Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Merrill Lynch Generics Conference 2008
46 slides from Teva Pharmaceutical Industries's conference presentation, Dec 1, 2008
Slide 1: Introducing the world leader in generic pharmaceuticals
Introducing the world leader in generic pharmaceuticals Eyal Desheh, CFO Gerard Van Odijk, President and CEO, Teva Europe Presentation at the Merrill Lynch Generics Conference Monday, December 1, 2008
Slide 2: Forward looking statements
Forward looking statements 2 TODAY’S PRESENTATION CONTAINS FORWARD-LOOKING STATEMENTS, WHICH EXPRESS THE CURRENT BELIEFS AND EXPECTATIONS OF MANAGEMENT. SUCH STATEMENTS INVOLVE A NUMBER OF KNOWN AND UNKNOWN RISKS AND UNCERTAINTIES THAT COULD CAUSE TEVA'S FUTURE RESULTS, PERFORMANCE OR ACHIEVEMENTS T
Slide 3: Today's discussion
Today’s discussion 3 Introducing Teva Financial and strategy update Q&A
Slide 4: Introducing Teva
Introducing Teva 4 Established 1901 $9.4bn 2007 sales ~60 countries ~29,000 employees
Slide 5: Three lines of business
Three lines of business 5 100%=$9.4bn 6% API (external only) synergies 75% Generic pharmaceuticals balance 19% Innovative pharmaceuticals (2007)
Slide 6: The world's number 1 generics player
The world’s number 1 generics player 6 Revenues, $ bn, 2007 Teva 9.4 Sandoz 7.4 Mylan 4.6 Barr 2.5 Watson 2.5 RatioPharm 2.4 Stada 2.3 Actavis 1.9 Ranbaxy 1.7 Perrigo 1.4 Dr. Reddy's 1.3 Gedeon R. 1.3 Source: company publications
Slide 7: With a strong branded operation
With a strong branded operation 7 Multiple Parkinson’s Respiratory sclerosis Supports balanced business model Marketing/branding skills for branded generics Highly profitable business
Slide 8: Vertical integration through in-house Teva API
Vertical integration through in-house Teva API 8 In-house API Generic & API Guaranteed quality R&D to maximizes ingredient supply first-to-file pipeline for generics business
Slide 9: Generics is all about scale – Teva is #1
Generics is all about scale – Teva is #1 9 IMS TRx MAT June, % of total Faster organic growth 39% Others Top 4 65% 61% Big 10% #4 players 11% #3 get bigger Top 4 35% 13% #2 7% 8% 6% Barr 12% 21% #1 - Teva 8% Better at M&A 1997 2007
Slide 10: Strategic partnership with customers: BIG to BIG
Strategic partnership with customers 10 Ranking of prescription volume, total Rx’s, millions, U.S. market Generic Branded Teva 467 17 484 Mylan 306 1 307 Novartis/Sandoz 197 62 259 Pfizer 225 Watson 224 Barr 126 1 Merck 107 Mallinckrodt 94 GSK 92 Qualitest 90 Apotex Actavis 86 86 BIG to BIG Greenhou
Slide 11: Big gets bigger – with Barr
Big gets bigger – with Barr 11 Ranking of prescription volume, total Rx’s, millions, U.S. market Generic Branded Teva + Barr 593 17 610 Mylan 306 1307 Novartis/Sandoz 197 62 259 Pfizer 225 Watson 224 Merck 107 Mallinckrodt 94 GSK 92 Qualitest 90 Apotex Actavis 86 86 BIG to BIG Greenhouse 82 Source:
Slide 12: R&D to feed the industry's largest pipeline
R&D to feed the industry's largest pipeline 12 U.S., 28 October 2008 $96bn $42bn brand sales brand sales
Slide 13: Globally diversified business
Globally diversified business 13 100%= $1.1bn $9.4bn International 6% 10% 4% Israel 25% 28% Europe 20% 58% North America 49% 1997 2007
Slide 14: Focused geographical expansion strategy
Focused geographical expansion strategy 14 Increased Japan, • M&A generics use Southern • Partnerships Europe • Portfolio Mature expansion economies, aging Stable US, • Market share population • Portfolio generics use Western Europe expansion Teva markets • Big to Big • M&A Branded Brazil, Mexico, •
Slide 15: The Japan opportunity
The Japan opportunity 15 • The world’s 2nd pharmaceutical market, with a relatively low generics share • Government aims to double generics use in 5 years
Slide 16: Our strategic partnership in Japan
Our strategic partnership in Japan 16 50% 50% Global expertise Local expertise Teva-KOWA Pharma Co., Ltd. $1bn sales in 2015
Slide 17: A platform for growth in Japan
A platform for growth in Japan 17 Global generics expertise Japan expertise Quality product supply Innovation track record Quality API supply Marketing expertise: Rx/OTC Patent challenge expertise Distribution channels
Slide 18: Global pharmaceutical supply chain
Global pharmaceutical supply chain 18 Manufacturing facilities Canada (3) UK (2) Netherlands Ireland Poland US (5) France Czech Rep Spain Hungary (2) Mexico (4) Israel (5) Peru Venezuela Chile Argentina
Slide 19: Successful M&A track record
Successful M&A track record 19 Index, 1995 = 100 Barr (global) IVAX (global) (pending) Bentley Dorom (Spain) Sales Net (Italy) CoGenesys income (technology) CAGR CAGR RDL 23% 29% (India – API) Honeywell Sicor (Italy) (global) APS Berk Novopharm Bayer Classics (UK) (Canada) (France) Copley Biocraft (
Slide 20: 2012 target: REACH EXCEED
2012 target 20 REACH EXCEED $20 20% billion net income sales margin
Slide 21: Pioneering biogenerics beyond 2012
Pioneering biogenerics beyond 2012 21 Attractive market Unique Teva assets • > $200bn by 2015 • Israeli and CoGenesys R&D capabilities • Patent expirations – 40% of total value • Financial resources • R&D, marketing • Early on ex-US investments limit activities (biosimilar number of competitors GCS-
Slide 22: Barr acquisition – compelling value creation
Barr acquisition – compelling value creation 22 Strong strategic fit Attractive economics + Extend global leadership Expand portfolio / pipeline Exceed 20/20 target
Slide 23: Teva in Europe
Teva in Europe 23 Growing market Growing market share
Slide 24: Two market clusters
Two market clusters 24 Generics volume market share, % Mature generics markets Emerging Growth generics markets Growth “Latin Europe” Growth Source: EGA 2007 Market Survey; US based on IMS estimates June 2007
Slide 25: Different competitive situations - 2008
Different competitive situations - 2008 25 UK Netherlands Strong Italy Teva position France Emerging Teva position Spain Germany Emerging Mature market market
Slide 26: The UK generics market in 2008
The UK generics market in 2008 26 Government cut reimbursement by GBP 400m Wholesalers reducing inventory levels, creating one-off sales reduction
Slide 27: Dutch government implemented tender system
Dutch government implemented tender system 27 Reimbursement list price (public) Pharmacy discount Discount flows back to payer Net price (“hidden”) Price transparency Before After
Slide 28: Teva benefits from its broad product range
Teva benefits from its broad product range 28 Insurer 25% impacted Affected by 50/50 tender Insurer not 25% TEVA RANGE impacted Market share increases All products 50/50 to 34% Not affected 50% by tender
Slide 29: Bentley creates Teva's Spanish growth platform
Bentley creates Teva’s Spanish growth platform 29 UK Netherlands Strong Italy Teva position France $360m cash acquisition Spain July 2008 2008 2H Basis for Spain platform Emerging Teva position -Product (pipeline) Spain Germany 2008 1H -Channel synergies Bentley: doctors Emerging Mature Teva: pharma
Slide 30: Growing our German market position
Growing our German market position 30 Tenders provide Opportunities for 2nd largest generics entry ticket attackers market - $5bn New AOK tender Teva backward Branded generic => based on “winner integrative model is generic-generic takes all” key strength
Slide 31: Executing Teva's 20/20 strategy - Barr acquisition
Executing Teva’s 20/20 strategy - Barr acquisition* 31 Teva strategy + + Enhances our geographic footprint in Europe Market share in key markets Enters top 5 in Germany Top 3 player in Poland Doubled position in a range of emerging CEE Double product countries portfolio Strengthens our por
Slide 32: Teva will enter 2009 with improved competitive strength
Teva will enter 2009 with improved competitive 32 strength in key markets UK Netherlands Strong Italy Teva position Poland France 2009 Spain 2008 1H Germany 2009 Emerging Teva position Spain Germany, 2008 1H Poland Emerging Mature market market
Slide 33: Teva continues its back-end investment as foundation for growth
In addition, Teva continues its back-end investment 33 as foundation for growth Past Now Recent investments ($200m) 8bn units in Hungary Doubling manufacturing capacity 4bn units in Czech Republic in 5 years to reach service levels 4bn units in Israel Packaging line in UK unparalleled in the industr
Slide 34: Recapping
Recapping 34 • European generics market is attractive • Growth strategy focused on achieving leadership - Increasing market share - Securing market leadership - Investing in core functions • Teva is uniquely positioned to succeed in Europe
Slide 35: Today's discussion
Today’s discussion 35 Introducing Teva Financial and strategy update Q&A
Slide 36: Overall results for Q3 2008
Overall results for Q3 2008 36 Q3 2007 Q3 2008 Change Sales 2,366 2,842 +20% $m Net income 527 599 +14% $m EPS 0.64 0.72 +13% $
Slide 37: Sources of sales growth
Sources of sales growth 37 Q3 sales, $ million 2007 2008 Change North America - pharma 1,315 1,614 23% Europe - pharma 621 685 10% International - pharma 300 395 32% Total - pharma 2,366 2,694 20% API (external sales) 130 148 14% Total 2,366 2,842 20%
Slide 38: Growth picking up in all businesses
Growth picking up in all businesses 38 Q3 year-on-year sales growth Q3 ‘07 North America - pharma -4% Q3 ‘08 23% Q3 ‘07 Europe - pharma 31% Q3 ‘08 10% Q3 ‘07 -2% International - pharma Q3 ‘08 32% Q3 ‘07 4% Total - pharma Q3 ‘08 20% Q3 ‘07 -8% API (external sales) 14% Q3 ‘08 Q3 ‘07 3% Total 20% Q3 ‘0
Slide 39: Continued track record of growth – Q3
Continued track record of growth – Q3 39 Q3 sales, $ million 2,842 148 2,386 395 2,286 130 141 300 307 685 621 API 473 1,247 1,317 Pharma - International 137 Pharma - Europe 146 125 106 347 Pharma - North America 276 1614 1365 1315 719 708 2004 2005 2006 2007 2008
Slide 40: Copaxone growth up in non-US markets
Copaxone® growth up in non-US markets 40 In market sales Sales growth versus previous period $ million 562 441 210 31% 27% 26% 28% 26% 24% 160 25% 25% 20% 21% Non-US 19% 352 281 Total 17% US 2005 YoY 2006 YoY 2007 YoY 2008 Q3 2007 Q3 2008 Q3
Slide 41: Copaxone is the U.S. market leader
Copaxone® is the U.S. market leader 41 Market share, value, % 35% 32% 30% 30% 29% 27% 25% 25% 25% 25.1% Copaxone® 24% 25% 24% 23% Avonex® 22% 24.6% 24% 21% 21% Rebif® 20% 22.2% 20% 19.2% 21% Betaseron® 10% Tysabri® 5% 8.9% 5% 1% 0% 2004 2005 2006 2007 2008 YTD Q3 Note: based on Q3’08 releases of all
Slide 42: Increasing R&D spend
Increasing R&D spend 42 R&D, in $ millions R&D, as % of sales 7.5% 7.1% 7.0% 581 6.2% 5.9% 495 369 338 194 141 2004 2005 2006 2007 Q3 Q3 2004 2005 2006 2007 2008 2007 2008 target
Slide 43: Cash generation
Cash generation 43 $ million 806 746 132 710 139 106 170 545 95 Cash from operations 142 97 Net asset purchase 332 79 Dividends distributed 104 568 512 443 73 324 Free cash flow 155 Q3 2007 Q4 2007 Q1 2008 Q2 2008 Q3 2008 $410m $366m acquisitions acquisitions
Slide 44: Leverage going down
Leverage going down 44 Selected balance sheet items, $ billion 19.4 18.3 18.8 0.7 2.0 1.8 3.9 3.4 3.3 Debt - short-term Debt - long-term Equity 13.7 14.8 12.9 30 Sep 31 Dec 30 Sep 2007 2007 2008 Leverage 29% 27% 24%
Slide 45: Summary – or what did we learn?
Summary – or what did we learn? 45 That Teva is the world’s largest Generic company and it is widening the gap from the rest of the pack That we have a vertically integrated, balanced business model which combines generics and innovative products That we have a truly global geographic presence
Slide 46: Today's discussion
Today’s discussion 46 Introducing Teva Financial and strategy update Q&A
Teva Pharmaceutical Industries — Merrill Lynch Generics Conference 2008 on 6ix