Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q1 2016 Earnings Presentation
40 slides from Teva Pharmaceutical Industries's earnings presentation, May 9, 2016
Slide 1: Q1 2016 Results
Q1 2016 Results May 9 2016 ee
Slide 2: Teva's Safe Harbor Statement under the U.S. Private Securities Litigation Reform Act of 1995
2 Teva's Safe Harbor Statement under the U. S. Private Securities 2 Litigation Reform Act of 1995: The following discussion and analysis contains forward-looking statements, which are based on management’s current beliefs and expectations and involve a number of known and unknown risks and uncertain
Slide 3: Erez Vigodman, President & CEO
Erez Vigodman President & CEO
Slide 4: Strong Financial Performance in Q1 2016
4 Strong Financial Performance in Q1 2016 4 Q1 2016 Q1 2015 Change Outlook Revenues 4,810 4,982 (3%) $4.7-4.9b $m Gross Margin 62.7% 61.5% % Operating Income 1,526 1,533 - $m Operating Margin 31.7% 30.8% % Net Income* 1,172 1,165 +1% $m EPS 1.20 1.16-1.20 $ EPS adjusted to exclude Dec 15 equity offe
Slide 5: Q1 2016 Highlights
5 Q1 2016 Highlights 5 Strong Results Driven by Robust Strengthening Our Closing and Execution Specialty Business Integrating EPS after December 15 Strong profitability in CINQAIR® (reslizumab) Closed the Rimsa acquisition equity offerings of $1.20, Generics (OM of 26.9%) approved at the high end of
Slide 6: We Are Building A New Teva
6 We Are Building A New Teva 6 All the measures we are taking are fundamentally changing Teva Continue the transformation of Robust specialty our business model pipeline Diversified net revenues and profit Significantly streams enhanced financial profile Solidified foundation unlocking value from ex
Slide 7: 2016 Priorities and Near Term Catalysts
7 2016 Priorities and Near Term Catalysts 7 Defend Integrate & Extract Build Synergies Deliver our operational and Actavis Generics deal closing Specialty pipeline: financial targets for 2016, on and integration Approvals: a standalone basis SD-809 in HD, Vantrela® ER HC Capturing all pl
Slide 8: Business Outlook Timeline
8 Business Outlook Timeline 8 June 2016 August 2016 September 2016 Actavis Gx Q2 2016 2017-2018 Deal Close results & 2016 Business & Combined Financial Company Outlook outlook
Slide 9: Siggi Olafsson, President & CEO Global Generic Medicines
Siggi Olafsson, President & CEO Global Generic Medicines
Slide 10: What has changed in the US pricing environment since Q4 2015?
What has changed in the US pricing environment since Q4 2015? The short answer is…nothing We still expect 4% price erosion on our portfolio
Slide 11: There is no change in the pricing environment
11 There is no change in the pricing environment It all comes down to each company’s business model
Slide 12: Generic segment maintaining its profitability
12 Generic segment maintaining its profitability 12 Portfolio, cost improvements and efficiencies defend against loss of exclusivity of new products and price pressures 49.0% 48.6% Gross profit margin 45.6% 46.0% 44.8% 30.5% 29.6% Profit margin 26.2% 26.9% 25.5% Generic segment profit 24.4% margin e
Slide 13: Why is Teva generics performance better than most Gx companies?
Why is Teva generics performance better than most Gx companies?
Slide 14: Portfolio optimization is one of the ways Teva is maintaining its generic profitability
14 Portfolio optimization is one of the ways Teva is maintaining its generic 14 profitability Number of products launched and discontinued in the US 30 20 New 26 10 21 21 Launches 0 2013 2014 2015 Product -10 discontinuation -22 -25 -23 -20 -30
Slide 15: New products are the lifeline of any good generic company
15 New products are the lifeline of any good generic company 15 5% growth 10% growth ~5% erosion in generics = from new - (price ~3-4% + products volume ~1-2%) 450 new launches in 2015 Over 1,000 new product launches in 2016, on a full-year pro-forma basis with Actavis Generics Expect ~1500 ne
Slide 16: The combined company looks as good or better than what was presented in July 2015
16 The combined company looks as good or better than what was 16 presented in July 2015 326 ANDA 123 First-to-File 202 launches on file at FDA post-close globally for both post-close* companies in Q1 * Excluding divestments
Slide 17: Regulatory approval process nearly complete
17 Regulatory approval process nearly complete 17 February March April May June Final Commission Finalize Divestiture List with FTC Approval (~2-4 weeks) Formal submission to Buyer Review and Selection Process FTC Reviews Final Bureau of Competition Set of Buyers and Bureau of Economics Finalize S
Slide 18: Actavis Generics: Maintaining our commitment to the Actavis numbers
18 Actavis Generics 18 Maintaining our commitment to the Actavis numbers presented in July Expect to achieve cost synergies and tax savings of approximately $1.4 billion annually, largely achievable by the third anniversary of the closing of the transaction Assume approximately $1.1b of net global
Slide 19: Transforming the generic business over the last two years
19 Transforming the generic business over the last two years 19 Build Revised Terminated Fully Improved Significantly Acquired Joint Acquisition organization pipeline business in integrated customer improved Actavis venture of Rimsa in and selection and 24 markets OTC into the service gross Generics
Slide 20: Eyal Desheh, EVP, Chief Financial Officer
Eyal Desheh EVP, Chief Financial Officer
Slide 21: First Quarter 2016 Results
First Quarter 2016 Results
Slide 22: Q1 2016 Financial Highlights
22 Q1 2016 Financial Highlights Q1 2016 Q1 2015 Change Outlook Revenues 4,810 4,982 (3%) 4.7-4.9 billion $m Operating Income 1,526 1,533 - $m (31.7%) (30.8%) EBITDA 1,634 1,644 (1%) $m Net Income* 1,172 1,165 +1% $m EPS 1.20 1.16-1.20 $ (979M shares) (978M shares) EPS adjusted to exclude Dec 15 equi
Slide 23: Foreign Exchange Impact
23 Foreign Exchange Impact Q1 2016 Q1 2015 Change FX Effect Real Change Revenues $m 4,810 4,982 (172) (107) (65) -1% Operating income 1,526 1,533 (7) (30) +23 +2% $m Operating Income is presented on a non-GAAP basis
Slide 24: Cash Flow Trends
24 Cash Flow Trends $ million Cash Flow from 1,354 1,480 1,093 1,615 1,376 Operations 246 144 141 171 111 Asset Purchase, Net Free Cash Flow 1,369 1,336 1,213 1,205 982 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016
Slide 25: Liquidity Trends
25 Liquidity Trends Leverage and debt remain low Debt 9.9 10.2 ($b) 12.5 11.7 11.0 Equity 29.9 30.6 ($b) 22.7 23.1 22.9 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Leverage 33% 35% 34% 25% 25% Debt/EBITDA 1.72 1.89 1.75 1.50 1.54
Slide 26: Quarterly EBITDA
26 Quarterly EBITDA $ million 1,719 1,644 1,661 1,634 1,597 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 * EBITDA is based on non-GAAP operating income plus non-GAAP depreciation.
Slide 27: Quarterly Revenue Breakdown by Region
27 Quarterly Revenue Breakdown by Region $ million 4,982 4,810 794 (16%) 918 (19%) 1,267 (25%) ROW 1,235 (26%) Europe US 2,921 (59%) 2,657 (55%) Q1 15 Q1 16
Slide 28: Quarterly Revenues
28 Quarterly Revenues Loss of exclusivity on esomeprazole and budesonide in the U.S. reduced generics revenues $ million 108 107 427 125 92 37 4,982 4,810 4,810 Q1 2015 Eso & Bud LoE Generics MS Specialty Specialty OTC & Other FX Q1 2016 All data, except Fx, are net of the impact of foreign exchange
Slide 29: Quarterly Revenues Breakdown by Segment
29 Quarterly Revenues Breakdown by Segment $ million 4,982 4,810 9% 405 (8%) 488 (10%) 22% 1,032 (21%) 1,146 (24%) OTC & Other 924 (19%) Specialty 20% 1,006 (21%) MS Specialty Generics 49% 2,621 (52%) 2,170 (45%) FY 2015 Q1 15 Q1 16
Slide 30: Quarterly Profit Breakdown by Segment
30 Quarterly Profit* Breakdown by Segment $ million 1,826 1,820 4% 50 (3%) 51 (3%) 17% 320 (18%) 380 (21%) OTC & Other 657 (36%) 42% Specialty 805 (44%) MS Specialty Generics 799 (44%) 37% 584 (32%) FY 2015 Q1 15 Q1 16 * Segment profit consists of gross profit, less S&M and R&D expenses related to t
Slide 31: Copaxone Revenue Evolution
31 Copaxone® Revenue Evolution Copaxone® 40mg is a leader in prescriptions to new patients in the U.S. $ million 1,200 924 1,054 1,085 960 1,006 35% 1,000 30% 184 207 185 192 200 25% 800 20% 600 15% 870 878 821 400 760 732 10% 200 5% 0 0% Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 US Ex-US US TRx MS* Copaxone® f
Slide 32: Quarterly Dividend
Quarterly Dividend
Slide 33: Teva's Dividend History
33 Teva’s Dividend History Q1 2016 dividend per ordinary share of $0.34 400 $0.40 350 $0.35 300 $0.30 250 $0.25 200 $0.20 377 327 150 281 268 291 299 294 290 288 289 290 $0.15 264 276 272 230 237 214 100 203 203 204 190 $0.10 164 167 172 174 50 $0.05 0 $0.00 Total Dividend ($m) $ per Share Total div
Slide 34: Financial Outlook
Financial Outlook
Slide 35: Guidance Background
35 Guidance Background Pending the closing of the Actavis Generics acquisition, we are providing revenue and non- GAAP EPS guidance for the second quarter 2016. This includes the results of the Rimsa acquisition and the Teva-Takeda BV, but not of the Actavis Generics acquisition. We continue to
Slide 36: Q2 2016 Financial Outlook Highlights
36 Q2 2016 Financial Outlook Highlights Q2 2016 Weighted average number of shares, Outlook in millions Revenues 4.7-4.9 $ billions Non GAAP EPS 1.16-1.20 980 $ Non GAAP EPS adjusted to exclude Dec 15 equity offerings 1.32-1.36 861 $ Cash flow from Operations 1.2-1.3 $ billions
Slide 37: Q&A
Q&A
Slide 38: Additional Information
38 38 Additional Information
Slide 39: Q1 2016 Non GAAP P&L Summary
39 Q1 2016 Non GAAP P&L Summary $ million Q1 16 Q1 15 Except EPS Q1 2016 margins Q1 2015 margins Change Revenues 4,810 4,982 (3%) COGS 1,794 37.3% 1,920 38.5% (7%) Gross Profit 3,016 62.7% 3,062 61.5% (2%) R&D 375 7.8% 328 6.6% +14% S&M Royalties 22 111 17.1% 18.2% (10%) S&M (w/o Royalties) 799 797
Slide 40: Q1 2016 GAAP P&L Summary
40 Q1 2016 GAAP P&L Summary $ million Q1 2016 Q1 2015 Except EPS Q1-16 Margins Q1-15 Margins Change Revenues 4,810 4,982 (3%) COGS 2,019 42.0% 2,146 43.1% (6%) Gross Profit 2,791 58.0% 2,836 56.9% (2%) R&D 389 8.1% 332 6.7% +17% S&M 839 17.4% 922 18.5% (9%) G&A 304 6.3% 307 6.1% (1%) Legal settlemen
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