Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q1 2014 Earnings Presentation
35 slides from Teva Pharmaceutical Industries's earnings presentation, May 1, 2014
Slide 1: First Quarter Results 2014
May 1 First Quarter Results 2014 2014 1
Slide 2: Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995: This presentation contains forward‐looking statements, which are based on management’s current beliefs and expectations. Such statements involve a number of known and unknown risks and uncertainties that could cau
Slide 3: Opening Remarks
Opening Remarks EErez Vigodman Vi d President & Chief Executive Officer 3
Slide 4: Review of first quarter 2014 results
Review of first quarter 2014 results Eyal Desheh Chief Financial Officer 4
Slide 5: Q1/2014 – Solid results
Q1/2014 – Solid results Q1/14* Q1/13* Change Revenues 5,001 4,901 +2% $m p g income Operating 1 365 1,365 1 250 1,250 +9% $m Net income 1,038 960 +8% $m EPS 1.22 1.12 +9% $ Cash flow from operations** 1,128 1,102 +2% $m *Net income, operating income and EPS are non GAAP results . ** Excludes legal s
Slide 6: FY outlook for 2014 reaffirmed
FY outlook for 2014 reaffirmed Outlook unchanged. Two possible Generic Exclusive scenarios regarding generic competition to COPAXONE® COPAXONE® COPAXONE® in the U.S. are maintained: Net Revenues ($ B) 19.3‐20.3 19.8‐20.8 The “Generic COPAXONE®” scenario GP (%) 57%‐59% 58%‐60% assumes the launch of
Slide 7: Revenues bridging
Revenues bridging $ million 70 56 6 32 5,001 4,901 Q1 2013 Generics MS Specialty OTC & Other Q1 2014 ex‐MS We recently changed the classification of certain of our products. The data presented have been conformed to reflect the revised classification for all periods. 7
Slide 8: Profitability bridging
Profitability* bridging $ million 117 8 36 1 667 1,667 51 1,557 Q1 2013 Generics MS Specialty OTC & Other Q1 2014 ex‐MS Profitability consists of gross profit, less S&M and R&D expenses related to the segment. Segment profitability does not include G&A expenses, amortization and certain other items.
Slide 9: Q1/2014 – Non-GAAP income data
Q1/2014 – Non‐GAAP income data $ million Change Except EPS Q1 2014 Q1 2013 vs. Q1 2013 Revenues 5,001 4,901 2% COGS 2,014 , 2,030 , ‐1% Gross Profit 2,987 2,871 4% R&D 353 329 7% S&M 967 985 ‐2% G&A 302 307 ‐2% Operating Income 1,365 1,250 9% Finance exp. 84 81 4% Tax 239 193 24% Net Income 1,038 96
Slide 10: Q1/14 – Non-GAAP reconciliation
Q1/14 – Non‐GAAP reconciliation $ million Except EPS Q1‐14 Q1‐13 non‐GAAP EPS ($) 1.22 1.12 non‐GAAP net income 1,038 960 Amortization 285 279 Restructuring, impairment and other expenses 61 58 Legal settlement and reserve 29 27 Regulatory actions 18 12 Financial expense ‐3 94 Corresponding tax bene
Slide 11: Q1/2014 – GAAP income statement
Q1/2014 – GAAP income statement $ million Diff Except EPS Q1‐14 Q1‐13 vs. Q1‐13 Revenues 5,001 4,901 2% COGS 2 304 2,304 2 311 2,311 ‐‐ Gross Profit 2,697 2,590 4% R&D 353 329 7% S&M 984 995 ‐1% G&A 302 307 ‐2% 2% Restructuring, legal settlement, 86 85 1% acquisition and impairment Operating Profit
Slide 12: Q1/2014 – Foreign exchange (Fx) effects
Q1/2014 – Foreign exchange (Fx) effects Change Fx Effect Real Q1/14 Q / Q1/13 Q / ($M) ($M) Change Revenues 130 5,001 4,901 100 ‐30 $M +3% Operating income* 142 1,365 1,250 115 ‐27 $M +11% Most significant foreign exchange effect on revenues: Russia, Latin America, Japan, Canada and Europe Most sign
Slide 13: Revenues breakdown by segment
Revenues breakdown by segment $ million 5,001 +2% 4,901 Others 489 10% ‐6% 521 11% Specialty ex‐MS 1,044 21% +6% 988 20% MS 1,070 21% +1% 1,064 22% Generics 2,398 48% +3% 2,328 47% Q1/14 Q1/13 We recently changed the classification of certain of our products. The data presented have been conformed t
Slide 14: Profitability breakdown by segment
Profitability* breakdown by segment $ million 1 667 1,667 +7% 1,557 Others 51 3% +19% 43 3% Specialty ex‐MS 343 21% 307 20% +12% MS 774 46% ‐6% 825 53% Generics 499 30% +31% 382 24% Q1/14 Q1/13 Profitability consists of gross profit, less S&M and R&D expenses related to the segment. Segment profitab
Slide 15: Cash flow trends
Cash flow trends 1,656 $ million 1,334 CF before 1,128 Cash from Operations 1,102 tax & panto CF before legal payments settlements ttl t off Asset Purchase, Net 181 of $840 $230 million million 898 CF before 875 panto & modafinil 816 payments Dividends 281 229 of $ 890 225 million 304 268 444 291 21
Slide 16: Improved financial leverage
Improved financial leverage $ billion 35.5 35.0 34.8 34.8 34.1 12.7 12.6 12.2 11.8 Debt 12.5 Equity 22.8 21.6 22.4 22.6 23.0 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Leverage 36% 37% 36% 35% 34% 16
Slide 17: Teva's dividend history
Teva’s dividend history 350 1.5 300 1 21 1.21 1.15 1.2 250 1 0.9 200 0.8 0.7 150 0.6 291 295 281 276 0.6 268 264 0.45 230 237 204 214 100 203 203 190 165 164 167 172 174 134 141 0.3 127 126 50 90 0 0 Total Dividend ($m) NIS per Share Q22014 payment is an estimate based on current exchange rate and n
Slide 18: Perspective on the business and immediate priorities
Perspective on the business and immediate priorities EErez Vigodman Vi d President & Chief Executive Officer 18
Slide 19: Key focus areas
Key focus areas 3 Position Teva for long‐term value l creationi 2 Drive Organic Growth Maintain COPAXONE COPAXONE® franchise 1 Fi the Fix h foundation f d i 19
Slide 20: Fix the foundation of Teva
Fix the foundation of Teva Deliver on our cost reduction program Accelerate operational network transformation and integration Strengthen our global generic leadership while improving profitability 20
Slide 21: Deliver on our cost reduction program
Deliver on our cost reduction program We are fully committed and on track to deliver: • $1B reduction in gross expenses by end‐of‐year ‐ $600M since 2012 • $2B reduction in gross expenses by 2017 • $500M of net savings by 2017 Identifying opportunities to be more ambitious biti on the th nett savin
Slide 22: Accelerate operational network transformation & integration
Accelerate operational network transformation & integration Focus on manufacturing network as a source of savings Plan to close or divest 11 p plants alreadyy underwayy 16 additional plants under evaluation Reassign significant capacity to low‐cost facilities in our network Operational Excel
Slide 23: Strengthen global generic leadership
Strengthen global generic leadership We will regain focus on our generics business. Emphasis on: • Portfolio selection & management • R&D and innovation • Markets and products profitability • Improving profitability by at least 600 basis points by end‐of‐year end of year 2017 Create a leading po
Slide 24: ~25,000 patients on COPAXONE 40mg
Maintain COPAXONE® franchise COPAXONE® 40mg offers a unique set of benefits to patients Teva’s world‐class world class “Shared Solutions” patient service center center, and wide traction achieved with payers (over 90% of commercial lives) Rapid uptake since launch of the product in late January 2014
Slide 25: Maintain COPAXONE franchise – NRx
Maintain COPAXONE® franchise COPAXONE COPAXONE® NRx COPAXONE 20mg NRx COPAXONE 40mg NRx COPAXONE Family NRx 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Jan 03 Jan 10 Jan 17 Jan 24 Jan 31 Feb 07 Feb 14 Feb 21 Feb 28 Mar 07 Mar 14 Mar 21 Mar 28 Apr 04 Apr 11 Apr 18 Week Ending 25
Slide 26: Maintain COPAXONE franchise – TRx
Maintain COPAXONE® franchise COPAXONE COPAXONE® TRx COPAXONE 20mg TRx COPAXONE 40mg TRx COPAXONE Family TRx 14,000 , 12,000 10,000 8,000 6,000 4,000 2,000 0 Jan 03 Jan 10 Jan 17 Jan 24 Jan 31 Feb 07 Feb 14 Feb 21 Feb 28 Mar 07 Mar 14 Mar 21 Mar 28 Apr 04 Apr 11 Apr 18 Week Ending 26
Slide 27: Total MS Market NRx Volume
Total MS Market NRx Volume through Week Ending 4‐18‐2014 Weekly NRx Volume COPAXONE Family COPAXONE 40mg Avonex Betaseron Rebif Tysabri Extavia Gilenya Aubagio Tecfidera 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 Dec‐13 Apr‐13 May‐13 May‐13 7‐Jun‐13 21‐Jun‐13 5‐JJul‐13 19‐JJul‐13 Au
Slide 28: Total MS Market TRx Volume
Total MS Market TRx Volume through Week Ending 4‐18‐2014 Weekly TRx Volume COPAXONE Family COPAXONE 40mg Avonex Betaseron Rebif Tysabri Extavia Gilenya Aubagio Tecfidera 16,000 14,000 12,000 , 10,000 8,000 6,000 4,000 2,000 0 Dec‐13 Apr‐13 May‐13 May‐13 7‐Jun‐13 21‐Jun‐13 5‐JJul‐13 19‐JJul‐13 Aug‐13
Slide 29: Defend COPAXONE franchise
Defend COPAXONE® franchise We will do everything in our power to vigorously protect our intellectual property U.S. Supreme Court will hear appeal on COPAXONE® patent in Fall 2014 (decision expected in 2015) If generici filer fil is i approved d andd decides d id to t launch, l h suchh sales l wi
Slide 30: Pipeline of patient-centric solutions
Pipeline of patient‐centric solutions 15 products in Phase 3 1 g approval through pp 1 4 products in Phase 2 2 18 NTEs NTE currently l in i 1 1 development 4 1 1 2 1 2 2 1 1 1 Approved Submitted Phase III Phase II Phase I CNS Respiratory Oncology Others 30
Slide 31: Pipeline delivering results
Pipeline of patient‐centric solutions Pi li delivering Pipeline d li i results lt Combined estimated peak sales of these 3 products is $1 Billion 31
Slide 32: Positioning Teva for long-term value creation
Positioning Teva for long‐term value creation Execute on our immediate priorities while strategic review i isi underway d Create a single powerful narrative and clear direction Deliver on our commitment of long‐term g sustainable value for shareholders 32
Slide 33: Positioning Teva for long-term value creation
Positioning Teva for long‐term value creation Capitalizing on trends Solidifying the and discontinuities in foundation of Teva our industry Teva’s unique strengths Building a new future f t for f Teva T Differentiated Clear direction Seizes opportunities 33
Slide 34: Role of M&A
Role of M&A Geographic expansion Portfolio & (particularly in pipeline assets Technologies emerging markets) Criteria Accretive to non‐GAAP earnings ROI friendly Overall strategic fit Create medium medium‐ and long long‐term term value for shareholders 34
Slide 35: Q&A
Q&A 35
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