Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q4 2020 Earnings Presentation
44 slides from Teva Pharmaceutical Industries's earnings presentation, Feb 10, 2021
Slide 1: Fourth Quarter and Full Year 2020 Results
Teva Pharmaceutical Industries Ltd. Fourth Quarter and Full Year 2020 Results February 10, 2021
Slide 2: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forw ard-looking statements w ithin the meaning of the Private Securities Litigation Reform Act of 1995, w hich are based on management’s current beliefs and expectations and are subject to substantial risks and uncertai
Slide 3: Kåre Schultz, President and Chief Executive Officer
Kåre Schultz President and Chief Executive Officer
Slide 4: Highlights
Highlights Financial Business Met key components of 2020 financial − Successfully navigated COVID-19 pandemic with minimal impact on our supply chain, R&D programs and product launches guidance: − AUSTEDO® rapid growth continues − Revenues of $16.7 billion − AJOVY® global sales bolstered by launch o
Slide 5: Revenue Development
Revenue Development $ millions 4,468 4,357 4,454 4,149 4,177 4,093 332 344 307 3,978 317 342 314 3,870 578 565 316 572 335 521 582 565 488 529 1,184 1,237 1,264 1,402 1,183 1,163 1,116 1,001 2,373 2,300 2,047 2,071 2,051 2,082 2,047 2,017 Other Activities International Markets Europe North America Q
Slide 6: AUSTEDO Continues to Grow
® AUSTEDO® Continues to Grow AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 185 40,000 168 Net global sales of $638 million in 35,503 161 35,000 2020, an increase of 65% vs. 2019 136 30,000 122 ~36K prescriptions dispensed in Q4 105 2020 25,000 96 20,000 74
Slide 7: AJOVY Sales Bolstered by Auto-Injector Launch
AJOVY® Sales Bolstered by Auto-Injector Launch AJOVY® Weekly Normalized TRx Count AJOVY® NBRx Share* Highlights 18,000 • Net global sales of $183 million in 2020: 16,000 • U.S. - $134 million, an increase of 45% vs. 2019 30% • Europe - $31 million 28% 14,000 28% 25% 25% 24% 24% 24% 12,000 • U.S. nor
Slide 8: TRUXIMA - Cornerstone of Teva's U.S. Biosimilar Strategy
TRUXIMA® - Cornerstone of Teva’s U.S. Biosimilar Strategy TRUXIMA Market Shares within rituximab IV, Q4 2020 Highlights 24.0% 24 22.2% Reached 24% market share 22 20.6% 20.6% by end of 2020 19.5% 20.1% 20 16.5% Remains only rituximab Volume Market Share in % 18 15.6% biosimilar indicated for 16
Slide 9: Teva Specialty & Biosimilar Product Pipeline
Teva Specialty & Biosimilar Product Pipeline by development stage - February 2021 Under Regulatory Pre-clinical Phase 1 Phase 2 Phase 3 Pre Submission Review TEV-54242 Fremanezumab2 Fremanezumab2 Fasinumab3 Digihaler® TEV-54142 Biosimilar to Humira® Oncology Additional Indication Fibromyalgia Osteoa
Slide 10: Gross Margin Improvement Program focused on key levers
Gross Margin Improvement Program focused on 5 key levers Take a total Cost of Continue the focus and Ensure operational Design & digitize Develop an agile, Ownership lens to drive accelerate the ongoing excellence and build end-to-end supply chain repeatable and reliable procurement savings network
Slide 11: Pharmaceutical Manufacturing Sites
Pharmaceutical Manufacturing Sites Number of sites 85 80 80 75 73 70 65 64 61 60 55 50 2017 2018 2019 2020 Footprint will continue to shrink - 11 additional sites announced to be divested/closed | 11 |
Slide 12: Operating Margin Expansion
Operating Margin Expansion Non-GAAP operating margin % 28.5% 28.0% 28.0% 27.8% 27.5% 26.8% 27.0% 26.5% 26.3% 25.9% 26.0% 25.5% 25.0% 24.5% 24.5% 24.0% 2017 2018 2019 2020 2021 Guidance* 2023 Target | 12 | * Estimated margin based on 2021 guidance
Slide 13: Net Debt Development
Net Debt Development $ billions $36.0 $34.0 $32.0 $30.0 $28.0 $26.0 $24.0 $22.0 $20.0 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1'20 Q2'20 Q3'20 Q4'20 | 13 |
Slide 14: Long-Term Financial Targets
Long-Term Financial Targets To be achieved by year-end 2023 Operating income margin (2)(3) Cash-to-earnings(1)(3)(4) Net debt / EBITDA (3)(5) 28% >80% <3X Committed to utilizing cash flow to pay down debt; we do not plan to raise equity (1) Free cash flow includes cash flow generated from operating
Slide 15: Teva's 2030 Environmental Long Term Targets
Teva’s 2030 Environmental Long Term Targets CLIMATE • Reduce Scope 1 and 2 greenhouse gas (GHG) emissions by 33% ACTION & • Support efforts to limit global temperature increase to well below 2°C RESILIENCE • Aligned with the 2015 Paris Climate Agreement RESPONSIBLE • Increase energy efficiency by 10
Slide 16: Eli Kalif, EVP & Chief Financial Officer
Eli Kalif EVP & Chief Financial Officer
Slide 17: Q4 2020 Summary
Q4 2020 Summary $ millions, except EPS Q4 2020 Q4 2019 Q4 2020 Q4 2019 GAAP Non-GAAP Revenues 4,454 4,468 4,454 4,468 Operating income (loss) 406 148 1,140 1,061 Net income (loss) attributable to Teva 150 110 753 683 0.14 0.10 0.68 0.62 Earnings (loss) per share ($)* 1,100 million 1,094 million 1,10
Slide 18: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q4 2020 Comments Amortization 262 Quarterly run-rate Impairment of assets, and accelerated depreciation 236 Mainly US product rights and IPR&D Mainly related to a fine imposed in connection with Legal settlements 50 the 2005 Modafinil patent settlement Equity compensa
Slide 19: Non-GAAP Summary
Non-GAAP Summary $ billions, except EPS Q4 2020 Q4 2019 Change FY 2020 FY 2019 Change Revenues 4.5 4.5 - 16.7 16.9 (1%) 2.3 2.3 8.7 8.7 Gross profit 52.3% 50.6% 1.6% 52.4% 51.5% 0.9% 1.1 1.1 4.4 4.1 Operating income 25.6% 23.8% 1.9% 26.3% 24.5% 1.8% EBITDA 1.3 1.2 6% 4.9 4.7 5% Net income attributab
Slide 20: Spend Base
Spend Base -4% $ millions 12,745 12,271 -3% 3,406 3,313 8,185 7,925 (64%) (65%) 2,206 2,126 (65%) (64%) 4,561 4,346 1,200 1,187 (36%) (35%) COGS (35%) (36%) OPEX Q4 2019 Q4 2020 FY 2019 FY 2020 Revenues 4,468 4,454 16,887 16,659 GP% 50.6% 52.3% 51.5% 52.4% OP% 23.8% 25.6% 24.5% 26.3% | 20 |
Slide 21: Free Cash Flow
Free Cash Flow $ millions 974 582 Cumulative 551 4 Quarters: 506 471 $ 2.1 bn Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Act Act Act Act Act | 21 | * Free cash flow includes cash flow generated from operating activities net of capital expenditures and deferred purchase price cash component collected fo
Slide 22: Cash-to-Earnings
Cash-to-Earnings $ millions +203 +57 Long-range target: 80% 2,830 2,110 2,627 2,053 78% 75% FY-19 FY-20 FY-19 FY-20 FY-19 FY-20 Free Cash Flow Cash-to-earnings* Non-GAAP Net Income | 22 | • * Free Cash Flow / non-GAAP Net income
Slide 23: Debt Reduction
Debt Reduction $ billions $2.1 billion cash generated, partially offset by $900 million negative FX impact Net Debt 24.9 24.3 23.9 23.8 23.7 4.7 4.9 4.9 4.8 4.9 EBITDA MAT Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Net Debt / EBITDA MAT* 5.32 4.95 4.90 4.92 4.83 Leverage 64% 64% 64% 71% 70% | 23 | * Te
Slide 24: 2020 Guidance Development
2020 Guidance Development 2020 November 2020 February 2020 $ billions, except EPS Actual Outlook Outlook Revenues 16.7 16.5 - 16.8 16.6 - 17.0 Operating Income 4.4 4.2 - 4.4 4.0 - 4.4 EBITDA 4.9 4.7 - 4.9 4.5 - 4.9 EPS ($) 2.57 2.40 - 2.55 2.30 - 2.55 1,099 million shares 1,098 million shares 1,098
Slide 25: 2021 Non-GAAP Outlook
2021 Non-GAAP Outlook $ billions, except EPS 2021 Outlook 2020 Actual November 2020 Outlook Revenues* 16.4 - 16.8 16.7 16.5 - 16.8 COPAXONE ~$1,050 million $1,337 million ~$1,300 million AUSTEDO ~$950 million $638 million ~$650 million AJOVY ~$300 million $183 million ~$200 million Operating Income
Slide 26: Q&A
Q&A
Slide 27: Additional Information
Additional Information teva
Slide 28: FY 2020 Summary
FY 2020 Summary FY FY FY FY $ millions, except EPS 2020 2019 2020 2019 GAAP Non-GAAP Revenues 16,659 16,887 16,659 16,887 Operating income (loss) (3,572) (443) 4,388 4,142 Net income (loss) attributable to Teva (3,990) (999) 2,830 2,627 (3.64) (0.91) 2.57 2.40 Earnings (loss) per share ($)* 1,095 mi
Slide 29: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q4 2020 Q4 2019 $ millions, except EPS Q4 2020 Q4 2019 Change Margins Margins Revenues 4,454 4,468 (0%) COGS 2,405 54.0% 2,510 56.2% (4%) Gross profit 2,048 46.0% 1,958 43.8% 5% R&D 293 6.6% 232 5.2% 26% S&M 683 15.3% 706 15.8% (3%) G&A 327 7.3% 318 7.1% 3% Legal sett
Slide 30: FY 2020 GAAP Income Statement
FY 2020 GAAP Income Statement FY 2020 FY 2019 $ millions, except EPS FY 2020 FY 2019 Change Margins Margins Revenues 16,659 16,887 (1%) COGS 8,933 53.6% 9,351 55.4% (4%) Gross profit 7,726 46.4% 7,537 44.6% 3% R&D 997 6.0% 1,010 6.0% (1%) S&M 2,498 15.0% 2,614 15.5% (4%) G&A 1,173 7.0% 1,192 7.1% (2
Slide 31: Q4 2020 Foreign Exchange Impact
Q4 2020 Foreign Exchange Impact $ millions Q4 2020 Q4 2019 Diff FX Effect Diff net FX Revenues 4,454 4,468 (14) 35 (49) Operating income 406 148 258 (30) 288 GAAP Operating income 1,140 1,061 79 (24) 103 Non-GAAP | 31 |
Slide 32: Net Revenue and Profitability (Non-GAAP)
Net Revenue and Profitability (Non-GAAP) $ millions 4,468 4,454 4,357 4,177 4,149 4,093 3,978 3,870 51.8% 52.4% 51.4% 50.6% 53.1% 52.0% 52.4% 52.3% 24.6% 24.2% 25.7% 23.8% 28.5% 25.3% 25.8% 25.6% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Net Revenues Gross Margin Operating Marg
Slide 33: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q4-19 Q1-20 Q2-20 Q3-20 Q4-20 FY-19 FY-20 North America Segment 2,373 2,082 2,047 2,017 2,300 8,542 8,447 Generic products 1,137 952 923 928 1,206 3,963 4,010 AJOVY ® 25 29 34 35 36 93 134 AUSTEDO® 136 122 161 168 185 412 637 ® ® BENDEKA /TREANDA
Slide 34: Profits and EPS (Non-GAAP)
Profits and EPS (Non-GAAP) $ millions, EPS in $ 1,244 1,140 1,051 1,061 1,019 1,011 1,025 979 835 753 654 653 637 683 637 605 0.60 0.60 0.58 0.62 0.76 0.68 0.55 0.58 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Net Income Operating Profit EPS | 34 |
Slide 35: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 FY-2019 FY-2020 COGS 2,206 2,046 1,859 1,894 2,126 8,185 7,925 S&M 665 570 559 566 627 2,438 2,322 R&D 237 221 233 233 254 1,004 941 G&A 309 290 245 269 312 1,145 1,115 Other income (9) (13) (6) (8) (5) (27) (31) Total 3,
Slide 36: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 15 -5 17 52 1,140 1,061 Q4-19 North America Europe International Markets Other Activities Q4-20 | 36 |
Slide 37: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,244 36 (3%) 1,140 1,061 156 (13%) 33 (3%) 17 (2%) 1,025 96 (8%) 101 (10%) 979 28 (3%) 66 (7%) 125 (12%) 273 258 502 97 (10%) ( 24%) ( 24%) ( 40%) 244 312 ( 25%) ( 30%) 686 738 ( 65%) 550 573 560 ( 65%) ( 44%) ( 59%) ( 55%) Other Activities Internation
Slide 38: Quarterly EBITDA
Quarterly EBITDA $ millions 1,375 1,204 1,277 1,108 1,153 Q4 2019 Q1 2020 Q2 2020 Q3 2020 Q4 2020 | 38 | * EBITDA is based on non-GAAP operating income (which excludes amortization and certain other items, as well as depreciation expenses)
Slide 39: Q4 2020 EBITDA to Free Cash Flow
Q4 2020 EBITDA to Free Cash Flow $ millions (806) (-63%) (275) (143) (213) 1,277 13 (82) (176) 303 (232) 471 331 Non-GAAP Interest Tax payments WC & Other Legal Securitization* Operating Securitization Asset sales; Free EBITDA payments, net Settlements cash flow reclass Capex gross cash flow | 39 |
Slide 40: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Dec 31, 2020 Dec 31, 2019 Diff Cash and Cash Equivalents 2.2 2.0 0.2 AR Trade 4.6 5.7 (1.1) Pre-paid Expenses and Other Current Assets 1.8 1.4 0.5 Inventory 4.4 4.4 (0.0) Fixed Assets 6.3 6.4 (0.1) Intangible Assets 8.9 11.2 (2.3) Goodwill 20.6 24.8 (4.2) Other
Slide 41: Q4 2020 Debt Movements
Q4 2020 Debt Movements $ billions -0.1 0.4 -2.2 25.6 25.9 23.7 Sep 30, RCF* Repayment FX Dec 31, Cash balance Dec 31, 2020 2020 2020 Gross Debt Gross Debt Net Debt | 41 | * RCF – Revolving Credit Facility
Slide 42: FY 2020 Debt Movements
FY 2020 Debt Movements $ billions -1.9 0.9 -2.2 26.9 25.9 23.7 Dec 31, Debt Repayment FX Dec 31, Cash balance Dec 31, 2019 2020 2020 Gross Debt Gross Debt Net Debt | 42 |
Slide 43: Teva 2020 ESG Performance
Teva 2020 ESG Performance 2020 Score 2020 Sector Ranking Previous Score Previous Sector Ranking 65 Top 10% 63 Top 14% 36 Top 30% 33 Top 45% A- Top 38% B Top 64% C Bottom 18% Not scored Not scored C Top 40% D+ N/A 3.4 Top 29% 3.9 Top 12% B Bottom 22% B Bottom 22% 56 Top 23% 56 Top 17% 22 Top 22% 9 To
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