income 17% of
Slide 42: New non-GAAP EPS
New non-GAAP EPS 2006* 2007 2008* 08-09 2009E** 08-09E $m $m $m % $m % 2,608 Reported net income 1,867 1,952 2,374 22% 10%-18% to 2,791 Amortization*** 154 171 142 477 Non-GAAP net income 2,928 2,021 2,123 2,516 19% 16%-24% to 3,111 2.85 Reported EPS 2.30 2.38 2.86 20% 0%-7% to 3.05 Amortization***
Slide 43: Cash flow projection
Cash flow projection $ million 3,400 3,231 Cash from operations 1,813 Net asset purchase Dividends paid 4 4 4 Free cash flow 2007 2008 2009E $5,163m acquisitions
Slide 44: Debt expected to decline in 2009
Debt expected to decline in 2009 Borrowings, $ million -$2bn 8,443 Bridge loan 4 6,413 Other short-term and long-term debt* Barr-syndicate 4 4 (3-5 years) Fixed debt 4 4 Convertible debt 4 4 $' * Includes $250M 6 year loan from EIB
Slide 45: Leverage – back to where we started!
Leverage – back to where we started! 24.7 24.7 18.8 19.4 Short-term debt Long-term debt Equity 31 Dec 30 Sept 31 Dec 31 Dec 2007 2008 2008 2009E Leverage 27% 24% 34% 25%
Slide 46: 2009 margins model (non-GAAP)
2009 margins model (non-GAAP) % of sales 2007* 2008* 2009E* Sales 100 100 100 COGS 47 45 42-45 Gross profit 53 55 55-58 R&D 6 7 7-7.5 Sales & marketing 13 16 16-18 General & administrative 7 6 <6 Total operating cost 72 74 71-76.5 Operating profit 28 26 23.5-29 * Previous results and 2009 projection
Slide 47: Barr integration synergies and future amortization data points
Eyal’s SLA slide – some more data points Barr integration synergies: Over $400M in 2011 SG&A: 50%; R&D + COGS – 50% Future amortization: 2009: Q1 – $57M; Q2 – $152M; Q3 – $143M; Q4 – $125M Totals: 2009 – $477M (+ $270 Step Up); 2010 – $530M; 2011 – $444M; 2012 – $423M Total intangibles – $2.8B (amor
Slide 48: Outperforming peers and broader U.S. stock market
Outperforming peers and broader U.S. stock market Teva DRG S&P 500 250% Teva, Health Sector, S&P 500 2/1/2003 – 11/2/09 200% 150% 100% 50% 3/11/02 3/11/03 3/11/04 3/11/05 3/11/06 3/11/07 3/11/08
Slide 49: Number 10 on NASDAQ
Number 10 on NASDAQ Market capitalization, $ bn, 13 February 2009 " ' $ / 5 $' 6 ' ) 7 8 ) 7 +, ' % ! 5 ' $ 9 8" " ) & : ' ; 5 7
Slide 50: Summary
Summary A very strong ending to a better then forecasted year 2009 and 2010 look good! Foreign exchange impact Very strong cash generation Solid balance sheet, leverage better than planned Barr integration – better than originally anticipated
Slide 51: THANK YOU!
il THANK YOU! TEVA PHAFMAOEUTIOAL INDUSTRIES LTD.
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