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In July 2014, GlaxoSmithKline (“GSK”) ~~sued~~filed claims against Teva in the U.S. District Court for the District of Delaware for infringement of a patent directed to using carvedilol in a specified manner to decrease the risk of mortality in patients with congestive heart failure. Teva and eight other generic producers began selling their carvedilol tablets (the generic version of GSK’s ~~Coreg~~

Coreg®) in September 2007. A jury trial was held and the jury returned a verdict in GSK’s favor finding Teva liable for induced infringement, including willful infringement, and assessing damages of ~~$235.5~~ $

235.5

million, not including

pre-

or post-judgment interest or a multiplier for willfulness. Thereafter, the ~~judge~~court overturned the jury verdict, finding no induced infringement by Teva and that Teva did not owe any damages. On August 5, 2021, the Court of Appeals for the Federal Circuit issued a

two-to-one

decision reinstating the ~~$235.5~~ $

235.5

million verdict and finding Teva liable for patent infringement. On February 11, 2022, the Court of Appeals for the Federal Circuit denied rehearing. Teva appealed this decision to the U.S. Supreme Court on July 11, 2022. In response to Teva’s

certiorari

petition, on October 3, 2022, the U.S. Supreme Court issued an order seeking the views of the U.S. Solicitor General as to whether to review this case. AtOn March 29, 2023, the ~~same time,~~U.S. Solicitor General filed a brief recommending that the U.S. Supreme Court grant Teva’s request and reverse the judgment of the Court of Appeals for the Federal Circuit. In addition to the pending U.S. Supreme Court proceedings, the case has been remanded to the district court for further proceedings on Teva’s other legal and equitable defenses that have not yet been considered by the district court. In the first quarter of 2021, Teva recognized a provision based on its offer to settle such matter.

In October 2016, Adapt and Emergent Biosciences Inc. (“EBSI”) sued Teva in the District Court for the District of New Jersey, asserting infringement of its patents expiring in 2035, as a result of Teva’s filing of its Abbreviated New Drug Application (“ANDA”) seeking to market a generic version of Narcan

~~nasal spray. In June 2020, the court issued a decision finding all of EBSI’s patents expiring in 2035, to be invalid. On December 22, 2021, Teva launched its generic version of Narcan~~

nasal spray. On February 10, 2022, the Court of Appeals for the Federal Circuit affirmed the lower court decision finding that EBSI’s patents are invalid. On May 5, 2022, the Court of Appeals for the Federal Circuit denied EBSI’s petition for rehearing. EBSI did not seek the U.S. Supreme Court’s review of this decision within the time allowed, so this case is now closed.

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Product Liability Litigation

Teva’s business inherently exposes it to potential product liability claims. Teva maintains a program of insurance, which may include commercial insurance, self-insurance (including direct risk retention), or a combination of both types of insurance, in amounts and on terms that it believes are reasonable and prudent in light of its business and related risks. However, Teva sells, and will continue to sell, pharmaceuticals that are not covered by its product liability insurance; in addition, it may be subject to claims for which insurance coverage is denied as well as claims that exceed its policy limits. Product liability coverage for pharmaceutical companies is becoming more expensive and increasingly difficult to obtain. As a result, Teva may not be able to obtain the type and amount of insurance it desires, or any insurance on reasonable terms, in certain or all of its markets.

Teva and its subsidiaries are parties to litigation relating to previously unknown nitrosamine impurities discovered in certain products. The discovery led to a global recall of single and combination valsartan medicines around the world starting in July 2018 and to subsequent recalls on other products. The nitrosamine impurities in valsartan are allegedly found in the active pharmaceutical ingredient (“API”) supplied to Teva by multiple API ~~manufacturers.~~manufacturers, including by Zhejiang Huahai Pharmaceuticals Co. Ltd. (“Huahai”). Since July 2018, Teva has been actively engaged with global regulatory authorities in reviewing its sartan and other products to determine whether NDMA and/or other related nitrosamine impurities are present in specific products. Where necessary, Teva has initiated additional voluntary recalls. In December 2019, Teva reached a settlement with Huahai resolving Teva’s claims related to certain sartan API supplied by Huahai. Under the settlement agreement, Huahai agreed to compensate Teva for some of its direct losses and provide it with prospective cost reductions for API. The settlement does not release Huahai from liability for any losses Teva may incur as a result of third party personal injury or product liability claims relating to the sartan API at issue, as discussed below.

In addition, multiple lawsuits have been filed in connection with this matter. Teva’s products allegedly at issue in the various nitrosamine-related litigations pending in the United States include valsartan, losartan, metformin and ranitidine. There are currently two Multi-District Litigations (“MDL”) pending in the United States District Courts against Teva and numerous other manufacturers. One MDL is pending in the United States District Court for the District of New Jersey for valsartan, losartan and irbesartan. Teva is not named in complaints with respect to irbesartan. The second MDL is pending in the United States District Court for the Southern District of Florida for ranitidine. The lawsuits against Teva in the MDLs consist of individual personal injury and/or product liability claims and economic damages claims brought by consumers and end payors on behalf of purported classes of other consumers and end payors as well as medical monitoring class claims. ~~Defendants’ motions to dismiss in the valsartan, losartan and irbesartan MDL were denied in part and granted in part and plaintiffs have filed amended complaints.~~ The judge in the valsartan MDL ~~has indicated~~ordered that the first trial, likely commencing in late 2023 or early 2024, will ~~consider~~involve third-party payor economic loss claims via a class representative on behalf of several subclasses of payors against Teva and two other defendants. On February 8, 2023, the district court in the valsartan MDL entered an order that certified a series of subclasses on plaintiffs’ economic loss claims and granted in part and denied in part the certification of a medical monitoring class. Defendants sought permission for appellate review of that decision, which was denied. In the ranitidine MDL, the ~~generics~~generic manufacturers’ motions to dismiss have been granted, although certain plaintiffs have appeals pending. In addition, on December 6, 2022, the court in the ranitidine MDL granted the brand defendants’ motions to exclude all of plaintiffs’ general causation experts and granted summary judgment to the brand defendants on that ground. Teva, as well as other

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generic manufacturers, is also named in several state court actions asserting allegations similar to those in the ranitidine MDL and the valsartan and losartan MDL. ~~The state~~State court valsartan and losartan actions are pending in New Jersey and Delaware and are currently stayed. ~~The state~~State court ranitidine cases naming Teva are pending in coordinated proceedings in California, Illinois, Pennsylvania and New York, with ~~coordinated proceedings~~motions to dismiss pending in ~~California,~~ Illinois, Pennsylvania and ~~Pennsylvania.~~New York on preemption and other grounds. In addition to ~~these~~the valsartan and ranitidine MDLs and coordinated state court proceedings, Teva has also been named in a consolidated proceeding pending in the United States District Court for the District of New Jersey brought by individuals and end payors seeking economic damages on behalf of purported classes of consumers and end payors who purchased Teva’s, as well as other generic manufacturers’ metformin products. Defendants’ motion to dismiss the plaintiffs’ amended metformin complaint from June 2021 was granted without prejudice with respect to the consumer economic loss plaintiffs, and granted in part and denied in part with respect to the end payor plaintiffs. Plaintiffs were granted leave to file a second amended complaint. Defendants’ motion to dismiss that complaint ~~which defendants have moved to dismiss. Those motions are currently pending.~~was granted in part and denied in part. Similar lawsuits are pending in Canada and Germany.

Competition Matters

As part of its generic pharmaceuticals business, Teva has challenged a number of patents covering branded pharmaceuticals, some of which are among the most widely-prescribed and well-known drugs on the market. Many of Teva’s patent challenges have resulted in litigation relating to Teva’s attempts to market generic versions of such pharmaceuticals under the federal Hatch-Waxman Act. Some of this litigation has been resolved through settlement agreements in which Teva obtained a license to market a generic version of the drug, often years before the patents expire.

Teva and its subsidiaries have been named as defendants in cases that allege antitrust violations arising from such settlement agreements. The plaintiffs in these cases are usually direct and indirect purchasers of pharmaceutical products, some of whom assert claims on behalf of classes of all direct and indirect purchasers, and they typically allege that (i) Teva received something of value from the innovator in exchange for an agreement to delay generic entry, and (ii) significant savings could have been realized if there had been no settlement agreement and generic competition had commenced earlier. These plaintiffs seek various forms of injunctive and monetary relief, including damages based on the difference between the brand price and what the generic price allegedly would have been and disgorgement of profits, which are often automatically tripled under the relevant statutes, plus attorneys’ fees and costs. The alleged damages generally depend on the size of the branded market and the length of the alleged delay, and can be substantial—potentially measured in multiples of the annual brand sales—particularly where the alleged delays are lengthy or branded drugs with annual sales in the billions of dollars are involved.

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Teva believes that its settlement agreements are lawful and serve to increase competition, and has defended them vigorously. In Teva’s experience to date, these cases have typically settled for a fraction of the high end of the damages sought, although there can be no assurance that such outcomes will continue.

In June 2013, the U.S. Supreme Court held, in Federal Trade Commission (“FTC”) v. Actavis, Inc., that a rule of reason test should be applied in analyzing whether such settlements potentially violate the federal antitrust laws. The Supreme Court held that a trial court must analyze each agreement in its entirety in order to determine whether it violates the antitrust laws. This ~~new~~ test has resulted in increased scrutiny of Teva’s patent settlements, additional action by the FTC and state and local authorities, and an increased risk of liability in Teva’s currently pending antitrust litigations.

In May 2015, Cephalon Inc., a Teva subsidiary (“Cephalon”), entered into a consent decree with the FTC (the “Modafinil Consent Decree”) under which the FTC dismissed antitrust claims against Cephalon related to certain finished modafinil products (marketed as PROVIGIL

) in exchange for Cephalon and Teva agreeing to, among other things, abide by certain restrictions and limitations, for a period of ten years, when entering into settlement agreements to resolve patent litigation in the United States. Those restrictions and limitations were further refined in connection with the settlement of other unrelated FTC antitrust lawsuits and the term of the Modafinil Consent Decree was extended until 2029.

In November 2020, the European Commission issued a final decision in its proceedings against both Cephalon and Teva, finding that the 2005 settlement agreement between the parties had the object and effect of hindering the entry of generic modafinil, and imposed fines totaling euro 60.5 million on Teva and Cephalon. Teva and Cephalon filed an appeal against the decision in February 2021. A provision for this matter was included in the financial statements. Teva has provided the European Commission with a bank guarantee in the amount of the imposed fines. The hearing for the appeal took place in December 2022 and a decision is pending.

In December 2011, three groups of plaintiffs ~~sued~~filed claims against Wyeth and Teva for alleged violations of the antitrust laws in connection with their November 2005 settlement of patent litigation involving extended release venlafaxine (generic Effexor XR

). The cases were filed by a purported class of direct purchasers, by a purported class of indirect purchasers and by certain chain pharmacies in the U.S. District Court for the District of New Jersey. The plaintiffs claim that the settlement agreement between Wyeth and Teva unlawfully delayed generic entry. In March 2020, the district court temporarily stayed discovery and referred the case to mediation, and discovery remains stayed. Annual sales of Effexor XR

were approximately $2.6 billion at the time of settlement and at the time Teva launched its generic version of Effexor XR

in July 2010.

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In February 2012, two purported classes of direct-purchaser plaintiffs ~~sued~~filed claims against GSK and Teva in New Jersey federal court for alleged violations of the antitrust laws in connection with their settlement of patent litigation involving lamotrigine (generic Lamictal

) entered into in February 2005. The plaintiffs ~~claim~~claimed that the settlement agreement unlawfully delayed generic entry and ~~seek~~sought unspecified damages. On April 9, 2021, the district court, which had previously granted an initial motion for class certification by the direct purchaser plaintiffs but was reversed on that ruling by the Third Circuit in April 2020, denied the direct purchaser plaintiffs’ renewed motion for class certification. Plaintiffs thereafter sought leave to file a supplemental expert report in an effort to show that they could still meet the class certification standard, which was denied in full on January 21, 2022, and on April 21, 2022, the court entered a schedule for additional briefing on the remaining class certification issues. Plaintiffs filed a further renewed motion for class certification on May 20, 2022, which ~~defendants opposed,~~was denied on February 1, 2023. On February 2, 2023, February 7, 2023, and ~~that motion remains pending.~~February 27, 2023, a number of direct purchasers, who would otherwise have been members of the proposed class had it been certified, filed suit as individual plaintiffs in Pennsylvania’s federal court. Annual sales of Lamictal

were approximately $950 million at the time of the settlement and approximately $2.3 billion at the time Teva launched its generic version of Lamictal

in July 2008.

In April 2013, purported classes of direct purchasers of, and end payers for, ~~Niaspan~~

~~(extended~~Niaspan® (extended release niacin) ~~sued~~filed claims against Teva and Abbott for violating the antitrust laws by entering into a settlement agreement in April 2005 to resolve patent litigation over the product. A multidistrict litigation has been established in the U.S. District Court for the Eastern District of Pennsylvania. Throughout 2015 and in January 2016, several individual direct-purchaser

opt-out

plaintiffs filed complaints with allegations nearly identical to those of the direct purchasers’ class. ~~In August 2019, the district court certified the direct-purchaser class, but in June 2020, the~~The court denied the indirect purchasers’ motion for class certification ~~without prejudice. On September 4, 2020, the indirect purchasers filed a renewed motion for class certification, which was subsequently denied~~ with prejudice, byand on April 24, 2023, the ~~district court and is now on appeal before~~denial was affirmed by the Court of Appeals for the Third Circuit. In October 2016, the District Attorney for Orange County, California, filed a similar complaint in California state court, alleging violations of state law and seeking restitution and civil penalties. Annual sales of ~~Niaspan~~

Niaspan® were approximately ~~$416~~

$416 million at the time of the settlement and approximately $1.1 billion at the time Teva launched its generic version of Niaspan

in September 2013.

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Since January 2014, numerous lawsuits have been filed in the U.S. District Court for the Southern District of New York by purported classes of

end-payers

for, and direct-purchasers of, Actos

and Actoplus Met (pioglitazone and pioglitazone plus metformin) against Takeda, the innovator, and several generic manufacturers, including Teva, Actavis and Watson. The lawsuits allege, among other things, that the settlement agreements between Takeda and the generic manufacturers violated the antitrust laws. The court dismissed the

end-payers’

lawsuits against all defendants in September 2015. On February 8, 2017, the Court of Appeals for the Second Circuit affirmed the dismissal in part and vacated and remanded the dismissal in part with respect to the claims against Takeda. The direct purchasers’ case had been stayed pending resolution of the appeal in the end payer matter and the direct purchasers amended their complaint for a second time following the Second Circuit’s decision, but on October 8, 2019, the district court dismissed, with prejudice, the direct purchasers’ claims against the generic manufacturers (including Teva, Actavis, and Watson). At the time of Teva’s settlement, annual sales of Actos

and Actoplus Met were approximately $3.7 billion and approximately $500 million, respectively. At the time Teva launched its authorized generic version of Actos

and Actoplus Met in August 2012, annual sales of Actos

and Actoplus Met were approximately $2.8 billion and approximately $430 million, respectively.

Putative classes of direct-purchaser and

end-payer

plaintiffs have filed antitrust lawsuits (which have since been coordinated in federal court in Delaware) against Amgen and Teva alleging that the January 2, 2019 settlement agreement between Amgen and Teva, resolving patent litigation over cinacalcet (generic ~~Sensipar~~

Sensipar®), violated the antitrust laws. ~~On November 30, 2020,~~In March 2023, Teva moved for re-argument of its motion to certify the district ~~court denied~~court’s rulings denying Teva’s motion to dismiss in part and on February 16, 2021, plaintiffs filed amended complaints. On March 30, 2021, Teva again moved to dismiss those claims based on plaintiffs’ failure to allege both that the settlement violated the antitrust laws and that the settlement caused any actual injury to plaintiffs. On March 11, 2022, the district court denied Teva’s motion to dismiss in part. Teva has requested that the district court certify its rulings for review by the ~~United States~~U.S. Court of Appeals for the Third Circuit, and is awaiting the court’s decision. Annual sales of ~~Sensipar~~

Sensipar® in the United States were approximately ~~$1.4~~$

1.4

billion at the time Teva launched its generic version of ~~Sensipar~~

Sensipar® in December 2018, and at the time of the January 2, 2019 settlement.

In August 2019, certain direct-purchaser plaintiffs filed claims in federal court in Philadelphia naming Teva and its affiliates as defendants alleging that certain patent litigation settlement agreements relating to AndroGel

% (testosterone gel) violate the antitrust laws, specifically the September 2006 patent litigation settlement between Watson Pharmaceuticals, Inc. (“Watson”), from which Teva later acquired certain assets and liabilities, and Solvay Pharmaceuticals, Inc. (“Solvay”), and a December 2011 settlement between Teva and AbbVie. Those claims remain pending. Annual sales of AndroGel

% were approximately $350 million at the time of the earlier Watson/Solvay settlement and approximately $140 million at the time Actavis launched its generic version of AndroGel

% in November 2015. A provision for these matters and related litigations in Georgia that have since been settled was included in the financial statements.

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Between September 1, 2020 and December 20, 2020, separate plaintiffs purporting to represent putative classes of direct and indirect purchasers and

opt-out

retailer purchasers of Bystolic

(nebivolol hydrochloride) filed separate complaints in the U.S. District Court for the Southern District of New York against several generic manufacturers, including Teva, Actavis, and Watson, alleging, among other things, that the settlement agreements these generic manufacturers entered into with Forest Laboratories, Inc., the innovator, to resolve patent litigation over Bystolic

violated the antitrust laws. The cases were coordinated and on ~~March 15, 2021, plaintiffs filed amended complaints, which Teva, Actavis, and Watson moved to dismiss. On~~ January 24, 2022, the court dismissed plaintiffs’ amended complaints without prejudice. ~~The plaintiffs~~Plaintiffs subsequently filed second amended complaints, and on February ~~22, 2022, which defendants (including Teva, Actavis and Watson) moved~~21, 2023, the court granted defendants’ motion to dismiss ~~on April 19, 2022,~~ and ~~the court has scheduled oral argument for November 3, 2022.~~dismissed all claims with prejudice. Plaintiffs have filed notices of their intent to appeal. Annual sales of Bystolic

in the United States were approximately $700 million at the time of Watson’s 2013 settlement with Forest.

In February 2021, the State of New Mexico filed a lawsuit against Teva and certain other defendants related to various medicines used to treat HIV. Between September and December 2021, several private plaintiffs including retailers and health insurance providers filed similar claims in federal court in the Northern District of California and in the District of Minnesota. As they relate to Teva, the lawsuits challenge settlement agreements Teva entered into with Gilead in 2013 ~~and~~and/or 2014 to resolve patent litigation relating to Teva’s generic versions of Viread

~~, Truvada~~

~~, and Atripla~~

~~. Plaintiffs~~

and/or Truvada

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and Atripla

. Plaintiffs allege that the ~~settlements~~settlement agreements contain improper reverse payments that delayed the availability of ~~Teva’s~~ generic products, in violation of the federal antitrust laws and state law. ~~Several recently filed cases are in the process of being coordinated with the existing litigation in the Northern District of California.~~ On February 16, 2022, Teva moved to dismiss the claims by certain private plaintiffs but that motion was denied. However, Teva has successfully moved to limit the potential damages period as to certain private plaintiffs. ~~Discovery in those cases is now closed.~~ Plaintiffs in ~~these~~the Northern District of California cases have abandoned any claim for damages relating to the Viread

settlement. ~~Defendants have submitted~~On January 5, 2023, the court denied the parties’ motions for summary ~~judgment motions, and briefing is ongoing.~~judgment. Trial is currently scheduled to commence in ~~March~~late May 2023. ~~On August 5, 2021,~~In the first quarter of 2023, Teva ~~moved~~recognized a provision based on its offer to settle this matter.

In October 2022, the New Mexico Supreme Court granted Teva’s petition for a writ of

certiorari

and scheduled oral argument for late May 2023 for Teva’s motion to dismiss the complaint brought by the State of New Mexico, ~~and on December 20, 2021,~~which motion was previously denied by the trial court denied Teva’s motion. The trial court certified the decision as appropriate for interlocutory appeal, but on April 8, 2022, the appellate court in New Mexico declined to accept the appeal. Teva has appealed the decision to the New Mexico Supreme Court, and that appeal remains pending.court. Annual sales in the United States at the time of the settlement of Viread

, Truvada

and Atripla

were approximately $582 million, $2.4 billion, and $2.9 billion, respectively. Annual sales in the United States at the time Teva launched its generic version of Viread

in 2017, Truvada

in 2020 and Atripla

in 2020 were approximately ~~$728~~

728

million, ~~$2.1~~$

2.1

billion and ~~$444~~$

444

million, respectively.

In March 2021, following the 2019 European Commission’s inspection of Teva and subsequent request for information, the European Commission opened a formal antitrust investigation to assess whether Teva may have abused a dominant position by delaying the market entry and uptake of medicines that compete with COPAXONE. On October 10, 2022, the European Commission issued a Statement of Objections, which sets forth its preliminary allegations that Teva had engaged in anti-competitive practices. Teva now has the opportunity to formally respond to the European Commission’s allegations. Annual sales of COPAXONE in the European Economic Area for 2021 were approximately $373 million.

On July 15, 2021, the U.K. Competition and Markets Authority (“CMA”) issued a decision imposing fines for breaches of U.K. competition law by Allergan, Actavis UK and Auden Mckenzie and a number of other companies in connection with the supply of 10mg and 20mg hydrocortisone tablets in the U.K. The decision combines the CMA’s three prior investigations into the supply of hydrocortisone tablets in the U.K. ~~and encompasses those allegations which were subject to prior statements of objections (a provisional finding of breach of the Competition Act)~~, ~~in particular those under case~~

~~50277-1~~

~~(unfair pricing, originally subject to a statement of objections on December 16, 2016), case~~

~~50277-2~~

~~(anti-competitive agreement with AMCo, originally subject to a statement of objections on March 3, 2017)~~ as well as the CMA’s subsequent investigation relating to an anti-competitive agreement with Waymade. On January 9, 2017, Teva completed the sale of Actavis UK to Accord Healthcare Limited, in connection with which Teva will indemnify Accord Healthcare for potential fines imposed by the CMA and/or damages awarded by a court against Actavis UK in relation to two of the three statements of objection from the CMA (dated December 16, 2016 and March 3, ~~2017 statements of objections,~~2017), and resulting from conduct prior to the closing date of the sale. In addition, Teva agreed to indemnify Allergan against losses arising from this matter in the event of any such fines or damages. On October 6, 2021, Accord UK and Auden Mckenzie appealed the CMA’s decision. A provision for the estimated exposure for Teva related to the fines and/or damages has been recorded in the financial statements. The hearing for the appeal concluded in the first quarter of 2023, and a decision remains pending.

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In August 2021, a plaintiff filed a putative class action suit in the United States District Court for the Eastern District of Pennsylvania against Takeda and several generic manufacturers, including Watson and Teva, alleging violations of the antitrust laws in connection with their settlement of patent litigation involving colchicine tablets (generic Colcrys

), entered into in January 2016. Plaintiff claims that the settlement was part of a ~~horizontal~~ conspiracy among Takeda and the generic manufacturers to unlawfully restrict output of colchicine by delaying generic entry. ~~Defendants moved to dismiss the complaint for failure to state a claim.~~ On December 28, 2021, the Court granted the defendants’ motion to dismiss, finding that plaintiff’s allegations were implausible, but granted plaintiff leave to amend, and on January 18, 2022, plaintiff filed its amended complaint, making substantively the same antitrust allegations as before, but with certain new allegations regarding the nature of the alleged conspiracy. On March 30,November 23, 2022, the ~~Court granted in part and~~court denied in part defendants’ motion to dismiss, dismissing the newly pled bilateral conspiracy claims but allowing the revised overarching conspiracy claim to proceed against all defendants. On April 8, 2022, Teva and Watson, along with their codefendant Amneal, moved the court to reconsider its partial

~~motion-to-dismiss~~

~~denial or, in the alternative, to certify that denial for immediate appellate review. However, that motion was denied on April 25, 2022. The case is in discovery, and plaintiff’s~~plaintiffs’ motion for class certification ~~was fully briefed~~without prejudice and on March 1, 2023, the Court denied plaintiff’s renewed motion for class certification. On April 10, 2023, plaintiff filed a motion for leave to amend its complaint to add 18 previously absent class members as plaintiffs. Defendants’ motion for summary judgment, and plaintiffs’ motion for partial summary judgment remain pending. Trial is currently scheduled to commence in September ~~28, 2022 and remains pending.~~2023. Annual sales of Colcrys

in the United States were approximately $187 million at the time of the settlement.

In November 2022, two complaints, one brought by Walgreen Co. and Kroger Specialty Pharmacy, Inc. and another by Fraternal Order of Police, Miami Lodge 20, Insurance Trust Fund and Jacksonville Police Officers and Fire Fighters Health Insurance Trust (collectively the “Walgreen and EPP complaints”), were filed in the United States District Court for the District of New Jersey against Teva and its marketing partner, Natco Pharma Limited (“Natco”), alleging violations of the antitrust laws in connection with their December 2015 settlement of patent litigation with Celgene Corporation (which was subsequently acquired by Bristol-Myers Squibb Company (“BMS”)) involving the drug Revlimid

(lenalidomide). The Walgreen and EPP complaints also name Celgene and BMS as defendants. On January 24, 2023, the Walgreen and EPP complaints were consolidated for

pre-trial

purposes only with an earlier-filed, already consolidated Insurer

Opt-Out

Action filed against BMS and Celgene,

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In Re Revlimid

& Thalomid Purchaser Antitrust Litigation

, Case No.

2:19-cv-7532-ES-MAH.

On February 16, 2023, the Walgreen and EPP plaintiffs filed amended complaints adding additional plaintiffs. On March 21, 2023, Teva and Natco moved to dismiss the complaints against them, and briefing remains ongoing. Annual sales of Revlimid

in the United States were approximately $3.5 billion at the time of the settlement.

On December 2, 2022, plaintiffs purporting to represent putative classes of indirect purchasers of EpiPen® (epinephrine injection) and Nuvigil® (armodafinil) filed a complaint in the United States District Court for the District of Kansas against Teva, Cephalon, and a former Teva executive. Teva owns the New Drug Application (“NDA”) for Nuvigil® and sold the brand product, for which generic entry occurred in 2016. Teva filed an ANDA to sell generic EpiPen®, which Teva launched in 2018, following receipt of FDA approval. The complaint alleges, among other things, that the defendants violated the federal antitrust laws, the Racketeer Influenced and Corrupt Organizations Act (“RICO Act”), and various state laws in connection with settlements resolving patent litigation relating to those products. Plaintiffs seek injunctive relief, compensatory and punitive damages, interest, attorneys’ fees and costs. On March 8, 2023, Teva filed a motion to dismiss the complaint, which is pending. Annual sales of Nuvigil® in the United States were approximately $

300 million at the time Teva entered into the first settlement with an ANDA filer in 2012; annual sales of EpiPen

in the United States were approximately $600 million at the time Teva entered into its settlement agreement for that product in 2012.

Government Investigations and Litigation Relating to Pricing and Marketing

Teva is involved in government investigations and litigation arising from the marketing and promotion of its pharmaceutical products in the United States.

In 2015 and 2016, Actavis and Teva USA each respectively received subpoenas from the U.S. Department of Justice (“DOJ”) Antitrust Division seeking documents and other information relating to the marketing and pricing of certain Teva USA generic products and communications with competitors about such products. On August 25, 2020, a federal grand jury in the Eastern District of Pennsylvania returned a ~~three count~~three-count indictment charging Teva USA with criminal felony Sherman Act violations. See

No. 20-cr-200

(E.D. Pa.). The indictment alleges Teva USA participated in three separate conspiracies with certain other generic drug manufacturers to maintain and fix prices, allocate customers, and other alleged antitrust offenses concerning the sale of generic drugs. The indictment identified the following generic drugs: Pravastatin, Carbamazepine, Clotrimazole, Etodolac (IR and ER), Fluocinonide (Cream

E-Cream,

Gel, and Ointment), Warfarin, Nadolol, Temozolomide, and Tobramycin. On September 8, 2020, Teva USA pled not guilty to all counts. ~~A tentative~~On December 14, 2022, the Court entered a scheduling order against Teva and its

co-defendant

Glenmark, which sets a May 2024 trial ~~date is yet to be scheduled.~~date. While the Company is unable to estimate a range of loss at this time, a conviction on these criminal charges could have a material adverse impact on the Company’s business, including monetary penalties and debarment from federally funded health care programs.

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(Unaudited)

In May 2018, Teva received a civil investigative demand from the DOJ Civil Division, pursuant to the federal False Claims Act, seeking documents and information produced since January 1, 2009 relevant to the Civil Division’s investigation concerning allegations that generic pharmaceutical manufacturers, including Teva, engaged in market allocation and price-fixing agreements, paid illegal remuneration, and caused false claims to be submitted in violation of the False Claims Act. An adverse resolution of this matter may include fines, penalties, financial forfeiture and compliance conditions.

In 2015 and 2016, Actavis and Teva USA each respectively received a subpoena from the Connecticut Attorney General seeking documents and other information relating to potential state antitrust law violations. Subsequently, on December 15, 2016, a civil action was brought by the attorneys general of twenty states against Teva USA and several other companies asserting claims under federal antitrust law alleging price fixing of generic products in the United States. That complaint was later amended to add new states as named plaintiffs, as well as new allegations and new state law claims, and on June 18, 2018, the attorneys general of 49 states plus Puerto Rico and the District of Columbia filed a consolidated amended complaint against Actavis and Teva, as well as other companies and individuals. On May 10, 2019, most (though not all) of these attorneys general filed another antitrust complaint against Actavis, Teva and other companies and individuals, alleging price-fixing and market allocation with respect to additional generic products. On November 1, 2019, the state attorneys general filed an amended complaint, bringing the total number of plaintiff states and territories to 54. The amended complaint alleges that Teva was at the center of a conspiracy in the generic pharmaceutical industry, and asserts that Teva and others fixed prices, rigged bids, and allocated customers and market share with respect to certain additional products. On June 10, 2020, most, but not all, of the same states, with the addition of the U.S. Virgin Islands, filed a third complaint in the District of Connecticut naming, among other defendants, Actavis, but not Teva USA, in a similar complaint relating to dermatological generics products. On September 9, 2021, the states’ attorneys general amended their third complaint to, among other things, add California as a plaintiff.

In the various complaints described above, the states seek a finding that the defendants’ actions violated federal antitrust law and state antitrust and consumer protection laws, as well as injunctive relief, disgorgement, damages on behalf of various state and governmental entities and consumers, civil penalties and costs. All such complaints have been transferred to the generic drug multidistrict litigation in the Eastern District of Pennsylvania (“Pennsylvania MDL”). On July 13, 2020, the court overseeing the Pennsylvania MDL chose the attorneys’ general November 1, 2019 amended complaint, referenced above, along with certain complaints filed by private plaintiffs, to proceed first in the litigation as bellwether complaints. On February 9, 2021, Teva’s motion to reconsider that ruling was granted, and on May 7, 2021, the Court chose the attorneys’ general third complaint filed on June 10, 2020 and subsequently amended to serve as a bellwether complaint in the Pennsylvania MDL, along with certain complaints filed by private plaintiffs. On December 9, 2021, the Court entered an order setting the schedule for the proceedings in the bellwether ~~cases. The order did~~cases, which the Court later amended on October 13, 2022. This amended schedule does not include trial dates, but provides for the parties to complete briefing on motions for summary ~~judgement~~judgment in ~~early~~the third quarter of 2024. On June 7, 2022, the Court dismissed the attorneys’ general claims for monetary relief under federal law, concluding that the federal statute under which the attorneys general brought suit authorizes injunctive relief only. However, the attorneys general have pending claims for monetary relief under state law. On February 27, 2023, the Court largely denied defendants’ motions to dismiss the federal claims asserted by the attorneys general in their bellwether complaint. Another motion to dismiss, directed at that same complaint, and related to the state law claims asserted by the attorneys general, remains pending.

Teva has settled with the states of Mississippi (in June 2021), Louisiana (in March 2022), Georgia (in September 2022) ~~and~~, Arkansas (in October 2022) and Florida (in February 2023). Teva paid each state an amount proportional

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to its share of the national population (approximately $1,000,000 for each 1%

share of the national population), and the states have dismissed their claims against Actavis and Teva USA, as well as certain former employees of Actavis and Teva USA, pursuant to these settlements. On March 30, 2022, the State of Alabama voluntarily dismissed all of its claims in the litigation, including its claims against Actavis and Teva USA, without prejudice. The territories of American Samoa and Guam have also voluntarily dismissed all of their claims in the litigation, including their claims against Actavis and Teva USA; American Samoa’s dismissal was without prejudice in July 2020, and Guam’s dismissal was with prejudice in February 2023. The most recent ~~settlements~~settlement with ~~Georgia and Arkansas follow~~Florida follows the pattern reached in earlier settlements. Specifically, as mentioned above, Teva agreed to pay each state an amount proportional to its share of the national population. This, in addition to the status of ongoing negotiations with several other U.S. state attorneys general to settle on comparable terms, caused management to consider settlement of the claims filed by the remaining attorneys general to be probable, and management recorded an estimated provision in the third quarter of 2022, in accordance with Accounting Standards Codification 450 “Accounting for Contingencies.”

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Beginning on March 2, 2016, and continuing through December 2020, numerous complaints have been filed in the United States on behalf of putative classes of direct and indirect purchasers of several generic drug products, as well as several individual direct and indirect purchaser

opt-out

plaintiffs. These complaints, which allege that the defendants engaged in conspiracies to fix prices and/or allocate market share of generic products have been brought against various manufacturer defendants, including Teva USA and Actavis. The plaintiffs generally seek injunctive relief and damages under federal antitrust law, and damages under various state laws. On October 16, 2018, the court denied certain of the defendants’ motions to dismiss as to certain federal claims, pending as of that date, and on February 15, 2019, the court granted in part and denied in part defendants’ motions to dismiss as to certain state law claims. On July 18, 2019, May 6, 2020 and October 8, 2021, certain individual plaintiffs commenced civil actions in the Pennsylvania Court of Common Pleas of Philadelphia County against many of the defendants in the Pennsylvania MDL, including Teva and Actavis, but no complaints have been filed in the actions and each of the three ~~of the~~ cases have been placed in deferred status. Certain counties in New York and Texas have also commenced civil actions against many of the defendants in the Pennsylvania MDL, including Teva and Actavis, and the complaints have been transferred to the Pennsylvania MDL. There is also one similar complaint brought in Canada, which alleges that the defendants engaged in conspiracies to fix prices and/or allocate market share of generic drug products to the detriment of a class of private payors. The action is in its early stages.

In March 2017, Teva received a subpoena from the U.S. Attorney’s office in Boston, Massachusetts requesting documents related to Teva’s donations to patient assistance programs. Subsequently, in August 2020, the U.S. Attorney’s office in Boston, Massachusetts brought a civil action in the U.S. District Court for the District of Massachusetts alleging violations of the federal Anti-Kickback Statute, and asserting causes of action under the federal False Claims Act and state ~~law.~~law (the “DOJ PAP Complaint”). It is alleged that Teva caused the submission of false claims to Medicare through Teva’s donations to bona fide independent charities that provide financial assistance to patients. An adverse judgment may involve damages, civil penalties and injunctive remedies. On September 10, 2021, the Court granted Teva’s motion to dismiss the unjust enrichment claim and denied the remainder of the motion. On October 15, 2021, Teva filed an answer to the ~~complaint.~~DOJ PAP Complaint. Trial for this matter is currently scheduled for September 2023. On April 24, 2023, both parties filed summary judgment motions, which are currently pending. In the first quarter of 2023, Teva recognized a provision based on its offer to settle this matter. Additionally, on January 8, 2021, Humana, Inc. filed an action against Teva in the United States District Court for the Middle District of Florida based on the allegations raised in the ~~August 2020 complaint filed by the U.S. Attorney’s Office in Boston.~~DOJ PAP Complaint. On April 2, 2021, Teva filed a motion to dismiss ~~the~~Humana’s claims on the grounds that the claims are time-barred and/or insufficiently pled, and that motion remains pending. On April 11, 2023, the court granted Teva’s motion to stay the case pending the court’s decision on Teva’s motion to dismiss and/or Humana’s motion to amend the complaint. On November 17, 2022, United Healthcare also filed an action against Teva in the United States District Court for the District of New Jersey based on the conduct alleged in the DOJ PAP Complaint. On March 10, 2023, Teva moved to dismiss United Healthcare’s claims on the grounds that it is time-barred and ~~discovery is ongoing.~~lacks standing and sufficient particularity to assert RICO claims, and that motion remains pending.

In April 2021, a city and county in Washington ~~sued~~filed claims against Teva in the United States District Court for the Western District of Washington for alleged violations of the Racketeer Influenced and Corrupt Organizations Act, Washington’s Consumer Protection Act, and unjust enrichment concerning Teva’s sale of COPAXONE. Plaintiffs purport to represent a nationwide class of health plans and a subclass of Washington-based health plans that purchased and/or reimbursed health plan members for COPAXONE. Plaintiffs allege that Teva engaged in several fraudulent schemes that resulted in plaintiffs and the putative class members purchasing and/or reimbursing plan members for additional prescriptions of COPAXONE and/or at inflated COPAXONE prices. Plaintiffs seek treble damages for the excess reimbursements and inflated costs, as well as injunctive relief. On September 28, 2021, plaintiffs filed an amended complaint. On November 17, 2021, Teva moved to dismiss the suit, on the grounds that plaintiffs’ claims are barred by the applicable statutes of limitations and the direct purchaser rule, suffer from jurisdictional defects, and fail to plausibly allege fraud or other elements of their claims. ~~That~~On March 9, 2023, the court held a hearing on the motion ~~is fully briefed~~to dismiss, and a decision remains pending.

On June 29, 2021, Mylan Pharmaceuticals (“Mylan”) ~~sued~~filed claims against Teva in the District Court for the District of New Jersey. On March 11, 2022 and March 15, 2022, FWK Holdings, LLC, KPH Healthcare Servs., Inc. d/b/a Kinney Drugs, Inc., Meijer Inc., Meijer Distribution, Inc., Labor-Management Healthcare Fund, the Mayor and City Council of Baltimore, and the New York State Teamsters Council Health and Hospital Fund ~~sued~~filed claims against Teva in the District Court for the District of New

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Jersey on behalf of themselves and other similarly situated direct and indirect purchasers of COPAXONE. On August 22, 2022, Blue Cross Blue Shield of Vermont and the Vermont Health Plan sued Teva in the

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District Court for the District of Vermont on behalf of themselves and other similarly situated indirect purchasers of COPAXONE. The complaints assert claims for alleged violations of the Lanham Act, state and federal unfair competition and monopolization laws, tortious interference, trade libel, and a violation of the ~~Racketeer Influenced and Corrupt Organizations~~RICO Act. ~~Plaintiffs~~Additionally, plaintiffs claim Teva was involved in an unlawful scheme to delay and hinder generic competition concerning COPAXONE sales. Plaintiffs seek damages for lost profits and expenses, disgorgement, restitution, treble damages, attorneys’ fees and costs, and injunctive relief. Teva has moved to dismiss the complaints filed by Mylan and the class plaintiffs in the District of New Jersey on the grounds, among others, that none of its challenged conduct, violates the law. Those motions are fully briefed and a decision remains pending. ~~Teva has moved~~On November 21, 2022, the Vermont court denied Teva’s motion to transfer the ~~remaining~~ complaint filed in Vermont. On December 21, 2022, Teva moved to dismiss the Vermont complaint on grounds similar to those asserted in its motions to dismiss the complaints in New Jersey. Those motions are fully briefed, and a decision remains pending.

On December 1, 2022, Teva received a civil subpoena from the U.S. Attorney’s office in Boston, Massachusetts requesting certain documents related to the ~~District~~sale and marketing of ~~New Jersey~~AUSTEDO and ~~expects to move to dismiss that complaint on similar grounds.~~

risperidone LAI. Teva is cooperating with the request for documents.

Opioids Litigation

Since May 2014, more than 3,500 complaints have been filed with respect to opioid sales and distribution against various Teva affiliates, along with several other pharmaceutical companies, by a number of cities, counties, states, other governmental agencies, tribes and private plaintiffs (including various putative class actions of individuals) in both state and federal courts. Most of the federal cases have been consolidated into a multidistrict litigation in the Northern District of Ohio (“MDL Opioid Proceeding”) and many of the cases filed in state court have been removed to federal court and consolidated into the MDL Opioid Proceeding. Two cases that were included in the MDL Opioid Proceeding were transferred back to federal district court for additional discovery,

pre-trial

proceedings and trial. Those cases are: City of Chicago v. Purdue Pharma L.P. et al.,

No. 14-cv-04361

(N.D. Ill.) and City and County of San Francisco v. Purdue Pharma L.P. et al.,

No. 18-cv-07591-CRB

(N.D. Cal.). Other cases remain pending in various states. In some jurisdictions, such as Illinois, New York, Pennsylvania, South Carolina, Texas, Utah and West Virginia, certain state court cases have been transferred to a single court within their respective state court systems for coordinated pretrial proceedings. Complaints asserting claims under similar provisions of different state law generally contend that the defendants allegedly engaged in improper marketing and distribution of opioids, including ACTIQ

and FENTORA

. The complaints also assert claims related to Teva’s generic opioid products. In addition, over 950 personal injury plaintiffs, including various putative class actions of individuals, have asserted personal injury and wrongful death claims in over 600 complaints, nearly all of which are consolidated in the MDL Opioid Proceeding. Furthermore, approximately 700

non-personal

injury complaints and approximately 100 personal injury complaints have named Anda, Inc. (and other distributors and manufacturers) alleging that Anda failed to develop and implement systems sufficient to identify suspicious orders of opioid products and prevent the abuse and diversion of such products to individuals who used them for other than legitimate medical purposes. Plaintiffs seek a variety of remedies, including restitution, civil penalties, disgorgement of profits, treble damages, attorneys’ fees and injunctive relief. Certain plaintiffs assert that the measure of damages is the entirety of the costs associated with addressing the abuse of opioids and opioid addiction and certain plaintiffs specify multiple billions of dollars in the aggregate as alleged damages. The individual personal injury plaintiffs further seek

non-economic

damages. In many of these cases, plaintiffs are seeking joint and several damages among all defendants.

On April 19, 2021, a bench trial in California (The People of the State of California, acting by and through Santa Clara County Counsel James R. Williams, et. al. v. Purdue Pharma L.P., et. al.) commenced against Teva and other defendants focused on the marketing of branded opioids. On December 14, 2021, the court issued its final judgment in favor of the defendants on all claims. Plaintiffs filed a notice of appeal of this judgment in February 2022. On June 29, 2021, a jury trial in New York (

In re Opioid Litigation

, Index No.

~~400000~~

/400000/2017) commenced against Teva and other defendants, focused on the marketing and distribution of opioids. The case was bifurcated between liability and damages. On December 30, 2021, the jury returned a liability verdict in favor of plaintiffs (the County of Suffolk, the County of Nassau and the State of New York) on the plaintiffs’ public nuisance claim. ~~Teva and the plaintiffs filed post-trial motions with respect to the liability portion of the case. In~~On November 3, 2022, Teva reached an agreement with the Attorney General of New York that ~~settles~~settled the state’s and its subdivisions’ opioid-related ~~claims.~~

~~In May 2019, Teva settled~~claims, the ~~Oklahoma litigation brought by the Oklahoma Attorney General (State~~details of Oklahoma, ex. rel. Mike Hunter, Attorney General of Oklahoma vs. Purdue Pharma L.P., et. al.) for $85 million. The settlement did not include any admission of violation of law for any of the claims or allegations made. As the Company demonstrated a willingness to settle part of the litigation, for accounting purposes, management considered a portion of opioid-related cases as probable and, as such, recorded an estimated provisionwhich are included in the second quarter of 2019. Given the relatively early stage of the cases, management viewed no amount within the range to be the most likely outcome. Therefore, management recorded a provision for the reasonably estimable minimum amount in the assessed range for such opioid-related cases in accordance with Accounting Standards Codification 450 “Accounting for Contingencies.”table below.

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Additionally, on October 21, 2019, Teva reached a settlement with the two plaintiffs in the MDL Opioid Proceeding that was scheduled for trial for the Track One case, Cuyahoga and Summit Counties of Ohio. Under the terms of the settlement, Teva agreed to provide the two counties with opioid treatment medication, buprenorphine naloxone (sublingual tablets), known by the brand name Suboxone

, with a value of $25 million at wholesale acquisition cost and distributed over three years to help in the care and treatment of people suffering from addiction, and a cash payment in the amount of $20 million, which has been paid.

On July 21, 2021, it was announced that four other defendants (not including Teva) reached nationwide settlements, subject to certain conditions, which include payment of up to approximately $26 billion spread over up to 18

years. In July 2022, Teva, ~~has continued to work toward a nationwide settlement with~~ the working group of States’ Attorneys General (the “Working Group”), the Multi-District Litigation Plaintiffs’ Executive Committee (“PEC”), and counsel for Native American tribes (“Tribes”)~~. In July 2022, the parties~~ reached an agreement in principle on the financial terms of ~~a final~~ nationwide ~~settlement~~settlements similar in structure to the nationwide settlements of other defendants. During the third quarter of 2022, Teva ~~the Working Group and PEC made substantial progress toward finalizing the non-financial terms of the proposed nationwide settlement agreement, and Teva~~ and Allergan resolved their dispute with respect to Teva’s indemnification obligations. In November 2022, Teva, Allergan, the Working Group and PEC, and representatives for the Tribes, finalized the terms of their respective proposed opioids nationwide settlement agreements. Under the financial terms of the proposed nationwide settlement agreement with the states and subdivisions, Teva will pay up to

~~$4.25~~ $4.25 billion (including the already settled cases) ~~plus approximately $100 million for the Tribes,~~, spread over 13 years. This total includes the supply of up to $1.2 billion of Teva’s generic version of Narcan

(naloxone hydrochloride nasal spray), valued at wholesale acquisition cost, over 10 years or cash at 20% of the wholesale acquisition cost ($240 million) in

lieu of product. ~~The~~In January of 2023,

Teva confirmed participation from all states except Nevada, and decided to move forward with the participation process of the subdivisions, and that process is ongoing. In February 2023, Teva and the Tribes finalized their opioids settlement with participation from 100% of the Tribes, the details of which are included in the table below.

Teva’s proposed nationwide settlement agreement with the states and subdivisions is contingent upon ~~(i) final documentation of the proposed nationwide settlement agreement; (ii) reaching~~ sufficient participation by ~~states~~the subdivisions in Teva’s and ~~subdivisions; and (iii) Allergan reaching a~~Allergan’s respective nationwide opioids ~~settlement. No other trials currently are scheduled against Teva~~settlement agreements. Currently, more than

% of the litigating subdivisions have chosen to participate in ~~2022 in any opioids matter. If the~~Teva’s nationwide settlement, ~~agreement is~~which represents

of the population of the participating states. Teva has until June 8, 2023 to determine whether or not to move forward with its proposed nationwide settlement. If these nationwide settlement agreements are not finalized or if Nevada or subdivisions choose not to participate, additional trials are expected to ~~proceed~~proceed. Trials in ~~several states~~two opioids cases currently are scheduled to commence in the second half of 2023; one brought by the Nevada Attorney General, currently scheduled to commence in August 2023, and the other brought by eight hospitals against Teva, other manufacturers, distributors, and pharmacies, currently scheduled to commence in July 2023.

~~On September 28, 2021,~~

In addition to its pending nationwide opioids settlement, Teva previously reached ~~an agreement~~settlements with individual states and subdivisions to settle opioids claims brought by those jurisdictions. The material details of those individual settlements and Teva’s settlement with the ~~Attorney General~~Tribes appear in the table below, which includes the cash payment to be made by Teva and the wholesale acquisition cost (“WAC”) of ~~Louisiana that settles~~product to be provided by Teva, in each case to such states and subdivisions and the ~~state’s opioid-related claims. The agreement was contingent that all political~~Tribes. If the nationwide settlement reaches sufficient participation by the subdivisions, Teva will finalize opioid settlements with a total of ~~Louisiana will formally release Teva as part~~49 of the ~~settlement, which Teva was advised has occurred by the Attorney General of Louisiana. Under the terms of the settlement, Teva will pay Louisiana $15 million over an~~

~~18-year~~50 states.

~~period and will provide buprenorphine naloxone (sublingual tablets) valued at $3 million (wholesale acquisition cost).~~


Date	Jurisdiction	Settlement Payment *	Payment Term	Settlement Product	Product WAC Value and Term
June 7, 2019	Oklahoma	$72.3 million (paid)	1 year	N/A	N/A
December 27, 2019	Cuyahoga County, OH	$12.4 million (paid)	2.5 years	buprenorphine naloxone (generic Suboxone ® )	$15.5 million (3 years)
December 27, 2019	Summit County, OH	$7.6 million (paid)	2.5 years	buprenorphine naloxone (generic Suboxone ® )	$9.5 million (3 years)
January 18, 2022	Louisiana	$15 million	18 years	buprenorphine naloxone (generic Suboxone ® )	$3 million (1 year)
February 4, 2022	Texas	$131.5 million	15 years	naloxone hydrochloride (generic Narcan®)	$75 million (10 years)
March 21, 2022	Rhode Island	$21 million	13 years	naloxone hydrochloride (generic Narcan ® ) and buprenorphine naloxone (generic Suboxone ® )	$78.5 million (10 years)
March 30, 2022	Florida	$177.1 million	15 years	naloxone hydrochloride (generic Narcan®)	$84 million (10 years)
July 12, 2022	San Francisco	$19.5 million	13 years	naloxone hydrochloride (generic Narcan®)	$20 million (10 years)
September 19, 2022	West Virginia	$75.4 million	15 years	naloxone hydrochloride (generic Narcan®)	$27 million (10 years)
November 3, 2022	New York	$313.3 million **	18 years	N/A	N/A
February 24, 2023	Tribes	$108.3 million	13 years	naloxone hydrochloride (generic Narcan®)	$25 million (10 years)

~~Teva~~

reached an agreement with the Attorney General of the State of Texas that settles Texas’ and its subdivisions’ opioid-related claims. On March 10, 2022, Texas confirmed that at least 96% of the population of subdivisions formally released Teva as part of the settlement. Under the terms of the settlement, Teva will pay Texas $150 million over a

~~15-year~~

~~period and will provide its generic version of Narcan~~

~~(naloxone hydrochloride nasal spray), valued at $75 million (wholesale acquisition cost) over 10 years.~~

On March 21, 2022, Teva reached an agreement with the Attorney General of Rhode Island that settles Rhode Island’s and its subdivisions’ opioid-related claims. Under the terms of the settlement, Teva will pay Rhode Island $21 million over 13 years, in addition to attorneys’ fees and costs, and will provide its generic version of Narcan

~~(naloxone hydrochloride nasal spray) and a significant amount of buprenorphine naloxone sublingual tablets known by the brand name Suboxone~~

~~, together valued at $78.5 million (wholesale acquisition cost) over 10 years.~~

On March 30, 2022, Teva reached an agreement with the Attorney General of Florida that settles Florida’s and its subdivisions’ opioid-related claims. Under the terms of the settlement, Teva will pay Florida $177 million over

~~15-years,~~

~~in addition to attorneys’ fees and costs, and will provide its generic version of Narcan~~

~~(naloxone hydrochloride nasal spray) valued at $84 million (wholesale acquisition cost) over 10 years.~~

On May 24, 2022, Teva reached an agreement in principle with the Attorney General of West Virginia that settles West Virginia’s and its subdivisions’ opioid-related claims. Under the terms of the settlement, Teva will pay West Virginia $75 million over

~~15-years,~~

~~in addition to attorneys’ fees and costs, and will provide its generic version of Narcan~~

~~(naloxone hydrochloride nasal spray) valued at $27 million (wholesale acquisition cost) over 10 years.~~

On July 12, 2022, Teva reached an agreement in principle with the City and County of San Francisco and the People of the State of California that settles opioid-related claims asserted on behalf of the City and County of San Francisco. Teva will provide San Francisco $20.3 million over 13 years, in addition to attorneys’ fees and costs, and will provide its generic version of Narcan

~~(naloxone hydrochloride nasal spray), valued at $20 million (wholesale acquisition cost), over 10 years.~~

*	Amounts exclude attorneys’ fees and costs, except New York.

**	Not including cash payment and attorneys’ fees allocated under the nationwide settlement.

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In light of the agreement ~~in principle~~ on the proposed nationwide settlement between Teva and the States’

Attorneys

General ~~their~~

~~subdivisions~~

and ~~the Tribes, the agreement with the Attorney General of New York,~~their subdivisions, Teva’s indemnification obligations arising from Teva’s acquisition of the Actavis Generics business for opioid-related claims, prior settlements with Louisiana, Texas, ~~Florida, Louisiana,~~ Rhode Island, Florida, San Francisco, West Virginia, New York, and ~~San Francisco,~~the Tribes, as well as an estimate for a number of items including, but not limited to, costs associated with administering injunctive terms, and most favored nations clauses associated with prior settlements, the Company has ~~reconsidered~~recorded a provision for the potential ~~settlement outcome and revised its provision.~~settlement. The ~~revised~~ provision is a reasonable estimate of the ultimate costs in the likely event that the nationwide settlement is finalized under its current proposed terms and conditions, after discounting payments to states to their net present value. However, if the nationwide settlement is not finalized for the entirety of the remaining cases, a reasonable upper end of a range of loss cannot be determined. An adverse resolution of any of these lawsuits or investigations may involve large monetary penalties, damages, and/or other forms of monetary and

non-monetary

relief and could have a material and adverse effect on Teva’s reputation, business, results of operations and cash flows.

In August 2019, Teva received a grand jury subpoena from the United States Attorney’s Office for the Eastern District of New York for documents related to the Company’s anti-diversion policies and procedures and distribution of its opioid medications, in what the Company understands to be part of a broader investigation into manufacturers’ and distributors’ monitoring programs and reporting under the Controlled Substances Act. In September 2019, Teva received subpoenas from the New York State Department of Financial Services (“NYDFS”) as part of an industry-wide inquiry into the effect of opioid prescriptions on New York health insurance premiums. This was followed by a Statement of Charges and Notice of Hearing filed by the ~~NYDFS, although no merits hearing date is currently set. Currently, Teva cannot predict how~~NYDFS. This matter has been resolved by Teva’s November 3, 2022 settlement with the ~~nationwide settlement (if finalized) will affect these investigations and administrative actions. In addition, a number~~Attorney General of ~~State Attorneys General, including a coordinated multistate effort, have initiated investigations into sales and marketing practices of Teva~~New York that settled the state’s and its affiliates with respect to opioids. Other states are conducting their own investigations outside of the multistate group. Teva is cooperating with these ongoing investigations and cannot predict their outcome at this time.subdivisions’ opioid-related claims.

In addition, ~~several jurisdictions~~Teva, certain of its subsidiaries and ~~consumers~~other defendants, are defending claims and putative class action lawsuits in Canada ~~have initiated litigation regarding~~related to the manufacture, sale, marketing and distribution of opioid medications. The lawsuits include a claim by the Province of British Columbia on behalf of itself and a putative class of other federal and provincial governments, and claims of municipalities, First Nations, and persons who used opioids ~~alleging similar claims as those in the United States. The~~on behalf of themselves and putative classes. These cases ~~in Canada~~ are in ~~their~~ early ~~stages.~~

stages with the preliminary motions brought by the Province of British Columbia expected to be heard in late 2023.

Shareholder Litigation

On November 6, 2016 and December 27, 2016, two putative securities class actions were filed in the U.S. District Court for the Central District of California against Teva and certain of its current and former officers and directors. Those lawsuits subsequently were consolidated and transferred to the U.S. District Court for the District of Connecticut (the “Ontario Teachers Securities Litigation”). On December 13, 2019, the lead plaintiff ~~in that action~~ filed an amended complaint, purportedly on behalf of purchasers of Teva’s securities between February 6, 2014 and May 10, ~~2019. The amended complaint asserts~~2019, asserting that Teva and certain of its current and former officers and directors violated federal securities and common laws in connection with Teva’s alleged failure to disclose pricing strategies for various drugs in its generic drug portfolio and by making allegedly false or misleading statements in certain offering materials. ~~The amended complaint seeks unspecified damages, legal fees, interest, and costs. In~~From July 2017 ~~August 2017, and~~to June 2019, other putative securities class actions were filed in other federal courts based on similar allegations and ~~those cases have been~~claims, and were transferred to the U.S. District Court for the District of Connecticut. Between August 2017 and January 2022, twenty-three complaints were filed against Teva and certain of its current and former officers and directors ~~seeking unspecified compensatory damages, legal fees, costs and expenses. The similar claims in these complaints have been brought~~ on behalf of plaintiffs in various forums across the country, ~~who have indicated that they intend to~~but many of those plaintiffs

“~~opt-out”~~opted-out”

of the Ontario Teachers Securities Litigation. On March 10, 2020, the Court consolidated the Ontario Teachers Securities Litigation with all of the above-referenced putative class actions for all purposes and the

“opt-out”

cases for pretrial purposes. ~~Pursuant to that consolidation order, plaintiffs~~On January 18, 2022, Teva entered into a settlement in ~~several~~the Ontario Teachers Securities Litigation for $420 million, which received final approval from the court on June 2, 2022. The vast majority of the

~~“opt-out”~~

~~cases filed amended complaints on May 28, 2020.~~ total settlement amount was covered by the Company’s insurance carriers, with a small portion contributed by Teva. Additionally, as part of the settlement, Teva admitted no liability and denied all allegations of wrongdoing. On January 22, 2021, the Court dismissed the

“opt-out”

plaintiffs’ claims arising from statements made prior to the five year statute of repose, but denied Teva’s motion to dismiss their claims under Israeli laws. ~~Those~~

~~“opt-out”~~

~~plaintiffs moved for reconsideration, which was denied on March 30, 2021.~~ On May 24, 2021, Teva moved to dismiss a majority of the

“opt-out”

complaints on various other ~~grounds. Those~~grounds, and on May 1, 2023, the Court granted in part and denied in part Teva’s motions. Teva has settled several

“opt-out”

claims, but a number of

opt-out

cases remain outstanding. In addition, Teva reached a settlement agreement of Israeli shareholder motions ~~are still pending. The~~to certify class action on similar allegations to those raised in the Ontario Teachers Securities ~~Litigation plaintiffs’ Motion for~~Litigation. The settlement agreement is awaiting court approval.

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Notes to Consolidated Financial Statements

(Unaudited)

Class Certification and Appointment of Class Representatives and Class Counsel was granted on March 9, 2021, to which Teva’s appeal was denied. On January 18, 2022, Teva entered into a settlement in the Ontario Teachers Securities Litigation for $420 million, which received final approval from the court on June 2, 2022. Pursuant to an agreement between the Company and its insurance carriers, the insurance carriers provided the vast majority of the total settlement amount, with a small portion contributed by Teva. Additionally, as part of the settlement, Teva admitted no liability and denied all allegations of wrongdoing. A number of

~~“opt-out”~~

complaints still remain outstanding, and motions to approve securities class actions were also filed in the Tel Aviv District Court in Israel with similar allegations to those made in the Ontario Teachers Securities Litigation.

On September 23, 2020, a putative securities class action was filed in the U.S. District Court for the Eastern District of Pennsylvania against Teva and certain of its former officers. On August 10, 2021, the lead plaintiff filed a corrected amended class action complaint, purportedly on behalf of persons who purchased or otherwise acquired Teva securities between October 29, 2015 and August 18, 2020. The corrected amended complaint alleges that Teva and certain of its current and former officers violated federal securities laws by allegedly making false and misleading statements regarding the commercial performance of COPAXONE, namely, by failing to disclose that Teva had allegedly caused the submission of false claims to Medicare through Teva’s donations to bona fide independent charities that provide financial assistance to patients, which allegedly impacted COPAXONE’s commercial success and the sustainability of its revenues and resulted in the ~~above-referenced August 2020 False Claims Act complaint~~DOJ PAP Complaint filed by the DOJ. The corrected amended complaint seeks unspecified damages and legal fees. On March 25, 2022, the court granted in part and denied in part Teva’s and the individual defendants’ motion to dismiss the corrected amended complaint, (i) holding that the plaintiffs’ complaint failed to plead that certain public statements regarding Teva’s compliance with the law were misleading, (ii) holding that two alleged partial corrective disclosures did not establish loss causation and cannot serve as the basis for plaintiff’s claimed loss, (iii) dismissing all claims against one of the individual defendants, and (iv) otherwise denying the motion to dismiss. On August 2, 2022, the court stayed all proceedings other than class certification proceedings pending the resolution of the ~~above-referenced August 2020 False Claims Act complaint~~DOJ PAP Complaint filed by the DOJ. On September 13, 2022, the plaintiff moved for class certification, which remains pending. A motion to approve a securities class action was also filed in the Central District Court in Israel, which has been stayed pending the U.S. litigation, with similar allegations to those made in the above complaint filed in the U.S. District Court for the Eastern District of Pennsylvania.

Motions to approve derivative actions seeking monetary damages against certain past and present directors and officers have been filed in Israeli Courts alleging negligence and recklessness. Motions for document disclosure prior to initiating derivative actions were filed with respect to several U.S. and EU settlement agreements, opioids, allegations related to the DOJ’s complaint regarding COPAXONE patient assistance program in the U.S., and with respect to the COPAXONE European Commission’s inspection. A motion for document disclosure prior to initiating derivative action with respect to the U.S. generic drug antitrust litigation matters was settled in October 2022.

Environmental Matters

Teva or its subsidiaries are party to a number of environmental proceedings, or have received claims, including under the federal Superfund law or other federal, provincial or state and local laws, imposing liability for alleged noncompliance, or for the investigation and remediation of releases of hazardous substances and for natural resource damages. Many of these proceedings and claims seek to require the generators of hazardous wastes disposed of at a third party-owned site, or the party responsible for a release of hazardous substances that impacted a site, to investigate and clean the site or to pay or reimburse others for such activities, including for oversight by governmental authorities and any related damages to natural resources. Teva or its subsidiaries have received claims, or been made a party to these proceedings, along with others, as an alleged generator of wastes that were disposed of or treated at third-party waste disposal sites, or as a result of an alleged release from one of Teva’s facilities or former facilities.

Although liability among the responsible parties, under certain circumstances, may be joint and several, these proceedings are frequently resolved so that the allocation of

clean-up

and other costs among the parties reflects the relative contributions of the parties to the site conditions and takes into account other pertinent factors. Teva’s potential liability varies greatly at each of the sites; for some sites the costs of the investigation,

clean-up

and natural resource damages have not yet been determined, and for others Teva’s allocable share of liability has not been determined. At other sites, Teva has taken an active role in identifying those costs, to the extent they are identifiable and estimable, which do not include reductions for potential recoveries of

clean-up

costs from insurers, indemnitors, former site owners or operators or other potentially responsible parties. In addition, enforcement proceedings relating to alleged violations of

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

federal, state, commonwealth or local requirements at some of Teva’s facilities may result in the imposition of significant penalties (in amounts not expected to materially adversely affect Teva’s results of operations) and the recovery of certain costs and natural resource damages, and may require that corrective actions and enhanced compliance measures be implemented.

Item 103 of Regulation

S-K

promulgated by the SEC requires disclosure of certain environmental matters when a governmental authority is a party to the proceedings and such proceedings involve potential monetary sanctions, unless the Company reasonably believes that the matter will result in no monetary sanctions, or in monetary sanctions, exclusive of interest and costs, of less than $300,000. The following matter is disclosed in accordance with that requirement. On July 8, 2021, the National Green Tribunal Principal Bench, New Delhi, issued an order against Teva’s subsidiary in India, Teva API India Private Limited, finding

non-compliance

with environmental laws and assessed a penalty of $1.4 million. The Company disputed certain of the findings and the amount of the penalty and filed an appeal before the Supreme Court of India. On August 5, 2021, the Supreme Court of India admitted the appeal for hearing and granted an interim unconditional stay on the National Green Tribunal’s order. The Company does not believe that the eventual outcome of such matter will have a material effect on its business.

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TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

Other Matters

On February 1, 2018, former shareholders of Ception Therapeutics, Inc., a company that was acquired by and merged into Cephalon in 2010, prior to Cephalon’s acquisition by Teva, filed breach of contract and other related claims against the Company, Teva USA and Cephalon in the Delaware Court of Chancery. Among other things, the plaintiffs allege that Cephalon breached the terms of the 2010 Ception-Cephalon merger agreement by failing to exercise commercially reasonable efforts to develop and commercialize CINQAIR

(reslizumab) for the treatment of eosinophilic esophagitis (“EE”). The plaintiffs claim damages of at least $200 million, an amount they allege is equivalent to the milestones payable to the former shareholders of Ception in the event Cephalon were to obtain regulatory approval for EE in the United States ($150 million) and Europe ($50 million). On December 28, 2018, following defendants’ motion to dismiss the complaint, the court granted the motion in part and dismissed all of plaintiffs’ claims, except for their claim against Cephalon for breach of contract. In November 2021, plaintiffs moved to amend their complaint to, among other things, reassert claims against the Company and Teva USA. However, on July 12, 2022, plaintiffs filed a new amended complaint that includes claims against Teva USA but not the Company, in exchange for Teva USA’s agreement to guarantee any judgment entered against Cephalon in the litigation. A bench trial for this matter was held in September 2022, and a ruling is expected in 2023, following ~~post-trial briefing~~closing arguments.

On March 15, 2022, The Scripps Research Institute (“Scripps”) filed claims against Teva’s subsidiary, Teva Pharmaceuticals International GmbH (“TPIG”) in the United States District Court for the Southern District of California for alleged breach of a sublicense agreement between Scripps and ~~closing arguments.~~Ivax Corporation (“Ivax”) dated November 2000 (“Sublicense Agreement”). After Teva’s acquisition of Ivax, TPIG became the successor-in-interest to Ivax under the Sublicense Agreement, pursuant to which Scripps licensed to Ivax certain rights to the drug cladribine. Scripps alleges that TPIG breached the Sublicense Agreement by failing to pay royalties on sales of cladribine in certain countries, and is seeking breach of contract damages for royalties allegedly due but not paid, as well as a declaratory judgment related to royalties due in the future. On November 17, 2022, the Court dismissed Scripps’ claim for breach of the implied covenant of good faith and fair dealing but denied TPIG’s motion to dismiss Scripps’ breach of contract and declaratory judgment claims. TPIG answered the first amended complaint on December 16, 2022, and discovery is ongoing.

Gain Contingencies

From time to time, Teva may directly or indirectly pursue claims against certain parties, including but not limited to patent infringement lawsuits against other pharmaceutical companies to protect its patent rights, as well as derivative actions brought on behalf of Teva. Teva recognizes gain contingencies from the defendants in such lawsuits when they are realized or when all related contingencies have been resolved. No gain has been recognized regarding the matters disclosed below, unless mentioned otherwise.

In October 2017, Teva filed a lawsuit in the U.S. District Court for the District of Massachusetts alleging that Eli Lilly & Co.’s (“Lilly”) marketing and sale of its galcanezumab product for the treatment of migraine infringes nine Teva patents, including three method of treatment patents and six composition of matter patents. Lilly then submitted inter partes review (“IPR”) petitions to the Patent Trial and Appeal Board (“PTAB”), challenging the validity of the nine Teva patents. The PTAB issued decisions upholding the three method of treatment patents but finding the six composition of matter patents invalid, which decisions were affirmed by the Court of Appeals for the Federal Circuit on August 16, 2021. A jury trial regarding the three method of treatment patents began on October 18, 2022, and on November 9, 2022, the jury issued a verdict in Teva’s favor, finding the three method of treatment patents valid and infringed by Lilly and awarding Teva $176.5 million in damages. On January 28, 2023, Lilly filed a motion requesting that the District Court overturn the jury’s verdict. Once the motion is decided, the losing party may appeal the decision to the Court of Appeals for the Federal Circuit. On June 8, 2021, Teva filed another lawsuit in the U.S. District Court for the District of Massachusetts alleging that Lilly’s marketing and sale of galcanezumab product infringes two patents related to the treatment of refractory migraine. Lilly’s IPR petitions challenging the patentability of these two patents as well as a third patent also related to the treatment of refractory migraine were instituted by the PTAB. The litigation in the District of Massachusetts was stayed during the pendency of these IPR proceedings. Teva intends to continue to vigorously defend its patents, which it believes are valid, against infringement by companies attempting to market products prior to the expiration of such patents.

Motions to approve derivative actions seeking monetary damages against certain past and present directors and officers have been filed in Israeli Courts alleging negligence and recklessness, as well as motions for document disclosure prior to initiating derivative actions. Motions were filed with respect to several U.S. and EU settlement agreements, opioids, allegations related to the DOJ’s complaint regarding COPAXONE patient assistance program in the U.S., and with respect to the COPAXONE European Commission’s inspection.

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

NOTE 11 – Income taxes:

In the ~~third~~first quarter of 2023, Teva recognized a tax benefit of $19 million, on

pre-tax

loss of $258 million. In the first quarter of 2022, Teva recognized a tax expense of ~~$107~~$2 million, on

pre-tax

~~income~~loss of ~~$166~~$971 million. ~~In the third quarter of 2021, Teva recognized a tax expense of $76 million, on~~

~~pre-tax~~

~~income of $382 million.~~

In the second quarter of 2022, one of Teva’s U.S. subsidiaries was determined to be insolvent for tax purposes (i.e., its liabilities exceeded the fair market value of its assets), mainly in light of its accumulated operational losses. Consequently, Teva will recognize on its 2022 tax return, a worthless stock deduction of approximately $4.2 billion, with related tax benefit of approximately $850 million.

Teva’s tax rate for the ~~third~~first quarter of ~~2022~~2023 was mainly affected by legal settlements, impairments, amortization and interest expense ~~disallowances and adjustments to valuation allowances on deferred tax assets.~~

~~In the first nine months of 2022, Teva recognized a tax benefit of $792 million, on~~

~~pre-tax~~

~~loss of $1,964 million. In the first nine months of 2021, Teva recognized a tax expense of $235 million, on~~

~~pre-tax~~

~~income of $833 million.~~

Teva’s tax rate for the first nine months of 2022 was mainly affected by the realization of losses related to its investment in one of its U.S. subsidiaries mentioned above, as well as impairments, legal settlements, interest expense disallowances and adjustments to valuation allowances on deferred tax assets.

disallowances.

The statutory Israeli corporate tax rate is 23%

in ~~2022.~~2023. Teva’s tax rate differs from the Israeli statutory tax rate, mainly due to generation of profits in various jurisdictions in which tax rates are different than the Israeli tax rate, interest expense disallowances, tax benefits in Israel and other countries, as well as infrequent or

non-recurring

items.

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Teva filed a claim seeking the refund of withholding taxes paid to the Indian tax authorities in 2012. A trial for this case is currently scheduled to begin in ~~November 2022.~~July 2023. A final and binding decision against Teva in this case may lead to ~~an impairment~~a charge of $

$128 million.

The Israeli tax authorities (“ITA”) issued tax assessment decrees for ~~2008-2012~~2008-2011, 2012 and 2013-2016, challenging the Company’s positions on several issues. Teva has protested the ~~2008-2012~~2008-2011, 2012 and 2013-2016 decrees before the Central District Court in Israel. On April 17, 2023, the ITA issued a tax assessment for 2017-2020, challenging the Company’s positions on several issues. The Company intends to challenge the tax assessment for 2017-2020, as well.

In October 2021, the Central District Court in Israel held in favor of the ~~Israeli tax authorities~~ITA with respect to 2008-2011 decrees. The case with respect to 2012-2016 remains pending with similar legal claims. The October 2021 Central District Court decision found that Teva has a tax liability to the Israeli government for 2008-2011 of approximately $350 million, of which a portion is being paid in cash during 2022 and ~~2023, and the remaining portion is being offset by carried forward losses that Teva would otherwise be entitled to.~~other claims. Teva appealed ~~the~~this decision to the Israeli Supreme Court and expects the appeal ~~hearings~~hearing to begin in ~~early~~the second half of 2023. The tax liability resulting from the October 2021 Central District Court decision, with respect to the decrees for 2008-2011 and with regard to the similar legal claims in the related following years, was approximately $350 million, of which a portion has been and will continue to be paid during 2022 and 2023.

The Company believes it has adequately provided for all of its uncertain tax positions, including those items currently under dispute, however, adverse results could be material.

NOTE 12 – Other assets impairments, restructuring and other items:


	Three months ended March 31,
	2023		2022

	(U.S. $ in millions)
Impairments of long-lived tangible assets (1)	$	10	$	16
Contingent consideration		20		33
Restructuring		56		57
Other		9		21

Total	$	96	$	128

Three months ended
September 30,

Nine months ended
September 30,


2022

2021

2022

2021



(U.S. $ in millions)

(U.S. $ in millions)

Impairments of long-lived tangible assets (1)
   $ 4    $ 26    $ 34    $ 106
Contingent consideration
   6    9    100    (7 )
Restructuring
   25    28    117    96
Other
   1    (1 )    31    32








Total
   $ 36    $ 62    $ 282    $ 227

(1)	Including impairments related to exit and disposal activities.

Impairments

Impairments of tangible assets for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were $4$10 million and ~~$26~~

$16 million, respectively.

~~Impairments of tangible assets for the nine months ended September 30, 2022 and 2021 were $34 million and $106~~

million, respectively. The impairment for the nine months ended September 30, 2022 was mainly related to certain assets in North America. The impairment for the nine months ended September 30, 2021 was mainly related to certain assets in Europe and North America.

Teva may record additional impairments in the future, to the extent it changes its plans on any given asset and/or the assumptions underlying such plans, as a result of its network consolidation activities.

Contingent consideration

In the three months ended ~~September 30, 2022,~~March 31, 2023, Teva recorded an expense of $6$20 million for contingent consideration, compared to an ~~income~~expense of $9$33 million in the three months ended ~~September 30, 2021.~~

~~In the nine months ended September 30, 2022, Teva recorded an expense of $100 million for contingent consideration, compared to an income of $7 million in the nine months ended September 30, 2021.~~March 31, 2022. The expense in the first ~~nine~~three months of ~~2022~~2023 was mainly related to ~~changes~~a change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales and a change in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

)~~, which~~. The expense in the first three months of 2022 was ~~part~~mainly related to a change in the estimated future royalty payments in connection with lenalidomide (generic equivalent of ~~the Actavis Generics a~~Revlimid

~~cquisition.~~).

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

Restructuring

In the three months ended ~~September 30, 2022,~~March 31, 2023, Teva recorded ~~$25~~$56 million of restructuring expenses, compared to ~~$28~~$57 million in the three months ended ~~September 30, 2021.~~March 31, 2022. The expenses for the three months ended ~~September 30,~~March 31, 2023 and March 31, 2022 ~~and September 30, 2021~~ were primarily related to network consolidation ~~activities and residual expenses of the restructuring plan announced in 2017.~~activities.

In the nine months ended September 30, 2022, Teva recorded $117 million of restructuring expenses, compared to $96 million in the nine months ended September 30, 2021. The expenses for the nine months ended September 30, 2022 and September 30, 2021 were primarily related to network consolidation activities and residual expenses of the restructuring plan announced in

~~2017.~~

The following tables provide the components of restructuring costs:

Three months ended September 30,


2022

2021



(U.S. $ in millions)

Restructuring

Employee termination
   $ 32    $ 24
Other
   (7 )    4




Total
   $ 25    $ 28





Nine months ended September 30,


2022

2021



(U.S. $ in millions)

Restructuring

Employee termination
   $ 95    $ 84
Other
   22    12




Total
   $ 117    $ 96


	Three months ended March 31,
	2023		2022

	(U.S. $ in millions)
Restructuring
Employee termination	$	23	$	52
Other		33		5

Total	$	56	$	57

The following table provides the components of and changes in the Company’s restructuring accruals:

Employee termination costs

Other

Total



(U.S. $ in millions )

Balance as of January 1, 2022
   $ (131 )    $ (7 )    $ (138 )
Provision
   (95 )    (22 )    (117 )
Utilization and other*
   114    22    136






Balance as of September 30, 2022
   $ (112 )    $ (7 )    $ (119 )


	Employee termination costs			Other			Total

	(U.S. $ in millions)
Balance as of January 1, 2023	$	(112	)	$	(7	)	$	(119	)
Provision		(23	)		(33	)		(56	)
Utilization and other*		25			27			52

Balance as of March 31, 2023	$	(110	)	$	(13	)	$	(123	)

Employee termination costs

Other

Total



(U.S. $ in millions )

Balance as of January 1, 2021
   $ (115 )    $ (7 )    $ (122 )
Provision
   (84 )    (12 )    (96 )
Utilization and other*
   78    12    90






Balance as of September 30, 2021
   $ (121 )    $ (7 )    $ (128 )


	Employee termination costs			Other			Total

	(U.S. $ in millions)
Balance as of January 1, 2022	$	(131	)	$	(7	)	$	(138	)
Provision		(52	)		(5	)		(57	)
Utilization and other*		59			6			65

Balance as of March 31, 2022	$	(124	)	$	(6	)	$	(130	)

*	Includes adjustments for foreign currency translation.

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~Significant regulatory and other events~~

In July 2018, Teva announced the voluntary recall of valsartan and certain combination valsartan medicines in various countries due to the detection of trace amounts of a previously unknown nitrosamine impurity called NDMA found in valsartan API supplied by Zhejiang Huahai Pharmaceuticals Co. Ltd. (“Huahai”). Since July 2018, Teva has been actively engaged with global regulatory authorities in reviewing its sartan and other products to determine whether NDMA and/or other related nitrosamine impurities are present in specific products. Where necessary, Teva has initiated additional voluntary recalls. In December 2019, Teva reached a settlement with Huahai resolving Teva’s claims related to certain sartan API supplied by Huahai. Under the settlement agreement, Huahai agreed to compensate Teva for some of its direct losses and provide it with prospective cost reductions for API. The settlement does not release Huahai from liability for any losses Teva may incur as a result of third party personal injury or product liability claims relating to the sartan API at issue. In addition, multiple lawsuits have been filed in connection with this matter, which may lead to additional customer penalties, impairments and litigation costs.

In the second quarter of 2020, Teva’s operations in its manufacturing facilities in Goa, India were temporarily suspended due to a water supply issue. During the second half of 2020, Teva completed partial remediation of this issue and restarted limited supply from its Goa facilities. The site experienced some additional delays in the first quarter of 2021 due to labor related issues, but the situation stabilized during the second quarter of 2021. The water supply remediation is expected to be completed during the fourth quarter of 2022, and in the meantime the site is operating under an interim water solution without any material impact expected on compliance and supply capacity. The impact to Teva’s financial results for the three and nine months ended September 30, 2022 was immaterial.

In June 2021, the Company temporarily paused manufacturing at its Irvine, California facility in the United States, and suspended release of product from the facility pending completion of an open manufacturing investigation. In July 2021, the FDA initiated an establishment inspection at the facility. On August 18, 2021, the Company issued field alert reports to the FDA for products manufactured at the Irvine facility and put Irvine manufactured products in Teva’s distribution center on hold. On August 20, 2021, the FDA completed its inspection and issued a Form

~~FDA-483~~

to the Irvine facility with ten observations and, on December 17, 2021, the FDA notified the Company that the inspection classification of this site is “official action indicated” (“OAI”). Teva began working diligently to address the FDA’s concerns in a manner consistent with current good manufacturing practice (“CGMP”) requirements, and was in discussions with the FDA Drug Shortage Staff (DSS) and FDA Office of Manufacturing Quality (OMQ) to recommence distribution, release and manufacture of certain medically necessary products from the site under defined controls and protocols.

On March 22, 2022, the Company announced its decision to permanently cease all manufacturing activities and to close the site, and to transfer certain products to other facilities. Teva will remain in contact with FDA regarding the status of the Irvine, California site to ensure that the Company continues to comply with all relevant CGMP requirements, particularly those involved with product transfers to other sites within the Teva network.

If Teva is unable to address FDA inspection issues satisfactorily, it could be subject to additional regulatory actions. Teva has considered these developments and, during the nine months ended September 30, 2022, recorded $90 million costs in its financial statements related to this matter. Teva will continue to assess potential financial implications, including loss of revenues, impairments, inventory write offs, customer penalties, costs of additional remediation and/or FDA enforcement

~~actions.~~

NOTE 13 – Earnings (Loss) per share:

Basic earnings and loss per share are computed by dividing net income (loss) attributable to Teva’s ordinary shareholders by the weighted average number of ordinary shares outstanding, including fully vested restricted share units (“RSUs”) and performance share units (“PSUs”) during the period, net of treasury shares.

In computing diluted ~~earnings~~loss per share for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021, basic earnings per share were adjusted to take into account the potential dilution that could occur upon the exercise of options and~~

~~non-vested~~

~~RSUs and PSUs granted under employee stock compensation plans~~

~~. No account was taken of the potential dilution by the convertible senior debentures, since they had an anti-dilutive effect on earnings per~~

~~share.~~

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

~~In computing~~

~~diluted loss per share for the nine months ended September 30,~~ 2022, no account was taken of the potential dilution that could occur upon the exercise of options and

non-vested

RSUs and PSUs granted under employee stock compensation plans, and convertible senior debentures, since they had an anti-dilutive effect on loss per share.

In computing diluted earnings per share for the nine months ended September 30, 2021, basic earnings per share were adjusted to take into account the potential dilution that could occur upon the exercise of options and

~~non-vested~~

~~RSUs and PSUs granted under employee stock compensation plans~~

~~. No account was taken of the potential dilution by the convertible senior debentures, since they had an anti-dilutive effect on earnings per share.~~

The weighted average diluted shares outstanding used for the fully diluted share calculations for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021,~~ were ~~1,119~~1,115 million and ~~1,109~~1,107 million shares, respectively.

~~The weighted average diluted shares outstanding used for the fully diluted share calculations for the nine months ended September 30, 2022, and 2021, were each~~36

~~1,109~~

Table of Contents

~~million shares.~~

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

Basic and diluted earnings per share were $0.05 for the three months ended September 30, 2022, compared to basic and diluted earnings per share of $0.26 for the three months ended September 30, 2021. Basic and diluted loss per share was ~~$1.02~~$0.18 for the ~~nine~~three months ended ~~September 30, 2022,~~March 31, 2023, compared to basic and diluted ~~earnings~~loss per share of ~~$0.52~~$0.86 for the ~~nine~~three months ended ~~September 30, 2021.~~March 31, 2022.

NOTE 14 – Accumulated other comprehensive income (loss):

The components of, and changes within, accumulated other comprehensive income (loss) attributable to Teva are presented in the table below:

Net Unrealized Gains (Losses)

Benefit Plans


Foreign
currency
translation
adjustments

Derivative
financial
instruments

Actuarial gains
(losses) and
prior service
(costs) credits

Total



(U.S. $ in millions)

Balance as of December 31, 2021, net of taxes
   $ (2,274 )    $ (324 )    $ (85 )    $ (2,683 )








Other comprehensive income (loss) before reclassifications
   (438 )    —      —      (438 )
Amounts reclassified to the statements of income
   —      21
—

   21








Net other comprehensive income (loss) before tax
   (438 )    21    —      (417 )








Corresponding income tax
   (53 )    —      —      (53 )








Net other comprehensive income (loss) after tax*
   (491 )    21    —      (470 )








Balance as of September 30, 2022, net of taxes
   $ (2,765 )    $ (303 )    $ (85 )    $ (3,153 )


	Net Unrealized Gains (Losses)						Benefit Plans
	Foreign currency translation adjustments			Derivative financial instruments			Actuarial gains (losses) and prior service (costs) credits			Total

	(U.S. $ in millions)
Balance as of December 31, 2022, net of taxes	$	(2,514	)	$	(295	)	$	(28	)	$	(2,838	)

Other comprehensive income (loss) before reclassifications		122			—			—			122
Amounts reclassified to the statements of income		—			8			(1	)		7

Net other comprehensive income (loss) before tax		122			8			(1	)		129

Corresponding income tax		7			—			—			7

Net other comprehensive income (loss) after tax*		129			8			(1	)		136

Balance as of March 31, 2023, net of taxes	$	(2,385	)	$	(287	)	$	(29	)	$	(2,701	)

*	Amounts do not include a ~~$193~~$9 million loss from foreign currency translation adjustments attributable to non-controlling interests.


	Net Unrealized Gains (Losses)						Benefit Plans
	Foreign currency translation adjustments			Derivative financial instruments			Actuarial gains (losses) and prior service (costs) credits			Total

	(U.S. $ in millions)
Balance as of December 31, 2021, net of taxes	$	(2,274	)	$	(324	)	$	(85	)	$	(2,683	)

Other comprehensive income (loss) before reclassifications		(4	)					—			(4	)
Amounts reclassified to the statements of income		—			7			—			7

Net other comprehensive income (loss) before tax		(4	)		7			—			3

Corresponding income tax		(7	)		—			—			(7	)

Net other comprehensive income (loss) after tax*		(11	)		7			—			(4	)

Balance as of March 31, 2022, net of taxes	$	(2,285	)	$	(317	)	$	(85	)	$	(2,687	)

Net Unrealized Gains (Losses)

Benefit Plans


Foreign
currency
translation
adjustments

Derivative
financial
instruments

Actuarial gains
(losses) and
prior service
(costs) credits

Total



(U.S. $ in millions)

Balance as of December 31, 2020, net of taxes
   $ (1,919 )    $ (363 )    $ (117 )    $ (2,399 )








Other comprehensive income (loss) before reclassifications
   (270 )
—

   —      (270 )
Amounts reclassified to the statements of income
   —      27    2    29








Net other comprehensive income (loss) before tax
   (270 )    27    2    (241 )








Corresponding income tax
   26    (6 )    —      20








Net other comprehensive income (loss) after tax*
   (244 )    21    2    (221 )








Balance as of September 30, 2021, net of taxes
   $ (2,163 )    $ (342 )    $ (115 )    $ (2,620 )

*	Amounts do not include a n ~~$81~~ $53 million loss from foreign currency translation adjustments attributable to non-controlling interests.

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

NOTE 15 – Segments:

Teva operates its business and reports its financial results in three segments:

(a)

North America segment, which includes the United States and Canada.

(b)

Europe segment, which includes the European Union, the United Kingdom and certain other European countries.

(c)

International Markets segment, which includes all countries other than those in the North America and Europe segments.

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

In addition to these three segments, Teva has other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an

out-licensing

platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

Teva’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), reviews financial information prepared on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the three identified reportable segments, namely North America, Europe and International Markets, to make decisions about resources to be allocated to the segments and assess their performance.

Segment profit is comprised of gross profit for the segment less R&D expenses, S&M expenses, G&A expenses and other income related to the segment. Segment profit does not include amortization and certain other items.

Teva manages its assets on a company basis, not by segments, as many of its assets are shared or commingled. Teva’s CODM does not regularly review asset information by reportable segment and, therefore, Teva does not report asset information by reportable segment.

Teva’s CEO may review its strategy and organizational structure from time to time. Currently, Teva’s newly appointed CEO is reviewing its strategy and organizational structure. Any changes in strategy may lead to a reevaluation of the Company’s segments and goodwill allocation to reporting units, as well as fair value attributable to its reporting units. See note 3 and note 6.

a. Segment information:

Three months ended September 30,


2022


North America

Europe

International Markets



(U.S. $ in millions)

Revenues
   $ 1,809    $ 1,069    $ 475
Gross profit
   942    634    252
R&D expenses
   111    44    15
S&M expenses
   232    169    97
G&A expenses
   122    61    30
Other income
       §        §    (2 )






Segment profit
   $ 477    $ 360    $ 112


	Three months ended March 31,
	2023
	North America			Europe		International Markets

	(U.S. $ in millions)
Revenues	$	1,766		$	1,184	$	492
Gross profit		812			655		262
R&D expenses		156			53		20
S&M expenses		223			187		98
G&A expenses		102			70		31
Other income		(1	)		§		(1	)

Segment profit	$	332		$	345	$	114

§	Represents an amount less than $0.5 million.


	Three months ended March 31,
	2022
	North America			Europe		International Markets

	(U.S. $ in millions)
Revenues	$	1,737		$	1,156	$	492
Gross profit		890			694		286
R&D expenses		143			58		20
S&M expenses		245			196		97
G&A expenses		112			59		29
Other income		(11	)		§		(40	)

Segment profit	$	402		$	381	$	179

§	Represents an amount less than $0.5 million.

~~Table of Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

Three months ended September 30,


2021


North America

Europe

International Markets



(U.S. $ in millions)

Revenues
   $ 1,875    $ 1,220    $ 530
Gross profit
   967    714    296
R&D expenses
   146    55    16
S&M expenses
   250    204    102
G&A expenses
   121    64    29
Other income
   (7 )    (2 )    (2 )






Segment profit
   $ 458    $ 394    $ 152

Nine months ended September 30,


2022


North America

Europe

International Markets



(U.S. $ in millions)

Revenues
   $ 5,450    $ 3,396    $ 1,422
Gross profit
   2,841    2,031    780
R&D expenses
   401    157    54
S&M expenses
   733    561    293
G&A expenses
   361    183    89
Other income
   (12 )    (1 )    (43 )






Segment profit
   $ 1,359    $ 1,130    $ 386

Nine months ended September 30,


2021


North America

Europe

International Markets



(U.S. $ in millions)

Revenues
   $ 5,807    $ 3,618    $ 1,505
Gross profit
   3,081    2,063    826
R&D expenses
   467    184    51
S&M expenses
   734    628    303
G&A expenses
   338    180    79
Other income
   (14 )    (3 )    (5 )






Segment profit
   $ 1,556    $ 1,074    $ 398

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

The following table presents a reconciliation of Teva’s segment profits to its consolidated operating income (loss) and to consolidated income (loss) before income taxes for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

Three months ended

Nine months ended


September 30,

September 30,


2022

2021

2022

2021



(U.S. $ in millions)

(U.S. $ in millions)

North America profit
   $ 477    $ 458    $ 1,359    $ 1,556
Europe profit
   360    394    1,130    1,074
International Markets profit
   112    152    386    398








Total reportable segments profit
   949    1,004    2,875    3,028
Profit of other activities
   29    38    135    125








Total segments profit
   977    1,042    3,010    3,153
Amounts not allocated to segments:









Amortization
   165    199    576    613
Other assets impairments, restructuring and other items
   36    62    282    227
Goodwill impairment
   —      —      745    —
Intangible assets impairments
   24    21    223    295
Legal settlements and loss contingencies
   195    3    2,048    113
Other unallocated amounts
   139    134    379    266








Consolidated operating income (loss)
   419    623    (1,244 )    1,638








Financial expenses, net
   252    241    721    805








Consolidated income (loss) before income taxes
   $ 166    $ 382    $ (1,964 )    $ 833


	Three months ended
	March 31,
	2023			2022

	(U.S. $ in millions)
North America profit	$	332		$	402
Europe profit		345			381
International Markets profit		114			179

Total reportable segments profit		791			962
Profit (loss) of other activities		(6	)		52

Total segments profit		785			1,013
Amounts not allocated to segments:
Amortization		165			200
Other assets impairments, restructuring and other items		96			128
Intangible assets impairments		178			149
Legal settlements and loss contingencies		233			1,124
Other unallocated amounts		112			127

Consolidated operating income (loss)		2			(713	)

Financial expenses, net		260			258

Consolidated income (loss) before income taxes	$	(258	)	$	(971	)

b. Segment revenues by major products and activities:

The following tables present revenues by major products and activities for the three ~~and nine~~ months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:

North America

Three months ended

September 30,


2022

2021



(U.S. $ in millions)

Generic products
   $ 806    $ 859
AJOVY
   57    46
AUSTEDO
   260    201
BENDEKA
®
/TREANDA
®
   77    95
COPAXONE
   105    133
Anda
   371    363
Other
   133    178




Total
   $ 1,809    $ 1,875


North America	Three months ended March 31,
	2023		2022

	(U.S. $ in millions)
Generic products	$	824	$	899
AJOVY		49		36
AUSTEDO		170		154
BENDEKA ® and TREANDA ®		63		82
COPAXONE		76		86
Anda		424		342
Other		160		139

Total	$	1,766	$	1,737

North America

Nine months ended September 30,


2022

2021



(U.S. $ in millions)

Generic products
   $ 2,731    $ 2,864
AJOVY
   142    123
AUSTEDO
   618    520
BENDEKA/TREANDA
   241    292
COPAXONE
   285    448
Anda
   1,021    968
Other
   411    592




Total
   $ 5,450    $ 5,807

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

Europe
Three months ended

September 30,


2022

2021



(U.S. $ in millions)


Generic products
   $ 803    $ 895
AJOVY
   30    23
COPAXONE
   63    95
Respiratory products
   62    85
Other
   111    122




Total
   $ 1,069    $ 1,220


Europe	Three months ended March 31,
	2023		2022

	(U.S. $ in millions)
Generic products	$	932	$	876
AJOVY		36		30
COPAXONE		59		72
Respiratory products		68		71
Other		89		107

Total	$	1,184	$	1,156


International markets	Three months ended March 31,
	2023		2022

	(U.S. $ in millions)
Generic products	$	400	$	388
AJOVY		10		6
COPAXONE		12		10
Other		70		88

Total	$	492	$	492

NOTE 16 – Fair value measurement:

Europe
Nine months ended
September 30,


2022

2021



(U.S. $ in millions)

Generic products
   $ 2,552    $ 2,637
AJOVY
   90    58
COPAXONE
   207    296
Respiratory products
   198    263
Other
   349    364




Total
   $ 3,396    $ 3,618

Financial items carried at fair value on a recurring basis as of March 31, 2023 and December 31, 2022 are classified in the tables below in one of the three categories of fair value levels:

International markets
Three months ended

September 30,


2022

2021



(U.S. $ in millions)

Generic products
   $ 393    $ 412
AJOVY
   6    39
COPAXONE
   9    10
Other
   67    69




Total
   $ 475    $ 530


	March 31, 2023
	Level 1		Level 2			Level 3			Total
	(U.S. $ in millions)
Cash and cash equivalents:
Money markets	$	702	$	—		$	—		$	702
Cash, deposits and other		1,441		—			—			1,441
Investment in securities:
Equity securities		10		—			—			10
Other		6		—			1			7
Restricted cash		33		—			—			33
Derivatives:
Asset derivatives:
Options and forward contracts		—		45			—			45
Cross currency interest rate swaps		—	§				—
Liability derivatives:
Options and forward contracts		—		(63	)		—			(63	)
Bifurcated embedded derivatives		—		—		§				—
Contingent consideration*		—		—			(148	)		(148	)

Total	$	2,192	$	(18	)	$	(147	)	$	2,027

International markets
Nine months ended
September 30,


2022

2021



(U.S. $ in millions)

Generic products
   $ 1,175    $ 1,211
AJOVY
   22    46
COPAXONE
   29    29
Other
   195    219




Total
   $ 1,422    $ 1,505

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)


	December 31, 2022
	Level 1		Level 2			Level 3			Total
	(U.S. $ in millions)
Cash and cash equivalents:
Money markets	$	1,222	$	—		$	—		$	1,222
Cash, deposits and other		1,579		—			—			1,579
Investment in securities:
Equity securities		9		—			—			9
Other		5		—			1			6
Restricted cash		33		—			—			33
Derivatives:
Asset derivatives—options and forward contracts		—		29			—			29
Liability derivatives:
Options and forward contracts		—		(101	)		—			(101	)
Bifurcated embedded derivatives		—		—			§			—
Contingent consideration*	$	—		—			(153	)		(153	)

Total		2,848	$	(73	)	$	(152	)	$	2,624

~~NOTE 16 – Fair value measurement:~~

~~Financial items carried at fair value on a recurring basis as of September 30, 2022 and December 31, 2021 are classified in the tables below in one of the three categories of fair value levels:~~

September 30, 2022


Level 1

Level 2

Level 3

Total



(U.S. $ in millions)

Cash and cash equivalents:

Money markets
   $ 897    $ —      $ —      $ 897
Cash, deposits and other
   1,328    —      —      1,328
Investment in securities:

Equity securities
   9    —      —      9
Other
   5    —      1    6
Restricted cash
   33    —      —      33
Derivatives:

Asset derivatives—options and forward contracts
   —      94    —      94
Liability derivatives:

Options and forward contracts
   —      (53 )    —      (53 )
Bifurcated embedded derivatives
   —      —      §    —
Contingent consideration*
   —      —      (113 )    (113 )








Total
   $ 2,272    $ 41    $ (112 )    $ 2,201

December 31, 2021





Level 1



Level 2



Level 3



Total











(U.S. $ in millions)

Cash and cash equivalents:

Money markets
   $ 220    $ —      $ —      $ 220
Cash, deposits and other
   1,945    —      —      1,945
Investment in securities:

Equity securities
   18    —      —      18
Other
   6    —      1    7
Restricted cash
   33    —      —      33
Derivatives:

Asset derivatives—options and forward contracts
   —      30    —      30
Liability derivatives:

Options and forward contracts
   —      (23 )    —      (23 )
Bifurcated embedded derivatives
   —      —      §    —
Contingent consideration*


—      —      (176 )    (176 )








Total

$

2,222    $ 7    $ (175 )    $ 2,054

§	Represents an amount less than $0.5 million.

*	Contingent consideration represents liabilities recorded at fair value in connection with acquisitions.

Teva determined the fair value of the liabilities for ~~the~~ contingent consideration based on a probability-weighted discounted cash flow analysis. This fair value measurement is based on significant unobservable inputs in the market and thus represents a Level 3 measurement within the fair value hierarchy. The fair value of ~~the~~ contingent consideration is based on several factors, such ~~as: the~~as cash flows projected from the success of unapproved product candidates; ~~the~~ probability of success of product candidates, including risks associated with uncertainty regarding achievement and payment of milestone events; ~~the~~ time and resources ~~needed~~required to complete the development and approval of product candidates; ~~the~~ life of the potential commercialized products and associated risks ofwith obtaining regulatory approvals in the United States and Europe, and the risk adjusted discount rate for fair value measurement. A probability of success factor

~~Table~~ of ~~Contents~~

~~TEVA PHARMACEUTICAL INDUSTRIES LIMITED~~

~~Notes to Consolidated Financial Statements~~

~~(Unaudited)~~

f 100% was used in the fair value calculation to reflect inherent regulatory and commercial ~~risk~~risks of the contingent payments and IPR&D. The discount rate applied ranged from 8.5% to ~~11.2%~~11%. The weighted average discount rate, calculated based on the relative fair value of Teva’s contingent consideration liabilities, was ~~8.9%~~8.95%. ~~The contingent~~Contingent consideration is evaluated quarterly, or more frequently, if circumstances dictate. Changes in the fair value of contingent consideration are recorded in the consolidated statements of income. Significant changes in unobservable inputs, mainly the probability of success and cash flows projected, could result in material changes to the contingent consideration liabilities.

The following table summarizes the activity for ~~those~~the financial assets and liabilities where fair value measurements are estimated utilizing Level 3 inputs:

Nine months
ended
September 30,
2022

Nine months
ended
September 30,
2021


(U.S. $ in millions)

Fair value at the beginning of the period
   $ (175 )    (258 )
Redemption of debt securities
   —      (9 )
Bifurcated embedded derivatives

§
   —
Adjustments to provisions for contingent consideration:

Actavis Generics transaction
   (98 )    21
Eagle transaction
   (2 )    (14 )
Settlement of contingent consideration:

Actavis Generics transaction
   106    —
Eagle transaction
   68    74
Additional contingent consideration resulting from Novetide acquisition*
   (11 )    —




Fair value at the end of the period
   $ (112 )    $ (186 )


	Three months ended March 31, 2023			Three months ended March 31, 2022

	(U.S. $ in millions)
Fair value at the beginning of the period	$	(152	)		(175	)
Bifurcated embedded derivatives		§			§
Adjustments to provisions for contingent consideration:
Actavis Generics transaction		(9	)		(31	)
Eagle transaction		(11	)		(2	)
Novetide transaction		(1	)		—
Settlement of contingent consideration:
Actavis Generics transaction		2			—
Eagle transaction		21			23
Novetide transaction		2
Additional contingent consideration resulting from Novetide acquisition*		—			(11	)

Fair value at the end of the period	$	(148	)	$	(196	)

Table of Contents

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Notes to Consolidated Financial Statements

(Unaudited)

§	Represents an amount less than $0.5 million.

In January 2022, Teva acquired 100% ownership of Novetide Ltd. (“Novetide”), which was previously accounted for as “investment in associated companies”. This transaction was accounted for as a business combination. Total consideration for the transaction included cash and certain contingent royalty payments through 2034. As part of the transaction, Teva recognized a gain under “Share in (profits) losses of associated companies, net”, reflecting the difference between the book value of its investment in Novetide and its fair value as of the date Teva completed its acquisition.

Financial instruments not measured at fair value

Financial instruments measured on a basis other than fair value mostly consist of senior notes and convertible senior debentures (see note 7) and are presented in the table below in terms of fair value (level 1 inputs):

Estimated fair value*


September 30,

December 31,


2022

2021



(U.S. $ in millions)

Senior notes and sustainability-linked senior notes included under senior notes and loans
   $ 15,552    $ 21,477
Senior notes and convertible senior debentures included under short-term debt
   2,710    1,426




Total
   $ 18,262    $ 22,903


	Estimated fair value*
	March 31,		December 31,
	2023		2022

	(U.S. $ in millions)
Senior notes and sustainability-linked senior notes included under senior notes and loans	$	18,007	$	16,694
Senior notes and convertible senior debentures included under short-term debt		1,013		2,075

Total	$	19,020	$	18,769

*	The fair value was estimated based on quoted market prices.

4642

~~Table of Contents~~

ITEM 2.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Business Overview

We are a global pharmaceutical company, committed to helping patients around the world to access affordable medicines and benefit from innovations to improve their health. Our mission is to be a global leader in generics, ~~specialty~~innovative medicines and biopharmaceuticals, improving the lives of patients.

We operate worldwide, with headquarters in Israel and a significant presence in the United States, Europe and many other markets around the world. Our key strengths include our world-leading generic medicines expertise and portfolio, focused ~~specialty~~innovative medicines portfolio and global infrastructure and scale.

Teva was incorporated in Israel on February 13, 1944 and is the successor to a number of Israeli corporations, the oldest of which was established in 1901.

Our Business Segments

We operate our business through three segments: North America, Europe and International Markets. Each business segment manages our entire product portfolio in its region, including generics, ~~specialty~~which includes biosimilars and OTC ~~products.~~products, as well as innovative medicines. This structure enables strong alignment and integration between operations, commercial regions, R&D and our global marketing and portfolio function, optimizing our product lifecycle across therapeutic areas.

In addition to these three segments, we have other activities, primarily the sale of API to third parties, certain contract manufacturing services and an

out-licensing

platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis.

Macroeconomic Environment

In recent months, the global economy has been impacted by fluctuating foreign exchange rates. Approximately ~~47%~~50% of our revenues are denominated in currencies other than the U.S. dollar. The strengthening of the U.S. dollar versus other currencies in which we operate, negatively impacts our revenues, results of operations, profits and cash flows. We also manufacture largely outside of the United States, which may to varying degrees result in lower expenses. Additionally, high levels of inflation have recently resulted in significant economic volatility and monetary tightening by central banks. The global economy has also been impacted by the ongoing conflict between Russia and Ukraine, which has spurred rising energy costs and caused disruptions to the global and the Company’s internal supply chain. Supply chain disruptions and rising energy costs could continue to result in delays in our production and distribution processes, R&D initiatives and our ability to timely respond to consumer demand. See also discussion under “—International Markets segment” below.

We have implemented certain measures in response to such macroeconomic pressures and are continually considering various initiatives, including price adjustments where we are not restricted contractually or regulatorily, enhanced inventory management and alternative sourcing strategies for our raw material supply, to allow us to partially mitigate and offset the impact of these ~~macro-economic~~macroeconomic factors. However, although inflationary and other macroeconomic pressures may ease, the higher costs we have experienced during the recent ~~period~~periods have already impacted our operations and will likely continue to have an effect on our financial results.

Highlights

Significant highlights in the ~~third~~first quarter of ~~2022~~2023 included:

Revenues in the ~~third~~first quarter of ~~2022~~2023 were ~~$3,595~~$3,661 million, ~~a decrease~~flat compared to the first quarter of ~~8% in U.S. dollars, or 2% in~~2022. In local currency terms, ~~compared to the third quarter of 2021. This decrease in local currency terms was~~revenues increased by 4%, mainly due to higher revenues from generic products in our Europe and International Markets segments, certain innovative products primarily AUSTEDO and AJOVY, as well as from Anda in our North America segment, partially offset by lower revenues from generic products in our North America segment, ~~COPAXONE in our North America and Europe segments,~~API sales to third parties and BENDEKA and TREANDA in our North America ~~segment, partially offset by higher revenues from AUSTEDO in our North America segment and generic products in our Europe~~ segment.

Our North America segment generated revenues of ~~$1,809~~$1,766 million and segment profit of ~~$477~~$332 million in the ~~third~~first quarter of 2023. Revenues increased by 2% compared to the first quarter of 2022. ~~Revenues~~Segment profit decreased by 4%17% compared to the ~~third~~first quarter of ~~2021. Profit increased by 4% compared to the third quarter of 2021.~~2022.

Our Europe segment generated revenues of ~~$1,069~~$1,184 million and segment profit of ~~$360~~$345 million in the ~~third~~first quarter of ~~2022.~~2023. Revenues ~~decreased~~increased by ~~12%~~2% in U.S. dollars, ~~but increased by 1%~~or 9% in local currency terms, compared to the ~~third~~first quarter of ~~2021. Profit~~2022. Segment profit decreased by 8%9% compared to the ~~third~~first quarter of ~~2021.~~2022.

~~Table of Contents~~

Our International Markets segment generated revenues of ~~$475~~$492 million and segment profit of ~~$112~~$114 million in the ~~third~~first quarter of 2023. Revenues were flat in U.S. dollars compared to the first quarter of 2022. ~~Revenues~~In local currency terms, revenues increased by 8% compared to the first quarter of 2022. Segment profit decreased by ~~10%~~36% compared to the first quarter of 2022.

Our revenues from other activities in the first quarter of 2023 were $219 million, a decrease of 20% in U.S. dollars, or 3%19% in local currency terms, compared to the ~~third~~first quarter of ~~2021. Profit decreased by 27% compared to the third quarter of 2021.~~2022.

~~Our revenues from other activities in the third quarter of 2022 were $241 million, a decrease of 8% in U.S. dollars, or 3% in local currency terms, compared to the third quarter of 2021.~~

Exchange rate movements during the ~~third~~first quarter of ~~2022, net of~~2023, including hedging effects, negatively impacted ~~overall~~ revenues by ~~$215 million and operating income by $53~~$128 million compared to the ~~third~~first quarter of ~~2021.~~2022.

Gross profit in the first quarter of 2023 was $1,582 million, a decrease of 9% compared to the first quarter of 2022.

Gross profit margin was 43.2% in the first quarter of 2023, compared to 47.5% in the first quarter of 2022. This decrease was mainly driven by rising costs due to inflationary and other macroeconomic pressures, and an unfavorable product mix.

Impairments of identifiable intangible assets were ~~$24~~$178 million in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~$21~~$149 million in the ~~third~~first quarter of ~~2021.~~2022. See note 5 to our consolidated financial statements.

We recorded expenses of ~~$36~~$96 million for other asset impairments, restructuring and other items in the ~~third~~first quarter of ~~2022,~~2023, compared to expenses of ~~$62~~$128 million in the ~~third~~first quarter of ~~2021.~~2022. See note 12 to our consolidated financial statements.

Legal settlements and loss contingencies expenses were ~~$195~~$233 million in the ~~third~~first quarter of ~~2022,~~2023, compared to $3$1,124 million in the ~~third~~first quarter of ~~2021.~~2022. See note 9 to our consolidated financial statements.

Operating income was ~~$419~~$2 million in the ~~third~~first quarter of ~~2022,~~2023, compared to an operating ~~income~~loss of ~~$623~~$713 million in the ~~third~~first quarter of ~~2021.~~2022.

Financial expenses were ~~$252~~$260 million in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~$241~~$258 million in the ~~third~~first quarter of ~~2021.~~2022.

•

In the first quarter of 2023, we recognized a tax benefit of $19 million, on a pre-tax loss of $258 million. In the first quarter of 2022, we recognized a tax expense of $2 million, on a pre-tax loss of $971 million. See note 11 to our consolidated financial statements.

~~In the third quarter of 2022, we recognized a tax expense of $107 million, on~~

~~pre-tax~~

~~income of $166 million. In the third quarter of 2021, we recognized a tax expense of $76 million, on~~

~~pre-tax~~

~~income of $382 million. See note 11 to our consolidated financial statements.~~

As of ~~September 30, 2022,~~March 31, 2023, our debt was ~~$21,266~~$20,691 million, compared to ~~$23,043~~$21,212 million as of December 31, ~~2021.~~2022. This decrease was mainly due to ~~$1,139 million from exchange rate fluctuations and $661~~$646 million senior notes repaid at ~~maturity.~~maturity, partially offset by $176 million of exchange rate fluctuations. Additionally, during the first quarter of 2023, we repurchased $2,506 million aggregate principal amount of notes upon consummation of a cash tender offer, and issued $2,445 million of sustainability-linked senior notes, net of issuance costs. See note 7 to our consolidated financial statements.

Cash flow ~~generated from~~used in operating activities during the ~~third~~first quarter of ~~2022~~2023 was ~~$543~~$145 million, compared to ~~$529~~$49 million in the ~~third~~first quarter of ~~2021.~~2022. The ~~increase~~higher cash flow used in the ~~third~~first quarter of ~~2022~~2023 resulted mainly from ~~changes in the deferred purchase price under our securitization agreement, partially offset by~~lower profit and changes in working capital items, ~~primarily a lower reduction~~including an increase in ~~our inventory levels compared to~~accounts receivables net of SR&A, partially offset by an increase in accounts payables.

During the ~~third~~first quarter of ~~2021.~~

~~During the third quarter of 2022,~~2023, we generated free cash flow of ~~$685~~$41 million, which we define as comprising: ~~$543~~$145 million in cash flow ~~generated from~~used in operating activities, ~~$262~~$323 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and $2 million in proceeds from divestitures of businesses and other assets, partially offset by ~~$122~~$139 million in cash used for capital investment. During the ~~third~~first quarter of ~~2021,~~2022, we generated free cash flow of ~~$795~~$117 million. The decrease in the ~~third~~first quarter of ~~2022~~2023 resulted mainly from ~~changes~~higher cash flow used in ~~working capital items, primarily a lower reduction in our inventory levels compared to the third quarter of 2021.~~operating activities.

~~Table of Contents~~

Results of Operations

Comparison of Three Months Ended ~~September 30, 2022~~March 31, 2023 to Three Months Ended ~~September 30, 2021~~

March 31, 2022

Segment Information

North America Segment

The following table presents revenues, expenses and profit for our North America segment for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~

Three months ended September 30,


2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 1,809    100 % $ 1,875    100 %
Gross profit
   942    52.1 % 967    51.6 %
R&D expenses
   111    6.1 % 146    7.8 %
S&M expenses
   232    12.8 % 250    13.3 %
G&A expenses
   122    6.8 % 121    6.4 %
Other income
   §    § (7 )    §






Segment profit*
   $ 477    26.3 % $ 458    24.4 %

2022:


	Three months ended March 31,
	2023					2022

	(U.S. $ in millions / % of Segment Revenues)
Revenues	$	1,766		100	%	$	1,737		100	%
Gross profit		812		46.0	%		890		51.2	%
R&D expenses		156		8.8	%		143		8.2	%
S&M expenses		223		12.6	%		245		14.1	%
G&A expenses		102		5.8	%		112		6.4	%
Other income		(1	)	§			(11	)	(0.7	%)

Segment profit*	$	332		18.8	%	$	402		23.1	%

*	Segment profit does not include amortization and certain other items.

§	Represents an amount less than ~~$0.5 million or~~ 0.5%~~, as applicable.~~ .

North America Revenues

Our North America segment includes the United States and Canada. Revenues from our North America segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$1,809~~$1,766 million, ~~a decrease~~an increase of ~~$66~~$29 million, or 4%2%, compared to the ~~third~~first quarter of ~~2021,~~2022. This increase was mainly due to ~~a decrease in~~higher revenues from certain innovative products, primarily AUSTEDO and AJOVY, as well as Anda, partially offset by lower revenues from generic products ~~COPAXONE~~ and BENDEKA and ~~TREANDA, partially offset by higher revenues from AUSTEDO.~~

~~On October 1, 2022, we discontinued marketing ProAir~~

~~HFA, while focusing our marketing efforts on albuterol sulfate inhalation aerosol (our ProAir authorized generic) and ProAir Digihaler~~

~~(albuterol sulfate 117 mcg). ProAir HFA and ProAir Digihaler results are included in “Other” in the revenues table below and were not material during the third quarter of 2022.~~

TREANDA.

Revenues by Major Products and Activities

The following table presents revenues for our North America segment by major products and activities for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


	Three months ended March 31,				Percentage Change
	2023		2022		2023-2022

	(U.S. $ in millions)
Generic products	$	824	$	899		(8	%)
AJOVY		49		36		36	%
AUSTEDO		170		154		10	%
BENDEKA and TREANDA		63		82		(23	%)
COPAXONE		76		86		(12	%)
Anda		424		342		24	%
Other*		160		139		15	%

Total	$	1,766	$	1,737		2	%

*	Other revenues in the first quarter of 2023 increased mainly due to a reduction in estimated liabilities in connection with ProAir^® HFA following its discontinuation on October 1, 2022.

Three months ended

September 30,

Percentage
Change


2022

2021

2022-2021



(U.S. $ in millions)

Generic products
   $ 806    $ 859    (6 %)
AJOVY
   57    46    23 %
AUSTEDO
   260    201    30 %
BENDEKA/TREANDA
   77    95    (20 %)
COPAXONE
   105    133    (21 %)
Anda
   371    363    2 %
Other
   133    178    (25 %)





Total
   $ 1,809    $ 1,875    (4 %)

~~Table of Contents~~

Generic products

revenues in our North America segment (including biosimilars) in the ~~third~~first quarter of ~~2022~~2023 were ~~$806~~$824 million, a decrease of 6%8% compared to the ~~third~~first quarter of ~~2021,~~2022, mainly due to increased ~~competition.~~

competition to parts of our portfolio.

Among the most significant generic products we sold in North America in the ~~third~~first quarter of ~~2022~~2023 were lenalidomide capsules (the generic version of Revlimid^®), Truxima^® (the biosimilar to Rituxan^®), epinephrine injectable solution (the generic equivalent of EpiPen

^®

and EpiPen Jr.

^®

~~), Truxima~~

~~(the biosimilar to Rituxan~~

), and albuterol sulfate inhalation aerosol (our ProAir authorized generic).

On March 9, 2023, Teva and Natco Pharma Ltd. announced the launch of additional strengths for lenalidomide capsules (the generic equivalent of Revlimid^®) in the U.S., in 2.5 mg and 20 mg strengths.

In the ~~third~~first quarter of ~~2022,~~2023, our total prescriptions were approximately ~~303~~81 million (based on trailing twelve months), representing ~~8.2%~~8.3% of total U.S. generic prescriptions according to IQVIA data.

AJOVY

revenues in our North America segment in the ~~third~~first quarter of ~~2022~~2023 increased by ~~23%~~36% to ~~$57~~$49 million, compared to the ~~third~~first quarter of ~~2021,~~2022, mainly due to growth in volume. In the ~~third~~first quarter of ~~2022,~~2023, AJOVY’s exit market share in the United States in terms of total number of prescriptions was ~~25%~~24.5% compared to ~~21%~~23.9% in the ~~third~~first quarter of ~~2021.~~

2022.

AJOVY is indicated for the preventive treatment of migraine in adults. AJOVY was launched in the U.S. in 2018, and was approved in Canada in April 2020. Our auto-injector device for AJOVY became commercially available in the U.S. in April 2020 and in Canada in April 2021. AJOVY is the only anti-CGRP subcutaneous product indicated for quarterly ~~treatment and in January 2021, we launched a new product offering, providing a quarterly dose.~~

treatment.

AJOVY is protected worldwide by patents expiring in 2026 ~~in Europe and in 2027 in~~at the ~~United States. Applications for patent term~~earliest; extensions have been ~~submitted~~granted in ~~various markets around~~several countries, including the ~~world,~~United States and ~~certain extensions in~~ Europe, ~~and other countries have already been granted~~ until 2031. Additional patents relating to the use of AJOVY in the treatment of migraine have also been issued in the United States and will expire between 2035 and 2039. Such patents are also pending in other countries. AJOVY will also be protected by regulatory exclusivity for 12 years from marketing approval in the United States and 10 years from marketing approval in Europe. We filed a lawsuit in the U.S. District Court for the District of Massachusetts alleging that Eli Lilly & Co.’s (“Lilly”) marketing and sale of its galcanezumab product for the treatment of migraine infringes nine Teva patents, including three method of treatment patents and six composition of matter patents. Lilly then submitted inter partes review (“IPR”) petitions to the Patent Trial and Appeal Board (“PTAB”), challenging the validity of the nine ~~patents asserted against it in the litigation.~~Teva patents. The ~~litigation in the district court was stayed pending resolution of the IPR petitions. On February 18, 2020, the~~ PTAB issued decisions onupholding the ~~first six IPRs,~~three method of treatment patents but finding the asserted claims of the six composition of matter patents invalid, ~~as being obvious. On March 31, 2020, the PTAB issued a decision upholding the three method of treatment patents. On August 16, 2021~~which decisions were affirmed by the Court of Appeals for the Federal Circuit ~~affirmed all of~~on August 16, 2021. A jury trial regarding the PTAB’s decisions. On October 3, 2022, the Massachusetts District Court issued an opinion resolving several motions for summary judgement brought by both Teva and Lilly. The Court denied Lilly’s motions to invalidate all three ~~of Teva’s~~ method of treatment patents ~~granted Lilly’s motion of~~

~~non-infringement~~

on two of the twenty asserted claims, and denied Teva’s motions to estop Lilly from making certain arguments at trial and to dismiss Lilly’s allegations that Teva’s patents are not enforceable. Trial for this case openedbegan on October 18, 2022, and on November 9, 2022, the jury issued a verdict in Teva’s favor, finding the three method of treatment patents valid and infringed by Lilly and awarding Teva $176.5 million in damages. On January 28, 2023, Lilly filed a motion requesting that the District Court overturn the jury’s verdict. Once the motion is ~~expected~~decided, the losing party may appeal the decision to ~~be completed by November 10, 2022.~~

~~We also filed another suit against Lilly on~~the Court of Appeals for the Federal Circuit.

On June 8, 2021, ~~asserting two patents recently granted to Teva, related to the treatment of refractory migraine. On March 15, 2022,~~we filed another lawsuit against Lilly in the U.S. District Court for the District of Massachusetts ~~denied~~alleging that Lilly’s ~~motion~~marketing and sale of galcanezumab product infringes two patents related to ~~dismiss and on March 23, 2022, Lilly submitted~~the treatment of refractory migraine. Lilly’s IPR petitions challenging the patentability of ~~the~~these two ~~refractory migraine~~ patents ~~followed by another IPR submitted on April 11, 2022 challenging the patentability of~~as well as a third patent also related to the ~~two~~treatment of refractory migraine ~~patents. On September 28, 2022,~~were instituted by the ~~U.S. Patent and Trademark Office issued decisions to institute a full trial on~~PTAB. The litigation in the ~~validity~~District of ~~two~~Massachusetts was stayed during the pendency of ~~the three refractory patents, and instituted a full trial on the third patent on October 14, 2022.~~these IPR proceedings. In addition, in 2018 we entered into separate agreements with Alder Biopharmaceuticals, Inc. and Lilly, resolving the European Patent Office oppositions that they filed against our AJOVY patents. The settlement agreement with Lilly also resolved Lilly’s action to revoke the patent protecting AJOVY in the United Kingdom.

AUSTEDO

revenues in our North America segment in the ~~third~~first quarter of ~~2022~~2023 increased by ~~30%~~10%, to ~~$260~~$170 million, compared to ~~$201~~$154 million in the ~~third~~first quarter of ~~2021,~~2022, mainly due to growth in volume.

AUSTEDO was launched in the U.S. in 2017. It is indicated for the treatment of chorea associated with ~~Huntington~~Huntington’s disease and for the treatment of tardive dyskinesia in adults.

AUSTEDO is protected in the United States by ~~eight~~ten Orange Book patents expiring between 2031 and 2038 and in Europe by two patents expiring in 2029. We received notice letters from two ANDA filers regarding the filing of their ANDAs with paragraph (IV) certifications for certain of the patents listed in the Orange Book for AUSTEDO. On July 1, 2021, we filed ~~a complaint~~claims against two generic ANDA filers, Aurobindo ~~asserting six of the Orange Book patents,~~ and ~~a separate complaint against~~ Lupin, ~~asserting four of the Orange Book patents. The suits were filed~~ in the U.S. District Court for the District of New Jersey. ~~The seventh patent was issued in November 2021, and listed in the Orange Book in December 2021.~~ In addition,

~~Table of Contents~~

Apotex filed a petition for IPR by the PTAB of the patent covering the deutetrabenazine compound that expires in 2031. On March 9, 2022, the U.S. Patent and Trademark Office denied Apotex’s petition and declined to institute a review of the deutetrabenazine patent. On April 29, 2022 and June 8, 2022, we reached agreements with Lupin and Aurobindo, respectively, to resolve the abovementioned disputes over Lupin’s and Aurobindo’s ANDAs for a generic deutetrabenazine product. Under the terms of the settlement agreements, the litigation between the parties in the U.S. District Court for the District of New Jersey have been ended, and Lupin and Aurobindo will have a license to sell their generic products beginning April 2033, or earlier under certain circumstances. There are no further patent litigations pending regarding AUSTEDO.

AUSTEDO XR (deutetrabenazine) extended-release tablets was approved by the FDA on February 17, 2023. AUSTEDO XR is a new once-daily formulation indicated in adults for tardive dyskinesia and chorea associated with Huntington’s disease, additional to the currently marketed twice-daily AUSTEDO. AUSTEDO XR is protected by eight Orange Book patents expiring between 2031 and 2041.

On April 28, 2023, the FDA approved UZEDY^TM(risperidone) extended-release injectable suspension for the treatment of schizophrenia in adults. UZEDY is the first subcutaneous, long-acting formulation of risperidone that controls the steady release of risperidone. UZEDY is expected to be available in the U.S. in the coming weeks.

BENDEKA

and

TREANDA

combined revenues in our North America segment in the ~~third~~first quarter of ~~2022~~2023 decreased by ~~20%~~23% to ~~$77~~$63 million, compared to the ~~third~~first quarter of ~~2021,~~2022, mainly due to generic bendamustine product entry into the ~~availability of alternative therapies and intense competition in anticipation of the~~market. The orphan drug exclusivity ~~expiration~~that had attached to bendamustine products expired in December ~~2022, as discussed below.~~

In July 2018, Eagle prevailed in its suit against the FDA to obtain seven years of orphan drug exclusivity in the United States for BENDEKA. On March 13, 2020, this decision was upheld in the appellate court. As things currently stand, drug applications referencing BENDEKA, TREANDA or any other bendamustine product will not be approved by the FDA until the orphan drug exclusivity expires in December 2022.

In April 2019, we signed an amendment to the license agreement with Eagle extending the royalty term applicable to the United States to the full period for which we sell BENDEKA and increased the royalty rate. In consideration, Eagle agreed to assume a portion of BENDEKA-related patent litigation expenses.

There are 16 patents listed in the U.S. Orange Book for BENDEKA with expiry dates in 2026 and 2031. In September 2019, a patent infringement action against four of six ANDA filers for generic versions of BENDEKA was tried in the U.S. District Court for the District of Delaware. On April 27, 2020, the district court upheld the validity of all of the asserted patents and found that all four ANDA filers infringe at least one of the patents. Three of the four ANDA filers appealed the district court decision. Teva settled with one of the three ANDA filers, and on August 13, 2021, the Federal Circuit issued a Rule 36 affirmance of the district court ~~decision with respect to the other two filers.~~decision. On December 14, 2021, Apotex filed a Petition for a Writ of Certiorari with the U.S. Supreme Court, which was denied. Litigation against the fifth ANDA filer was dismissed after the withdrawal of its patent challenge, and the case against a sixth ANDA filer was also settled. ~~Suits against two filers of 505(b)(2) NDAs referencing BENDEKA are pending.~~

Additionally, in July 2018, Teva and Eagle filed suit against Hospira, Inc. (“Hospira”) related to its 505(b)(2) NDA referencing BENDEKA in the U.S. District Court for the District of Delaware. On December 16, 2019, the district court dismissed the case against Hospira on all but one of the asserted patents, which expires in 2031. On April 18, 2022, Teva and Eagle settled this matter ~~allowing~~with Hospira. Teva had also filed suit against two other 505(b)(2) NDA filers, Doctor Reddy’s Laboratories (“DRL”) and Accord Healthcare (“Accord”). On December 10, 2022 and April 4, 2023, Teva and Eagle settled with Accord and DRL, respectively. Based on the settlement agreements, the three 505(b)(2) filers, Hospira, toAccord and DRL can launch ~~its product~~their products on ~~January~~November 17, ~~2028~~2027 or earlier under certain circumstances. ~~A trial~~On May 4, 2023, Teva and Eagle also filed suit against ~~two additional~~BendaRx Corp. in the U.S. District Court for the District of Delaware, following its filing of a 505(b)(2) NDA ~~filers, Doctor Reddy’s and Accord, is set to begin in April 2023.~~

for a bendamustine product.

In addition to the settlement with Eagle regarding its bendamustine 505(b)(2) NDA, between 2015 and 2020, we reached final settlements with 22 ANDA filers for generic versions of the lyophilized form of TREANDA and one 505(b)(2) NDA filer for a generic version of the liquid form of TREANDA, providing for the launch of generic versions of TREANDA prior to patent expiration.

The orphan drug exclusivity that had attached to bendamustine products expired in December 2022. To-date we are aware of one generic TREANDA product on the market.

COPAXONE

revenues in our North America segment in the ~~third~~first quarter of ~~2022~~2023 decreased by ~~21%~~12% to ~~$105~~$76 million, compared to the ~~third~~first quarter of ~~2021,~~2022, mainly due to generic competition in the United States and a decrease in glatiramer acetate market share due to availability of alternative therapies.

The market for MS treatments continues to develop, particularly with the approval of generic versions of COPAXONE. Oral treatments for MS, such as Tecfidera

^®

, Gilenya

^®

and Aubagio

^®

, continue to present significant and increasing competition. COPAXONE also continues to face competition from existing injectable products, as well as from monoclonal antibodies, such as Ocrevus

^®

and Kesimpta

^®

Anda

revenues from third-party products in our North America segment in the ~~third~~first quarter of ~~2022~~2023 increased by 2%24% to ~~$371~~$424 million, compared to ~~$363~~$342 million in the ~~third~~first quarter of ~~2021,~~2022, mainly due to higher demand. Anda, our distribution business in the United States, distributes generic ~~specialty~~and innovative medicines and OTC pharmaceutical products from Teva and various ~~third party~~third-party manufacturers to independent retail pharmacies, pharmacy retail chains, hospitals and physician offices in the United States. Anda is able to compete in the secondary distribution market by maintaining ~~high inventory levels for~~ a broad ~~offering~~portfolio of products, competitive pricing and offering next day delivery throughout the United States.

~~Table of Contents~~

Product Launches and Pipeline

In the ~~third~~first quarter of ~~2022,~~2023, we launched the generic version of the following branded products in North America:

Product Name

Brand Name

Launch
Date

Total Annual U.S.

Branded Sales at Time

of Launch

(U.S. $ in millions
(IQVIA))
*

Levothyroxine Sodium Tablets USP, 25 mcg, 50 mcg, 75 mcg, 88 mcg, 100 mcg, 112 mcg, 125 mcg, 137 mcg, 150 mcg, 175 mcg, 200 mcg and 300 mcg
   Synthroid
®
tablets    September    $ 2,035
Tacrolimus Ointment
   Protopic
®
Ointment    September    $ 79.9
Pantoprazole Sodium for Injection
   Protonix
®
I.V. for Injection    September    $ 76.5
Mycophenolate Mofetil Tablets 500mg
   CellCept
®
Tablets    September    $ 67.8
Nitrofurantoin Capsules, USP (Monohydrate/Macrocrystals) 100mg
   Macrobid
®
   September    $ 54.5
Icosapent Ethyl Capsules 500mg
   Vascepa
®
Capsules    September    $ 21.1


Product Name	Brand Name	Launch Date	Total Annual U.S. Branded Sales at Time of Launch (U.S. $ in millions (IQVIA))^*
Teriflunomide Tablets	Aubagio^® Tablets	March	$	1,970
Lubiprostone Capsules	Amitiza^® capsules	January	$	204
Topiramate Extended-release Capsules	Trokendi XR^® ER capsules	March	$	188
Lenalidomide Capsules 2.5mg & 20mg	Revlimid^® capsules	March	$	185
Sorafenib Tablets, USP	Nexavar^® tablets	January	$	64
Theophylline Extended-Release Tablets	Theo-Dur	January	$	22
Doxepin Hydrochloride Cream	Zonalon^® Cream	February	$	6

^*	The figures presented are for the twelve months ended in the calendar quarter immediately prior to our launch or re-launch.

Our generic products pipeline in the United States includes, as of ~~September 30, 2022, 173~~March 31, 2023, 160 product applications awaiting FDA approval, including 6970 tentative approvals. This total reflects all pending ANDAs, supplements for product line extensions and tentatively approved applications and includes some instances where more than one application was submitted for the same reference product. Excluding overlaps, the branded products underlying these pending applications had U.S. sales for the twelve months ended ~~June 30,~~December 31, 2022 of approximately ~~$108~~$112 billion, according to IQVIA. Approximately ~~72%~~76% of pending applications include a paragraph IV patent challenge, and we believe we are first to file with respect to 7270 of these products, or 9997 products including final approvals where launch is pending a settlement agreement or court decision. Collectively, these ~~first to file~~first-to-file opportunities represent over ~~$79~~$75 billion in U.S. brand sales for the twelve months ended ~~June 30,~~December 31, 2022, according to IQVIA.

IQVIA reported brand sales are one of the many indicators of future potential value of a launch, but equally important are the mix and timing of competition, as well as cost effectiveness. The potential advantages of being the first filer with respect to some of these products may be subject to forfeiture, shared exclusivity or competition from

so-called

~~“authorized~~ “authorized generics,” which may ultimately affect the value derived.

In the ~~third~~first quarter of ~~2022,~~2023, we received tentative approvals for generic equivalents of the products listed in the table below, excluding overlapping applications. A “tentative approval” indicates that the FDA has substantially completed its review of an application and final approval is expected once the relevant patent expires, a court decision is reached, a

30-month

regulatory stay lapses or a

180-day

exclusivity period awarded to another manufacturer either expires or is forfeited.

Generic Name

Brand Name

Total Annual U.S.

Branded Sales at Time

of Launch

(U.S. $ in millions
(IQVIA))
*

Dasatinib Tablets, 20 mg, 50 mg, 70 mg, 80 mg, 100 mg and 140 mg
   Sprycel
®
   $ 1,569
Dapagliflozin/ Metformin Tablets
   Xigduo XR
®
   $ 560
Paclitaxel Protein-Bound Particles for Injectable Suspension, 100 mg/vial **
   N/A    No Data

*
Generic Name	Brand Name	Total Annual U.S. Branded Sales at Time of Launch (U.S. $ in millions (IQVIA))^*
Aspirin Delayed-Release and Omeprazole Tablets, 81 mg/40 mg and 325 mg and 40 mg^**	Yosprala^®	No Data

^*	The figures presented are for the twelve months ended in the calendar quarter immediately prior to our launch or re-launch.

^**	~~Teva’s Paclitaxel is a 505(b)(2)~~ Branded product ~~was filed as an NDA and is not bioequivalent to a brand product.~~ discontinued on FDA website.

For information regarding our ~~specialty~~innovative and biosimilar products pipeline, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.

~~Table of Contents~~

North America Gross Profit

Gross profit from our North America segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$942~~$812 million, a decrease of 3%9%, compared to ~~$967~~$890 million in the ~~third~~first quarter of ~~2021.~~

2022.

Gross profit margin for our North America segment in the ~~third~~first quarter of ~~2022 increased~~2023 decreased to ~~52.1%~~46.0%, compared to ~~51.6%~~51.2% in the ~~third~~first quarter of ~~2021.~~2022. This ~~increase~~decrease was mainly due to ~~a favorable change~~higher cost of goods sold, mainly driven by rising costs due to inflationary and other macroeconomic pressures, as well as an increase in ~~the mix of products.~~

revenues with lower profitability from Anda.

North America R&D Expenses

R&D expenses relating to our North America segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$111~~$156 million, ~~a decrease~~an increase of ~~24%~~9%, compared to ~~$146~~$143 million in the ~~third~~first quarter of ~~2021.~~

2022.

For a description of our R&D expenses in the ~~third~~first quarter of ~~2022,~~2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.

North America S&M Expenses

S&M expenses relating to our North America segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$232~~$223 million, a decrease of 7%9%, compared to ~~$250~~$245 million in the ~~third~~first quarter of ~~2021,~~2022, mainly due to cost efficiencies.

North America G&A Expenses

G&A expenses relating to our North America segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$122~~$102 million, ~~an increase~~a decrease of 1%9% compared to ~~$121~~$112 million in the ~~third~~first quarter of ~~2021.~~

2022.

North America Profit

Profit from our North America segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our North America segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$477~~$332 million, ~~an increase~~a decrease of 4%17% compared to ~~$458~~$402 million in the ~~third~~first quarter of ~~2021,~~2022. This decrease was mainly due to ~~a favorable change in the mix of products, cost efficiencies and~~ lower ~~R&D expenses, as discussed above.~~

gross profit.

Europe Segment

The following table presents revenues, expenses and profit for our Europe segment for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~

Three months ended September 30,


2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 1,069    100 % $ 1,220    100 %
Gross profit
   634    59.3 % 714    58.6 %
R&D expenses
   44    4.1 % 55    4.5 %
S&M expenses
   169    15.8 % 204    16.7 %
G&A expenses
   61    5.7 % 64    5.2 %
Other income
   §    § (2 )    §






Segment profit*
   $ 360    33.7 % $ 394    32.3 %

2022:


	Three months ended March 31,
	2023				2022

	(U.S. $ in millions / % of Segment Revenues)
Revenues	$	1,184	100	%	$	1,156	100	%
Gross profit		655	55.3	%		694	60.0	%
R&D expenses		53	4.5	%		58	5.0	%
S&M expenses		187	15.8	%		196	17.0	%
G&A expenses		70	5.9	%		59	5.1	%
Other income		§	§			§	§

Segment profit*	$	345	29.1	%	$	381	32.9	%

*	Segment profit does not include amortization and certain other items.

§	Represents an amount less than $0.5 million or 0.5%, as applicable.

~~Table of Contents~~

Europe Revenues

Our Europe segment includes the European Union, the United Kingdom and certain other European countries.

Revenues from our Europe segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$1,069~~$1,184 million, ~~a decrease~~an increase of ~~12%~~2%, or ~~$151~~$28 million, compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues increased by 1%9%, mainly due to higher ~~demand for generic products, together with higher~~ revenues from generic products and generic product launches.

In the ~~third~~first quarter of ~~2022,~~2023, revenues were negatively impacted by exchange rate fluctuations of ~~$162~~$79 million, net of hedging effects, compared to the ~~third~~first quarter of ~~2021.~~2022. Revenues in the ~~third~~first quarter of ~~2022~~2023 included ~~$24~~$6 million from a ~~positive~~negative hedging impact, which is included in “Other” in the table below. See note 8d to our consolidated financial statements.

Revenues by Major Products and Activities

The following table presents revenues for our Europe segment by major products and activities for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~

Three months ended

September 30,

Percentage
Change


2022

2021

2022-2021



(U.S. $ in millions)

Generic products
   $ 803    $ 895    (10 %)
AJOVY
   30    23    31 %
COPAXONE
   63    95    (34 %)
Respiratory products
   62    85    (27 %)
Other
   111    122    (9 %)





Total
   $ 1,069    $ 1,220    (12 %)

2022:


	Three months ended March 31,				Percentage Change
	2023		2022		2023-2022

	(U.S. $ in millions)
Generic products	$	932	$	876	6%
AJOVY		36		30	17%
COPAXONE		59		72	(17%)
Respiratory products		68		71	(4%)
Other		89		107	(17%)

Total	$	1,184	$	1,156	2%

Generic products

revenues (including OTC and biosimilar products) in our Europe segment in the ~~third~~first quarter of ~~2022, decreased~~2023, increased by ~~10%~~6% to ~~$803~~$932 million, compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues increased by 5%12%, mainly due to higher ~~demand for~~revenues from generic and OTC products ~~together with higher revenues~~and from generic product launches.

~~On August 29, 2022 the European Commission granted a marketing authorization for Ranivisio~~

~~(ranibizumab), a biosimilar to Lucentis~~

~~, across all five indications in adults for which Lucentis~~

~~is authorized, including~~

~~age-related~~

~~macular degeneration (AMD) and four other ophthalmology indications.~~

AJOVY

revenues in our Europe segment in the ~~third~~first quarter of ~~2022~~2023 increased by 17% to $36 million, compared to $30 million ~~compared to $23 million~~ in the ~~third~~first quarter of ~~2021,~~2022. In local currency terms, revenues increased by 28%, mainly due to growth in European countries in which AJOVY had previously been ~~launched, as well as launches and reimbursements in additional European countries.~~

launched.

For information about AJOVY patent protection, see “—North America Revenues—Revenues by Major Product” above.

COPAXONE

revenues in our Europe segment in the ~~third~~first quarter of ~~2022~~2023 decreased by ~~34%~~17% to ~~$63~~$59 million, compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues decreased by ~~23%~~12%, due to price reductions and a decline in volume resulting from competing glatiramer acetate products.

One European patent protecting COPAXONE 40 mg/mL was found invalid by the Board of Appeal of the European Patent Office in September ~~2020. Two~~2020 and two additional patents expiring in 2030 were found invalid ~~at the European Patent Office~~ in December 2021. In certain countries, Teva remains in litigation against generic companies on an additional COPAXONE 40 mg/mL patent that expires in 2030.

Respiratory products

revenues in our Europe segment in the ~~third~~first quarter of ~~2022~~2023 decreased by ~~27%~~4% to ~~$62~~$68 million compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues ~~decreased~~increased by ~~15%~~2%, mainly due to ~~net price reductions and lower volumes.~~

higher demand.

Product Launches and Pipeline

As of ~~September 30, 2022,~~March 31, 2023, our generic products pipeline in Europe included ~~588~~128 generic approvals relating to 7227 compounds in ~~155~~53 formulations, with no European Medicines Agency (“EMA”) approvals received. In addition, approximately ~~1,199~~1,129 marketing authorization applications are pending approval in 37 European countries, relating to ~~110~~102 compounds in ~~220~~206 formulations. ~~Two applications are~~One application is pending with the EMA ~~with one application relating to two strengths in 30 markets and one application~~ relating to three strengths in 30 markets.

~~Table of Contents~~

For information regarding our ~~specialty~~innovative medicines and biosimilar products pipeline, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.

Europe Gross Profit

Gross profit from our Europe segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$634~~$655 million, a decrease of ~~11%~~6% compared to ~~$714~~$694 million in the ~~third~~first quarter of ~~2021, mainly due to exchange rate fluctuations.~~

2022.

Gross profit margin for our Europe segment in the ~~third~~first quarter of ~~2022 increased~~2023 decreased to ~~59.3%~~55.3%, compared to ~~58.6%~~60.0% in the ~~third~~first quarter of ~~2021.~~2022. This ~~increase~~decrease was mainly due to higher ~~revenues from the positive impact of hedging activities discussed above, as well as lower~~ cost of goods sold, mainly driven by rising costs due to ~~a better mix of products~~inflationary and ~~decrease in write-offs.~~

other macroeconomic pressures.

Europe R&D Expenses

R&D expenses relating to our Europe segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$44~~$53 million, a decrease of ~~21%~~8% compared to ~~$55~~$58 million in the ~~third~~first quarter of ~~2021.~~

2022.

For a description of our R&D expenses in the ~~third~~first quarter of ~~2022,~~2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.

Europe S&M Expenses

S&M expenses relating to our Europe segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$169~~$187 million, a decrease of ~~17%~~5% compared to ~~$204~~$196 million in the ~~third~~first quarter of ~~2021.~~2022. This decrease was mainly due to exchange rate ~~fluctuations and cost efficiencies in the third quarter of 2022.~~

fluctuations.

Europe G&A Expenses

G&A expenses relating to our Europe segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$61~~$70 million, ~~a decrease~~an increase of 4%18% compared to ~~$64~~$59 million in the ~~third~~first quarter of ~~2021.~~

2022.

Europe Profit

Profit from our Europe segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our Europe segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$360~~$345 million, a decrease of 8%9%, compared to ~~$394~~$381 million in the ~~third~~first quarter of ~~2021.~~2022. This decrease was mainly due to lower gross profit as described above and exchange rate fluctuations.

International Markets Segment

The following table presents revenues, expenses and profit for our International Markets segment for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~

Three months ended
September 30,


2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 475    100 % $ 530    100 %
Gross profit
   252    53.0 % 296    55.9 %
R&D expenses
   15    3.2 % 16    3.0 %
S&M expenses
   97    20.5 % 102    19.2 %
G&A expenses
   30    6.2 % 29    5.4 %
Other income
   (2 )    § (2 )    §






Segment profit*
   $ 112    23.5 % $ 152    28.8 %

2022:


	Three months ended March 31,
	2023				2022

	(U.S. $ in millions / % of Segment Revenues)
Revenues	$	492	100	%	$	492	100	%
Gross profit		262	53.2	%		286	58.1	%
R&D expenses		20	4.0	%		20	4.0	%
S&M expenses		98	19.8	%		97	19.8	%
G&A expenses		31	6.4	%		29	5.9	%
Other income		(1)	§			(40)	(8.1	%)

Segment profit*	$	114	23.1	%	$	179	36.4	%

*	Segment profit does not include amortization and certain other items.

§	Represents an amount less than 0.5%.

~~Table of Contents~~

International Markets Revenues

Our International Markets segment includes all countries in which we operate other than those in our North America and Europe segments. The International Markets segment includes more than 35 countries, covering a substantial portion of the global pharmaceutical market. The countries in our International Markets segment include highly regulated, pure generic markets, such as Israel, branded generics oriented markets, such as Russia and certain Latin America markets and hybrid markets, such as Japan.

In February 2022, Russia launched an invasion of Ukraine. As of the date of this Quarterly Report on Form

10-Q,

sustained conflict and disruption in the region is ongoing. Russia and Ukraine markets are included in our International Markets segment results. We have no manufacturing or R&D facilities in these markets. During the three ~~and nine~~ months ended ~~September 30, 2022,~~March 31, 2023, the impact of this conflict on our International Markets segment’s results of operations and financial condition was immaterial. Consistent with our foreign exchange risk management hedging programs, we entered into hedges to hedge our exposure to currency exchange rate fluctuations with respect to our balance sheet assets, revenues and expenses. However, as of the end of the ~~third~~first quarter of ~~2022,~~2023, we were unable to renew certain of our expiring hedging positions due to the liquidity situation in the market for Russian ~~rubles.~~rubles and we currently hedge a small part of our projected net revenues for 2023. Prior to and since the escalation of the conflict, we have been taking measures to reduce our operational cash balances in Russia and Ukraine. We have been monitoring the solvency of our customers in Russia and Ukraine and have taken measures, where practicable, to mitigate our exposure to risks related to the conflict in the region. However, the duration, severity and global implications (including potential inflation and devaluation consequences) of the conflict cannot be predicted at this time and could have an effect on our business, including on our exchange rate exposure, supply chain, operational costs and commercial presence in these markets.

Revenues from our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$475~~$492 million, ~~a decrease~~flat compared to the first quarter of ~~10% in U.S. dollars, or 3% in~~2022. In local currency terms, revenues increased by 8% compared to the ~~third~~first quarter of ~~2021. Revenues in~~2022.

In the ~~third~~first quarter of ~~2021 included a milestone payment of $35 million received from Otsuka related to the launch of AJOVY in Japan.~~

~~In the third quarter of 2022,~~2023, revenues were negatively impacted by exchange rate fluctuations of ~~$38~~$41 million, net of hedging effects, compared to the ~~third~~first quarter of ~~2021.~~2022. Revenues in the ~~third~~first quarter of ~~2022~~2023 included a minimal hedging impact, compared to a positive hedging impact of $4$12 million in the first quarter of 2022, which is included in “Other” in the table below. See note 8d to our consolidated financial statements.

Revenues by Major Products and Activities

The following table presents revenues for our International Markets segment by major products and activities for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~2022:


	Three months ended March 31,				Percentage Change
	2023		2022		2023-2022

	(U.S. $ in millions)
Generic products	$	400	$	388	3%
AJOVY		10		6	74%
COPAXONE		12		10	16%
Other		70		88	(20%)

Total	$	492	$	492	§

Three months ended

September 30,

Percentage
Change


2022

2021

2022-2021



(U.S. $ in millions)

Generic products
   $ 393    $ 412    (5 %)
AJOVY
   6    39    (85 %)
COPAXONE
   9    10    (4 %)
Other
   67    69    (2 %)





Total
   $ 475    $ 530    (10 %)

Generic products

revenues in our International Markets segment in the ~~third~~first quarter of ~~2022,~~2023, which include OTC products, ~~decreased~~increased by 5%3% in U.S. dollars to ~~$393~~$400 million. In local currency terms, revenues increased by 3%9% compared to the ~~third~~first quarter of ~~2021. This increase was~~2022, mainly due to higher revenues in certain markets, as well as price increases largely as a result of rising costs due to inflationary pressure, partially offset by ~~lower sales in Japan due to~~ regulatory price reductions and generic competition to

off-patented

products in Japan.

~~Table of Contents~~

AJOVY

was launched in certain markets in our International Markets segment, including in Japan in August 2021. We are moving forward with plans to launch AJOVY in other markets. AJOVY revenues in our International Markets segment in the ~~third~~first quarter of 2023 were $10 million, compared to $6 million in the first quarter of 2022, ~~were $6 million, compared~~mainly due to ~~$39 million~~growth in ~~the third quarter of 2021. Revenues in the third quarter of 2021 included a milestone payment of $35 million received from Otsuka related to the launch of AJOVY in Japan.~~

volume.

COPAXONE

revenues in our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 were $9$12 million compared to $10 million in the ~~third~~first quarter of ~~2021.~~

2022.

AUSTEDO

was launched in early 2021 in China for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia, and was also launched in Israel during 2021. During the third quarter of 2022, AUSTEDO was launched in Brazil. We continue with additional submissions in various other markets.

International Markets Gross Profit

Gross profit from our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$252~~$262 million, a decrease of ~~15%~~8% compared to ~~$296~~$286 million in the ~~third~~first quarter of ~~2021.~~

2022.

Gross profit margin for our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 decreased to ~~53.0%~~53.2%, compared to ~~55.9%~~58.1% in the ~~third~~first quarter of ~~2021.~~2022. This decrease was mainly due to ~~the impact of a milestone payment of $35 million related to AJOVY in the third quarter of 2021 as mentioned above, as well as~~ regulatory price reductions and generic competition to

off-patented

products in Japan, the positive hedging impact of $12 million in the ~~third~~first quarter of 2022, as well as rising costs due to inflationary and other macroeconomic pressures, partially offset by price increases largely as a result of such rising ~~costs due to inflationary pressure.~~

costs.

International Markets R&D Expenses

R&D expenses relating to our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$15~~$20 million, ~~a decrease of 3%~~flat compared to ~~$16 million in~~ the ~~third~~first quarter of ~~2021.~~

2022.

For a description of our R&D expenses in the ~~third~~first quarter of ~~2022,~~2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.

International Markets S&M Expenses

S&M expenses relating to our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$97~~$98 million, ~~a decrease of 4%~~flat compared to ~~$102 million in~~ the ~~third~~first quarter of ~~2021.~~

2022.

International Markets G&A Expenses

G&A expenses relating to our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 were ~~$30~~$31 million, an increase of 3%7% compared to $29 million in the ~~third~~first quarter of ~~2021.~~

2022.

International Markets Other Income

Other income relating to our International Markets segment in the first quarter of 2023 was $1 million, compared to $40 million in the first quarter of 2022. Other income in the first quarter of 2022 was mainly the result of settlement proceeds.

International Markets Profit

Profit from our International Markets segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items.

Profit from our International Markets segment in the ~~third~~first quarter of ~~2022~~2023 was ~~$112~~$114 million, a decrease of ~~27%~~36%, compared to ~~$152~~$179 million in the ~~third~~first quarter of ~~2021.~~2022. This decrease was mainly due to ~~lower~~higher other income and higher gross profit in the first quarter of 2022 as ~~discussed above.~~compared to the first quarter of 2023.

Other Activities

We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an

out-licensing

platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. Our other activities are not included in our North America, Europe or International Markets segments described above.

Our revenues from other activities in the ~~third~~first quarter of ~~2022~~2023 were ~~$241~~$219 million, a decrease of 8%20% in U.S. dollars compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues decreased by 3%19%.

API sales to third parties in the ~~third~~first quarter of ~~2022~~2023 were ~~$149~~$132 million, a decrease of 7%27% in both U.S. dollars and local currency terms, compared to the ~~third~~first quarter of ~~2021.~~

~~Table of Contents~~

2022, as many pharmaceutical customers de-stocked inventory levels that had remained high through the COVID-19 pandemic.

Teva Consolidated Results

Revenues

Revenues in the ~~third~~first quarter of ~~2022~~2023 were ~~$3,595~~$3,661 million, ~~a decrease of 8%~~flat compared to the ~~third~~first quarter of ~~2021.~~2022. In local currency terms, revenues ~~decreased~~increased by 2%4%, mainly due to ~~a decrease~~higher revenues from generic products in our Europe and International Markets segments, certain innovative products primarily AUSTEDO and AJOVY, as well as from Anda in our North America segment, partially offset by lower revenues from generic products in our North America segment, ~~COPAXONE in our North America and Europe segments,~~API sales to third parties and BENDEKA and TREANDA in our North America ~~segment, partially offset by higher revenues from AUSTEDO in our North America segment and generic products in our Europe~~ segment. See “—North America Revenues,” “—Europe Revenues,” “—International Markets Revenues” and “—Other Activities” above.

Exchange rate movements during the ~~third~~first quarter of ~~2022, net of~~2023, including hedging effects, negatively impacted revenues by ~~$215~~$128 million, compared to the ~~third~~first quarter of ~~2021.~~2022. See note 8d to our consolidated financial statements.

Gross Profit

Gross profit in the ~~third~~first quarter of ~~2022~~2023 was ~~$1,669~~$1,582 million, a decrease of 7%9% compared to the ~~third~~first quarter of ~~2021.~~

2022.

Gross profit margin was ~~46.4%~~43.2% in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~46.2%~~47.5% in the ~~third~~first quarter of ~~2021.~~2022. This ~~increase~~decrease was mainly driven by ~~higher~~rising costs due to inflationary and other macroeconomic pressures, an increase in revenues with lower profitability from Anda in our North America segment, lower revenues from ~~AUSTEDO, a favorable mix of generic products in our Europe segment,~~COPAXONE and ~~higher revenues from the positive~~BENDEKA and TREANDA, and an unfavorable impact of hedging activities, partially offset ~~mainly~~ by higher ~~operational costs due to macroeconomic headwinds and lower~~ revenues from ~~COPAXONE.~~

AUSTEDO and AJOVY.

Research and Development (R&D) Expenses

Our R&D activities for generic products in each of our segments include both (i) direct expenses relating to product formulation, analytical method development, stability testing, management of bioequivalence and other clinical studies and regulatory filings; and (ii) indirect expenses, such as costs of internal administration, infrastructure and personnel.

Our R&D activities for ~~specialty~~innovative medicines and biosimilar products in each of our segments include costs of discovery research, preclinical development, drug formulation, early- and late-clinical development ~~and drug formulation, clinical trials~~ and product registration costs. These expenditures are reported net of contributions received from collaboration partners. Our spending takes place throughout the development process, including (i) early-stage projects in both discovery and preclinical phases; (ii) middle-stage projects in clinical programs up to phase 3; (iii) late-stage projects in phase 3 programs, including where a new drug application is currently pending approval; (iv) post-approval studies for marketed products; and (v) indirect expenses, such as costs of internal administration, infrastructure and personnel.

R&D expenses in the ~~third~~first quarter of ~~2022~~2023 were ~~$175~~$234 million, ~~a decrease~~an increase of ~~21%~~4% compared to ~~$222~~$225 million in the ~~third~~first quarter of ~~2021.~~

2022.

In the ~~third~~first quarter of ~~2022,~~2023, our R&D expenses related primarily to ~~specialty~~innovative product candidates in neuroscience (such as neuropsychiatry migraine and movement disorders/ neurodegeneration, ~~and neuropsychiatry,~~ including post-approval commitments), immunology (such as respiratory medicines) and selected other areas, as well as generic products and biosimilars.

Our ~~lower~~higher R&D expenses in the ~~third~~first quarter of ~~2022,~~2023, compared to the ~~third~~first quarter of ~~2021,~~2022, were mainly due to ~~a decrease~~an increase in neuroscience ~~(in the pain~~(mainly neuropsychiatry) and ~~migraine and headache therapeutic areas) and~~ immunology ~~(in the respiratory therapeutic area)~~ as well as various generics ~~projects,~~ and ~~an adjustment in payments pursuant to a contract with one of our R&D partners in the third quarter of 2022, partially offset by higher R&D expenses related to our~~ biosimilar ~~products pipeline.~~

products.

R&D expenses as a percentage of revenues were ~~4.9%~~6.4% in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~5.7%~~6.2% in the ~~third~~first quarter of ~~2021.~~2022.

~~Table of Contents~~

~~Specialty Products~~

Innovative Medicines Pipeline

Below is a description of key products in our ~~specialty~~innovative medicines pipeline as of ~~October 31, 2022:~~

May 1, 2023:


	Phase 2	Phase 3	Pre-Submission	Under Regulatory Review
Neuroscience		~~Deutetrabenazine~~ ~~Dyskinesia in Cerebral Palsy~~ ~~(September 2019)~~		~~Risperidone~~ Olanzapine LAI Schizophrenia ~~(1)~~
		~~TEV-44749~~ ~~LAI~~ ~~Schizophrenia~~ (September 2022)

Immunology	TEV-48574 Inflammatory Bowel Disease	ICS-SABA (TEV-56248) Respiratory (February 2023)

Other
~~Other~~ Digihaler^® (beclomethasone dipropionate HFA)(U.S.)			Digihaler ^® (budesonide and formoterol fumarate dihydrate) (EU)
			~~Digihaler~~ ® ~~(beclomethasone dipropionate HFA)(U.S.)~~	⁽¹⁾

⁽¹⁾

~~Developed under a license agreement with MedinCell. In August 2021,~~

Digital component approved in the ~~FDA accepted~~U.K. by the NDA for risperidone LAI, based on phase 3 data from two pivotal studies. In April 2022, the FDA issued a Complete Response Letter (“CRL”) regarding the NDA for risperidone LAI. We resubmitted the NDA in October 2022Medicines and ~~await the FDA’s response.~~

Healthcare products Regulatory Agency (MHRA).

Discontinued Project

In ~~October 2022,~~the first quarter of 2023, development of ~~fasinumab~~deutetrabenazine for ~~the treatment of osteoarthritic pain~~dyskinesia in cerebral palsy was discontinued.

Biosimilar Products Pipeline

We have additional biosimilar products in development internally and with our partners that are in various stages of clinical trials and regulatory review worldwide, including phase 3 clinical trials for biosimilars to Prolia

^®

(denosumab), Xolair

^®

(omalizumab), Eylea^® (afilbercept) and ~~Eylea~~

Simponi^®

~~(afilbercept)~~ (golimumab), a biosimilar to Lucentis

^®

(ranibizumab) that was submitted in Canada, ~~Stelera~~

and biosimilars to Stelara^®

(ustekinumab) ~~that is currently in~~

~~pre-submission~~

~~in the U.S., as well as a biosimilar~~and to Humira

^®

(adalimumab) ~~that is~~, each of which are currently under U.S. regulatory review.

Selling and Marketing (S&M) Expenses

S&M expenses in the ~~third~~first quarter of ~~2022~~2023 were ~~$539~~$546 million, a decrease of ~~10%~~6% compared to the ~~third~~first quarter of ~~2021.~~2022. This decrease was mainly a result of the factors discussed above under “—North America segment—S&M Expenses” and “—Europe Segment—S&M Expenses.”

S&M expenses as a percentage of revenues were ~~15.0%~~14.9% in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~15.4%~~15.9% in the ~~third~~first quarter of ~~2021.~~

2022.

General and Administrative (G&A) Expenses

G&A expenses in the ~~third~~first quarter of ~~2022~~2023 were ~~$283~~$296 million, ~~a decrease of 3%~~flat compared to the ~~third~~first quarter of ~~2021.~~

2022.

G&A expenses as a percentage of revenues were ~~7.9%~~8.1% in the ~~third~~first quarter of ~~2022, compared to 7.5%~~2023 and in the ~~third~~first quarter of ~~2021.~~

2022.

Intangible Asset Impairments

We recorded expenses of ~~$24~~$178 million for identifiable intangible asset impairments in the ~~third~~first quarter of ~~2022,~~2023, compared to expenses of ~~$21~~$149 million in the ~~third~~first quarter of ~~2021.~~2022. See note 5 to our consolidated financial statements.

Goodwill Impairment

No goodwill impairments were recorded in the ~~third~~first quarters of ~~2022~~2023 and ~~2021.~~

~~Table of Contents~~

2022.

Other Asset Impairments, Restructuring and Other Items

We recorded expenses of ~~$36~~$96 million for other asset impairments, restructuring and other items in the ~~third~~first quarter of ~~2022,~~2023, compared to expenses of ~~$62~~$128 million in the ~~third~~first quarter of ~~2021. For further details, as well as a description of significant regulatory and other events, see~~2022. See note 12 to our consolidated financial statements.

Legal Settlements and Loss Contingencies

In the ~~third~~first quarter of ~~2022,~~2023, we recorded expenses of ~~$195~~$233 million in legal settlements and loss contingencies, compared to an expense of $3$1,124 million in the ~~third~~first quarter of ~~2021.~~2022. See note 9 to our consolidated financial statements.

Other Income

Other income in the ~~third~~first quarter of ~~2022~~2023 was $2 million, compared to ~~$25~~$52 million in the ~~third~~first quarter of ~~2021.~~

2022. Other income in the first quarter of 2022 was mainly the result of settlement proceeds in our International Markets segment.

Operating Income (Loss)

Operating income was ~~$419~~$2 million in the ~~third~~first quarter of ~~2022,~~2023, compared to an operating ~~income~~loss of ~~$623~~$713 million in the ~~third~~first quarter of ~~2021.~~2022. The ~~decrease~~increase in operating income in the ~~third~~first quarter of ~~2022 compared to the third quarter of 2021~~2023 was mainly due to higher legal settlements and loss contingencies ~~as well as lower gross profit, partially offset by lower S&M and R&D expenses, as discussed above.~~

in the first quarter of 2022.

Operating income as a percentage of revenues was ~~11.6%~~0.1% in the ~~third~~first quarter of ~~2022,~~2023, compared to operating ~~income~~loss as a percentage of revenues of ~~16.0%~~19.5% in the ~~third~~first quarter of ~~2021.~~

2022.

Financial Expenses, Net

Financial expenses were ~~$252~~$260 million in the ~~third~~first quarter of ~~2022,~~2023, compared to ~~$241~~$258 million in the ~~third~~first quarter of ~~2021.~~2022. Financial expenses in the ~~third~~first quarter of 2023 were mainly comprised of interest expenses of $260 million. Financial expenses in the first quarter of 2022 were mainly comprised of interest expenses of ~~$230~~$238 million. ~~Financial expenses in the third quarter of 2021 were mainly comprised of interest expenses of $232 million.~~

The following table presents a reconciliation of our segment profits to our consolidated operating income (loss) and to consolidated income (loss) before income taxes for the three months ended ~~September 30, 2022~~March 31, 2023 and ~~2021:~~

Three months ended


September 30,


2022

2021



(U.S. $ in millions)

North America profit
   $ 477    $ 458




Europe profit
   360    394
International Markets profit
   112    152




Total reportable segments profit
   949    1,004
Profit of other activities
   29    38




Total segments profit
   977    1,042
Amounts not allocated to segments:

Amortization
   165    199
Other assets impairments, restructuring and other items
   36    62
Goodwill impairment
   —      —
Intangible assets impairments
   24    21
Legal settlements and loss contingencies
   195    3
Other unallocated amounts
   139    134




Consolidated operating income (loss)
   419    623




Financial expenses, net
   252    241




Consolidated income (loss) before income taxes
   $ 166    $ 382

~~Table of Contents~~

2022:


	Three months ended
	March 31,
	2023			2022

	(U.S. $ in millions)
North America profit	$	332		$	402
Europe profit		345			381
International Markets profit		114			179

Total reportable segments profit		791			962
Profit (loss) of other activities		(6	)		52

Total segments profit		785			1,013
Amounts not allocated to segments:
Amortization		165			200
Other assets impairments, restructuring and other items		96			128
Intangible assets impairments		178			149
Legal settlements and loss contingencies		233			1,124
Other unallocated amounts		112			127

Consolidated operating income (loss)		2			(713	)

Financial expenses, net		260			258

Consolidated income (loss) before income taxes	$	(258	)	$	(971	)

Income ~~taxes~~

Taxes

In the ~~third~~first quarter of 2023, we recognized a tax benefit of $19 million, on a pre-tax loss of $258 million. In the first quarter of 2022, we recognized a tax expense of ~~$107~~$2 million, on

a pre-tax

~~income~~ loss of ~~$166 million. In the third quarter of 2021, we recognized a tax expense of $76 million, on~~

~~pre-tax~~

~~income of $382~~$971 million. See note 11 to our consolidated financial statements.

Share in (Profits) Losses of Associated Companies, Net

Share in ~~losses~~profits of associated companies, net in the ~~third~~first quarter of 2023 was immaterial, compared to share in profits of associated companies, net of $21 million in the first quarter of 2022. Share in profits of associated companies, net in the first quarter of 2022 was ~~$1 million, compared~~mainly related to ~~share~~the difference between the book value of our investment in ~~losses~~Novetide and its fair value as of ~~$5 million~~the date we completed its acquisition in ~~the third quarter of 2021.~~January 2022.

Net Income (Loss) Attributable to Teva

Net ~~income~~loss was ~~$56~~$205 million in the ~~third~~first quarter of ~~2022,~~2023, compared to net ~~income~~loss of ~~$292~~$955 million in the ~~third~~first quarter of ~~2021. The decrease in net income~~2022. Net loss in the ~~third~~first quarter of 2022 was mainly ~~due to lower operating income~~impacted by legal settlements and ~~higher income taxes, all~~loss contingencies, as discussed above.

Diluted Shares Outstanding and Earnings (Loss) per Share

The weighted average diluted shares outstanding used for the fully diluted share calculations for the three months ended ~~September 30,~~March 31, 2023 and 2022 ~~and 2021~~ were ~~1,119~~1,115 million and ~~1,109~~1,107 million shares, respectively.

Diluted ~~earnings~~loss per share ~~were $0.05~~was $0.18 in the ~~third~~first quarter of ~~2022,~~2023, compared to diluted ~~earnings~~loss per share of ~~$0.26~~$0.86 in the ~~third~~first quarter of ~~2021.~~2022. See note 13 to our consolidated financial statements.

Share Count for Market Capitalization

We calculate share amounts using the outstanding number of shares (i.e., excluding treasury shares) plus shares that would be outstanding upon the exercise of options and vesting of RSUs and PSUs, and the conversion of our convertible senior debentures, in each case, at period end.

As of ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ the fully diluted share count for purposes of calculating our market capitalization was approximately ~~1,144~~1,158 million and ~~1,128~~1,145 million, respectively.

Impact of Currency Fluctuations on Results of Operations

In the ~~third~~first quarter of ~~2022,~~2023, approximately ~~47%~~50% of our revenues were denominated in currencies other than the U.S. dollar. Because our results are reported in U.S. dollars, we are subject to significant foreign currency risks. Accordingly, changes in the rate of exchange between the U.S. dollar and the local currencies in the markets in which we operate (primarily the euro, British pound, Canadian dollar, Russian ruble, Japanese yen, Swiss franc and the new Israeli shekel) impact our results.

During the ~~third~~first quarter of ~~2022,~~2023, the following main currencies relevant to our operations decreased in value against the U.S. dollar (each on a quarterly average compared to quarterly average basis): Argentinian peso by 44%, Turkish lira by ~~52%~~26%, ~~Argentinian peso~~Ukrainian hryvna by ~~28%~~22%, Japanese yen by 12%, Swedish krona by 11%, Hungarian forint by ~~25%~~10%, ~~Ukrainian hryvna~~Israeli shekel by ~~23%, Japanese yen by 20%, Swedish krona by 18%, Polish zloty by 18%, Chilean peso by 17%~~10%, British pound by ~~15%~~10% and the euro by ~~15%~~4%. The ~~Russian ruble~~following main currencies increased in value against the U.S. ~~dollar~~dollar: Russian ruble by ~~23%~~18%, Mexican peso by 10% and Brazilian real by 1%.

As a result, exchange rate movements during the ~~third~~first quarter of ~~2022, net of~~2023, including hedging effects, negatively impacted overall revenues by ~~$215~~$128 million and operating income by ~~$53~~$32 million, compared to the ~~third~~first quarter of ~~2021.~~

2022.

In the ~~third~~first quarter of 2023, a negative hedging impact of $6 million was recognized under revenues, and a minimal positive impact was recognized under cost of sales. In the first quarter of 2022, a positive hedging impact of ~~$34 million was recognized under revenues, and a negative impact of $1 million was recognized under cost of sales. In the third quarter of 2021, a positive hedging impact of $16~~$19 million was recognized under revenues and a minimal negative impact was recognized under cost of sales.

~~Table of Contents~~

Hedging transactions against future projected revenues and expenses are recognized on the balance sheet at their fair value on a quarterly basis, while the foreign exchange impact on the underlying revenues and expenses may occur in subsequent quarters. See note 8d to our consolidated financial statements.

Commencing in the third quarter of 2018, the cumulative inflation in Argentina exceeded 100% or more over a three-year period. Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations.

Commencing in the second quarter of 2022, the cumulative inflation in Turkey exceeded 100% or more over a three-year period. Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations.

~~Comparison of Nine Months Ended September 30, 2022 to Nine Months Ended September 30, 2021~~

Unless specified otherwise, the factors used to explain quarterly changes on a year-over-year basis are also relevant for the comparison of the results for the nine months ended September 30, 2022 and 2021. Where there are different factors affecting the nine months comparison, we have described them below.

~~Segment Information~~

~~North America Segment~~

~~The following table presents revenues, expenses and profit for our North America segment for the nine months ended September 30, 2022 and 2021:~~

Nine months ended September 30,


2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 5,450    100 % $ 5,807    100 %
Gross profit
   2,841    52.1 % 3,081    53.1 %
R&D expenses
   401    7.4 % 467    8.1 %
S&M expenses
   733    13.4 % 734    12.6 %
G&A expenses
   361    6.6 % 338    5.8 %
Other income
   (12 )    § (14 )    §






Segment profit*
   $ 1,359    24.9 % $ 1,556    26.8 %

*	~~Segment profit does not include amortization and certain other items.~~

§	~~Represents an amount less than 0.5%.~~

~~North America Revenues~~

Our North America segment includes the United States and Canada. Revenues from our North America segment in the first nine months of 2022 were $5,450 million, a decrease of 6% compared to $5,807 million in the first nine months of 2021.

~~Revenues by Major Products and Activities~~

~~The following table presents revenues for our North America segment by major products and activities for the nine months ended September 30, 2022 and 2021:~~

Nine months ended September 30,

Percentage

Change

2022-2021


2022

2021



(U.S. $ in millions)

Generic products
   $ 2,731    $ 2,864    (5 %)
AJOVY
   142    123    16 %
AUSTEDO
   618    520    19 %
BENDEKA/TREANDA
   241    292    (17 %)
COPAXONE
   285    448    (36 %)
Anda
   1,021    968    5 %
Other
   411    592    (31 %)





Total
   $ 5,450    $ 5,807    (6 %)

~~Table of Contents~~

~~North America Gross Profit~~

~~Gross profit from our North America segment in the first nine months of 2022 was $2,841 million, a decrease of 8%, compared to $3,081 million in the first nine months of 2021.~~

Gross profit margin for our North America segment in the first nine months of 2022 decreased to 52.1% compared to 53.1% in the first nine months of 2021. This decrease was mainly due to a change in mix of products.

~~North America R&D Expenses~~

~~R&D expenses relating to our North America segment in the first nine months of 2022 were $401 million, a decrease of 14%, compared to $467 million in the first nine months of 2021.~~

~~North America S&M Expenses~~

~~S&M expenses relating to our North America segment in the first nine months of 2022 were $733 million, flat compared to the first nine months of 2021.~~

~~North America G&A Expenses~~

~~G&A expenses relating to our North America segment in the first nine months of 2022 were $361 million, an increase of 7%, compared to $338 million in the first nine months of 2021.~~

~~North America Profit~~

Profit from our North America segment in the first nine months of 2022 was $1,359 million, a decrease of 13%, compared to $1,556 million in the first nine months of 2021. This decrease was mainly due to lower revenues and an unfavorable change in the mix of products, as mentioned above.

~~Europe Segment~~

~~The following table presents revenues, expenses and profit for our Europe segment for the nine months ended September 30, 2022 and 2021:~~

Nine months ended September 30,


2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 3,396    100 % $ 3,618    100 %
Gross profit
   2,031    59.8 % 2,063    57.0 %
R&D expenses
   157    4.6 % 184    5.1 %
S&M expenses
   561    16.5 % 628    17.3 %
G&A expenses
   183    5.4 % 180    5.0 %
Other (income) expense
   (1 )    § (3 )    §






Segment profit*
   $ 1,130    33.3 % $ 1,074    29.7 %

*	~~Segment profit does not include amortization and certain other items.~~

§	~~Represents an amount less than 0.5%.~~

~~Table of Contents~~

~~Europe Revenues~~

Our Europe segment includes the European Union, the United Kingdom, and certain other European countries. Revenues from our Europe segment in the first nine months of 2022 were $3,396 million, a decrease of 6% or $222 million, compared to the first nine months of 2021. In local currency terms, revenues increased by 6%, compared to the first nine months of 2021.

In the first nine months of 2022, revenues were negatively impacted by exchange rate fluctuations of $357 million, net of hedging effects, compared to the first nine months of 2021. Revenues in the first nine months of 2022 included $63 million from a positive hedging impact, which are included in “Other” in the table below. See note 8d to our consolidated financial statements.

~~Revenues by Major Products and Activities~~

~~The following table presents revenues for our Europe segment by major products and activities for the nine months ended September 30, 2022 and 2021:~~

Nine months ended September 30,

Percentage

Change

2022-2021


2022

2021



(U.S. $ in millions)

Generic products
   $ 2,552    $ 2,637    (3 %)
AJOVY
   90    58    55 %
COPAXONE
   207    296    (30 %)
Respiratory products
   198    263    (25 %)
Other
   349    364    (4 %)





Total
   $ 3,396    $ 3,618    (6 %)

~~Europe Gross Profit~~

~~Gross profit from our Europe segment in the first nine months of 2022 was $2,031 million, a decrease of 2% compared to $2,063 million in the first nine months of 2021.~~

~~Gross profit margin for our Europe segment in the first nine months of 2022 increased to 59.8% compared to 57.0% in the first nine months of 2021.~~

~~Europe R&D Expenses~~

~~R&D expenses relating to our Europe segment in the first nine months of 2022 were $157 million, a decrease of 14% compared to $184 million in the first nine months of 2021.~~

~~Europe S&M Expenses~~

~~S&M expenses relating to our Europe segment in the first nine months of 2022 were $561 million, a decrease of 11% compared to $628 million in the first nine months of 2021.~~

~~Europe G&A Expenses~~

~~G&A expenses relating to our Europe segment in the first nine months of 2022 were $183 million, an increase of 2% compared to $180 million in the first nine months of 2021.~~

~~Europe Profit~~

Profit from our Europe segment in the first nine months of 2022 was $1,130 million, an increase of 5% compared to first nine months of 2021. This increase was primarily due to lower R&D and S&M expenses. Profit from our Europe segment in the first nine months of 2022 was impacted by exchange rate fluctuations.

~~Table of Contents~~

~~International Markets Segment~~

~~The following table presents revenues, expenses and profit for our International Markets segment for the nine months ended September 30, 2022 and 2021:~~

2022

2021



(U.S. $ in millions / % of Segment Revenues)

Revenues
   $ 1,422    100 % $ 1,505    100 %
Gross profit
   780    54.9 % 826    54.9 %
R&D expenses
   54    3.8 % 51    3.4 %
S&M expenses
   293    20.6 % 303    20.1 %
G&A expenses
   89    6.3 % 79    5.3 %
Other (income) expense
   (43 )    (3.0 %) (5 )    §






Segment profit*
   $ 386    27.2 % $ 398    26.4 %

*	~~Segment profit does not include amortization and certain other items.~~

§	~~Represents an amount less than 0.5%.~~

~~International Markets Revenues~~

Our International Markets segment includes all countries other than those in our North America and Europe segments. Revenues from our International Markets segment in the first nine months of 2022 were $1,422 million, a decrease of $83 million, or 6%, compared to the first nine months of 2021. In local currency terms, revenues increased by 2%. This increase was mainly due to higher revenues in certain markets, as well as price increases largely as a result of rising costs due to inflationary pressure, partially offset by a milestone payment of $35 million related to AJOVY in the third quarter of 2021 as mentioned above, regulatory price reductions and generic competition to

~~off-patented~~

~~products in Japan, and the sale of the majority of the generic and operational assets of our business venture in Japan in the first quarter of 2021.~~

In the first nine months of 2022, revenues were negatively impacted by exchange rate fluctuations of $120 million net of hedging effects, compared to the first nine months of 2021. Revenues in the first nine months of 2022 included a minimal negative hedging impact, which is included in “Other” in the table below. See note 8d to our consolidated financial statements.

~~Revenues by Major Products and Activities~~

~~The following table presents revenues for our International Markets segment by major products and activities for the nine months ended September 30, 2022 and 2021:~~

Nine months ended September 30,

Percentage

Change

2022-2021


2022

2021



(U.S. $ in millions)

Generic products
   $ 1,175    $ 1,211    (3 %)
AJOVY
   22    46    (51 %)
COPAXONE
   29    29    1 %
Other
   195    219    (11 %)





Total
   $ 1,422    $ 1,505    (6 %)

~~International Markets Gross Profit~~

~~Gross profit from our International Markets segment in the first nine months of 2022 was $780 million, compared to $826 million in the first nine months of 2021.~~

~~Gross profit margin for our International Markets segment in the first nine months of 2022 was 54.9%, flat compared to the first nine months of 2021.~~

~~International Markets R&D Expenses~~

~~R&D expenses relating to our International Markets segment in the first nine months of 2022 were $54 million, an increase of 7% compared to $51 million in the first nine months of 2021.~~

~~Table of Contents~~

~~International Markets S&M Expenses~~

~~S&M expenses relating to our International Markets segment in the first nine months of 2022 were $293 million, a decrease of 3% compared to $303 million in the first nine months of 2021.~~

~~International Markets G&A Expenses~~

~~G&A expenses relating to our International Markets segment in the first nine months of 2022 were $89 million, an increase of 12% compared to $79 million in the first nine months of 2021.~~

~~International Markets Other Income~~

Other income in the first nine months of 2022 was $43 million, compared to $5 million in the first nine months of 2021. Other income in the first nine months of 2022 was mainly the result of settlement proceeds.

~~International Markets Profit~~

~~Profit from our International Markets segment in the first nine months of 2022 was $386 million, a decrease of 3%, compared to $398 million in the first nine months of 2021.~~

~~Other Activities~~

~~Our revenues from other activities in the first nine months of 2022 decreased by 9% to $773 million, compared to the first nine months of 2021. In local currency terms, revenues decreased by 5%.~~

~~API sales to third parties in the first nine months of 2022 were $507 million, a decrease of 6% in both U.S. dollars and local currency terms, compared to the first nine months of 2021.~~

~~Teva Consolidated Results~~

~~Revenues~~

~~Revenues in the first nine months of 2022 were $11,041 million, a decrease of 6%, or 2% in local currency terms, compared to the first nine months of 2021.~~

Exchange rate movements during the first nine months of 2022, net of hedging effects, negatively impacted revenues by $510 million, compared to the first nine months of 2021. See note 8d to our consolidated financial statements.

~~Gross Profit~~

~~Gross profit in the first nine months of 2022 was $5,203 million, a decrease of 6% compared to the first nine months of 2021.~~

~~Gross profit margin was 47.1% in the first nine months of 2022, flat compared to the first nine months of 2021.~~

~~Research and Development (R&D) Expenses~~

~~R&D expenses in the first nine months of 2022 were $628 million, a decrease of 13% compared to the first nine months of 2021.~~

~~R&D expenses as a percentage of revenues were 5.7% in the first nine months of 2022, compared to 6.1% in the first nine months of 2021.~~

~~Selling and Marketing (S&M) Expenses~~

~~S&M expenses in the first nine months of 2022 were $1,716 million, a decrease of 5% compared to the first nine months of 2021.~~

~~S&M expenses as a percentage of revenues were 15.5% in the first nine months of 2022, compared to 15.3% in the first nine months of 2021.~~

~~Table of Contents~~

~~General and Administrative (G&A) Expenses~~

G&A expenses in the first nine months of 2022 were $892 million, an increase of 8% compared to the first nine months of 2021. The increase in G&A expenses in the first nine months of 2022 was related to proceeds received from Teva’s insurance carriers pursuant to a settlement reached on a derivative proceeding related to the acquisition of Actavis Generics in the second quarter of 2021, as well as higher litigation fees in the second quarter of 2022.

~~G&A expenses as a percentage of revenues were 8.1% in the first nine months of 2022, compared to 7.0% in the first nine months of 2021.~~

~~Intangible Asset Impairments~~

We recorded expenses of $223 million for identifiable intangible asset impairments, in the first nine months of 2022, compared to expenses of $295 million in the first nine months of 2021. See note 5 to our consolidated financial statements.

~~Goodwill Impairment~~

We recorded a goodwill impairment charge of $745 million in the first nine months of 2022, of which $479 million is related to our International Markets reporting unit and $266 million is related to Teva’s API reporting unit. See note 6 to our consolidated financial statements.

~~Other Asset Impairments, Restructuring and Other Items~~

We recorded expenses of $282 million for other asset impairments, restructuring and other items in the first nine months of 2022, compared to expenses of $227 million in the first nine months of 2021. See note 12 to our consolidated financial statements.

~~Legal Settlements and Loss Contingencies~~

In the first nine months of 2022, we recorded expenses of $2,048 million in legal settlements and loss contingencies, compared to expenses of $113 million in the first nine months of 2021. See note 9 to our consolidated financial statements.

~~Other Income~~

Other income in the first nine months of 2022 was $88 million, compared to $73 million in the first nine months of 2021. Other income in the first nine months of 2022 was mainly the result of settlement proceeds in our International Markets segment as well as a capital gain related to the sale of an R&D site. Other income in the first nine months of 2021 was mainly due to capital gains related to the sale of certain OTC assets.

~~Operating Income (Loss)~~

~~Operating loss was $1,244 million in the first nine months of 2022, compared to operating income of $1,638 million in the first nine months of 2021.~~

~~Operating loss as a percentage of revenues was 11.3% in the first nine months of 2022, compared to operating income as a percentage of revenues of 13.9% in the first nine months of 2021.~~

~~Financial Expenses, Net~~

Financial expenses were $721 million in the first nine months of 2022, compared to $805 million in the first nine months of 2021. Financial expenses in the first nine months of 2022 were mainly comprised of interest expenses of $693 million. Financial expenses in the first nine months of 2021 were mainly comprised of interest expenses of $711 million and loss on revaluations of marketable securities of $104 million.

~~Table of Contents~~

The following table presents a reconciliation of our segment profits to our consolidated operating income (loss) and to consolidated income (loss) before income taxes for the nine months ended September 30, 2022 and 2021:

Nine months ended
September 30,


2022

2021



(U.S. $ in millions)

North America profit
   $ 1,359    $ 1,556
Europe profit
   1,130    1,074
International Markets profit
   386    398




Total reportable segments profit
   2,875    3,028
Profit of other activities
   135    125




Total segments profit
   3,010    3,153
Amounts not allocated to segments:

Amortization
   576    613
Other assets impairments, restructuring and other items
   282    227
Goodwill impairment
   745    —
Intangible asset impairments
   223    295
Legal settlements and loss contingencies
   2,048    113
Other unallocated amounts
   379    266




Consolidated operating income (loss)
   (1,244 )    1,638




Financial expenses, net
   721    805




Consolidated income (loss) before income taxes
   $ (1,964 )    $ 833

~~Income taxes~~

~~In the first nine months of 2022, we recognized a tax benefit of $792 million, on~~

~~pre-tax~~

~~loss of $1,964 million. In the first nine months of 2021, we recognized a tax expense of $235 million, on~~

~~pre-tax~~

~~income of $833 million. See note 11 to our consolidated financial statements.~~

~~Share in (Profits) Losses of Associated Companies, Net~~

Share in profits of associated companies, net in the first nine months of 2022 was $20 million, compared to share in profits of $9 million in the first nine months of 2021. Share in profits of associated companies, net in the first nine months of 2022 was mainly related to the difference between the book value of our investment in Novetide and its fair value as of the date we completed its acquisition in January 2022.

~~Net Income (Loss) Attributable to Teva~~

~~Net loss was $1,132 million in the first nine months of 2022, compared to net income of $576 million in the first nine months of 2021.~~

~~Diluted Shares Outstanding and Earnings (Loss) per Share~~

~~The weighted average diluted shares outstanding used for the fully diluted share calculation for the nine months ended September 30, 2022 and 2021 were 1,109 million shares.~~

Diluted loss per share was $1.02 in the first nine months of 2022, compared to diluted earnings per share of $0.52 in the first nine months of 2021. See note 13 to our consolidated financial statements.

~~Impact of Currency Fluctuations on Results of Operations~~

In the first nine months of 2022, approximately 47% of our revenues were denominated in currencies other than the U.S. dollar. Because our results are reported in U.S. dollars, we are subject to significant foreign currency risks and, accordingly, changes in the exchange rate between the U.S. dollar and local currencies in markets in which we operate (primarily the euro, British pound, Canadian dollar, Russian ruble, Japanese yen, Swiss franc and new Israeli shekel) impact our results.

During the first nine months of 2022, the following main currencies relevant to our operations decreased in value against the U.S. dollar: Turkish lira by 48%, Argentinian peso by 22%, Hungarian forint by 17%, Japanese yen by 15%, Swedish krona by 14%, Chilean peso by 14%, Polish zloty by 13%, Ukrainian hryvna by 11%, euro by 11% and British pound by 9% (all compared on a nine-month average basis). The following main currencies relevant to our operations increased in value against the U.S. dollar: Russian ruble by 7% and Brazilian real by 4%.

~~Table of Contents~~

As a result, exchange rate movements during the first nine months of 2022 negatively impacted overall revenues by $510 million and our operating income by $115 million, in comparison to the first nine months of 2021.

In the first nine months of 2022, a positive hedging impact of $69 million was recognized under revenues, and a negative hedging impact of $5 million was recognized under cost of sales. In the first nine months of 2021, a positive hedging impact of $29 million was recognized under revenues and a negative hedging impact of $1 million was recognized under cost of sales.

Liquidity and Capital Resources

Total balance sheet assets were ~~$44,252~~$43,456 million as of ~~September 30, 2022,~~March 31, 2023, compared to ~~$47,666~~$44,006 million as of December 31, ~~2021.~~

2022.

Our working capital balance, which includes accounts receivables net of SR&A, inventories, prepaid expenses and other current assets, accounts payables, employee-related obligations, accrued expenses and other current liabilities, was ~~$448~~negative $41 million as of ~~September 30, 2022,~~March 31, 2023, compared to ~~$787~~negative $119 million as of December 31, ~~2021.~~2022. This ~~decrease~~increase was mainly due to ~~a decrease~~an increase in accounts receivables, net of SR&A, as well as in inventory levels and ~~an increase in accrued~~prepaid expenses, ~~mainly due to an update to the estimated settlement provision recorded in connection with the remaining opioid cases, partially offset by~~and a decrease in employee-related obligations, ~~due to performance incentive payments to employees.~~partially offset by an increase in accounts payables and provisions for legal settlements and loss contingencies.

Employee-related obligations, as of ~~September 30, 2022~~March 31, 2023 were ~~$496~~$432 million, compared to ~~$563~~$566 million as of December 31, ~~2021.~~2022. The decrease in the first ~~nine months~~quarter of ~~2022~~2023 was mainly due to performance incentive payments to employees for ~~2021,~~2022, partially offset by an accrual for performance incentive payments to employees for ~~2022.~~

2023.

Cash investment in property, plant and equipment in the ~~third~~first quarter of ~~2022~~2023 was ~~$122~~$139 million, compared to ~~$146~~$157 million in the ~~third~~first quarter of ~~2021.~~2022. Depreciation in the ~~third~~first quarter of ~~2022~~2023 was ~~$156~~$139 million, compared to ~~$132~~$123 million in the ~~third~~first quarter of ~~2021.~~

2022.

Cash and cash equivalents and short-term and long-term investments as of ~~September 30, 2022~~March 31, 2023 were ~~$2,241~~$2,161 million, compared to ~~$2,191~~$2,817 million as of December 31, ~~2021.~~

2022.

Our cash on hand that is not used for ongoing operations is generally invested in bank deposits as well as liquid securities that bear fixed and floating rates.

Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily ~~its~~our $1.8 billion unsecured syndicated sustainability-linked revolving credit facility, entered into in April 2022, which was amended in February 2023 (“RCF”). See note 7 to our consolidated financial statements.

Debt Balance and Movements

maturity, partially offset by $176 million of exchange rate fluctuations. Additionally, during the first quarter of 2023, we repurchased $2,506 million aggregate principal amount of notes upon consummation of a cash tender offer, and issued $2,445 million of sustainability-linked senior notes, net of issuance costs. For further information, see note 7 to our consolidated financial statements.

Our debt as of ~~September 30, 2022~~March 31, 2023 was effectively denominated in the following currencies: ~~65%~~62% in U.S. dollars, ~~33%~~36% in euros and 2% in Swiss francs.

The portion of total debt classified as short-term as of ~~September 30, 2022~~March 31, 2023 was ~~13%~~5%, compared to 6%10% as of December 31, ~~2021.~~

2022.

Our financial leverage, which is the ratio between our debt and the sum of our debt and equity, was ~~69%~~71% as of ~~September 30, 2022, compared to 67%~~March 31, 2023 and as of December 31, ~~2021.~~

2022.

Our average debt maturity was approximately ~~5.9~~6.4 years as of ~~September 30, 2022,~~March 31, 2023, compared to ~~6.4~~5.8 years as of December 31, ~~2021.~~

2022.

Total Equity

Total equity was ~~$9,519~~$8,612 million as of ~~September 30, 2022,~~March 31, 2023, compared to ~~$11,244~~$8,691 million as of December 31, ~~2021.~~2022. This decrease was mainly due to a net loss of ~~$1,152~~$238 million, ~~and~~partially offset by a ~~negative~~positive impact of ~~$684~~$120 million from exchange rate fluctuations.

~~Table of Contents~~

Exchange rate fluctuations affected our balance sheet, as approximately ~~68%~~82% of our net assets as of ~~September 30, 2022~~March 31, 2023 (including both

non-monetary

and monetary assets) were in currencies other than the U.S. dollar. When compared to December 31, ~~2021,~~2022, changes in currency rates had a ~~negative~~positive impact of ~~$684~~$120 million on our equity as of ~~September 30, 2022.~~March 31, 2023. The following main currencies ~~decreased~~increased in value against the U.S. dollar: ~~Turkish lira~~Mexican peso by ~~41%~~7%, ~~Japanese yen~~Chilean peso by ~~26%~~7%, Polish zloty by ~~22%~~2%, British pound by ~~21%, Croatian kuna by 15%~~2%, Bulgarian lev by ~~15%,~~2% and euro by ~~15%, Chilean peso by 13% and Indian rupee by 10%~~2%. The Russian ruble ~~increased~~decreased in value against the U.S. dollar by ~~23%~~5%. All comparisons are on a ~~year to date~~year-to-date basis.

Cash Flow

We seek to continually improve the efficiency of our working capital management. From time to time, as part of our cash and commercial relationship management activities, we may make decisions in our commercial and supply chain activities which may drive an acceleration of receivable payments from customers or deceleration of payments to vendors, having the effect of increasing or decreasing cash from operations induring an individual period. Such decisions may have an impact on our annual operating cash flow measurement, as well as on our quarterly results.

Cash flow ~~generated from~~used in operating activities during the ~~third~~first quarter of ~~2022~~2023 was ~~$543~~$145 million, compared to ~~$529~~$49 million in the ~~third~~first quarter of ~~2021.~~2022. The ~~increase~~higher cash flow used in the ~~third~~first quarter of ~~2022~~2023 resulted mainly from ~~changes in the deferred purchase price under our securitization agreement, partially offset by~~lower profit and changes in working capital items, ~~primarily a lower reduction~~including an increase in ~~our inventory levels compared to~~accounts receivables, net of SR&A, partially offset by an increase in accounts payables.

During the ~~third~~first quarter of ~~2021.~~

~~During the third quarter of 2022,~~2023, we generated free cash flow of ~~$685~~$41 million, which we define as comprising ~~$543~~$145 million in cash flow ~~generated from~~used in operating activities, ~~$262~~$323 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and $2 million in proceeds from divestitures of businesses and other assets, partially offset by ~~$122~~$139 million in cash used for capital investment. During the ~~third~~first quarter of ~~2021,~~2022, we generated free cash flow of ~~$795~~$117 million, which we define as comprising ~~$529~~$49 million in cash flow ~~generated from~~used in operating activities, ~~$397~~$305 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and ~~$15~~$25 million in proceeds from divestitures of businesses and other assets, partially offset by ~~$146~~$157 million in cash used for capital ~~investment.~~investment and $7 million in cash used for acquisition of businesses, net of cash acquired. The decrease in the ~~third~~first quarter of ~~2022,~~2023, resulted mainly from ~~changes~~higher cash flow used in ~~working capital items, primarily a lower reduction in our inventory levels compared to the third quarter of 2021.~~

operating activities, as discussed above.

Dividends

We have not paid dividends on our ordinary shares or ADSs since December 2017.

Commitments

In addition to financing obligations under short-term debt and long-term senior notes and loans, debentures and convertible debentures, our major contractual obligations and commercial commitments include leases, royalty payments, contingent payments pursuant to acquisition agreements and participation in joint ventures associated with R&D activities.

~~In October 2021, Teva announced a license agreement~~ For further information on our agreements with ~~MODAG GmbH (“Modag”) that will provide Teva an exclusive global license~~Modag, Alvotech, Otsuka, Takeda and MedinCell, see note 2 to ~~develop, manufacture and commercialize Modag’s lead compound~~

~~(TEV-56286)~~

~~and a related compound~~

~~(TEV-56287).~~

~~TEV-56286~~

was initially developed for the treatment of Multiple System Atrophy (“MSA”) and Parkinson’s disease, and has the potential to be applied to other treatments for neurodegenerative disorders, such as Alzheimer’s disease. A phase 1b clinical trial is currently being completed for

~~TEV-56286.~~

In the fourth quarter of 2021, Teva made an upfront payment of $10 million to Modag that was recorded as an R&D expense. Modag may be eligible for future development milestone payments, totaling an aggregate amount of up to $70 million, as well as future commercial milestones and royalties.

In August 2020, Teva entered into an agreement with biopharmaceutical company Alvotech for the exclusive commercialization in the U.S. of five biosimilar product candidates. The initial pipeline for this collaboration contains biosimilar candidates addressing multiple therapeutic areas, including a proposed biosimilar to Humira

. Under the terms of the agreement, Alvotech is responsible for the development, registration and supply of the biosimilar product candidates and Teva will exclusively commercialize the products in the United States. Teva paid an upfront payment in the third quarter of 2020 and additional upfront and milestone payments in the second quarter of 2021, which were recorded as R&D expenses. Additional development and commercial milestone payments of up to $400 million, as well as royalty payments, may be payable by Teva over the next few years. Teva and Alvotech will share profit from the commercialization of these biosimilars. Alvotech was previously involved in litigation involving certain IP and trade secrets claims filed by Abbvie in relation to Alvotech’s proposed biosimilar to Humira

~~, all of which were settled on~~

~~Table of Contents~~

~~March 8, 2022. Pursuant to that settlement, Alvotech and Teva may sell Alvotech’s proposed biosimilar to Humira~~

in the United States beginning on July 1, 2023, provided that U.S. regulatory approval is obtained by that date. In September 2022, Alvotech announced they received a Complete Response Letter (“CRL”) from the FDA with respect to Alvotech’s proposed biosimilar to Humira

In September 2016, Teva and Regeneron Pharmaceuticals, Inc. (“Regeneron”) entered into a collaborative agreement to develop and commercialize Regeneron’s pain medication product, fasinumab. Teva and Regeneron share in the global commercial rights to this product (excluding Japan, Korea and nine other Asian countries), as well as ongoing associated R&D costs of approximately $1 billion. Teva made an upfront payment of $250 million to Regeneron in the third quarter of 2016 and additional payments for achievement of development milestones in an aggregate amount of $120 million were paid during 2017 and 2018. The agreement stipulates additional development and commercial milestone payments of up to $2,230 million, as well as future royalties. In October 2022, development of fasinumab for the treatment of osteoarthritic pain was discontinued.

In November 2013, Teva entered into an agreement with MedinCell for the development and commercialization of multiple long-acting injectable (“LAI”) products. The lead product candidate selected was risperidone LAI

~~(TV-46000)~~

suspension for subcutaneous use for the treatment of schizophrenia. In August 2021, the FDA accepted the new drug application (“NDA”) for risperidone LAI, based on phase 3 data from two pivotal studies. Teva leads the clinical development and regulatory process and is responsible for commercialization of this product candidate. MedinCell may be eligible for development milestones, and future commercial milestones of up to $112 million in respect of risperidone LAI. Teva will also pay MedinCell royalties on net sales. In April 2022, the FDA issued a CRL regarding the NDA for risperidone LAI. Teva resubmitted the NDA in October 2022 and awaits the FDA’s response.

~~The second selected product candidate is~~

~~TEV-44749,~~

a LAI for the treatment of schizophrenia. In the third quarter of 2022, Teva decided to progress development of the product to phase 3, as a result of which a $3 million milestone payment was paid to MedinCell. MedinCell may become eligible for further milestones and royalties on sales of

~~TEV-44749.~~

our consolidated financial statements.

We are committed to paying royalties to owners of

know-how,

partners in alliances and certain other arrangements, and to parties that financed R&D at a wide range of rates as a percentage of sales of certain products, as defined in the agreements. In some cases, the royalty period is not defined; in other cases, royalties will be paid over various periods not exceeding 20 years.

In connection with certain development, supply and marketing, and research and collaboration or services agreements, we are required to indemnify, in unspecified amounts, the parties to such agreements against third-party claims relating to (i) infringement or violation of intellectual property or other rights of such third party; or (ii) damages to users of the related products. Except as described in our financial statements, we are not aware of any material pending action that may result in the counterparties to these agreements claiming such indemnification.

~~2022~~

2023 Aggregated Contractual Obligations

There have not been any material changes in our assessment of material contractual obligations and commitments as set forth in Item 7 of our Annual Report on Form

10-K

for the year ended December 31, ~~2021.~~

2022.

Non-GAAP

Net Income and

Non-GAAP

EPS Data

We present

non-GAAP

net income and

non-GAAP

earnings per share (“EPS”) as management believes that such data provide useful information to investors because they are used by management and our Board of Directors, in conjunction with other performance metrics, to evaluate our operational performance, to prepare and evaluate our work plans and annual budgets and ultimately to evaluate the performance of management, including annual compensation. While other qualitative factors and judgment also affect annual compensation, the principal quantitative element in the determination of such compensation are performance targets tied to the work plan, which are based on these

non-GAAP

measures.

Non-GAAP

financial measures have no standardized meaning and accordingly have limitations in their usefulness to investors. Investors are cautioned that, unlike financial measures prepared in accordance with U.S. GAAP,

non-GAAP

measures may not be comparable with the calculation of similar measures for other companies. These

non-GAAP

financial measures are presented solely to permit investors to more fully understand how management assesses our performance. The limitations of using

non-GAAP

financial measures as performance measures are that they provide a view of our results of operations without including all events during a period and may not provide a comparable view of our performance to other companies in the pharmaceutical industry. Investors should consider non-GAAP net income and

non-GAAP

EPS in addition to, and not as replacements for, or superior to, measures of financial performance prepared in accordance with GAAP.

~~Table of Contents~~

In preparing our

non-GAAP

net income and

non-GAAP

EPS data, we exclude items that either have a

non-recurring

impact on our financial performance or which, in the judgment of our management, are items that, either as a result of their nature or size, could, were they not excluded, potentially cause investors to extrapolate future performance from an improper base that is not reflective of our underlying business performance. Certain of these items are also excluded because of the difficulty in predicting their timing and scope. The items excluded from our

non-GAAP

net income and

non-GAAP

EPS include:

amortization of purchased intangible assets;

legal settlements and material litigation fees and/or loss contingencies, due to the difficulty in predicting their timing and scope;

impairments of long-lived assets, including intangibles, property, plant and equipment and goodwill;

restructuring expenses, including severance, retention costs, contract cancellation costs and certain accelerated depreciation expenses primarily related to the rationalization of our plants or to certain other strategic activities, such as the realignment of R&D focus or other similar activities;

•

acquisition- or divestment- related items, including changes in contingent consideration, integration costs, banker and other professional fees and inventory step-up;

~~acquisition- or divestment- related items, including changes in contingent consideration, integration costs, banker and other professional fees and inventory~~

~~step-up;~~

expenses related to our equity compensation;

•

significant one-time financing costs, amortization of issuance costs and terminated derivative instruments, and marketable securities investment valuation gains/losses;

~~significant~~

~~one-time~~

~~financing costs, amortization of issuance costs and terminated derivative instruments, and marketable securities investment valuation gains/losses;~~

unusual tax items;

other awards or settlement amounts, either paid or received;

other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, such as impacts due to changes in accounting, significant costs for remediation of plants, or other unusual events; and

corresponding tax effects of the foregoing items.

~~Commencing the first quarter of 2022, we no longer exclude IPR&D acquired in development arrangements from our~~

~~non-GAAP~~

~~financial measures. No IPR&D acquired in development arrangements was recorded in our comparable~~

~~non-GAAP~~

~~financial measures for the third quarter of 2021. In our comparable~~

~~non-GAAP~~

~~financial measures for the nine months ended September 30, 2021, we excluded $5 million IPR&D acquired in development. We are not recasting the~~

~~non-GAAP~~

~~presentation for the nine months ended September 30, 2021 since the adjustment is not significant. We made this change to our presentation of~~

~~non-GAAP~~

~~financial measures to improve the comparability of our~~

~~non-GAAP~~

~~presentation to those of other companies in the pharmaceutical industry that made a similar change to their presentations beginning in the first quarter of 2022.~~

~~Table of Contents~~

The following tables present our

non-GAAP

net income and

non-GAAP

EPS for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2023 and 2022, ~~and 2021,~~ as well as reconciliations of each measure to their nearest GAAP equivalents:

   Three months ended    Nine months ended
   September 30,    September 30,
($ in millions except per share amounts)
   2022    2021    2022    2021
Net income (loss) attributable to Teva
   ($) 56    292    ($) (1,132)    576
Increase (decrease) for excluded items:

Amortization of purchased intangible assets
   165    199    576    613
Legal settlements and loss contingencies
   195    3    2,048    113
Goodwill impairment
   —      —      745    —
Impairment of long-lived assets
   28    47    257    401
Other R&D expenses
   —      —      —      5
Restructuring costs
   25    28    117    96
Costs related to regulatory actions taken in facilities
   2    5    6    17
Equity compensation
   26    26    88    86
Contingent consideration
   6    9    100    (7 )
Gain on sale of business
   —      (7 )    (31 )    (44 )
Accelerated depreciation
   45    4    78    13
Financial expenses
   14    6    48    104
Share in profits (losses) of associated companies – net
   —      —      (22 )    (1 )
Items attributable to
non-controlling
interests
   (4 )    (4 )    (54 )    (10 )
Other
non-GAAP
items*
   67    105    268    220
Corresponding tax effects and unusual tax items
   33    (62 )    (1,072 )    (182 )
Non-GAAP
net income attributable to Teva
   ($) 658    651    ($) 2,021    2,001
Diluted earnings (loss) per share attributable to Teva
   ($) 0.05    0.26    ($) (1.02)    0.52
EPS difference**
   0.54    0.32    2.83    1.29
Diluted
Non-GAAP
EPS attributable to Teva**
   ($) 0.59    0.59    ($) 1.81    1.81


	Three months ended
	March 31,
($ in millions except per share amounts)	2023			2022
Net income (loss) attributable to Teva	$	(205	)	$	(955	)
Increase (decrease) for excluded items:
Amortization of purchased intangible assets		165			200
Legal settlements and loss contingencies		233			1,124
Impairment of long-lived assets		188			165
Restructuring costs		56			57
Costs related to regulatory actions taken in facilities		1			1
Equity compensation		32			24
Contingent consideration		20			33
Accelerated depreciation		25			1
Financial expenses		23			11
Share in profits (losses) of associated companies – net		—			(22	)
Items attributable to non-controlling interests		(40	)		(11	)
Other non-GAAP items^*		63			121
Corresponding tax effects and unusual tax items		(104	)		(140	)
Non-GAAP net income attributable to Teva	$	457		$	609
Diluted earnings (loss) per share attributable to Teva	$	(0.18	)	$	(0.86	)
EPS difference^**		0.59			1.41
Diluted Non-GAAP EPS attributable to Teva^**	$	0.40		$	0.55
Non-GAAP weighted average number of shares (in millions)		1,128			1,112

Other

non-GAAP

items include other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, such as inventory write-offs, primarily related to the rationalization of our plants, material litigation fees and other unusual events.

^**

EPS difference and diluted

non-GAAP

EPS are calculated by dividing our

non-GAAP

net income attributable to Teva by our

non-GAAP

diluted weighted average number of shares. ~~The~~

~~non-GAAP~~

~~diluted weighted average number of shares for the three months ended September 30, 2022, and 2021, were 1,119 million and 1,109 million shares, respectively. The~~

~~non-GAAP~~

~~diluted weighted average number of shares for the nine months ended September 30, 2022, and 2021, were 1,114 million and 1,109 million shares, respectively.~~

Off-Balance

Sheet Arrangements

Except for securitization transactions, which are disclosed in note ~~10(f)~~10f to our consolidated financial statements included in our Annual Report on Form

10-K

for the year ended December 31, ~~2021,~~2022, we do not have any material

off-balance

sheet arrangements.

Critical Accounting Policies

For a summary of our significant accounting policies, see note 1 to our consolidated financial statements and “Critical Accounting Policies” included in our Annual Report on Form

10-K

for the year ended December 31, ~~2021.~~

2022.

Recently Issued Accounting Pronouncements

See note 1 to our consolidated financial statements.


Israel		Not Applicable
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification Number)

124 Dvora HaNevi’a St., Tel Aviv, ISRAEL		6944020
(Address of principal executive offices)		(Zip code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
American Depositary Shares, each representing one Ordinary Share	TEVA	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

		Emerging growth company	☐


PART I.	Financial Statements (unaudited)

Item 1.	Financial Statements (unaudited)

	Consolidated Balance Sheets	5

	Consolidated Statements of Income (loss)	6

	Consolidated Statements of Comprehensive Income (loss)	7

	Consolidated statements of changes in equity	8

	Consolidated Statements of Cash Flows	9

	Notes to Consolidated Financial Statements	10

Item 2.	~~Notes to Consolidated Financial Statements~~	11

~~Item 2.~~	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4743

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	7461

Item 4.	Controls and Procedures	7461

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings	7562

Item 1A.	Risk Factors	7562

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	7562

Item 3.	Defaults Upon Senior Securities	7562

Item 4.	Mine Safety Disclosures	7562

Item 5.	Other Information	7562

Item 6.	Exhibits	7663

	Signatures	7764


	September 30,			December 31,
	2022			2021
ASSETS
Current assets:
Cash and cash equivalents	$	2,225		$	2,165
Accounts receivables, net of allowance for credit losses of $94 million and $90 million as of September 30, 2022 and December 31, 2021		3,730			4,529
Inventories		3,859			3,818
Prepaid expenses		1,045			1,075
Other current assets		579			965
Assets held for sale		16			19

Total current assets		11,453			12,573
Deferred income taxes		1,546			596
Other non-current assets		438			515
Property, plant and equipment, net		5,568			5,982
Operating lease right-of-use assets		422			495
Identifiable intangible assets, net		6,393			7,466
Goodwill		18,433			20,040

Total assets	$	44,252		$	47,666

LIABILITIES AND EQUITY
Current liabilities:
Short-term debt	$	2,769		$	1,426
Sales reserves and allowances		3,648			4,241
Accounts payables		1,635			1,686
Employee-related obligations		496			563
Accrued expenses		2,041			2,208
Other current liabilities		945			903

Total current liabilities		11,534			11,027
Long-term liabilities:
Deferred income taxes		503			784
Other taxes and long-term liabilities		3,846			2,578
Senior notes and loans		18,497			21,617
Operating lease liabilities		354			416

Total long-term liabilities		23,200			25,395

Commitments and contingencies , see note 10
Total liabilities		34,734			36,422

Equity:
Teva shareholders’ equity:
Ordinary shares of NIS 0.10 par value per share; September 30, 2022 and December 31, 2021: authorized 2,495 million shares; issued 1,216 million shares and 1,209 million shares, respectively.		57			57
Additional paid-in capital		27,652			27,561
Accumulated deficit		(11,660	)		(10,529	)
Accumulated other comprehensive loss		(3,153	)		(2,683	)
Treasury shares as of September 30, 2022 and December 31, 2021: 106 million ordinary shares		(4,128	)		(4,128	)

		8,767			10,278

Non-controlling interests		751			966

Total equity		9,519			11,244

Total liabilities and equity	$	44,252		$	47,666


	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Net revenues	$	3,595		$	3,887		$	11,041		$	11,778
Cost of sales		1,926			2,093			5,839			6,234

Gross profit		1,669			1,794			5,203			5,544
Research and development expenses		175			222			628			723
Selling and marketing expenses		539			597			1,716			1,798
General and administrative expenses		283			291			892			822
Intangible assets impairments		24			21			223			295
Goodwill impairment		—			—			745			—
Other assets impairments, restructuring and other items		36			62			282			227
Legal settlements and loss contingencies		195			3			2,048			113
Other income		(2	)		(25	)		(88	)		(73	)

Operating income (loss)		419			623			(1,244	)		1,638
Financial expenses, net		252			241			721			805

Income (loss) before income taxes		166			382			(1,964	)		833
Income taxes (benefit)		107			76			(792	)		235
Share in (profits) losses of associated companies, net		1			5			(20	)		(9	)

Net income (loss)		58			302			(1,152	)		608
Net income (loss) attributable to non-controlling interests		3			11			(21	)		32

Net income (loss) attributable to Teva		56			292			(1,132	)		576

Earnings (loss) per share attributable to ordinary shareholders:
Basic	$	0.05		$	0.26		$	(1.02	)	$	0.52

Diluted	$	0.05		$	0.26		$	(1.02	)	$	0.52

Weighted average number of shares (in millions):
Basic		1,111			1,103			1,109			1,102

Diluted		1,119			1,109			1,109			1,109


	Three months ended						Nine months ended
	September 30,						September 30,
	2022			2021			2022			2021
Net income (loss)	$	58		$	302		$	(1,152	)	$	608
Other comprehensive income (loss), net of tax:
Currency translation adjustment		(402	)		(195	)		(684	)		(325	)
Unrealized gain (loss) from derivative financial instruments, net		7			7			21			21
Unrealized loss on defined benefit plans		—			1			—			2

Total other comprehensive income (loss)		(395	)		(187	)		(663	)		(302	)

Total comprehensive income (loss)		(337	)		115			(1,815	)		306
Comprehensive income (loss) attributable to non-controlling interests		(40	)		(3	)		(214	)		(49	)

Comprehensive income (loss) attributable to Teva	$	(297	)	$	118		$	(1,601	)	$	355


	Teva shareholders’ equity
	Ordinary shares
	Number of shares (in millions)		Stated value		Additional paid-in capital		Retained earnings (accumulated deficit)			Accumulated other comprehensive (loss)			Treasury shares			Total Teva shareholders’ equity			Non- controlling interests			Total equity

	(U.S. dollars in millions)
Balance at December 31, 2022		1,217		57		27,688		(12,882	)		(2,838	)		(4,128	)		7,897			794			8,691
Net Income (loss)								(205	)								(205	)		(33	)		(238	)
Other comprehensive income (loss)											136						136			(9	)		127
Issuance of Shares		9		*		*											*						*
Stock-based compensation expense						32											32						32

Balance at March 31, 2023		1,226	$	57	$	27,719	$	(13,086	)	$	(2,701	)	$	(4,128	)	$	7,860		$	751		$	8,612


	Three months ended September 30, 2022
	North America		Europe		International Markets		Other activities		Total

	(U.S. $ in millions)
Sale of goods		1,393		1,034		445		149		3,021
Licensing arrangements		37		10		4		1		52
Distribution		371		§		12		—		383
Other		9		26		14		91		139

	$	1,809	$	1,069	$	475	$	241	$	3,595


	Three months ended September 30, 2021
	North America		Europe		International Markets		Other activities		Total

	(U.S. $ in millions)
Sale of goods		1,487		1,197		495		160		3,340
Licensing arrangements		22		11		4		1		38
Distribution		363		§		15		—		378
Other		2		11		15		102		130

	$	1,875	$	1,220	$	530	$	262	$	3,887


	Nine months ended September 30, 2022
	North America		Europe		International Markets		Other activities		Total

	(U.S. $ in millions)
Sale of goods		4,308		3,295		1,338		505		9,447
Licensing arrangements		111		36		12		3		162
Distribution		1,021		1		38		—		1,060
Other		10		65		33		266		373

	$	5,450	$	3,396	$	1,422	$	773		11,041


	Three months ended March 31, 2023
	North America		Europe			International Markets		Other activities		Total

	(U.S. $ in millions)
Sale of goods		1,319		1,176			464		131		3,090
Licensing arrangements		23		14			5		1		43
Distribution		424		§			10		—		434
Other		§		(6	)		13		87		95

	$	1,766		1,184			492		219		3,661


	Nine months ended September 30, 2021
	North America		Europe		International Markets		Other activities		Total

	(U.S. $ in millions)

Sale of goods		4,776		3,560		1,397		534		10,268
Licensing arrangements		62		32		9		3		106
Distribution		968		§		49		—		1,018
Other		§		25		50		312		387

	$	5,807	$	3,618	$	1,505	$	849	$	11,778


	Three months ended March 31, 2022
	North America			Europe		International Markets		Other activities		Total

	(U.S. $ in millions)
Sale of goods		1,377			1,134		445		180		3,136
Licensing arrangements		21			12		4		1		38
Distribution		342			§		16		—		358
Other		(2	)		9		27		95		129

	$	1,737		$	1,156	$	492	$	275	$	3,661


	Sales Reserves and Allowances
	Reserves included in Accounts Receivable, net			Rebates			Medicaid and other governmental allowances			Chargebacks			Returns			Other			Total reserves included in Sales Reserves and Allowances			Total

	(U.S. $ in millions)
Balance at January 1, 2023	$	67		$	1,575		$	663		$	991		$	455		$	66		$	3,750		$	3,817
Provisions related to sales made in current year period		80			1,003			142			1,855			73			25			3,098			3,178
Provisions related to sales made in prior periods		—			(7	)		(36	)		(9	)		6			(1	)		(47	)		(47	)
Credits and payments		(84	)		(1,127	)		(289	)		(1,973	)		(95	)		(21	)		(3,505	)		(3,589	)
Translation differences		—			8			2			2			1			§			13			13

Balance at March 31, 2023	$	63		$	1,452		$	482		$	866		$	440		$	69		$	3,309		$	3,372


	Gross carrying amount net of impairment				Accumulated amortization				Net carrying amount
	September 30,		December 31,		September 30,		December 31,		September 30,		December 31,
	2022		2021		2022		2021		2022		2021

	(U.S. $ in millions)
Product rights	$	17,599	$	18,815	$	12,050	$	12,318	$	5,548	$	6,497
Trade names		556		590		216		198		340		392
In process research and development		505		577		—		—		505		577

Total	$	18,660	$	19,982	$	12,267	$	12,516	$	6,393	$	7,466


	Gross carrying amount net of impairment				Accumulated amortization				Net carrying amount
	March 31,		December 31,		March 31,		December 31,		March 31,		December 31,
	2023		2022		2023		2022		2023		2022

	(U.S. $ in millions)
Product rights	$	18,094	$	18,067	$	12,934	$	12,630	$	5,160	$	5,437
Trade names		583		577		241		231		342		346
In process research and development		462		487		—		—		462		487

Total	$	19,139	$	19,131	$	13,175	$	12,861	$	5,964	$	6,270


	Interest rate as of March 31, 2023			Maturity		March 31, 2023			December 31, 2022

						(U.S. $ in millions)
Senior notes EUR 1,500 million		1.13	%		2024		683			670
Sustainability-linked senior notes EUR 1,500 million (6)(*)		4.38	%		2030		1,635			1,606
Senior notes EUR 1,300 million (9)		1.25	%		2023		—			633
Sustainability-linked senior notes EUR 1,100 million (7)(*)		3.75	%		2027		1,199			1,177
Senior notes EUR 1,000 million (5)		6.00	%		2025		449			1,070
Senior notes EUR 900 million (5)		4.50	%		2025		541			963
Sustainability-linked senior notes EUR 800 million (1)(*)		7.38	%		2029		872			—
Senior notes EUR 750 million		1.63	%		2028		814			800
Senior notes EUR 700 million		1.88	%		2027		762			748
Sustainability-linked senior notes EUR 500 million (2)(*)		7.88	%		2031		545			—
Senior notes USD 3,500 million (5)		3.15	%		2026		3,374			3,496
Senior notes USD 3,000 million (5)		2.80	%		2023		1,000			1,453
Senior notes USD 2,000 million		4.10	%		2046		1,986			1,986
Senior notes USD 1,250 million (5)		6.00	%		2024		957			1,250
Senior notes USD 1,250 million		6.75	%		2028		1,250			1,250
Senior notes USD 1,000 million (5)		7.13	%		2025		427			1,000
Sustainability-linked senior notes USD 1,000 million (7)(*)		4.75	%		2027		1,000			1,000
Sustainability-linked senior notes USD 1,000 million (6)(*)		5.13	%		2029		1,000			1,000
Senior notes USD 789 million		6.15	%		2036		783			783
Sustainability-linked senior notes USD 600 million (3)(*)		7.88	%		2029		600			—
Sustainability-linked senior notes USD 500 million (4)(*)		8.13	%		2031		500			—
Senior notes CHF 350 million		1.00	%		2025		384			382

Total senior notes							20,761			21,266
Other long-term debt							1			1
Less current maturities							(1,000	)		(2,086	)
Less debt issuance costs (8)							(94	)		(78	)

Total senior notes and loans						$	19,668		$	19,103


	Weighted average interest rate as of September 30, 2022			Maturity		September 30, 2022			December 31, 2021

						(U.S. $ in millions)
Senior notes EUR 1,500 million		1.13	%		2024		614			708
Sustainability-linked senior notes EUR 1,500 million (1)(*)		4.38	%		2030		1472			1,699
Senior notes EUR 1,300 million		1.25	%		2023		578			670
Sustainability-linked senior notes EUR 1,100 million (2)(*)	��	3.75	%		2027		1080			1,246
Senior notes EUR 1,000 million		6.00	%		2025		983			1,134
Senior notes EUR 900 million		4.50	%		2025		883			1,020
Senior notes EUR 750 million		1.63	%		2028		733			844
Senior notes EUR 700 million (3)		3.25	%		2022		—			307
Senior notes EUR 700 million		1.88	%		2027		686			792
Senior notes USD 3,500 million		3.15	%		2026		3,496			3,496
Senior notes USD 3,000 million		2.80	%		2023		1,453			1,453
Senior notes USD 2,000 million		4.10	%		2046		1,986			1,986
Senior notes USD 1,250 million		6.00	%		2024		1,250			1,250
Senior notes USD 1,250 million		6.75	%		2028		1,250			1,250
Senior notes USD 1,000 million		7.13	%		2025		1,000			1,000
Sustainability-linked senior notes USD 1,000 million (2)(*)		4.75	%		2027		1,000			1,000
Sustainability-linked senior notes USD 1,000 million (1)(*)		5.13	%		2029		1,000			1,000
Senior notes USD 844 million		2.95	%		2022		715			715
Senior notes USD 789 million		6.15	%		2036		783			783
Senior notes CHF 350 million (4)		0.50	%		2022		—			382
Senior notes CHF 350 million		1.00	%		2025		360			383

Total senior notes							21,322			23,118
Other long-term debt							2			2
Less current maturities							(2,746	)		(1,403	)
Less debt issuance costs							(81	)		(100	)

Total senior notes and loans						$	18,497		$	21,617


	Fair value
	Designated as hedging instruments				Not designated as hedging instruments
	March 31, 2023		December 31, 2022		March 31, 2023			December 31, 2022

Reported under	(U.S. $ in millions)				(U.S. $ in millions)
Asset derivatives:
Other current assets:
Option and forward contracts	$	—	$	—	$	45		$	29
Other non-current assets:
Cross-currency swap-cash flow hedge (1)		§		—		—			—
Liability derivatives:
Other current liabilities:
Option and forward contracts		—		—		(63	)		(101	)


	Fair value
	Not designated as hedging instruments
	September 30, 2022			December 31, 2021

Reported under	(U.S. $ in millions)
Asset derivatives:
Other current assets:
Option and forward contracts	$	94		$	30
Liability derivatives:
Other current liabilities:
Option and forward contracts		(53	)		(23	)


	Financial expenses, net				Other comprehensive income (loss)
	Three months ended,				Three months ended,
	March 31, 2023		March 31, 2022		March 31, 2023			March 31, 2022

Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	260	$	258	$	127		$	(57	)
Cross-currency swaps - cash flow hedge (1)		1		—		(2	)		—


	Financial expenses, net						Net revenues
	Nine months ended,						Nine months ended,
	September 30, 2022			September 30, 2021			September 30, 2022			September 30, 2021

Reported under	(U.S. $ in millions)
Line items in which effects of hedges are recorded	$	721		$	805		$	(11,041	)	$	(11,778	)
Option and forward contracts (1)		(48	)		(51	)		—			—
Option and forward contracts economic hedge (2)		—			—			(69	)		(29	)


	Three months ended September 30,					Nine months ended September 30,
	2022		2021			2022		2021

	(U.S. $ in millions)					(U.S. $ in millions)
Impairments of long-lived tangible assets (1)	$	4	$	26		$	34	$	106
Contingent consideration		6		9			100		(7	)
Restructuring		25		28			117		96
Other		1		(1	)		31		32

Total	$	36	$	62		$	282	$	227


	Three months ended September 30,
	2022			2021

	(U.S. $ in millions)
Restructuring
Employee termination	$	32		$	24
Other		(7	)		4

Total	$	25		$	28



	Nine months ended September 30,
	2022			2021

	(U.S. $ in millions)
Restructuring
Employee termination	$	95		$	84
Other		22			12

Total	$	117		$	96


	Employee termination costs			Other			Total

	(U.S. $ in millions )
Balance as of January 1, 2022	$	(131	)	$	(7	)	$	(138	)
Provision		(95	)		(22	)		(117	)
Utilization and other*		114			22			136

Balance as of September 30, 2022	$	(112	)	$	(7	)	$	(119	)


North America	Three months ended September 30,
	2022		2021

	(U.S. $ in millions)
Generic products	$	806	$	859
AJOVY		57		46
AUSTEDO		260		201
BENDEKA ® /TREANDA ®		77		95
COPAXONE		105		133
Anda		371		363
Other		133		178

Total	$	1,809	$	1,875


	September 30, 2022
	Level 1		Level 2			Level 3			Total

	(U.S. $ in millions)
Cash and cash equivalents:
Money markets	$	897	$	—		$	—		$	897
Cash, deposits and other		1,328		—			—			1,328
Investment in securities:
Equity securities		9		—			—			9
Other		5		—			1			6
Restricted cash		33		—			—			33
Derivatives:
Asset derivatives—options and forward contracts		—		94			—			94
Liability derivatives:
Options and forward contracts		—		(53	)		—			(53	)
Bifurcated embedded derivatives		—		—			§			—
Contingent consideration*		—		—			(113	)		(113	)

Total	$	2,272	$	41		$	(112	)	$	2,201


		December 31, 2021

		Level 1		Level 2			Level 3			Total

		(U.S. $ in millions)
Cash and cash equivalents:
Money markets	$	220	$	—		$	—		$	220
Cash, deposits and other		1,945		—			—			1,945
Investment in securities:
Equity securities		18		—			—			18
Other		6		—			1			7
Restricted cash		33		—			—			33
Derivatives:
Asset derivatives—options and forward contracts		—		30			—			30
Liability derivatives:
Options and forward contracts		—		(23	)		—			(23	)
Bifurcated embedded derivatives		—		—			§			—
Contingent consideration*		—		—			(176	)		(176	)

Total	$	2,222	$	7		$	(175	)	$	2,054


	Nine months ended September 30, 2022			Nine months ended September 30, 2021
	(U.S. $ in millions)
Fair value at the beginning of the period	$	(175	)		(258	)
Redemption of debt securities		—			(9	)
Bifurcated embedded derivatives		§			—
Adjustments to provisions for contingent consideration:
Actavis Generics transaction		(98	)		21
Eagle transaction		(2	)		(14	)
Settlement of contingent consideration:
Actavis Generics transaction		106			—
Eagle transaction		68			74
Additional contingent consideration resulting from Novetide acquisition*		(11	)		—

Fair value at the end of the period	$	(112	)	$	(186	)


Generic Name	Brand Name	Total Annual U.S. Branded Sales at Time of Launch (U.S. $ in millions (IQVIA)) *
Dasatinib Tablets, 20 mg, 50 mg, 70 mg, 80 mg, 100 mg and 140 mg	Sprycel ®	$	1,569
Dapagliflozin/ Metformin Tablets	Xigduo XR ®	$	560
Paclitaxel Protein-Bound Particles for Injectable Suspension, 100 mg/vial **	N/A		No Data


	Nine months ended September 30,				Percentage Change 2022-2021
	2022		2021		Percentage Change 2022-2021

	(U.S. $ in millions)
Generic products	$	2,731	$	2,864		(5	%)
AJOVY		142		123		16	%
AUSTEDO		618		520		19	%
BENDEKA/TREANDA		241		292		(17	%)
COPAXONE		285		448		(36	%)
Anda		1,021		968		5	%
Other		411		592		(31	%)

Total	$	5,450	$	5,807		(6	%)


4.1		Fourth Supplemental Senior Indenture, dated as of March 9, 2023, among Teva Pharmaceutical Finance Netherlands II B.V., Teva Pharmaceutical Industries Limited, The Bank of New York Mellon, as trustee, and The Bank of New York Mellon, London Branch, as paying agent (incorporated by reference to Exhibit 4.2 to Current Report on Form 8-K filed with the SEC on March 9, 2023)

4.2		Form of 2029 Euro Notes (included in Exhibit 4.1)

4.3		Form of 2031 Euro Notes (included in Exhibit 4.1)

4.4		Fourth Supplemental Senior Indenture, dated as of March 9, 2023, among Teva Pharmaceutical Finance Netherlands III B.V., Teva Pharmaceutical Industries Limited and The Bank of New York Mellon, as trustee (incorporated by reference to Exhibit 4.6 to Current Report on Form 8-K filed with the SEC on March 9, 2023)

4.5		Form of 2029 USD Notes (included in Exhibit 4.4)

4.6		Form of 2031 USD Notes (included in Exhibit 4.4)

10.1		Letter Agreement, dated as of February 8, 2023, between Teva Pharmaceutical Industries Ltd. and Eric Drapé *

31.1		Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

31.2		Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 *

32		Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 *

101.INS		Inline XBRL Taxonomy Instance Document

101.SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

TEVA PHARMACEUTICAL INDUSTRIES LIMITED

Date: ~~November 3, 2022~~May 10, 2023

/s/ Eli Kalif

Executive Vice President,
Chief Financial Officer
(Duly Authorized Officer)