Teva Pharmaceutical Industries Limited · TASE:TEVA
Teva Pharmaceutical Industries — Q2 2022 Earnings Presentation
52 slides from Teva Pharmaceutical Industries's earnings presentation, Jul 27, 2022
Slide 1: Second Quarter 2022 Results
Teva Pharmaceutical Industries Ltd. Second Quarter 2022 Results July 27, 2022
Slide 2: Agenda
Agenda . 1 Opioid litigation updates 2 Second quarter 2022 results 3 Strategy update and 2027 long-term financial targets 4 Q&A
Slide 3: Cautionary Note Regarding Forward-Looking Statements
Cautionary Note Regarding Forward-Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, which are based on management’s current beliefs and expectations and are subject to substantial risks and uncertainti
Slide 4: Kåre Schultz
Kåre Schultz President and Chief Executive Officer
Slide 5: Opioid Litigation Updates
Opioid Litigation Updates ̶ Teva has reached an agreement in principle with the working group of States’ Attorneys General, counsel for Native American Tribes, and plaintiffs’ lawyers representing the States and subdivisions, on the primary financial terms of a nationwide opioids settlement. ̶ Teva
Slide 6: Opioid Litigation Updates – Cont.
Opioid Litigation Updates – Cont. ̶ The agreement is also contingent upon Teva reaching an agreement with Allergan with respect to any indemnification obligations, and Allergan reaching a nationwide opioids settlement. ̶ Once the documentation is finalized, the nationwide agreement will need to be a
Slide 7: Highlights
Highlights Financial Business − AUSTEDO® – Prescriptions continue to grow − Revenues of $3.8 billion − AJOVY® – Launched in EU and fully reimbursable in 24 countries − Adjusted EBITDA of $1.1 billion with a 30.3% volume market share, U.S. market share at 24% − GAAP diluted Loss Per Share of $0.21; N
Slide 8: Revenue Development
Revenue Development $ millions 4,454 344 4,100 3,978 3,982 3,910 3,870 3,887 302 316 572 289 3,786 335 298 262 3,661 257 527 275 529 490 485 488 530 454 492 1,237 1,116 1,214 1,268 1,001 1,184 1,220 1,171 1,156 2,300 2,047 2,017 1,989 1,943 2,003 1,904 Other Activities 1,875 1,737 International Mark
Slide 9: AUSTEDO
® AUSTEDO® AUSTEDO® Revenues By Quarter AUSTEDO® TRx Count Per Quarter Highlights ($ million) 282 60,000 • U.S. sales of $204 million in Q2 2022, an increase of 17% vs. Q2 50,000 48,412 2021 201 204 185 • ~48K prescriptions were dispensed 174 40,000 168 161 in Q2 2022 vs. ~38K in Q2 2021, 154 146 an
Slide 10: AJOVY
AJOVY® AJOVY® U.S. QTR Normalized TRx AJOVY EU Monthly Volume market share Highlights ̶ Net global sales of $88 million in Q2 2022, up 27% from Q2 2021: 300,000 ̶ North America - $49 million 244,685 30.3% 250,000 ̶ Europe - $29 million 24% ̶ International Markets - $10 million 200,000 150,000 ̶ Unit
Slide 11: Operating Margin Expansion
Operating Margin Expansion Non-GAAP operating margin % 28.5% 28.0% 28.0% 27.8% 27.7% 27.5% 27.3% 27.0% 26.5% 26.3% H1 2021 26.7% 26.0% 25.9% 25.5% 25.0% 24.5% 24.5% 24.0% 2017 2018 2019 2020 2021 H1 2022 2023 Target | 11 |
Slide 12: Net Debt Development
Net Debt Development $ billions $35.0 $34.0 $33.0 $31.0 $29.0 $27.0 $25.0 $23.0 $21.0 $20.0 $19.0 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 Q1'21 Q2'21 Q3'21 Q4'21 Q1'22 Q2'22 | 12 |
Slide 13: We are helping patients across the globe get the medicines they need
We are helping patients across the globe get the medicines they need Persons Living Mental in Poverty Health (and Migrants) France Stateless Israel United States Population Breast Cancer Uganda Ghana Rwanda Tanzania Childhood Malawi Cancer Botswana Programs in progress | Programs in development | 13
Slide 14: Eli Kalif
Eli Kalif EVP & Chief Financial Officer
Slide 15: Q2 2022 Summary
Q2 2022 Summary $ millions, except EPS Q2 2022 Q2 2021 Q2 2022 Q2 2021 GAAP Non-GAAP Net Revenues 3,786 3,910 3,786 3,910 Operating income (loss) (949) 582 1,019 1,034 Net income (loss) attributable to Teva (232) 207 754 651 (0.21) 0.19 0.68 0.59 Earnings (loss) per share ($)* 1,110 million 1,109 mi
Slide 16: Non-GAAP Adjustments
Non-GAAP Adjustments $ millions Q2 2022 Comments Goodwill impairment 745 Due to increased discount rate and country risk premium Legal settlements and loss contingencies 729 Mainly related to an update of the estimated opioid settlement provision Amortization 212 Quarterly run-rate Impairment of lon
Slide 17: Q2 2022 Non-GAAP Summary
Q2 2022 Non-GAAP Summary $ billions, except EPS Q2 2022 Q2 2021 Change H1 2022 H1 2021 Change Revenues* 3.8 3.9 (3%) 7.4 7.9 (6%) 2.1 2.1 (1%) 4.0 4.2 (4%) Gross profit 54.4% 53.3% 1.1% 54.3% 53.6% 0.7% 1.0 1.0 (1%) 2.0 2.1 (4%) Operating income 26.9% 26.4% 0.5% 27.3% 26.7% 0.6% EBITDA 1.1 1.2 (2%)
Slide 18: Spend Base
Spend Base $ millions -110 (-4%) -367 (-6%) +41 Net of FX -142 Net of FX 2,876 5,781 2,766 5,414 1,826 1,726 3,663 3,401 (63%) (62%) (63%) (63%) 1,051 1,040 2,117 2,013 COGS (37%) (38%) (37%) (37%) OPEX Q2 2021 Q2 2022 H1 2021 H1 2022 Revenues 3,910 3,786 7,892 7,447 GP% 53.3% 54.4% 53.6% 54.3% OP%
Slide 19: Free Cash Flow by Quarters
Free Cash Flow by Quarters $ millions 795 716 625 582 506 471 301 117 59 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 | 19 |
Slide 20: Ongoing Debt Reduction
Ongoing Debt Reduction $ billions 22.7 21.7 Net Debt 20.9 20.7 20.0 4.8 4.8 4.9 4.8 4.8 EBITDA MAT Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Debt / EBITDA MAT* 4.73 4.51 4.25 4.29 4.16 Leverage 69% 67% 67% 69% 69% | 20 | *Teva's Net Debt/EBITDA MAT covenant ratio limits are 4.5x for Q2 and Q3 2022
Slide 21: 2022 Non-GAAP Outlook
2022 Non-GAAP Outlook $ billions, except EPS July 2022 Outlook May 2022 Outlook 2021 Actual Revenues 15.0 – 15.6 15.4 – 16.0 15.9 COPAXONE ($m) ~700 ~750 1,005 AUSTEDO ($m) ~1,000 ~1,000 808 AJOVY ($m) ~400 ~400 313 Operating Income 4.2 – 4.5 4.2 – 4.5 4.4 EBITDA 4.7 – 5.0 4.7 – 5.0 4.9 2.40 – 2.60
Slide 22: Teva Strategy Update
Teva Strategy Update
Slide 23: On Track to Achieving our 2023 Targets
On Track to Achieving our 2023 Targets • Unified and simplified • Reached an agreement in organizational structure principle on the primary • Continued network financial terms of a U.S. optimization: nationwide opioids settlement • Reduced number of manufacturing sites from Optimize Legal 80 to 53 i
Slide 24: It All Begins With Our Mission and Values
It All Begins With Our Mission and Values OUR MISSION To be a global leader in generics and biopharmaceuticals, improving the lives of patients OUR PATIENT FOCUS STRATEGY OUR VALUES • Solidify global generics business • Leading the way Enabling growtoa live people • Build and better, leading healthi
Slide 25: Our Strategy is Centered on a Strong Portfolio
Our Strategy is Centered on a Strong Portfolio Benefitting from High Productivity and Efficiency Wide and diversified scope of generics, biosimilar and specialty products across the globe Generics Biosimilars Specialty Leading global generics Uniquely positioned to AUSTEDO and AJOVY company providin
Slide 26: Significant Opportunity in Generics and Biosimilars
Significant Opportunity in Generics and Biosimilars: The impact of exclusivity losses will increase to $188 billion over the next 5 years $ billions – loss of exclusivity Forecast 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 0 -1.4 -3.7 -5.5 -5.2 -6.4 -23.4 -9.7 -20.5 -11.6 (5) -21.9 -10.5 -14.
Slide 27: Total Generics Market Outlook 2022 - 2027
Total Generics Market Outlook 2022 - 2027 $500 $450 $400 Global Generics Gross Sales (LC USD Billions) $350 $300 $250 $200 $343 $356 $369 $316 $330 $150 $302 $100 $50 $0 2022 2023 2024 2025 2026 2027 Sources: Generics sales from IQVIA Generics Market Forecast May 2022 with 2021 actuals (Innovation I
Slide 28: Generics: $400 billion Going Off-Patent in the Next 10 Years
Generics: $400 billion Going Off-Patent in the Next 10 Years Full range of complex 1,100 projects technologies and covering +80% of capabilities products going off- including: inhalers, patent patches, long acting injectables Significant optimization First-to-file leadership in opportunity with the
Slide 29: Total Biosimilars Market Outlook 2022 - 2027
Total Biosimilars Market Outlook 2022 - 2027 $60 $50 Gross Sales (LC USD Billions) $40 $30 $56 $50 $20 $42 $36 $30 $26 $10 $0 2022 2023 2024 2025 2026 2027 NA CAGR: +19.5% EU CAGR: +13.5% INTL CAGR: +18.1% Sources: BioS Sales from IQVIA Forecast Link custom query2017 to 2021 (filters = Biocomparable
Slide 30: Extensive Portfolio and Full Value Chain in Biosimilars
Extensive Portfolio and Full Value Chain in the Biosimilars Rapidly Evolving Space A robust portfolio of 16 biosimilars Future demand is Teva’s biosimilar portfolio Through partnerships and organic growth supported by macro trends addressing ~80% in and significant societal value of biologic product
Slide 31: Selected Teva Specialty Pipeline
Selected Teva Specialty Pipeline by therapeutic area – July 15 2022 Neuroscience Immunology Other TEV-562862 Digihaler® TEV-56279 I TEV-56278 PrS (budesonide and formoterol PrC Multiple System PrC Immuno Oncology Pain Atrophy fumarate dihydrate) (EU) QVAR® Digihaler® TEV-48438 TEV-44749 TEV-56192 (b
Slide 32: Established Improved 2027 Long-Term Financial Targets
Established Improved 2027 Long-Term Financial Targets To be achieved by year-end 2027 Operating income Net debt/EBITDA(1)(3)(4) Cash-to-earnings(3)(5) Revenue growth(6) margin(2)(3) 30% 2.0X 80% Committed to utilizing cash flow to pay down debt; we do not plan to raise equity (1) Free cash flow incl
Slide 33: Sustainable Foundation to Return to Growth and Increase Shareholder Value
Sustainable Foundation to Return to Growth and Increase Shareholder Value • Balanced growth driven by: • Stable and predictable generics business • Strong biosimilar portfolio • Focused specialty pipeline with high growth potential • Margin expansion through operational optimization • Solid cash flo
Slide 34: Q&A
Q&A
Slide 35: Additional Information
Additional Information teva
Slide 36: H1 2022 Summary
H1 2022 Summary $ millions, except EPS H1 2022 H1 2021 H1 2022 H1 2021 GAAP Non-GAAP Revenues* 7,447 7,892 7,447 7,892 Operating income (loss) (1,662) 1,015 2,033 2,111 Net income (loss) attributable to (1,187) 284 1,363 1,350 Teva (1.07) 0.26 1.22 1.22 Earnings (loss) per share ($)** 1,109 million
Slide 37: Quarterly GAAP Income Statement
Quarterly GAAP Income Statement Q2 2022 Q2 2021 $ millions, except EPS Q2 2022 Q2 2021 Change Margins Margins Revenues 3,786 3,910 (3%) COGS 1,992 52.6% 2,037 52.1% (2%) Gross profit 1,794 47.4% 1,873 47.9% (4%) R&D 228 6.0% 248 6.3% (8%) S&M 594 15.7% 615 15.7% (3%) G&A 313 8.3% 242 6.2% 29% Legal
Slide 38: H1 2022 GAAP Income Statement
H1 2022 GAAP Income Statement H1 2022 H1 2021 $ millions, except EPS H1 2022 H1 2021 Change Margins Margins Revenues 7,447 7,892 (6%) COGS 3,913 52.5% 4,141 52.5% (6%) Gross profit 3,534 47.5% 3,750 47.5% (6%) R&D 453 6.1% 501 6.4% (10%) S&M 1,178 15.8% 1,200 15.2% (2%) G&A 609 8.2% 532 6.7% 15% Leg
Slide 39: Q2 2022 Foreign Exchange Impact
Q2 2022 Foreign Exchange Impact $ millions Q2 2022 Q2 2021 Diff FX Effect Diff net FX Revenues 3,786 3,910 (124) (162) 37 Operating income (949) 582 (1,530) (6) (1,524) GAAP Operating income 1,019 1,034 (15) (11) (4) Non-GAAP | 39 |
Slide 40: Net Revenue and Profitability (Non-GAAP)
Net Revenue and Profitability (Non-GAAP) $ millions 4,454 4,100 3,978 3,982 3,870 3,910 3,887 3,786 3,661 52.4% 53.8% 53.3% 53.6% 56.1% 54.2% 54.4% 52.0% 52.3% 27.1% 26.8% 30.4% 27.7% 26.9% 25.3% 25.8% 25.6% 26.4% Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Revenues G
Slide 41: Revenues by Activity and Geographical Area
Revenues by Activity and Geographical Area $ millions Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 North America Segment 1,943 1,875 2,003 1,737 1,904 Generic products 951 859 905 899 1,026 AJOVY® 46 46 53 36 49 AUSTEDO® 174 201 282 154 204 BENDEKA®/TREANDA® 106 95 93 82 83 COPAXONE® 152 133 129 86 94 Anda 316 363
Slide 42: Profits and EPS (Non-GAAP)
Profits and EPS (Non-GAAP) $ millions, EPS in $ 1,248 1,140 1,077 1,019 1,025 1,034 1,042 979 1,013 854 753 754 699 651 651 605 637 609 0.55 0.58 0.68 0.63 0.59 0.77 0.68 0.59 0.55 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 Net Income Operating Profit EPS | 42 |
Slide 43: Spend Base Trend (Non-GAAP)
Spend Base Trend (Non-GAAP) $ millions Q2-21 Q3-21 Q4-21 Q1-22 Q2-22 COGS 1,826 1,804 1,798 1,675 1,726 S&M 582 567 600 552 563 R&D 243 217 229 221 222 G&A 231 275 244 252 258 Other income (6) (18) (19) (52) (3) Total 2,876 2,845 2,852 2,648 2,766 | 43 |
Slide 44: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions -$15m (-1%) -$4m Net of FX 0% (29) (40) 46 8 1,034 1,019 Q2-21 North America Europe International Markets Other Activities Q2-22 | 44 |
Slide 45: H1 2022 Non-GAAP Operating Income
H1 2022 Non-GAAP Operating Income $ millions -$78m (-4%) -$68m Net of FX (-3%) 19 (215) 29 89 2,111 2,033 H1-21 North America Europe International Markets Other Activities H1-22 | 45 |
Slide 46: Quarterly Non-GAAP Operating Income
Quarterly Non-GAAP Operating Income $ millions 1,248 29 (2%) 131 (10%) 1,034 1,042 1,019 38 (4%) 1,013 55 47 (5%) 51 (5%) 95 (5%) 123 (12%) 152 (15%) 420 179 (18%) (9%) (34%) 343 389 (33%) 394 (38%) 381 (38%) (38%) 668 521 (54%) 481 458 402 Other Activities (50%) (47%) (44%) (40%) International Mark
Slide 47: Quarterly Adjusted EBITDA
Quarterly Adjusted EBITDA* $ millions 1,373 1,162 1,170 1,135 1,134 Q2 2021 Q3 2021 Q4 2021 Q1 2022 Q2 2022 | 47 | * Adjusted EBITDA is defined as operating income excluding depreciation and amortization expenses and certain other items
Slide 48: Q2 2022 Adjusted EBITDA to Free Cash Flow
Q2 2022 Adjusted EBITDA to Free Cash Flow $ millions (833) (73%) (225) (126) (124) 1,134 (161) (141) 18 (127) (235) 287 301 123 Adjusted Interest Tax payments AR Inventory AP & Other Securitization* Operating Securitization Asset sales, Free EBITDA payments, cash flow reclass net; cash flow net Cape
Slide 49: Consolidated Balance Sheet
Consolidated Balance Sheet $ billions Jun 30, 2022 Mar 31, 2022 Diff Cash and Cash Equivalents 2.1 2.2 (0.1) AR Trade 4.5 4.3 0.2 Pre-paid Expenses and Other Current Assets 1.6 2.0 (0.4) Inventory 4.0 4.0 0.0 Fixed Assets 5.7 5.9 (0.2) Intangible Assets 6.7 7.1 (0.4) Goodwill 18.8 20.0 (1.1) Other L
Slide 50: Q2 2022 Debt Movements
Q2 2022 Debt Movements $ Billions 22.9 (0.3) (0.6) 22.1 (2.1) 20.0 Mar 31, Debt repayment FX June 30, Cash balance June 30, 2022 2022 2022 Gross Debt Gross Debt Net Debt | 50 |
Slide 51: Teva Specialty & Biosimilar Pipeline
Teva Specialty & Biosimilar Pipeline By development stage – as of July 15, 2022 Under Regulatory Preclinical Phase 1 Phase 2 Phase 3 Pre Submission Review TEV-56278 TEV-44749 TEV-48574 Fasinumab2 Digihaler® Biosimilar to Humira® TEV-56285 Inflammatory Bowel Oncology Schizophrenia Osteoarthritic Pain
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Teva Pharmaceutical Industries — Q2 2022 Earnings Presentation on 6ix