Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q2 2014 Earnings Presentation
46 slides from Teva Pharmaceutical Industries's earnings presentation, Jul 31, 2014
Slide 1: Second Quarter Results 2014
Second Quarter Results 2014 July 31, 2014
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: Review of Second Quarter 2014 Financial Results
03 Review of Second Quarter 2014 Financial Results Eyal Desheh Chief Financial Officer
Slide 4: Q2 2014 – Strong results
Q2 2014 – Strong results 04 Q2 2014* Q2 2013* Change Revenues 5,045 4,924 +2% 2% $ $m Operating income 1,367 1,260 +8% $m Net income 1,054 1,018 +4% $m EPS 1.23 1.20 +3% $ Cash flow from operations** 1,253 875 +43% $m *Net income, operating income and EPS are non GAAP results . ** Excludes legal set
Slide 5: Improving 2014 Guidance
05 Improving 2014 Guidance Two possible scenarios regarding 2014 Updated Updated generic competition to Copaxone® in the U.S. Generic Exclusive Copaxone® Copaxone® are maintained: Net Revenues ($ ($B)) 19.5‐20.5 19.8‐20.8 The “Generic Copaxone®” scenario GP (%) 58%‐59% 58%‐60% assumes the launch o
Slide 6: Q2 2014 – Non-GAAP income data
Q2 2014 – Non‐GAAP income data 06 $ million Q2 2014 Q2 2013 Change Except EPS Revenues 5,045 4,924 2% COGS 2,118 2,036 4% Gross Profit 2,927 2,888 1% R&D 344 336 2% S&M 914 973 (6%) G&A 302 319 (5%) Operating Income 1,367 1,260 8% Finance exp. 76 82 (7%) Tax 240 161 49% Ass. & minority (3) (1) 200%
Slide 7: Q2 2014 – GAAP income statement
Q2 2014 – GAAP income statement 07 Q2 2014 Q2 2013 Change $ million Revenues 5,045 4,924 2% Except EPS COGS 2,384 2,331 2% Gross Profit 2,661 2,593 3% R&D 344 339 1% S&M 921 982 (6%) G&A 302 319 (5%) Restructuring, legal settlement, acquisition 169 1539 (89%) and impairment O Operating ti Profit P f
Slide 8: Q2 2014 – Non-GAAP reconciliation
Q2 2014 – Non‐GAAP reconciliation 08 Q2 2014 Q2 2013 $ million non‐GAAP EPS ($) 1.23 1.20 Except EPS non‐GAAP net income 1,054 1,018 Amortization 256 288 Restructuring and other expenses 90 58 Impairment of long‐lived assets 56 49 Legal settlement and reserve 26 1,435 Regulatory actions 14 16 Financ
Slide 9: Revenues bridging
Revenues bridging 09 $ million 110 107 35 131 5,045 4,924 Q2 2013 Generics MS Specialty OTC & Other Q2 2014 ex MS 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.
Slide 10: Copaxone sales and U.S. TRx market share
10 Copaxone® sales and U.S. TRx market share 1,070 1,052 1,142 1,070 939 1,200 37% 1,000 36.0% 36% 253 337 254 254 35% 800 277 34.3% 34% 600 33.1% 33.2% 32.5% 33% 400 817 798 805 662 32% 816 200 31% ‐ 30% $ million Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 US EU & RoW CopaxoneFamily Copaxone US Family
Slide 11: Copaxone U.S. revenues: Q1 2014 to Q2 2014
Copaxone U.S. revenues: Q1 2014 to Q2 2014 11 56 Increased demand Channel inventory d launch and l h quantities 210 816 662 $ million Q1 2014 Revenues Q2 2014 Revenues
Slide 12: Revenues breakdown by segment
Revenues breakdown by segment 12 $ million 5,045 +2% 4,924 Others 503 10% +7% 468 9% Specialty ex-MS 1,088 21% +11% 981 20% 939 19% ‐12% 1,070 22% MS Generics 2,515 50% +5% 2,405 49% Q2 2014 Q2 2013 We recently changed the classification of certain of our products. The data presented have been confo
Slide 13: Revenues breakdown by market
Revenues breakdown by market 13 $ million 5,045 +2% 4,924 ROW 987 20% +4% 945 19% Europe 1,521 1 521 30% +4% 1,457 30% US +1% 2,537 50% 2,522 51% Q2 2014 Q2 2013
Slide 14: Profitability bridging
Profitability* bridging 14 $ million 156 57 22 101 1,669 1,579 Q2 2013 Generics MS Specialty OTC & Other Q2 2014 ex MS 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
Slide 15: Profitability breakdown by segment
Profitability* breakdown by segment 15 $ million +6% 1,669 1,579 Others 67 4% ‐25% 89 5% Specialty ex-MS 370 22% +18% 313 20% MS 700 42% ‐13% 801 51% Generics 532 32% +41% 376 24% Q2 2014 Q2 2013 * Profitability consists of gross profit, less S&M and R&D expenses related to the segment. Segment prof
Slide 16: Q2 2014 – Foreign exchange impact
Q2 2014 – Foreign exchange impact 16 Q2 2014 Q2 2013 Change ($ M) Fx Effect ( $M) Real Change Revenues 105 5,045 4,924 121 16 $M +2% Operating income 122 1,367 1,260 107 (16) $M +10% Most significant foreign exchange effect on revenues: Gains on euro, British pound and Israeli shekel, partially offs
Slide 17: Cash flow trends
Cash flow trends 17 $ million 1,656 1,334 legal settlements & 1,253 l l legal reserves: settlements & $840 million 1,128 legal reserves: settlements & $890 million legal reserves: settlements & $200 million reserves: 1,053 $230 million Cash from Operations 875 898 171 816 229 225 Asset Purchase, Net
Slide 18: Improved financial leverage
Improved financial leverage 18 $ billion Debt 12.6 12.2 11.8 11.2 12.5 Equity 21.6 22.4 22.6 23.0 23.6 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Leverage 37% 36% 35% 34% 32% Debt/EBITDA 2.19 2.24 2.16 2.04 1.89
Slide 19: Teva's dividend history
19 Teva’s dividend history Q2 dividend set at NIS 1.21 1 21 350 1.50 1.21 300 1.15 1 20 1.20 250 1.00 0.80 0.90 200 0.70 0.60 150 291 299 281 268 276 0.60 264 230 237 100 203 203 204 214 190 165 164 167 172 174 127 134 126 141 0 30 0.30 50 90 0 0.00 Total Dividend ($m) NIS per Share
Slide 20: Second Quarter 2014 Results
Second Quarter 2014 Results Erez Vigodman President & CEO
Slide 21: Making Progress on all our Must Wins for 2014
22 Making Progress on all our Must Wins for 2014 Position Teva for long‐ term value creation Drive organic growth Maintain COPAXONE® franchise Solidify the foundation
Slide 22: Solidify the Foundation
23 Solidify the Position Teva for long‐ term value creation Foundation Drive organic growth Maintain COPAXONE® franchise Solidify the foundation
Slide 23: Delivering on our Cost Reduction Program
24 Delivering on our Cost Reduction Program Original projection on New Projection on savings flowing to our savings flowing to our bottom‐line by 2017: bottom‐line by 2017: 500 800 million million Expect to save $1 billion in gross expenses by EOY; $2 billion by 2017 Byy the end of Q2, Q , we have s
Slide 24: Restructuring our organization
Restructuring our organization 25 Previous Structure Markets / Businesses President & CEO Core Processes Enabling Processes Global Americas Japan/ Quality R&D Europe Gx Specialty EMIA/APAC operations Gx S. Korea Position Business Human Teva for long‐ Corporate IT BD Legal Process Finance Resources t
Slide 25: Restructuring our organization
Restructuring our organization 26 New Structure Markets / Businesses President & CEO Core Processes Enabling Processes Global Global Global R&D Operations Generic Specialty Medicines Medicines Corporate Corporate Marketing Development, Human Position Excellence Finance Strategy and Legal Teva for lo
Slide 26: Strengthening our global leadership in Generics
27 Strengthening our global leadership in Generics Creation of Global Generics Medicines Group Gl b l iintegration Global t ti off businesses b i t d tto iimprove overallll performance expected f d profitability and fit bilit Appointed Siggi Olafsson President and CEO of Global Generic Medicines Gro
Slide 27: Maintain Copaxone franchise
28 Maintain Position Teva for long‐ term value creation Copaxone® p Drive organic growth franchise Maintain COPAXONE® franchise Solidify the foundation
Slide 28: Facts and Figures
29 Facts and Figures Copaxone® TRx & NRx leading global MS market share Copaxone® 40mg has exceeded our goals and expectations*: TRx conversion rate at 51%; NRx conversion rate at 52% Copaxone® 40mg TRx share of the U.S. MS market is 16.9% Copaxone® Family U.S. TRx trends stabilizing post 40mg
Slide 29: Competitive Landscape
Competitive Landscape Weekly Total Rx Market Share Sy py C ——— COPAXONE 4OMG ——— COPAXONE Family ——— Betaseron —— Reblf —— fAubaglo —— Tecfidera —— Gllenya = Tysabr
Slide 30: The Legal Front
31 The Legal Front Supreme Court hearing scheduled for Oct 15, 2014. Decision expected later this yyear or earlyy next yyear Amicus briefs filed to date strongly support our view that deference to the district court is the proper standard Any generic launch at risk could result in treble damages, po
Slide 31: The Regulatory Front
32 The Regulatory Front Citizen Petition filed with the FDA on July 7, 2014. Provides new gene expression data Implications of gene expression findings: Gene expression data underscores the very complex mechanism of action of Copaxone® Key K differences diff between b t Copaxone® C ® and d purpo
Slide 32: Drive organic Growth
33 Drive organic Position Teva for long‐ term value creation Growth Drive organic growth Maintain COPAXONE® franchise Solidify the foundation
Slide 33: Drive Organic Growth in Generics
34 Drive Organic Growth in Generics Focus on patent challenges ‐ both in U.S. and International markets Capture pricing opportunities Strong focus on product selection, pipeline and profitability Enhance our capabilities in complex generics and bio‐similars Position Penetrate emerging markets Teva f
Slide 34: Drive organic growth in Specialty
35 Drive organic growth in Specialty Rigorously defend all potential LOEs Successfully execute all our near‐term launches Deliver on the promise in our pipeline 15 products in Phase 3 through approval 9 products in Phase 2 18 NTEs approved for development Focus our therapeutic areas Position T
Slide 35: Teva's Unique Patient-Centric Strategy in Pain & Respiratory
36 Teva’s Unique q Position Teva for long‐ Patient‐Centric term value creation Strategy in Pain Drive organic growth & Respiratory Maintain COPAXONE® franchise Solidify the foundation
Slide 36: Our Goal: Become a Global Leader in Pain by 2020
Our Goal: Become a Global Leader in Pain by 2020 37 2014 2020 # of approved products 4 10+ Estimated annual net $0.5B $2B+ sales Geographic scope US Global Position Teva for long‐ term value creation Drive organic growth Position in global market 9 Top 3 Maintain COPAXONE® franchise Solidify the fou
Slide 37: We are Uniquely Positioned to Succeed in Pain Care
We are Uniquely Positioned to Succeed in Pain Care 38 #1 reason for loss of health globally Strong projected global market growth by 2020 Why Pain Care? Significant unmet medical needs Combination of reformulations, new mechanisms of action and technology Existing integrated capabilities a
Slide 38: Strong Patient-Centric Pipeline to Support Growth
Strong Patient‐Centric Pipeline to Support Growth 39 2014 2015 2016 2017 2018 2019 2020 In line brands generating $470m net sales in over 30 countries (2014E) Zecuity #1 or #2 in market ER Hydrocodone Abuse deterrent tablet ((NTE)) Abuse deterrent tablet (NTE) LBR‐101 CGRP antibody Position TV‐ 4507
Slide 39: Teva's Respiratory Franchise
Teva’s Respiratory Franchise 40 Our Vision: Become one of the top three global players by providing unique fully‐integrated products d solutions and l ti off superior i quality lit and d value l that th t improve i th d lilives off patients the everyday ti t Teva is currently the 5th largest respira
Slide 40: Multiple Approaches to Address Unmet Patient Needs
41 Multiple Approaches to Address Unmet Patient Needs Differentiated e e t ated Novel solutions based Generics molecules on innovative devices & technology t h l Position Teva for long‐ term value creation Drive organic growth Reslizumab es u ab Spiromax p ® MicroDose Generic Maintain COPAXONE® fran
Slide 41: Developing Products in all Major Categories & Diseases
42 Developing Products in all Major Categories & Diseases LAMA BAI RSV Allergic AB‐rated LAMA Asthma COPD Respiratory Syncytial Virus Rhinitis LAMA Qvar BAI DuoResp® Spiromax® FP RespiClick ICS FS Spiromax®/RespiClick AB‐rated AB rated ICS ICS/LABA / FS MDI AB‐rated ICS/LABA SABA
Slide 42: From a $1B to $2.5B Franchise by 2019
From a $1B to $2.5B Franchise by 2019 43 Rich Pipeline Driving Growth‐ 15 Submissions Planned by 2019 Pre‐Clinical Phase I Phase II Phase III Filed ProAir ® RespiClick ‐ Asthma, Bronchospasm 1 QVAR®BAI‐ Asthma Reslizumab (IV&SC)‐ Asthma 4 Fluticasone Proionate RespiClick (2:1)‐ Asthma Fluticasone Sa
Slide 43: Position Teva for long term Value Creation
44 Position Teva Position Teva for long‐ term value creation for longg term Drive organic growth Value Maintain COPAXONE® franchise Creation Solidify the foundation
Slide 44: Transform our Business Model
Transform our Business Model 45 Value Created Horizon 3 Create true long‐term value from integration Horizon 2 Capture Synergies Horizon 1 Position Solidify the foundation Teva for long‐ term value creation & drive organic growth Drive organic growth Maintain COPAXONE® franchise Generics Specialty S
Slide 45: Role of M&A
46 Role of M&A Generics Specialty Criteria non‐ Accretive to non Portfolio and pipeline assets (e.g., Labrys) GAAP earnings ROI friendly Overall strategic fit Technologies Create medium and long‐term value for share holders Geographic expansion (particularly in emerging markets) Po
Slide 46: Q&A
Q&A
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