☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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 | ☐ |
For an accessible version of Contents
INDEX
PART I. | ||||||
Item 1. | ||||||
5 | ||||||
6 | ||||||
7 | ||||||
8 | ||||||
9 | ||||||
10 | ||||||
Item 2. | ||||||
Management’s Discussion and Analysis of Financial Condition and Results of Operations | ||||||
Item 3. | ||||||
Item 4. | ||||||
PART II. | ||||||
Item 1. | ||||||
Item 1A. | ||||||
Item 2. | ||||||
Item 3. | ||||||
Item 4. | ||||||
Item 5. | ||||||
Item 6. | ||||||
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
INTRODUCTION AND USE OF CERTAIN TERMS
Unless otherwise indicated, all references to the “Company,” “we,” “our” and “Teva” refer to Teva Pharmaceutical Industries Limited and its subsidiaries, and references to “revenues” refer to net revenues. References to “U.S. dollars,” “dollars,” “U.S. $” and “$” are to the lawful currency of the United States of America, and references to “NIS” are to new Israeli shekels. References to “ADS(s)” are to Teva’s American Depositary Share(s). References to “MS” are to multiple sclerosis. Market data, including both sales and share data, is based on information provided by IQVIA, a provider of market research to the pharmaceutical industry (“IQVIA”), unless otherwise stated. References to “R&D” are to Research and Development, references to “IPR&D” are to
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this Quarterly Report on Form
• | our ability to successfully compete in the marketplace, including: that we are substantially dependent on our generic products; concentration of our customer base and commercial alliances among our customers; delays in launches of new generic products; the increase in the number of competitors targeting generic opportunities and seeking U.S. market exclusivity for generic versions of significant products; our ability to develop and commercialize biopharmaceutical products; competition for our innovative medicines, including AUSTEDO®, AJOVY® and COPAXONE®; our ability to achieve expected results from investments in our product pipeline; our ability to develop and commercialize additional pharmaceutical products; and the effectiveness of our patents and other measures to protect our intellectual property rights; |
our substantial indebtedness, which may limit our ability to incur additional indebtedness, engage in additional transactions or make new investments, may result in a further downgrade of our credit ratings; and our inability to raise debt or borrow funds in amounts or on terms that are favorable to us;
our business and operations in general, including: uncertainty regarding the
compliance, regulatory and litigation matters, including: failure to comply with complex legal and regulatory environments; increased legal and regulatory action in connection with public concern over the abuse of opioid medications and any delay in our ability to reach a final resolution of the remaining opioid-related litigation, including to finalize settlement documentation and obtain sufficient participation of plaintiffs for the proposed nationwide settlement to take effect;of our opioid-related litigation in the United States; scrutiny from competition and pricing authorities around the world, including our ability to successfully defend against the U.S. Department of Justice (“DOJ”) criminal charges of Sherman Act violations; potential liability for patentintellectual property right infringement; product liability claims; failure to comply with complex Medicare and Medicaid reporting and payment obligations; compliance with anti-corruption, sanctions and trade control laws; environmental risks; and the impact of Environmental, Social and Governance (“ESG”) issues;
other financial and economic risks, including: our exposure to currency fluctuations and restrictions as well as credit risks; potential impairments of our intangiblelong-lived assets; the impact of other macroeconomic developments such as rising inflation and geopolitical conflicts including the ongoing conflict between Russia and Ukraine; potential significant increases in tax liabilities (including as a result of potential tax reform in the United States);liabilities; and the effect on our overall effective tax rate of the termination or expiration of governmental programs or tax benefits, or of a change in our business;
3
TEVA PHARMACEUTICAL INDUSTRIES LIMITED
and other factors discussed in this Quarterly Report on Form
4
ITEM 1. FINANCIAL STATEMENTS |
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 | 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 | ||||||||
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 | ||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,143 | $ | 2,801 | ||||
Accounts receivables, net of allowance for credit losses of $88 million and $91 million as of March 31, 2023 and December 31, 2022 | 3,435 | 3,696 | ||||||
Inventories | 4,118 | 3,833 | ||||||
Prepaid expenses | 1,253 | 1,162 | ||||||
Other current assets | 542 | 549 | ||||||
Assets held for sale | 10 | 10 | ||||||
Total current assets | 11,501 | 12,051 | ||||||
Deferred income taxes | 1,572 | 1,453 | ||||||
Other non-current assets | 450 | 441 | ||||||
Property, plant and equipment, net | 5,751 | 5,739 | ||||||
Operating lease right-of-use | 420 | 419 | ||||||
Identifiable intangible assets, net | 5,964 | 6,270 | ||||||
Goodwill | 17,799 | 17,633 | ||||||
Total assets | $ | 43,456 | $ | 44,006 | ||||
LIABILITIES AND EQUITY | ||||||||
Current liabilities: | ||||||||
Short-term debt | $ | 1,023 | $ | 2,109 | ||||
Sales reserves and allowances | 3,309 | 3,750 | ||||||
Accounts payables | 2,381 | 1,887 | ||||||
Employee-related obligations | 432 | 566 | ||||||
Accrued expenses | 2,267 | 2,151 | ||||||
Other current liabilities | 1,000 | 1,005 | ||||||
Total current liabilities | 10,411 | 11,469 | ||||||
Long-term liabilities: | ||||||||
Deferred income taxes | 550 | 548 | ||||||
Other taxes and long-term liabilities | 3,869 | 3,847 | ||||||
Senior notes and loans | 19,668 | 19,103 | ||||||
Operating lease liabilities | 345 | 349 | ||||||
Total long-term liabilities | 24,433 | 23,846 | ||||||
Commitments and contingencies | ||||||||
Total liabilities | 34,844 | 35,315 | ||||||
Equity: | ||||||||
Teva shareholders’ equity: | ||||||||
Ordinary shares of NIS 0.10 par value per share; March 31, 2023 and December 31, 2022: authorized 2,495 million shares; issued 1,226 million shares and 1,217 million shares, respectively | 57 | 57 | ||||||
Additional paid-in capital | 27,719 | 27,688 | ||||||
Accumulated deficit | (13,086 | ) | (12,882 | ) | ||||
Accumulated other comprehensive loss | (2,701 | ) | (2,838 | ) | ||||
Treasury shares as of March 31, 2023 and December 31, 2022: 106 million ordinary shares | (4,128 | ) | (4,128 | ) | ||||
7,860 | 7,897 | |||||||
Non-controlling interests | 751 | 794 | ||||||
Total equity | 8,612 | 8,691 | ||||||
Total liabilities and equity | $ | 43,456 | $ | 44,006 | ||||
Three months ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Net revenues | $ | 3,661 | $ | 3,661 | ||||
Cost of sales | 2,079 | 1,921 | ||||||
Gross profit | 1,582 | 1,740 | ||||||
Research and development expenses | 234 | 225 | ||||||
Selling and marketing expenses | 546 | 584 | ||||||
General and administrative expenses | 296 | 296 | ||||||
Intangible assets impairments | 178 | 149 | ||||||
Other assets impairments, restructuring and other items | 96 | 128 | ||||||
Legal settlements and loss contingencies | 233 | 1,124 | ||||||
Other income | (2 | ) | (52 | ) | ||||
Operating income (loss) | 2 | (713 | ) | |||||
Financial expenses, net | 260 | 258 | ||||||
Income (loss) before income taxes | (258 | ) | (971 | ) | ||||
Income taxes (benefit) | (19 | ) | 2 | |||||
Share in (profits) losses of associated companies, net | § | (21 | ) | |||||
Net income (loss) | (238 | ) | (952 | ) | ||||
Net income (loss) attributable to non-controlling interests | (33 | ) | 3 | |||||
Net income (loss) attributable to Teva | (205 | ) | (955 | ) | ||||
Earnings (loss) per share attributable to ordinary shareholders: | ||||||||
Basic | $ | (0.18 | ) | $ | (0.86 | ) | ||
Diluted | $ | (0.18 | ) | $ | (0.86 | ) | ||
Weighted average number of shares (in millions): | ||||||||
Basic | 1,115 | 1,107 | ||||||
Diluted | 1,115 | 1,107 | ||||||
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 | ||||||||||||
§ | Represents an amount less than $0.5 million. |
Three months ended | Nine | |||||||||||||||
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 | ||||||
Three months ended March 31, | ||||||||
2023 | 2022 | |||||||
Net income (loss) | $ | (238 | ) | $ | (952 | ) | ||
Other comprehensive income (loss), net of tax: | ||||||||
Currency translation adjustment | 120 | (64 | ) | |||||
Unrealized gain (loss) from derivative financial instruments, net | 8 | 7 | ||||||
Unrealized loss on defined benefit plans | (1 | ) | — | |||||
Total other comprehensive income (loss) | 127 | (57 | ) | |||||
Total comprehensive income (loss) | (111 | ) | (1,009 | ) | ||||
Comprehensive income (loss) attributable to non-controlling interests | (42 | ) | (50 | ) | ||||
Comprehensive income (loss) attributable to Teva | $ | (69 | ) | $ | (959 | ) | ||
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 | ||||||||||||||||
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 June 30, 2022 | 1,216 | 57 | 27,625 | (11,716 | ) | (2,801 | ) | (4,128 | ) | 9,037 | 791 | 9,828 | ||||||||||||||||||||||||
Net Income (loss) | 56 | 56 | 3 | 58 | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (352 | ) | (352 | ) | (43 | ) | (395 | ) | ||||||||||||||||||||||||||||
Issuance of Shares | * | * | * | * | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 26 | 26 | 26 | |||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | 1,216 | $ | 57 | $ | 27,652 | $ | (11,660 | ) | $ | (3,153 | ) | $ | (4,128 | ) | $ | 8,767 | $ | 751 | $ | 9,519 | ||||||||||||||||
* | Represents an amount less than $0.5 million. |
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, 2021 | 1,209 | 57 | 27,561 | (10,529 | ) | (2,683 | ) | (4,128 | ) | 10,278 | 966 | 11,244 | ||||||||||||||||||||||||
Net Income (loss) | (955 | ) | (955 | ) | 3 | (952 | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss) | (4 | ) | (4 | ) | (53 | ) | (57 | ) | ||||||||||||||||||||||||||||
Issuance of shares | 7 | * | 1 | 1 | 1 | |||||||||||||||||||||||||||||||
Stock-based compensation expense | 24 | 24 | 24 | |||||||||||||||||||||||||||||||||
Balance at March 31, 2022 | 1,216 | $ | 57 | $ | 27,587 | $ | (11,484 | ) | $ | (2,687 | ) | $ | (4,128 | ) | $ | 9,344 | $ | 916 | $ | 10,260 | ||||||||||||||||
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 June 30, 2021 | 1,209 | 57 | 27,503 | (10,662 | ) | (2,446 | ) | (4,128 | ) | 10,324 | 987 | 11,311 | ||||||||||||||||||||||||
Net Income (loss) | 292 | 292 | 11 | 302 | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (174 | ) | (174 | ) | (13 | ) | (187 | ) | ||||||||||||||||||||||||||||
Issuance of Shares | * | * | * | * | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 26 | 26 | 26 | |||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | 1,209 | $ | 57 | $ | 27,529 | $ | (10,370 | ) | $ | (2,620 | ) | $ | (4,128 | ) | $ | 10,467 | $ | 984 | $ | 11,451 | ||||||||||||||||
* | Represents an amount less than $0.5 million. |
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, 2021 | 1,209 | 57 | 27,561 | (10,529 | ) | (2,683 | ) | (4,128 | ) | 10,278 | 966 | 11,244 | ||||||||||||||||||||||||
Net Income (loss) | (1,132 | ) | (1,132 | ) | (21 | ) | (1,152 | ) | ||||||||||||||||||||||||||||
Other comprehensive income (loss) | (470 | ) | (470 | ) | (193 | ) | (663 | ) | ||||||||||||||||||||||||||||
Issuance of Shares | 7 | * | 1 | 1 | 1 | |||||||||||||||||||||||||||||||
Stock-based compensation expense | 88 | 88 | 88 | |||||||||||||||||||||||||||||||||
Balance at September 30, 2022 | 1,216 | $ | 57 | $ | 27,652 | $ | (11,660 | ) | $ | (3,153 | ) | $ | (4,128 | ) | $ | 8,767 | $ | 751 | $ | 9,519 | ||||||||||||||||
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, 2020 | 1,202 | 57 | 27,443 | (10,946 | ) | (2,399 | ) | (4,128 | ) | 10,026 | 1,035 | 11,061 | ||||||||||||||||||||||||
Net Income (loss) | 576 | 576 | 32 | 608 | ||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (221 | ) | (221 | ) | (81 | ) | (302 | ) | ||||||||||||||||||||||||||||
Issuance of shares | 7 | * | * | * | ||||||||||||||||||||||||||||||||
Stock-based compensation expense | 86 | 86 | 86 | |||||||||||||||||||||||||||||||||
Balance at September 30, 2021 | 1,209 | $ | 57 | $ | 27,529 | $ | (10,370 | ) | $ | (2,620 | ) | $ | (4,128 | ) | $ | 10,467 | $ | 984 | $ | 11,451 | ||||||||||||||||
Nine months ended | ||||||||
September 30, | ||||||||
2022 | 2021 | |||||||
Operating activities: | ||||||||
Net income (loss) | $ | (1,152 | ) | $ | 608 | |||
Adjustments to reconcile net income (loss) to net cash provided by operations: | ||||||||
Depreciation and amortization | 1,002 | 1,010 | ||||||
Impairment of goodwill, long-lived assets and assets held for sale | 1,002 | 401 | ||||||
Net change in operating assets and liabilities | 1,007 | (1,881 | ) | |||||
Deferred income taxes – net and uncertain tax positions | (1,214 | ) | 13 | |||||
Stock-based compensation | 88 | 86 | ||||||
Other items | (117 | ) | (4 | ) | ||||
Net loss (gain) from investments and from sale of long lived assets | 1 | 109 | ||||||
Net cash provided by (used in) operating activities | 617 | 342 | ||||||
Investing activities: | ||||||||
Beneficial interest collected in exchange for securitized trade receivables | 854 | 1,278 | ||||||
Purchases of property, plant and equipment | (406 | ) | (409 | ) | ||||
Proceeds from sale of business and long lived assets | 45 | 269 | ||||||
Acquisition of businesses, net of cash acquired | (7 | ) | — | |||||
Proceeds from sale of investments | 4 | 172 | ||||||
Purchases of investments and other assets | (2 | ) | (36 | ) | ||||
Other investing activities | — | 3 | ||||||
Net cash provided by (used in) investing activities | 488 | 1,277 | ||||||
Financing activities: | ||||||||
Redemption of convertible senior notes | — | (491 | ) | |||||
Proceeds from short term debt | — | 500 | ||||||
Repayment of short term debt | — | (200 | ) | |||||
Repayment of senior notes and loans | (661 | ) | (1,475 | ) | ||||
Other financing activities | (115 | ) | (5 | ) | ||||
Net cash provided by (used in) financing activities | (776 | ) | (1,671 | ) | ||||
Translation adjustment on cash and cash equivalents | (269 | ) | (80 | ) | ||||
Net change in cash, cash equivalents and restricted cash | 60 | (132 | ) | |||||
Balance of cash, cash equivalents and restricted cash at beginning of period | 2,198 | 2,177 | ||||||
Balance of cash, cash equivalents and restricted cash at end of period | $ | 2,258 | $ | 2,045 | ||||
Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: | ||||||||
Cash and cash equivalents | 2,225 | 2,045 | ||||||
Restricted cash included in other current assets . . | 33 | — | ||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 2,258 | 2,045 | ||||||
Non-cash financing and investing activities: | ||||||||
Beneficial interest obtained in exchange for securitized accounts receivables | $ | 883 | $ | 1,310 |
Three months ended | ||||||||
March 31, | ||||||||
2023 | 2022 | |||||||
Operating activities: | ||||||||
Net income (loss) | $ | (238 | ) | $ | (952 | ) | ||
Adjustments to reconcile net income (loss) to net cash provided by operations: | ||||||||
Depreciation and amortization | 304 | 323 | ||||||
Impairment of long-lived assets and assets held for sale | 189 | 165 | ||||||
Net change in operating assets and liabilities | (364 | ) | 559 | |||||
Deferred income taxes – net and uncertain tax positions | (106 | ) | (175 | ) | ||||
Stock-based compensation | 32 | 24 | ||||||
Other items | 34 | 30 | ||||||
Net loss (gain) from investments and from sale of long lived assets | 4 | (23 | ) | |||||
Net cash provided by (used in) operating activities | (145 | ) | (49 | ) | ||||
Investing activities: | ||||||||
Beneficial interest collected in exchange for securitized trade receivables | 323 | 305 | ||||||
Purchases of property, plant and equipment | (139 | ) | (157 | ) | ||||
Proceeds from sale of business and long lived assets | 2 | 25 | ||||||
Acquisition of businesses, net of cash acquired | — | (7 | ) | |||||
Purchases of investments and other assets | (4 | ) | (4 | ) | ||||
Other investing activities | (1 | ) | (1 | ) | ||||
Net cash provided by (used in) investing activities | 181 | 161 | ||||||
Financing activities: | ||||||||
Repayment of senior notes and loans and other long term liabilities | (3,152 | ) | — | |||||
Proceeds from senior notes, net of issuance costs | 2,451 | — | ||||||
Other financing activities | (5 | ) | 2 | |||||
Net cash provided by (used in) financing activities | (706 | ) | 2 | |||||
Translation adjustment on cash and cash equivalents | 12 | (62 | ) | |||||
Net change in cash, cash equivalents and restricted cash | (658 | ) | 52 | |||||
Balance of cash, cash equivalents and restricted cash at beginning of period | 2,834 | 2,198 | ||||||
Balance of cash, cash equivalents and restricted cash at end of period | $ | 2,176 | $ | 2,250 | ||||
Reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets: | ||||||||
Cash and cash equivalents | 2,143 | 2,175 | ||||||
Restricted cash included in other current assets | 33 | 75 | ||||||
Total cash, cash equivalents and restricted cash shown in the statement of cash flows | 2,176 | 2,250 | ||||||
Non-cash financing and investing activities: | ||||||||
Beneficial interest obtained in exchange for securitized accounts receivables | $ | 334 | $ | 299 |
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
(U.S. $ in millions) | ||||||||
Inventories | — | 2 | ||||||
Property, plant and equipment, net and others | 46 | 86 | ||||||
Goodwill | — | 7 | ||||||
Adjustments of assets held for sale to fair value | (30 | ) | (76 | ) | ||||
Total assets of the disposal group classified as held for sale in the consolidated balance sheets | $ | 16 | $ | 19 | ||||
Total liabilities of the disposal group classified as held for sale in the consolidated balance sheets, recorded under accrued expenses and other long-term liabilities | $ | — | $ | (43 | ) | |||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
(U.S. $ in millions) | ||||||||
Inventories | 2 | 2 | ||||||
Property, plant and equipment, net and others | 18 | 18 | ||||||
Adjustments of assets held for sale to fair value | (10 | ) | (10 | ) | ||||
Total assets of the disposal group classified as held for sale in the consolidated balance sheets | $ | 10 | $ | 10 | ||||
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 | |||||||||||
§ | Represents an amount less than $0.5 million. |
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 | |||||||||||
§ | Represents an amount less than $0.5 million. |
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 | ||||||||||||||||
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, 2022 | $ | 68 | $ | 1,655 | $ | 854 | $ | 1,085 | $ | 535 | $ | 112 | $ | 4,241 | $ | 4,309 | ||||||||||||||||
Provisions related to sales made in current year period | 82 | 928 | 198 | 1,814 | 58 | 90 | 3,088 | 3,170 | ||||||||||||||||||||||||
Provisions related to sales made in prior periods | — | (90 | ) | 26 | (8 | ) | (14 | ) | (1 | ) | (87 | ) | (87 | ) | ||||||||||||||||||
Credits and payments | (88 | ) | (1,037 | ) | (270 | ) | (1,940 | ) | (110 | ) | (73 | ) | (3,430 | ) | (3,518 | ) | ||||||||||||||||
Translation differences | — | (3 | ) | (1 | ) | — | — | (1 | ) | (5 | ) | (5 | ) | |||||||||||||||||||
Balance at March 31, 2022 | $ | 62 | $ | 1,453 | $ | 807 | $ | 951 | $ | 469 | $ | 127 | $ | 3,807 | $ | 3,869 | ||||||||||||||||
Sales Reserves and Allowances | ||||||||||||||||||||||||||||||||
Reserves included in Accounts Receivable, net | Rebates | Medicaid and other governmental allowances | Chargebacks | Returns | Other | Total reserves included in SR&A | Total | |||||||||||||||||||||||||
(U.S. $ in millions) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2021 | $ | 68 | $ | 1,655 | $ | 854 | $ | 1,085 | $ | 535 | $ | 112 | $ | 4,241 | $ | 4,309 | ||||||||||||||||
Provisions related to sales made in current year | 269 | 2,832 | 684 | 5,656 | 219 | 226 | 9,617 | 9,886 | ||||||||||||||||||||||||
Provisions related to sales made in prior periods | — | (103 | ) | (15 | ) | (28 | ) | (9 | ) | (3 | ) | (158 | ) | (158 | ) | |||||||||||||||||
Credits and payments | (285 | ) | (2,845 | ) | (762 | ) | (5,826 | ) | (300 | ) | (213 | ) | (9,946 | ) | (10,231 | ) | ||||||||||||||||
Translation differences | — | (66 | ) | (11 | ) | (17 | ) | (8 | ) | (4 | ) | (106 | ) | (106 | ) | |||||||||||||||||
Balance at September 30, 2022 | $ | 52 | 1,473 | $ | 750 | $ | 870 | $ | 437 | $ | 118 | $ | 3,648 | $ | 3,700 | |||||||||||||||||
§ | Represents an amount less than $0.5 million. |
Reserves included in Accounts Receivable, net | Rebates | Medicaid and other governmental allowances | Chargebacks | Returns | Other | Total reserves included in SR&A | Total | |||||||||||||||||||||||||
(U.S.$ in millions) | ||||||||||||||||||||||||||||||||
Balance at December 31, 2020 | $ | 80 | $ | 2,054 | $ | 828 | $ | 1,108 | $ | 686 | $ | 148 | $ | 4,824 | $ | 4,904 | ||||||||||||||||
Provisions related to sales made in current year | 285 | 3,060 | 617 | 5,949 | 207 | 246 | 10,079 | 10,364 | ||||||||||||||||||||||||
Provisions related to sales made in prior periods | (5 | ) | (94 | ) | (46 | ) | (31 | ) | (53 | ) | (25 | ) | (249 | ) | (254 | ) | ||||||||||||||||
Credits and payments | (293 | ) | (3,286 | ) | (595 | ) | (5,983 | ) | (265 | ) | (247 | ) | (10,376 | ) | (10,669 | ) | ||||||||||||||||
Translation differences | — | (22 | ) | (5 | ) | (4 | ) | (4 | ) | (2 | ) | (37 | ) | (37 | ) | |||||||||||||||||
Balance at September 30, 2021 | $ | 67 | $ | 1,712 | $ | 799 | $ | 1,039 | $ | 571 | $ | 120 | $ | 4,241 | $ | 4,308 | ||||||||||||||||
September 30, | December 31, | |||||||
2022 | 2021 | |||||||
(U.S. $ in millions) | ||||||||
Finished products | $ | 1,801 | $ | 1,932 | ||||
Raw and packaging materials | 1,292 | 1,136 | ||||||
Products in process | 606 | 587 | ||||||
Materials in transit and payments on account | 160 | 163 | ||||||
Total | $ | 3,859 | $ | 3,818 | ||||
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
(U.S. $ in millions) | ||||||||
Finished products | $ | 2,110 | $ | 1,987 | ||||
Raw and packaging materials | 1,205 | 1,059 | ||||||
Products in process | 620 | 555 | ||||||
Materials in transit and payments on account | 183 | 232 | ||||||
$ | 4,118 | $ | 3,833 | |||||
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 | ||||||||||||
(a) | Identifiable product rights of |
(b) | IPR&D assets of and launch date). |
North America | Europe | International Markets | Other | Total | ||||||||||||||||
(U.S. $ in millions) | ||||||||||||||||||||
Balance as of December 31, 2021 (1) | $ | 6,474 | $ | 8,544 | $ | 2,328 | $ | 2,694 | $ | 20,040 | ||||||||||
Changes during the period: | ||||||||||||||||||||
Goodwill impairment | — | — | (479 | ) | (266 | ) | (745 | ) | ||||||||||||
Goodwill acquired | 12 | 12 | ||||||||||||||||||
Translation differences | (27 | ) | (559 | ) | (67 | ) | (221 | ) | (874 | ) | ||||||||||
Balance as of September 30, 2022 (1) | $ | 6,447 | $ | 7,985 | $ | 1,782 | $ | 2,219 | $ | 18,433 | ||||||||||
North America | Europe | International Markets | Other | Total | ||||||||||||||||||||
Teva’s API | Medis | |||||||||||||||||||||||
(U.S. $ in millions) | ||||||||||||||||||||||||
Balance as of December 31, 2022 (1) | $ | 6,450 | $ | 8,302 | $ | 1,339 | $ | 1,293 | $ | 249 | $ | 17,633 | ||||||||||||
Changes during the period: | ||||||||||||||||||||||||
Translation differences | 1 | 82 | 61 | 12 | 10 | 166 | ||||||||||||||||||
Balance as of March 31, 2023 (1) | $ | 6,451 | $ | 8,384 | $ | 1,400 | $ | 1,305 | $ | 259 | $ | 17,799 | ||||||||||||
(1) | Accumulated goodwill impairment as of $25.6 billion, respectively. |
a. | Short-term debt: |
September 30, | December 31, | March 31, | December 31, | |||||||||||||||||||||||||||||
Weighted average interest rate as of September 30, 2022 | Maturity | 2022 | 2021 | Interest rate as of March 31, 2023 | Maturity | 2023 | 2022 | |||||||||||||||||||||||||
(U.S. $ in millions) | (U.S. $ in millions) | |||||||||||||||||||||||||||||||
Convertible senior debentures | 0.25 | % | 2026 | 23 | 23 | 0.25 | % | 2026 | 23 | 23 | ||||||||||||||||||||||
Current maturities of long-term liabilities | Current maturities of long-term liabilities | 2,746 | 1,403 | 1,000 | 2,086 | |||||||||||||||||||||||||||
Total short-term debt | Total short-term debt | $ | 2,769 | $ | 1,426 | $ | 1,023 | $ | 2,109 | |||||||||||||||||||||||
b. | Long-term debt: |
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 | ||||||||||||
(1) | In March 2023, Teva issued sustainability-linked senior notes in an aggregate principal amount of 800 million euro bearing 7.38% annual interest and due September 2029. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.100%-0.300% per annum, from and including September 15, 2026. |
(2) | In March 2023, Teva issued sustainability-linked senior notes in an aggregate principal amount of 500 million euro bearing 7.88% annual interest and due September 2031. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.100%-0.300% per annum, from and including September 15, 2026. |
(3) | In March 2023, Teva issued sustainability-linked senior notes in an aggregate principal amount of $600 million bearing 7.88% annual interest and due September 2029. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.100%-0.300% per annum, from and including September 15, 2026. |
(4) | In March 2023, Teva issued sustainability-linked senior notes in an aggregate principal amount of $500 million bearing 8.13% annual interest and due September 2031. If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.100%-0.300% per annum, from and including September 15, 2026. |
(5) | In March 2023, Teva consummated a cash tender offer and extinguished $631 million aggregate principal amount of its 1,000 million euro 6% senior notes due in 2025; $432 million aggregate principal amount of its 900 million euro 4.5% senior notes due in 2025; $574 million aggregate principal amount of its $1,000 million 7.13% senior notes due in 2025; $454 million aggregate principal amount of its $3,000 million 2.8% senior notes due in 2023; $293 million aggregate principal amount of its $1,250 million 6% senior notes due in 2024 and $122 million aggregate principal amount of its $3,500 million 3.15% senior notes due in 2026. |
(6) | If Teva fails to achieve certain sustainability performance targets, the interest rate shall increase by 0.125%-0.375% per annum, from and including May 9, 2026. |
If Teva fails to achieve certain sustainability performance targets, a one-time premium payment of0.15%-0.45% out of the principal amount will be paid at maturity or upon earlier redemption, if such redemption is on or after May 9, 2026. |
Debt issuance costs as of March 31, 2023 include $26 million in connection with the issuance of the sustainability-linked senior notes in March 2023, partially offset by $6 million acceleration of issuance costs related to the cash tender offer. |
(9) | In repaid |
(*) | Interest rate adjustments and a potential one-time premium payment related to the sustainability-linked bonds are treated as bifurcated embedded derivatives. See note 8c. |
a. |
b. | Interest risk management: |
c. | Bifurcated embedded derivatives: |
d. | Derivative instruments outstanding: |
March 31, | December 31, | |||||||
2023 | 2022 | |||||||
(U.S. $ in millions) | ||||||||
Cross-currency swap - cash flow hedge (1) | $ | 169 | $ | — | ||||
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 | ) |
§ | Represents an amount less than $0.5 million. |
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 | |||||||||||||||
Three months ended, | Three 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 | $ | 252 | $ | 241 | $ | (3,595 | ) | $ | (3,887 | ) | ||||||
Option and forward contracts (1) | (6 | ) | (9 | ) | — | — | ||||||||||
Option and forward contracts economic hedge (2) | — | — | (34 | ) | (16 | ) |
Financial expenses, net | Net revenues | |||||||||||||||
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 | $ | (3,661 | ) | $ | (3,661 | ) | ||||||
Option and forward contracts (2) | (13 | ) | (5 | ) | — | — | ||||||||||
Option and forward contracts economic hedge (3) | — | — | 6 | (19 | ) |
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 | ) |
(1) | On March 31, 2023, Teva entered into a cross currency interest rate swap agreement, designated as cash flow hedge for accounting purposes with respect to an intercompany loan due October 2026, denominated in Japanese yen. |
(2) | Teva uses foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, Teva recognizes gains or losses that offset the revaluation of the balance sheet items also recorded under financial expenses, net. |
Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on projected revenues and expenses recorded in euro, Swiss franc, Japanese yen, British pound, Russian ruble, Canadian dollar, of cash flows. |
e. | Amortizations due to terminated derivative instruments: |
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 ® ) andbuprenorphine 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) |
* | Amounts exclude attorneys’ fees and costs, except New York. |
** | Not including cash payment and attorneys’ fees allocated under the nationwide settlement. |
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. |
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 | ||||
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. |
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 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 non-controlling interests. |
(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. |
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. |
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 | ||||||
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 | ) | ||
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 | ||||
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 | ||||
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 | ||||
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 | ||||
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 | |||||||
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. |
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 | ) | ||
§ | 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. |
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. |
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, specialtyinnovative 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 specialtyinnovative 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, specialtywhich 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
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-economicmacroeconomic factors. However, although inflationary and other macroeconomic pressures may ease, the higher costs we have experienced during the recent periodperiods have already impacted our operations and will likely continue to have an effect on our financial results.
Highlights
Significant highlights in the thirdfirst quarter of 20222023 included:
Revenues in the thirdfirst quarter of 20222023 were $3,595$3,661 million, a decreaseflat compared to the first quarter of 8% in U.S. dollars, or 2% in2022. In local currency terms, compared to the third quarter of 2021. This decrease in local currency terms wasrevenues 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.
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Our North America segment generated revenues of $1,809$1,766 million and segment profit of $477$332 million in the thirdfirst quarter of 2023. Revenues increased by 2% compared to the first quarter of 2022. RevenuesSegment profit decreased by 4%17% compared to the thirdfirst 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 thirdfirst quarter of 2022.2023. Revenues decreasedincreased by 12%2% in U.S. dollars, but increased by 1%or 9% in local currency terms, compared to the thirdfirst quarter of 2021. Profit2022. Segment profit decreased by 8%9% compared to the thirdfirst quarter of 2021.2022.
Our International Markets segment generated revenues of $475$492 million and segment profit of $112$114 million in the thirdfirst quarter of 2023. Revenues were flat in U.S. dollars compared to the first quarter of 2022. RevenuesIn 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 thirdfirst quarter of 2021. Profit decreased by 27% compared to the third quarter of 2021.2022.
Exchange rate movements during the thirdfirst quarter of 2022, net of2023, including hedging effects, negatively impacted overall revenues by $215 million and operating income by $53$128 million compared to the thirdfirst 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 thirdfirst quarter of 2022,2023, compared to $21$149 million in the thirdfirst 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 thirdfirst quarter of 2022,2023, compared to expenses of $62$128 million in the thirdfirst quarter of 2021.2022. See note 12 to our consolidated financial statements.
Legal settlements and loss contingencies expenses were $195$233 million in the thirdfirst quarter of 2022,2023, compared to $3$1,124 million in the thirdfirst quarter of 2021.2022. See note 9 to our consolidated financial statements.
Operating income was $419$2 million in the thirdfirst quarter of 2022,2023, compared to an operating incomeloss of $623$713 million in the thirdfirst quarter of 2021.2022.
Financial expenses were $252$260 million in the thirdfirst quarter of 2022,2023, compared to $241$258 million in the thirdfirst 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. |
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 fromused in operating activities during the thirdfirst quarter of 20222023 was $543$145 million, compared to $529$49 million in the thirdfirst quarter of 2021.2022. The increasehigher cash flow used in the thirdfirst quarter of 20222023 resulted mainly from changes in the deferred purchase price under our securitization agreement, partially offset bylower profit and changes in working capital items, primarily a lower reductionincluding an increase in our inventory levels compared toaccounts receivables net of SR&A, partially offset by an increase in accounts payables.
During the thirdfirst quarter of 2021.
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Results of Operations
Comparison of Three Months Ended September 30, 2022March 31, 2023 to Three Months Ended September 30, 2021
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, 2022March 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 | % | ||||||||
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 | %) | |||||||||
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| |||||||||
Segment profit* | $ | 332 | 18.8 | % | $ | 402 | 23.1 | % | ||||||||
|
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|
* | Segment profit does not include amortization and certain other items. |
§ | Represents an amount less than |
North America Revenues
Our North America segment includes the United States and Canada. Revenues from our North America segment in the thirdfirst quarter of 20222023 were $1,809$1,766 million, a decreasean increase of $66$29 million, or 4%2%, compared to the thirdfirst quarter of 2021,2022. This increase was mainly due to a decrease inhigher 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.
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, 2022March 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 | % | ||||||||
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Total | $ | 1,766 | $ | 1,737 | 2 | % | ||||||
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* | 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. |
45
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 | %) | ||||||
Generic products
Among the most significant generic products we sold in North America in the thirdfirst quarter of 20222023 were lenalidomide capsules (the generic version of Revlimid®), Truxima® (the biosimilar to Rituxan®), epinephrine injectable solution (the generic equivalent of EpiPen
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 thirdfirst quarter of 2022,2023, our total prescriptions were approximately 30381 million (based on trailing twelve months), representing 8.2%8.3% of total U.S. generic prescriptions according to IQVIA data.
AJOVY
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.
AJOVY is protected worldwide by patents expiring in 2026 in Europe and in 2027 inat the United States. Applications for patent termearliest; extensions have been submittedgranted in various markets aroundseveral 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, 2021which decisions were affirmed by the Court of Appeals for the Federal Circuit affirmed all ofon 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
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 deniedalleging that Lilly’s motionmarketing and sale of galcanezumab product infringes two patents related to dismiss and on March 23, 2022, Lilly submittedthe treatment of refractory migraine. Lilly’s IPR petitions challenging the patentability of thethese two refractory migraine patents followed by another IPR submitted on April 11, 2022 challenging the patentability ofas well as a third patent also related to the twotreatment 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 onPTAB. The litigation in the validityDistrict of twoMassachusetts 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
AUSTEDO was launched in the U.S. in 2017. It is indicated for the treatment of chorea associated with HuntingtonHuntington’s disease and for the treatment of tardive dyskinesia in adults.
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AUSTEDO is protected in the United States by eightten 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 complaintclaims 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,
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 UZEDYTM(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
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 allowingwith 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 producttheir products on JanuaryNovember 17, 20282027 or earlier under certain circumstances. A trialOn May 4, 2023, Teva and Eagle also filed suit against two additionalBendaRx 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.
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.
COPAXONE
The market for MS treatments continues to develop, particularly with the approval of generic versions of COPAXONE. Oral treatments for MS, such as Tecfidera
47
Anda
Product Launches and Pipeline
In the thirdfirst 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, 173March 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 filefirst-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
In the thirdfirst 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
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. |
** | Branded product |
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For information regarding our specialtyinnovative and biosimilar products pipeline, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
North America Gross Profit
Gross profit from our North America segment in the thirdfirst quarter of 20222023 was $942$812 million, a decrease of 3%9%, compared to $967$890 million in the thirdfirst quarter of 2021.
Gross profit margin for our North America segment in the thirdfirst quarter of 2022 increased2023 decreased to 52.1%46.0%, compared to 51.6%51.2% in the thirdfirst quarter of 2021.2022. This increasedecrease was mainly due to a favorable changehigher 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.
North America R&D Expenses
R&D expenses relating to our North America segment in the thirdfirst quarter of 20222023 were $111$156 million, a decreasean increase of 24%9%, compared to $146$143 million in the thirdfirst quarter of 2021.
For a description of our R&D expenses in the thirdfirst 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 thirdfirst quarter of 20222023 were $232$223 million, a decrease of 7%9%, compared to $250$245 million in the thirdfirst 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 thirdfirst quarter of 20222023 were $122$102 million, an increasea decrease of 1%9% compared to $121$112 million in the thirdfirst quarter of 2021.
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 thirdfirst quarter of 20222023 was $477$332 million, an increasea decrease of 4%17% compared to $458$402 million in the thirdfirst 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.
Europe Segment
The following table presents revenues, expenses and profit for our Europe segment for the three months ended September 30, 2022March 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 | % | ||||||||
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 | § | § | § | § | ||||||||||||
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Segment profit* | $ | 345 | 29.1 | % | $ | 381 | 32.9 | % | ||||||||
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* | Segment profit does not include amortization and certain other items. |
§ | Represents an amount less than $0.5 million or 0.5%, as applicable. |
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Europe Revenues
Our Europe segment includes the European Union, the United Kingdom and certain other European countries.
Revenues from our Europe segment in the thirdfirst quarter of 20222023 were $1,069$1,184 million, a decreasean increase of 12%2%, or $151$28 million, compared to the thirdfirst 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 thirdfirst quarter of 2022,2023, revenues were negatively impacted by exchange rate fluctuations of $162$79 million, net of hedging effects, compared to the thirdfirst quarter of 2021.2022. Revenues in the thirdfirst quarter of 20222023 included $24$6 million from a positivenegative 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, 2022March 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 | %) | ||||||
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%) | |||||||
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Total | $ | 1,184 | $ | 1,156 | 2% | |||||
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Generic products
AJOVY
For information about AJOVY patent protection, see “—North America Revenues—Revenues by Major Product” above.
COPAXONE
One European patent protecting COPAXONE 40 mg/mL was found invalid by the Board of Appeal of the European Patent Office in September 2020. Two2020 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.
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Respiratory products
Product Launches and Pipeline
As of September 30, 2022,March 31, 2023, our generic products pipeline in Europe included 588128 generic approvals relating to 7227 compounds in 15553 formulations, with no European Medicines Agency (“EMA”) approvals received. In addition, approximately 1,1991,129 marketing authorization applications are pending approval in 37 European countries, relating to 110102 compounds in 220206 formulations. Two applications areOne 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.
For information regarding our specialtyinnovative 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 thirdfirst quarter of 20222023 was $634$655 million, a decrease of 11%6% compared to $714$694 million in the thirdfirst quarter of 2021, mainly due to exchange rate fluctuations.
Gross profit margin for our Europe segment in the thirdfirst quarter of 2022 increased2023 decreased to 59.3%55.3%, compared to 58.6%60.0% in the thirdfirst quarter of 2021.2022. This increasedecrease 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 productsinflationary and decrease in write-offs.
Europe R&D Expenses
R&D expenses relating to our Europe segment in the thirdfirst quarter of 20222023 were $44$53 million, a decrease of 21%8% compared to $55$58 million in the thirdfirst quarter of 2021.
For a description of our R&D expenses in the thirdfirst 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 thirdfirst quarter of 20222023 were $169$187 million, a decrease of 17%5% compared to $204$196 million in the thirdfirst quarter of 2021.2022. This decrease was mainly due to exchange rate fluctuations and cost efficiencies in the third quarter of 2022.
Europe G&A Expenses
G&A expenses relating to our Europe segment in the thirdfirst quarter of 20222023 were $61$70 million, a decreasean increase of 4%18% compared to $64$59 million in the thirdfirst quarter of 2021.
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 thirdfirst quarter of 20222023 was $360$345 million, a decrease of 8%9%, compared to $394$381 million in the thirdfirst quarter of 2021.2022. This decrease was mainly due to lower gross profit as described above and exchange rate fluctuations.
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International Markets Segment
The following table presents revenues, expenses and profit for our International Markets segment for the three months ended September 30, 2022March 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 | % | ||||||||
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 | %) | |||||||||||
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Segment profit* | $ | 114 | 23.1 | % | $ | 179 | 36.4 | % | ||||||||
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* | 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 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
Revenues from our International Markets segment in the thirdfirst quarter of 20222023 were $475$492 million, a decreaseflat compared to the first quarter of 10% in U.S. dollars, or 3% in2022. In local currency terms, revenues increased by 8% compared to the thirdfirst quarter of 2021. Revenues in2022.
In the thirdfirst quarter of 2021 included a milestone payment of $35 million received from Otsuka related to the launch of AJOVY in Japan.
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, 2022March 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%) | |||||||
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Total | $ | 492 | $ | 492 | § | |||||
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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
AJOVY
COPAXONE
AUSTEDO
International Markets Gross Profit
Gross profit from our International Markets segment in the thirdfirst quarter of 20222023 was $252$262 million, a decrease of 15%8% compared to $296$286 million in the thirdfirst quarter of 2021.
Gross profit margin for our International Markets segment in the thirdfirst quarter of 20222023 decreased to 53.0%53.2%, compared to 55.9%58.1% in the thirdfirst 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
International Markets R&D Expenses
R&D expenses relating to our International Markets segment in the thirdfirst quarter of 20222023 were $15$20 million, a decrease of 3%flat compared to $16 million in the thirdfirst quarter of 2021.
For a description of our R&D expenses in the thirdfirst 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 thirdfirst quarter of 20222023 were $97$98 million, a decrease of 4%flat compared to $102 million in the thirdfirst quarter of 2021.
International Markets G&A Expenses
G&A expenses relating to our International Markets segment in the thirdfirst quarter of 20222023 were $30$31 million, an increase of 3%7% compared to $29 million in the thirdfirst quarter of 2021.
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 thirdfirst quarter of 20222023 was $112$114 million, a decrease of 27%36%, compared to $152$179 million in the thirdfirst quarter of 2021.2022. This decrease was mainly due to lowerhigher other income and higher gross profit in the first quarter of 2022 as discussed above.compared to the first quarter of 2023.
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Other Activities
We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an
Our revenues from other activities in the thirdfirst quarter of 20222023 were $241$219 million, a decrease of 8%20% in U.S. dollars compared to the thirdfirst quarter of 2021.2022. In local currency terms, revenues decreased by 3%19%.
API sales to third parties in the thirdfirst quarter of 20222023 were $149$132 million, a decrease of 7%27% in both U.S. dollars and local currency terms, compared to the thirdfirst quarter of 2021.
Teva Consolidated Results
Revenues
Revenues in the thirdfirst quarter of 20222023 were $3,595$3,661 million, a decrease of 8%flat compared to the thirdfirst quarter of 2021.2022. In local currency terms, revenues decreasedincreased by 2%4%, mainly due to a decreasehigher 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 thirdfirst quarter of 2022, net of2023, including hedging effects, negatively impacted revenues by $215$128 million, compared to the thirdfirst quarter of 2021.2022. See note 8d to our consolidated financial statements.
Gross Profit
Gross profit in the thirdfirst quarter of 20222023 was $1,669$1,582 million, a decrease of 7%9% compared to the thirdfirst quarter of 2021.
Gross profit margin was 46.4%43.2% in the thirdfirst quarter of 2022,2023, compared to 46.2%47.5% in the thirdfirst quarter of 2021.2022. This increasedecrease was mainly driven by higherrising 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 positiveBENDEKA 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.
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 specialtyinnovative 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 thirdfirst quarter of 20222023 were $175$234 million, a decreasean increase of 21%4% compared to $222$225 million in the thirdfirst quarter of 2021.
In the thirdfirst quarter of 2022,2023, our R&D expenses related primarily to specialtyinnovative 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 lowerhigher R&D expenses in the thirdfirst quarter of 2022,2023, compared to the thirdfirst quarter of 2021,2022, were mainly due to a decreasean 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.
R&D expenses as a percentage of revenues were 4.9%6.4% in the thirdfirst quarter of 2022,2023, compared to 5.7%6.2% in the thirdfirst quarter of 2021.2022.
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Innovative Medicines Pipeline
Below is a description of key products in our specialtyinnovative medicines pipeline as of October 31, 2022:
Phase 2 | Phase 3 | Pre-Submission | Under Regulatory Review | |||||
Neuroscience | Olanzapine LAI Schizophrenia | |||||||
(September 2022) | ||||||||
Immunology | TEV-48574 Inflammatory Bowel Disease | ICS-SABA (TEV-56248) Respiratory (February 2023) | ||||||
Other | ||||||||
Digihaler® (beclomethasone dipropionate HFA)(U.S.) | Digihaler (budesonide and formoterol fumarate dihydrate) (EU) | |||||||
(1) |
(1) | Digital component approved in the |
Discontinued Project
In October 2022,the first quarter of 2023, development of fasinumabdeutetrabenazine for the treatment of osteoarthritic paindyskinesia 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
Selling and Marketing (S&M) Expenses
S&M expenses in the thirdfirst quarter of 20222023 were $539$546 million, a decrease of 10%6% compared to the thirdfirst 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 thirdfirst quarter of 2022,2023, compared to 15.4%15.9% in the thirdfirst quarter of 2021.
General and Administrative (G&A) Expenses
G&A expenses in the thirdfirst quarter of 20222023 were $283$296 million, a decrease of 3%flat compared to the thirdfirst quarter of 2021.
G&A expenses as a percentage of revenues were 7.9%8.1% in the thirdfirst quarter of 2022, compared to 7.5%2023 and in the thirdfirst quarter of 2021.
Intangible Asset Impairments
We recorded expenses of $24$178 million for identifiable intangible asset impairments in the thirdfirst quarter of 2022,2023, compared to expenses of $21$149 million in the thirdfirst quarter of 2021.2022. See note 5 to our consolidated financial statements.
Goodwill Impairment
No goodwill impairments were recorded in the thirdfirst quarters of 20222023 and 2021.
Other Asset Impairments, Restructuring and Other Items
We recorded expenses of $36$96 million for other asset impairments, restructuring and other items in the thirdfirst quarter of 2022,2023, compared to expenses of $62$128 million in the thirdfirst quarter of 2021. For further details, as well as a description of significant regulatory and other events, see2022. See note 12 to our consolidated financial statements.
Legal Settlements and Loss Contingencies
In the thirdfirst 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 thirdfirst quarter of 2021.2022. See note 9 to our consolidated financial statements.
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Other Income
Other income in the thirdfirst quarter of 20222023 was $2 million, compared to $25$52 million in the thirdfirst quarter of 2021.
Operating Income (Loss)
Operating income was $419$2 million in the thirdfirst quarter of 2022,2023, compared to an operating incomeloss of $623$713 million in the thirdfirst quarter of 2021.2022. The decreaseincrease in operating income in the thirdfirst quarter of 2022 compared to the third quarter of 20212023 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.
Operating income as a percentage of revenues was 11.6%0.1% in the thirdfirst quarter of 2022,2023, compared to operating incomeloss as a percentage of revenues of 16.0%19.5% in the thirdfirst quarter of 2021.
Financial Expenses, Net
Financial expenses were $252$260 million in the thirdfirst quarter of 2022,2023, compared to $241$258 million in the thirdfirst quarter of 2021.2022. Financial expenses in the thirdfirst 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, 2022March 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 | ||||
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 | ||||||
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Total reportable segments profit | 791 | 962 | ||||||
Profit (loss) of other activities | (6 | ) | 52 | |||||
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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 | ||||||
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Consolidated operating income (loss) | 2 | (713 | ) | |||||
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Financial expenses, net | 260 | 258 | ||||||
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Consolidated income (loss) before income taxes | $ | (258 | ) | $ | (971 | ) | ||
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Income taxes
In the thirdfirst 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
Share in (Profits) Losses of Associated Companies, Net
Share in lossesprofits of associated companies, net in the thirdfirst 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, comparedmainly related to sharethe difference between the book value of our investment in lossesNovetide and its fair value as of $5 millionthe date we completed its acquisition in the third quarter of 2021.January 2022.
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Net Income (Loss) Attributable to Teva
Net incomeloss was $56$205 million in the thirdfirst quarter of 2022,2023, compared to net incomeloss of $292$955 million in the thirdfirst quarter of 2021. The decrease in net income2022. Net loss in the thirdfirst quarter of 2022 was mainly due to lower operating incomeimpacted by legal settlements and higher income taxes, allloss 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 1,1191,115 million and 1,1091,107 million shares, respectively.
Diluted earningsloss per share were $0.05was $0.18 in the thirdfirst quarter of 2022,2023, compared to diluted earningsloss per share of $0.26$0.86 in the thirdfirst 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 1,1441,158 million and 1,1281,145 million, respectively.
Impact of Currency Fluctuations on Results of Operations
In the thirdfirst 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 thirdfirst 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 pesoUkrainian hryvna by 28%22%, Japanese yen by 12%, Swedish krona by 11%, Hungarian forint by 25%10%, Ukrainian hryvnaIsraeli 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 rublefollowing main currencies increased in value against the U.S. dollardollar: Russian ruble by 23%18%, Mexican peso by 10% and Brazilian real by 1%.
As a result, exchange rate movements during the thirdfirst quarter of 2022, net of2023, including hedging effects, negatively impacted overall revenues by $215$128 million and operating income by $53$32 million, compared to the thirdfirst quarter of 2021.
In the thirdfirst 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.
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.
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 | % | ||||||||
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 | %) | ||||||
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 | % | ||||||||
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 | %) | ||||||
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 | % | ||||||||
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 | %) | ||||||
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 | |||
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.
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 $448negative $41 million as of September 30, 2022,March 31, 2023, compared to $787negative $119 million as of December 31, 2021.2022. This decreaseincrease was mainly due to a decreasean increase in accounts receivables, net of SR&A, as well as in inventory levels and an increase in accruedprepaid expenses, mainly due to an update to the estimated settlement provision recorded in connection with the remaining opioid cases, partially offset byand 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.
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Employee-related obligations, as of September 30, 2022March 31, 2023 were $496$432 million, compared to $563$566 million as of December 31, 2021.2022. The decrease in the first nine monthsquarter of 20222023 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.
Cash investment in property, plant and equipment in the thirdfirst quarter of 20222023 was $122$139 million, compared to $146$157 million in the thirdfirst quarter of 2021.2022. Depreciation in the thirdfirst quarter of 20222023 was $156$139 million, compared to $132$123 million in the thirdfirst quarter of 2021.
Cash and cash equivalents and short-term and long-term investments as of September 30, 2022March 31, 2023 were $2,241$2,161 million, compared to $2,191$2,817 million as of December 31, 2021.
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 itsour $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
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.
Our debt as of September 30, 2022March 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, 2022March 31, 2023 was 13%5%, compared to 6%10% as of December 31, 2021.
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.
Our average debt maturity was approximately 5.96.4 years as of September 30, 2022,March 31, 2023, compared to 6.45.8 years as of December 31, 2021.
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, andpartially offset by a negativepositive impact of $684$120 million from exchange rate fluctuations.
Exchange rate fluctuations affected our balance sheet, as approximately 68%82% of our net assets as of September 30, 2022March 31, 2023 (including both
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.
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Cash flow generated fromused in operating activities during the thirdfirst quarter of 20222023 was $543$145 million, compared to $529$49 million in the thirdfirst quarter of 2021.2022. The increasehigher cash flow used in the thirdfirst quarter of 20222023 resulted mainly from changes in the deferred purchase price under our securitization agreement, partially offset bylower profit and changes in working capital items, primarily a lower reductionincluding an increase in our inventory levels compared toaccounts receivables, net of SR&A, partially offset by an increase in accounts payables.
During the thirdfirst quarter of 2021.
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.
We are committed to paying royalties to owners of
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.
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
Non-GAAP
We present
Non-GAAP
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In preparing our
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; |
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; |
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.
The following tables present our
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 ournon-GAAP net income attributable to Teva by ournon-GAAP diluted weighted average number of shares. |
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Off-Balance
Except for securitization transactions, which are disclosed in note 10(f)10f to our consolidated financial statements included in our Annual Report on Form
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
Recently Issued Accounting Pronouncements
See note 1 to our consolidated financial statements.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
There has not been any material change in our assessment of market risk as set forth in Item 7A to our Annual Report on Form
ITEM 4. | CONTROLS AND PROCEDURES |
Disclosure Controls and Procedures
Teva maintains “disclosure controls and procedures” (as defined in
After evaluating the effectiveness of our disclosure controls and procedures as of September 30, 2022,March 31, 2023, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, Teva’s disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Control over Financial Reporting
During the quarterthree months ended September 30, 2022,March 31, 2023, there were no changes in internal control over financial reporting that materially affected or are reasonably likely to materially affect Teva’s internal control over financial reporting.
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PART II — OTHER INFORMATION
ITEM 1. | LEGAL PROCEEDINGS |
We are subject to various litigation and other legal proceedings. For a discussion of these matters, see “Commitments and Contingencies” included in note 10 to the consolidated financial statements included in Part I, Item 1 of this Quarterly Report on Form
ITEM 1A. | RISK FACTORS |
There are no material changes to the risk factors previously disclosed in our Annual Report on Form
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
Unregistered Sales of Equity Securities
There were no sales of unregistered equity securities during the three months ended September 30, 2022.
Repurchase of Shares
We did not repurchase any of our shares during the three months ended September 30, 2022March 31, 2023 and currently cannot conduct share repurchases or pay dividends due to our accumulated deficit.
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
Not applicable.
ITEM 4. | MINE SAFETY DISCLOSURES |
Not applicable.
ITEM 5. | OTHER INFORMATION |
None.
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ITEM 6. | EXHIBITS |
* | Filed herewith. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
TEVA PHARMACEUTICAL INDUSTRIES LIMITED | ||||||
Date: | By: | /s/ Eli Kalif | ||||
Name: | Eli Kalif | |||||
Title: | Executive Vice President, Chief Financial Officer (Duly Authorized Officer) |
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