TEVA - Earnings call transcript Q4 2017 | Teva Pharmaceutical Industries Limited

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Operator

Good afternoon, ladies and gentlemen, and thank you for standing by, and welcome to the Fourth Quarter 2017 Financial Results. At this time, all participants are in a listen-only mode. There will be a presentation, followed by a question-and-answer session I must advise you this conference is being recorded today, Thursday, February 8, 2018. And I'd now like to hand the conference over to your speaker today, Kevin Mannix, Senior Vice President, Head of Investor Relations. Please go ahead.

Kevin C. Mannix

thank Fourth for XXXX Quarter and to us Financial Tracy, Teva's discuss and you, you, joining everyone, today Results. Thank Full Year our and morning, for this we our release Earlier issued the year. detailing quarter press results A be copy presented the the well Investor of on our on app. the website copy call as slides Relations can our well press as of this as as release on found being at www.tevapharm.com Teva

company's Head call outlook. uses both the would you XXXX of turn Teva's Our with to by Kåre. Management believes discussion Q&A company's of today North the I'd with us quarter detail Commercial. information disclosed I'll earnings understand the the and management Brendan Executive recent assumptions our results, measures, meaningful some measures results our on to supplementary that Today, will with remarks now certain open financial evaluate and on is America GAAP to Financial better Mike the note call financial Kåre, more results the inclusion provides and additional our the annual business. Officer, its the to O'Grady, review fourth please. also trends. in measures call and like internally will of Kåre for in the Chief available financial and defined as our GAAP our to McClellan, non-GAAP during includes and operations outlook in over non-GAAP manage events discuss operations measures Officer, and XXXX. analysis financial Schultz, that, around are if Chief And to available by non-GAAP Reconciliation facilitates presentation. of the Further, non-GAAP measures SEC. today's performance, financial release investors evaluating and in

Kåre Schultz

thanks and everybody, in. for calling morning, Good

start, cautionary statements. please read note we our forward-looking regarding Before

COPAXONE of the full revenues, marginally course, income. then numbers. XXXX and and and if operating looking revenues year was, inclusion I'll came As we in there on above income in the these the of the net and downward full pressure did below of start U.S. The in came the Kevin said, slightly a address sales generic as combination on well then some the in

If you a with had third we full for non-GAAP came which the of outlook the line predictions earnings, the we is at look out we quarter. the result in with the year, had, after $X

course, related impairment If U.S. see cash look and of debt the the GAAP results, get situation an debt reason, the can and our including important to basis, XXXX. our able that also divestitures you'd the of flow, were Mike similar significant you you that the see is, will as a loss then in ongoing of operating which the we're later. reducing some at cash look in If the back reduction to a of in nicely continue to we goodwill and a see the details deleveraging we in flow, net you'd but is came primary this of at and a where significant so course, businesses on the the on then revenue, flow, free income cash generics

everything you that a everything is our but bit flavor me key is which let on plan is to short give restructuring revealed outlook it. of target, restructuring One mid-December. the our all to of on you on elements the we plan, message of is business plan, of The

we're forms the and of the new plan all management that levels basis down guidance have organizational teams, for in giving structure created terms organization for XXXX, today. We place for that has new operating this in our it's you all our annual which

is our able we find where our profitable be XXXX, our our out generics also generics that issues at happy also we moving regarding of so way be throughout on see another customers, XX,XXX-persons planned. we and area, block expected divestments in workforce end to that we a a Israel, the speculative restructuring us XXXX ongoing programs specialty through it's our closures But And talking this process that during will have we of of year the also either in of very of following all an the half In outside a would is from discontinuation optimization an that in inform we area which of R&D this these products from from we of And price We announced core we're completed roughly we've our reduction very unprofitable year. expertise of our XXXX. we the and announced six and XX,XXX alluded be products our had manufacturing in of of We've a Everything don't completely plan. quarters communicated to our the portfolio. Half closures over period but also and on reduction form basis constructive solution very are as a have six unrest these a seen XX,XXX, programs. on to key fall will remaining go side. with whether December, U.S. by year global all plants the investment footprint, we to of calm, QX anything plants is portfolio And planned, of end includes cut as six which to this We've the taken sure close we of executing course, worldwide this a now programs. making despite the way, are doing programs. according in would to since have have the some working you return and the the communicated announce course, have trimmed the fact are, lot expecting adjustments And here, plan. discussing this before. XX% Basically following look a as exactly process in that This to we and I'm is, or this to years. that by consolidate reduction.

world's largest portfolio base We but be we to short And The a billion spend and communicated and programs. filings. achieve reduction that XXXX. minor reduction a we've earlier done the message half XXX on there in happen of $X we is still XXXX track that will will in the more have generic it's this scale, full the than amount of are realized of

drivers, have dyskinesia in and last for well. Huntington's AUSTEDO and disease. launched on know, later Korea key both year. course, of drivers our In And launched for of very it for in assets. launched And tardive first terms dyskinesia. of It's growth doing you we AUSTEDO growth one the as was is, tardive specialty Huntington's was

exactly as patients accumulating are we planning. were We

basis very are to basically thereby, a growth of clinical optimistic in marketplace. broaden the the important all potential in we're clinical also this the about June XX. this the product product. in very on TOURETTE doing very and, focused much order So date increase PDUFA This We're year, future also we trials for further had fremanezumab. in growth We

that And handling would the voucher, FDA so review with manufacturing, bought well. see from is we seeing clinical the dialogue they're know, of elements constant all FDA. the as are and very looking very are, the expectation we that ahead in such inspecting with and have we nicely very, of we moving actually the finished elements very that you a a and course, different process fast we As

active Korea. our Celltrion Celltrion We we manufactured in with warning that API program. dialogue our from fremanezumab have by one that and to the partner order in is this that issue new of is in not our a affect supplies here letter received to letter and They would flagging are warning fact the are FDA that we API ensure have

optimistic in to prove is able the that clinical in it here to we a discussion working We're broaden good be FDA. also course are product. We but with API will that to basis settled for manufacturing the of remains the shape, be

debt Regeneron reduce product. early see area slightly as headache, have a So Phase as in passed keep as are to we pain. to to company small you lower than is know, of I've And we But told a have then. flow. before seeing I exciting items debt the it's Building simply we it end the we of on have little which very exactly. important coming by there's has very we here that's month to will here, of in have. forward like exciting on going very are starting that and as in you positive. and be that. and which we can and handle will you, the on I several to billion cash more from cluster basis. therefore be And nice. pain years. a results is, X a pain, the see us it that for expected have just on years Unfortunately exciting a on huge flows are X and are sort of footnote the many with don't less we've us we debt a and we have, of ours in we mentioned we keep very reducing this looking much program for the forward have as coming collaboration in been back last are facing the debt. you $X.X potentials. that headaches would won't it reduced product we the But we like course, significant And we since reducing since debt communicate also are in able speed that Phase are that really a the chronic ongoing In an Phase working that all in on and the had and that we secure month the fasinumab. that with to optimistic cash year, all a the And actually We're X post-traumatic bars are This will And arthritis seeing hard you're liquidity reason

organic in we There the And we $XXX are to With order for full-year the we the reduction here of We financial XXXX, in make have reducing our million the are really reasons cash four have situation. getting significant sure needed on from very outlook for a have settlement flow. covenants revenues. to expecting will to you Allergan it. stable are renegotiated that main that we keep also and the flexibility regards a see strong debt

sold are say the that the of quarter These we've we've roughly It's price pressure we've a also which the and in drop also the there's $X.X at another have in then to and some the competition That's effect fourth on billion half U.S. seen structural. the than like on. decline, of could it of leads roughly Healthcare Women's reasons Japan, a the sold in fourth, generics, businesses revenues, of we've a then that off, program the restructuring and drop to Venezuela in off, one the deconsolidated You are have we and see in operating COPAXONE. is expecting to is distribution base. you some changes items of that income. roughly so less half seen business of of generic spend our which the decline of is course, come the This, reduction related the being the we

and flow year, be at $X $X case, I'll of now look billion, $X.XX off between and expecting hand without would $X.X billion $X.X what where will we're to coming billion. might who The potential it and course, EPS the billion With cash EBITDA in we it more $X.X at McClellan the $X.XX. this the the later is that is, goes in that over to between review which full in Of is fourth Free see XXXX, quarter. this divestitures Mike year, to billion. out

Michael McClellan

everyone. Okay, you, morning, Good thank Kåre.

for our lot on XXXX. share I'd a to in results our take release, as key have you that and have received some think we of You've important as with to areas are like some to I outlook today the press well focus of what made time we to highlight assumptions information our of

other This of where performance posted XXXX. GAAP $XX of So with primarily billion $XX.X we quarterly a is turning to loss our slide of our by gain billion from review driven the into divested partially and related business of and our impairments that Health and on business tax U.S. benefit I'll mainly one-time goodwill a in offset generic a Women's go later. XX, in start fourth GAAP we operating quarter to intangibles

to a noted XXXX, larger price customer the buying further included result During U.S. fourth generics quarter the economic the extracting consolidation pricing of of pressure market of market as deterioration the in we generics greater environments, and groups, in U.S. the additional reductions. which capable

government value in and as well a saw our decrease to other the some launches We regulation as of changes. future due also pricing challenges

As of flow our the of fair generics result of of XXXX. in this, determine the we of cash of of certain XXXX our recorded related on the unit quarter adjusted a projections have impairment reporting to the generics used our this, U.S. assumptions reporting we've in billion value to unit. $XX fourth quarter U.S. a goodwill Based fourth

rights discussed slide of XX, goodwill of quarter, we additional to other billion impairment as as adjustments products certain the adjustments from also generics had about some This our marketing $XXX Takeda of revaluation and of of million. to well mainly that for Actavis related and long-lived turning an non-GAAP related equipment we and as U.S. products $XX.X to includes impairment property, for the billion, plant addition, in well I $XX had acquired products, products billion. discontinued impairments So Actavis, for just net of products generic Generics Rimsa and business Teva $X.X the as of assets a

that have of over control is nearly during in to has deconsolidation our Additionally $XXX driver this subsidiaries, primary fourth Venezuela, that and concluded led translation of related the results based quarter, adjustments a the connection we cumulative conditions deemed million to we not our in on had currency the charge of Venezuela. are with to and the we

was the December. gain the also signed items, our liabilities by primarily that We Act net-deferred Tax in of tax Reform in the had on tax-related U.S. a following driven revaluation

of slide. our would looking driven like is billion to down by low the goods to significantly, we though will This a XXXX, next So non-GAAP highlight quarter generics, annual COPAXONE, XXXX the $X revenues revenues. are slide payment level XX, price received associated sales $XXX is original that attributable erosion financial decision that non-GAAP performance of from declined or the flat. to QX fact that $X.XX the to I in roughly revenue is are $X.XX. are to decline cost non-recurring we with of our our our fact previously see Takeda This XX% impact that The of What diluted in at that the mainly goods upfront compared on had compared the cost of Venezuela relatively EPS in the here down guidance while which year. guided million U.S. on mainly The of was I to and drill to the XXXX QX pay we range bonus to our of below result for Teva's $X.XX. not upside for significantly due the were was the an this company's results of significantly, the for

was of accrual guided there reversal bonus without As to $X.XX been have Still, no a for first and per the quarter of would the result, amounts our three range $X.XX a this accrued QX. the in results benefit, during share. inside the

previous guided higher higher the billion, totaling $X.X flow from than billion, to our actually for range mainly in collections million to quarter $X cash due customers. of from came Lastly, operations $XXX

the revenues This rights XX% in XX, the quarter Specialty revenues compared XXXX. to was in were $X.X COPAXONE and for payment quarter Takeda decrease Ninlaro, of of we primarily Medicines the a the generic for due our due fourth to had upfront segment down is in slide of from that other segment the the to absence exchange Specialty as to in revenue competition XXXX booked Turning XXXX. $XXX well royalties our fourth billion, under in as in million which

Venezuelan lastly, due market. in in for dynamics decline challenging business U.S. And rate the We the also used adjustments of saw U.S. the the exchange to a our generics generics market ago $XXX resulted million, a is year of decrease $XXX to of offset a decrease in currency roughly other for Venezuela, compared currencies. of million appreciation net by which million bolivar $XXX

But driven saw bonus savings we non-GAAP Turning to reduced XX, rate of of to offset mainly exchange COPAXONE, slide by drop the XX%, earlier. expense mentioned differences due including operating I reversal the Venezuela. quarter-over-quarter partially accrual by in the the the a were sales of these income

million, decrease which and compared U.S. U.S. revenues end the fourth XX, generic the which XX the quarter is million. compared quarter of before lower $XXX XX% in competition, the outside $XXX to XX% Turning XXXX were United XXXX, XX% revenues total XXXX, the States. higher Mylan, rebates volumes. decrease slide fourth COPAXONE XXXX, in the of the of of third and a to to were XX% COPAXONE to was a U.S., which $XXX COPAXONE of and million, quarter generic launch drop for compared revenues the milligram the of over of to of prescriptions resulted the global mainly in of At over the the the quarter to were milligram of down of third accounted due XX generic In

cash we second the to the and QX payments one-time flow see from Turning slide in XX, free for after flow cash strong operations straight and QX. several quarter was

and divestitures, I benefited XXXX cash $X.X higher from in of flow from collections billion Women's of in slightly and which proceeds to here the had Health sale. from QX XXXX, as cash the noted $X.X $XXX I we of customers, well note in free as XXXX billion of any from related QX exclude operations figures the billion QX that flow would As earlier,

shares also had proceeds earlier of about in million. We from the Mylan sale the of $XXX year

the We to in of our expect bulk continue our flow free to XXXX to reduce debt. cash use outstanding

see which sheet. led to other declines in with reform related mainly generics to equity. few in a mainly And reduction intangible noted, we minutes. Also, we deferred in liabilities, reviewed I and ended XX, few our in in This assets to the following significant related in slide our Meanwhile, billion year my the approximately quarter debt U.S. previously business. go items due incomes did see U.S. reduction tax I the a highlight a our goodwill We gain on Turning long-term had the will balance in in we the cash. presentation, to shareholders' also the tax to that as tax on fourth a the $X to similar into earlier reduction in the due to a impairments

XXXX. of due sale the the as completed billion mainly to using $X.X revolving decrease as which by $XX.X for to repayments euro. debt the roughly of Health from our payment from intend debt proceeds end XXXX, our reduce will Allergan slide was billion, We The was of our during the offset Women's XX, the first XXXX. exchange of million $X.X strengthening, Turning quarter a recently $X.X to our one-time XX, of of billion settlement to of to decrease compared of further were $XXX of the that of as the we as $XX.X ex-U.S. recently short-term of receive is at a foreign fluctuations billion billion, loans, term approximately of loans other result our well that agreement. debt expected facility credit announced business the million and $XXX Payment the December due

to the we through some outlook, to outlook. that financial key numbers, in note now Kåre important constructing think turning this So but have has made it's I taken you the assumptions

ongoing XX% have milligram due are that to April. well U.S. a of base and competition factors erosion franchise price be business periods segmentation, ProAir. approximately roughly generic U.S. the biggest billion, in ongoing U.S. current Concerta. be approximately the three as of products as generic are other including decline a of of sales, erosion and XX from to enjoyed are the recent assumes This generic as the as with revenues, generics our $X to generic the second consistent in expected the includes For XXXX. expected XXXX COPAXONE $X.X versus billion in early launch exclusivity, the Global COPAXONE, sales

our We in also for XXXX. expect U.S. to second see of a ProAir half during the generic competition franchise the

mainly XXXX. For of – divestments to by shekel offset billion expect cost-saving show in initiatives, approximately to decline billion negative result in $XX.X $X.X that note due impacts dollar. the the partially This from our a of currency the like strengthening spend and $XX.X dollar strengthening base, to the we effective and I'd XXXX billion is euro versus to net

January the $X.XX this include at are the a which XXX. on roughly end to ILS the dollar dollar at rates Israeli shekel assumptions Additional to recent euro and those of at XXXX, currency to similar

the for from two, which We in and of the range around be the to due capped is tax expenses U.S., our expense rate due reduced and in rate negative preferential reflects of benefits U.S. will interest to a rate, expect tax financing on EBIT to short reforms tax to the short term expected impact our XX%, be – of year at the overall the reform which have in COPAXONE, million XX% the sales in to which a XX% the on one, $XXX the today

mentioned XXXX million costs cash earlier. the million year flow coming million expense the approximately $X.X the sources. Kåre two other, of Women's the We the Teva capital cash an to expect $XXX settlement will expect items the we for that offset by the during operations include approximately to Allergan of $XXX and Health each by that cash of gross in lowered ex-U.S. debt $XXX of proceeds restructuring also program and free be approximately XXXX, one-time Our – announced payment cash the billion result by large due from the recently be flow, from other expense of year-end sale a will and expenditures our to do as

in the the we due give will guidance. quarters in of to leaves going recent be like during of cash shares this over coming is At the you will to COPAXONE XXXX. and of but generic at paying us million. we the Q&A. paying on operator a our it shares But longer shares conversion and X,XXX strongest affects second accumulation will rather be goodwill thing expect by the them April, not look dividend positive that that approximately dividend be we're cash, course as note we in as turn year. end should of we situation expect a and is at where of impairment QX the weighted the One us count average partially no to the year, Lastly, number the driven in into fact take retained This fact our that earnings preferred we have then be the period quarterly the if the that share last the not over to a probably to the point, the to I'd suspending

Operator

you. Thank Ladies we the question-and-answer session. begin now gentlemen, and will

of first question Tsao the comes Your from Douglas line of Barclays. Please question. ask your

Douglas Tsao

Thanks questions. morning. the for Good Hi. taking (XX:XX:XX)

Just also remarks, press Do in from prepared worsening Econdisc market quarter. you in terms XXXX fourth of the I the it a comments WBAD? release, some the sense of contributions the the U.S. have guidance? from missed fremanezumab joining in comments, have might generic referenced in the in And the the just – of the you impact

Kåre Schultz

are to for the XXXX, new an Yes. will guidance a questions. it's of where take an a revenue. In insignificant hoping And slow for therapy, expansion which market review with the first has the of a case the fremanezumab middle because the the launch Thanks for basically existing this that's the the area but we not I'll generics. is (XX:XX:XX). U.S. give year that takeoff, and and we'll see fremanezumab see on then sometime simply Brendan you in

insignificant expectations expectations, very have modest the revenue. for We

However, important believe potential there's it since market. a we us Brendan? in product long-term migraine an is for the huge

Brendan O'Grady

question. price group just that to we've I just fourth the continue continuation it. Econdisc overall the of don't think it's the in seen for market. U.S. generic had It's joining WBAD a regards I erosion. thanks we what really to think and quarter, see everybody, to morning, is In market in with much do what the good the the continued Yeah,

Douglas Tsao

much. you Thank great. very Okay,

Kevin C. Mannix

Next question.

Operator

you. Thank

comes question your question. Please line next Cantor. ask Chen of from of Your the Louise

Louise Chen

Hi. Thanks it. for Appreciate taking my questions.

historical pushes if Teva was, on So sales sales beyond, side drivers see earnings launch first longer-term as the you that your can Thank for and question and in the pulls What for And Teva? question growth on growth you for for is do you XXXX? the implemented that could cuts in of with think vision Teva very achieve that, how last and generic more XXXX be are cost the you've I would elaborate helpful. you then what had and you. do levels

Kåre Schultz

try could go the simply in expect to historical a over and Thank better say generic believe same that it can and some does mean meaningful mean sales business. growth you, having first last give into we the and that for business, see see on numbers. down That starting after and Brendan whole the you I'll to our we worldwide process global U.S. margin margin accelerate having At stabilize that we time, can and products, strategy developments and portfolio your due We years. combine competition does not we that perspective our more to we business question, to our fremanezumab by that the expect generics the significant then increase business OTC to revenue long-term market think new profit-oriented COPAXONE coming to in generic increases will but having and specialty coming Louise. into actually generics. return the of the AUSTEDO to then

significantly So strategy now are to with strategy profitability being turning very much COPAXONE we of could a a basically the from around lower sort generics at and say you volume-driven of a segment being stable stabilizing increasing strategy the more and a profitability-driven Brendan, future couple level the generics then to believe strong But a than and us. we of products you us it taking XXXX. new that what the specialty pushes was years where for on pulls a have makes off, really that's over ahead and ago combination

Brendan O'Grady

Yes.

It year. will do to as significant U.S. market base four through is of look Kåre XXXX, to So I We've in continue at already stabilize that, the our launches in that mentioned, work the the goal that if think stabilize And we generic executed the to you is continue to the as we planned launches we those throughout business. and XXXX. through have business.

So we're XXXX get control optimistic the as that. business will about of transform in very we I how think and overall,

Kevin C. Mannix

Next question.

Operator

Thank you.

ask Please Thanks comes of question the (USA) question. Credit Credit Securities next so Great. Hi. line Suisse. your much. Divan Vamil - LLC Our from of Vamil Suisse K. Divan

plant? I more commercially that bit plan terms or that I understand trying there's have of confidence to dialogue trials the of warning fremanezumab. one at in Curious same how in you device about to bit And little plant a the placebo gauge. said different little curious FDA on site world. the second then the if bring provide on approval. you published of present to with just product. there's regarding on detail in something the has know letter? at reaction of Just level what of in Journal, you're in is just New the the that to it type in for side that going the noticed England can you a commercial that if just been the those terms Thanks. your produced change real Is the XX% Celltrion rates on more with it warning similar letter or needle trial? the So in I'm down a product, that to given injection that's the is

Kåre Schultz

questions, them. for those Vamil. Thanks of I'll handle both

manufacturing. plant. And is inspected FDA was letter pharmaceutical another which original part which of Celltrion the last warning is finished is includes pharmaceutical both the large the of which on inspected of producing part A, comments on and summer for part is in XXX finished the the and what that one facility got API plant, the which the facility doing the the letter when a in facility really is First,

setup. to could is letter with and you the have the same nothing the warning the say but huge API So side, manufacturing do it comments

could it two say, is you plant, the plant. of So but parts the different same

with We own working Celltrion. people our there, had have

external is of perfect commercial course, with are there issue is manufacturing ahead experts securing But working of to outlook how the we in we hopefully product. done manufacturing date and of with go to regard With aim of this ensure on PAI and the had with all GMP have injections the all that confident inspection for that fremanezumab. of an We FDA that have commercial they outlook, of them, warning conditions. now the the and very the fremanezumab reach need and it letter PDUFA agreement an will API can see we the the a keeping in course

times means that huge year. basically going a do completely are in That want a month, self-injection a is home at it in like of marketplace year means space you we and don't only about standard problem concern that if site if which want. be see the go to There's a doctor that year, reaction there and injection. basically and other of doctor you that there to see days do product us always we it's what some come once worry times then the XX but you antibodies a that cause need have whereas in it's is products. you the or this know, or do the rest either of home or migraine might no products syringe go and As a you for What to to year has to the you issue only you take other the and come take ones doing advantage most four have it to can a nothing injection pharmacist can at on level no there. do you this the comparable all you that as a And four and is this to similar on all products, see then the will

as no efficacy of similar. flexibility you And advantage probably So I injection on think in this this know, have. huge injection, that development there. the injections and real a is the products difference There's commercial are frequency reduced all we

same convenience, the we for K. (USA) Thanks a us Credit LLC Divan marketplace. - in Securities more the will edge a Okay. but key that significant Suisse be having for comments. Vamil think efficacy, So the Thanks.

Kevin C. Mannix

Next question.

Operator

Thank you.

Our question from your comes question. Randall next ask Capital Please Stanicky of the Markets. of line RBC

Randall S. Stanicky

Thanks. have Great. couple. a I just

least on just it covenants, to imply forward. or will seems going EBITDA amended First, that implies annually based grow the at

you are So coming I the and of is case where then just for, want that from? what looking and to confirm you. that Thank growth specifically is growth type

Kåre Schultz

before. see plan. form pressure due the the year see COPAXONE And then restructuring uplift see Basically a coming AUSTEDO you'll then I implementation Thanks, to line and still and you of will the from in from next an you both top losing generic what the of from It's uplift full coming Randall. coming fremanezumab explained from will erosion. sales the

is back the exactly the situation it's overtake EBITDA. to to that getting But plan detail for next generics these business will how us COPAXONE we a in XXXX from out the quantify. where thereby and basic that growing five we're So course, for into clear play in difficult me the downward quite for have is, uplifts pressure years of

Randall S. Stanicky

Got it.

XXXX how growing to be clear, just line? should be XXXX, and to and revenue expect So we the in about EBITDA that

Kåre Schultz

at costs that's too XXXX, said, – So time. will for you say will happening expect two it's to different will the like things But grow have – decrease. the same because I you early

XXXX. term, for to means will the That's we'll I'm term, see specialty answering So will have you plan reducing increasing be other a that and EBITDA in will right a stabilize, specialty will I COPAXONE but of on for give you'll But because fremanezumab and specific then for it's And be of be take COPAXONE. how sure the that big AUSTEDO will base be The downturn that the that growing it's big decrease longer how hard it's down. you can't two base. the implementation restructuring spend on tell me and spend products now growing, to COPAXONE of why we'll XXXX. the sales longer depends that be the going number

Randall S. Stanicky

years? next comment your Thank Understood. BD then to focus ability to support Okay. you medium-term couple over of on growth Kåre, you. could And help the just on

Kåre Schultz

answer pay do in-licensing, do fixed very to big-time don't and a down of because early-stage We and won't want but BD Yes. any integrate because consolidate, cash to we That's it structural some that's lot have a not not and We that's BD, at really we do to all, do we money. don't want it. the might short debt. small

years constantly course, X we're reach now to XX the that from products of to in-license can looking exciting So, marketplace.

Michael McClellan

Yeah, you're looking years. of Randall, covenants, expecting I would of pay at debt add to what Kåre we're those those also to significant said when over remember amounts down each that

helps So the with that also leverage.

Randall S. Stanicky

Right.

Thanks, Okay. guys.

Kevin C. Mannix

Thanks.

question. Next

Operator

Thank you.

line the of question. comes next Please of ask Deutsche from Gilbert your Gregg Bank. Our question

Gregg Gilbert

for lastly, A was – free AUSTEDO are any, generic been some then and Mike, and questions. Kåre, give cash detail can in flow Mike items, on XXXX, the some for couple could the ones what on you've in if more as us final and on versus comment generically, conversations quick you of you in hi. as then last buyers in or again – get have subject hoping on your you non-operating sales I ever? you And it guidance you that you term why Yes, including gone month? the Lialda quarter? had Thanks. a given generic price with ability your final, having And know, can tentative near discontinuation? And raising file comment Xifaxan a we the generic to could the didn't far lastly,

Michael McClellan

So the I'll first take question.

So is framed operations, basically, basically from flow we've our cash way free cash the net flow our less CapEx.

is So the reduced CapEx from that.

capital million – it from working you settlement offset of at Allergan, flow, in be restructuring $XXX from but by expenditures. free we we million $XXX the the that will or cash items cash get special Actavis include we from did will about look If do

see cash income free really it's pretty the flow. the So with much that you will consistent otherwise in driven net

Kåre Schultz

positive, is, on some to close really the Brendan on been involved of to customers, some a and more I'll course that. of discussions give With light then, of regard Brendan you they're very it's the so course, the I've in those discussion key buyers, let who but with basis daily constructive and

Brendan O'Grady

Kåre. Yeah, thanks,

for with So The of our the and good. explained think a good meet we've intent major suspect them. situation products there our those And three will three to one profitable will have time of has of And over our price work that all plays. where address we wind we be profitable customers are be they'll There is. we'll of all level and discussion and issues. successful to move of customers increasing been up a discourse to in in suppliers. will major and that I we with with we of on products third have that not customers the there be group that to will what bucket other and the this period that products the There's us because with met a I continue relationship positive a

do here goal pledge or to market. not in with to customers. disruptions create that shortages the our Our And we is any

relationship as good So very move I working think forward. we we have a

Kevin C. Mannix

Can you say products. the anything on

Brendan O'Grady

approval regulatory working we are an an process Yeah, and we and on product on through and the Lialda, towards in that XXXX. approval continue expect to work

Gregg Gilbert

Xifaxan lastly? the And filing

Brendan O'Grady

see that as goes. with Yeah, and that on so in we're active the we'll discussions FDA well where

Gregg Gilbert

Thanks.

Kevin C. Mannix

Thanks.

question. Next

Operator

you. Thank

comes from Abraham from ahead. question next of Our line Liav go the Citi. Please

is open. line Your

Liav Abraham

Thank you.

of Just couple questions. a

was And the key what assuming behind XXXX. can mid for that. calculations, is Thank the U.S., just of just generics, generics comments on Mike, on maybe some business predominantly your comment the business And to the the the drivers implied on my in given on in U.S. reasonable? secondly, margin, made on margin for QX I'm in generics on comment if partly business the gross Firstly, your base base this then pricing on XXXX? Is in of you on are can based guidance, and COPAXONE the compression it's you what you can based your that high XXXX, you. comment expectations versus the erosion you assumption gross XX% that range. and erosion

Kåre Schultz

a me by Let on start comment and pricing erosion. general price

point from to for seems customers to longer view, behind comments competitive on little competitors And sharing on Going forward, your a and details me your numbers that. no From a point price to specific we will giving erosion. explain time with of just view. your counterproductive like be expected take of competitive the a I'd development specific price logic

this the XX%. reason in for ask spiral will the marketplace. generics XX%, it's if maybe everybody So say for the partly you is like, downward It's

And say doesn't that my you everybody If it's business. in XX%. our will for ask mind, help XX%,

the So development. specific I think we're this. much And on won't on much going numbers discontinued, and us that will forward, is business. any And price overall seeing give how the help either details how is being how repriced being exactly we stabilize give we you the won't

details. numbers realized with outlook quarter the broadly every of will none course, are you the also total of these we with and expecting, will, you but share share We pricing we

don't And QX comment a give last you about any talked problems year. we sharing have However, we what erosion. with Brendan, on the can

Brendan O'Grady

Yeah.

pretty line was XX%. much with industry expectations, erosion QX about the in So

Michael McClellan

Yeah.

So I can take on overall margins. the question gross

well expectations as look is drop pricing roughly margin pressure to It's U.S. as XX%. versus a So whole, pressure – closer as percentage X COPAXONE driven mainly next The XX% our Teva by gross a we of percentage XXXX; were point if you year. year on the in at are pricing full generics. in

a a bit little of there. currency We impact see also

erosion base the have out. is the erosion of COPAXONE and majority price the businesses generics, and pricing do including coming X-point on You Concerta. U.S. the the the But on the results really divested of transition

Liav Abraham

you. Thank

Kevin C. Mannix

Next question.

Operator

Thank you.

Our your next Please the question Umer comes from question. line Evercore. of ask Raffat of

Umer Raffat

so much CGRP warning focus may, this high-priority then Thanks only either to the guess And I a up sales is Thank program wanted sign letter? you. I to how what if it or on question. XQ? new like were source take long for would it a have typical this? And in API resolve AUSTEDO Hi. one and my taking to on I ask, API

Kåre Schultz

Umer. you, Thank

we the source. source, up. we And our we which more have actually than to we capacity. own moment, only are planning to supplier have more are are one is have also one one planning But on CGRP; Celltrion. coming this building At one So

suppliers. term, two we longer will So have

is supplier ready right not second The now.

we to have and resolve do the are that we can Celltrion optimistic FDA and with this together really we So that.

warning That If sales say active of take got on it that would XX then the China since it day little resolve to say you to a on anywhere started you I our it. sort long it. day the how And working would in we've from different, it's about of how it and you you or to you've the a successfully the warning do from months the right inspection now, take then normal original think the been report can typically takes XXX. be can day depends see on the typically of letter, XX just letter,

that. QX, roughly we Brendan talking sales on. the on in is are On comment that AUSTEDO So I'll that timelines let

Brendan O'Grady

sales were AUSTEDO so $XX were QX in in Yeah, line million. expectations and with

Umer Raffat

CGRP saying XX do your are API second if – months you will XX you in think may, I from to saying be XX AUSTEDO should – are or sorry that? should Kåre, months now – before approved you kick

Kåre Schultz

No, that. I'm saying not

comments at of is saying API happened warning to inspection that do I'm was finished products any didn't inspected. what in the all, the where the and it that products. manufacturing, not their letter A any you and during part the or of factory filling have of finished because pharmaceutical Celltrion First the was it inspected wasn't

file, in sites actually are being working are and Europe is just now. file. on PAI a right That's a working diligently standard also they're with our had with have inspection We this the expected in like connection by now we've to finished the so being clinical supplier manufacturing FDA, inspected

can PAI hope So we that, Celltrion, a that and in of that API on into we based we the in have marketplace. the go can respect,

So it XX saying that But it be months be now. how I'm seen it out. will all not plays from remains to

Umer Raffat

you. Thank

Kevin C. Mannix

Next question.

Operator

you. Thank

Our from line Goldman Jami Please Rubin Sachs. next of question ask of question. comes your the

Jami Rubin

you. Thank

can a if your bit just year-end debt Just explicit on have you a net Mike, more be forecast. couple. little

$X.X at billion. billion, it billion. $XX by lowering you week, but that's you what to bring You press I release last started that the around read what? XXXX we've be said from had ended would think to you $XX.X when But down

And If But companies months I again, XX on again, typically to with past amendment. just year, times, this from launched X midpoint to apply in of if original there? likely from want looking a you and debt the and EBITDA is more if that say, you that going the have at X.X your at getting and I'm the cushion. that the to put could Wouldn't $X.XX could, your on help, end months times Kåre, reduction you could XXX I year be question, explicit if $XX to end billion, XX to how And need kind more guidance where be you talk fremanezumab. bit a a that So forward? could your if debt timely And billion what that letter? you to XX just That's just of X.X against pretty billion, what? where of wondering of are secondly, just-announced we that themselves times. to then you take up another provide It like at be – would fremanezumab And covenants going now of I'm it net And about just X.X of $XX amended announced Thanks. From some basis? seems is perspective. of, timing correctly. number low. net little this your this cushion about then that's brushing little a bit

Michael McClellan

Yeah.

the turn of it then Kåre. I'll couple to I'll take and questions, So first over

$XX.X was we in year-end our debt $X had and So gross billion about our billion, slides in cash.

driven debt not to guidance, free that's net in billion a the do the in free pay the at down at We cash of of That's So least the cash Women's plus billion. expect from $XXX million by flow. you $XX.X end sale XXXX. the ex-U.S. see our $X.X that Health flow

if We that we will see additional also look on of to asset divestments. top do

we're part also put the the outlook of that to plans. is what haven't that our But in looking middle still be divest. at We could of of value because in

in that news a a at If comfortable fact weeks to some got surprise could X.X. you we clear the look COPAXONE the that do little bit couple that under at We the up might move in We that plant But potential agreed for ago. warning meantime, letter the we asset that. the been the covenants very the that In confident it you're given put we it's feel a covenants, come feel right need We did our had online second up. a XX XXXX. especially Pfizer still milligram with covenants, amended earlier we did generic. covenants divestments

to XXXX, a additional We And us we're they rest really as there. and then down help But flow something that going manage have closely start the see wonderful to XXXX. gave plan restructuring debt. very of should to cash great an give us to partners, kick our the in, of when in pay banking we it's more into support a relationship with we have go

additional in confident, divestments feel see rapidly down but look if that be debt we help more will are to looking So XXXX. we there having things can pay and will at be to even minor we

Kåre Schultz

maybe the make XX complex letter, it said months so didn't close so XX think finished it would are is letter little because where to biologics normally in so manufacturing. the API the is a do of the not if factory of manufacturing. product, related And Because some of the and filling does our letter on on was this you I that in it a our we products the manufacturing, be warning the it than was time maybe just which it's warning XX, XX, warning typically part part I being Jami, I factory it And more XX. me. takes that on. by clear a to the a – to to said, situation But to is is not X out mispronounced and but that XX X to

we delay API actual So how we people, are, of that so problems that's all work together saying with and work that the the against the is I'm of fremanezumab, used we our have then, people, that there that Celltrion's ex-Celltrion. secure everything voucher goes them, ensure the with in no why through of that possible PDUFA manufacturing quality given FDA a to course, fremanezumab. have be if done, of and will the a of without can mid-June, we dialogue of we course, fact PAI based doing If quality on can date far

I up of And be On that other letter. the to would say there from something said if X the could that warning then there some delay. hand, issues, and are hope I if be XX the to XX, it. date I receiving But a pops other XX. clarifies didn't actual

Jami Rubin

Okay, thank you. Thank you.

Kevin C. Mannix

Okay.

Next question, please.

Operator

you. Thank

the line Company. Cowen from comes & Ken of Cacciatore ask question question. your of next Please Our

Ken Cacciatore

Hi thanks.

Just had on question fremanezumab. one

going Your be competitors are auto-injectors. to with launching

products going you're think auto-injector? Are differentiated. that and with pre-filled you're I don't syringe. wondering The a to launch working are you Just an on indicating

little So things just matter. could

you Thank if know try to product your auto-injector. into to an to put are working want you. Just

Kåre Schultz

Yes, a for sort year. relatively yes, one it's who it's difference of a have a to and huge we expect we and would are not a injections that I especially answer, within future. like only four simple short segment don't to have think times

it's to at from decide probably pre-filled no the doctor with injections millions begin different clinic. we of standard and It's people used You to what's And day. would a being syringe a to every the go have have. by

big don't issue have see for us. an as of we a So auto-injector. it we also course, will But

Kevin C. Mannix

Thank you.

question. Next

Operator

Thank you.

Fargo. Please ask Your next Wells question from question. David comes Maris your of

David Maris

A few Morning. questions.

are going of that on assume Thank how near-term investors debt the first, So on and color you And that and maturities? the the those what so look you. think XXXX guidance through the growth prices products a unprofitable us that bit. you've what give of quite where are determined products R&D, you Can number why of were number to cuts and does coming down you then Secondly, the kind that or at walk cut from, that far? shouldn't impairs forward? this were just refinancing raised some on cut lastly, of expenses

Kåre Schultz

take the first ones, one debt. can So I'll take Mike the and about the two

of products, without But, won't supplies. because profitable contracts price, average out typically either any a So dialogue an our the on in to future. in manner. them, getting six of timely course, the without adjusting And of any products. of of us we patients we Brendan number are course, discussing won't us the are the We with of leave like terms right them our of or of are now leave options into key for And contracts say them in sort the we said, making again, it's months customers customers. early too with

once in year about cut of something alluded is you all our looked XX But specialty regard have XX% by we those basically a areas. sort With bit this that our R&D. outcome projects. core are, R&D, done it we really branded explaining roughly of skills, we now. has projects little kept core our to we what capabilities you our is this we've roughly have right I to And That's tell and projects more can in tell passed. at So the can't where

on. those out. so more So course, more of the we set the high-risk sort we're of have these CNS And areas, neurology, projects, are and Blue taking of creative then Ocean,

then and to develop been research of very our it and And return been not won't of whereas the those. far won't the of we've projects, CNS look at generics, sort the what view. its our started to competencies, core into R&D I of research close on organizations we've a successful and it historically, point the really you hurt future it hurt we've from company. from it has the very doing the our decided investment away outlook And is space Teva then research. portfolio on done it's think If look we've investments In more from to been ideas taking projects neurology on pipeline strength some where other that good do means of space basic the and of has within the where basic

at have, are portfolios valuable profitability-oriented of in these building the So value, up NDAs, our very look marginal getting most the we we way of have the these and a of of are portfolio thereby of of generics which and ANDAs more portfolio which projects.

Michael McClellan

Yeah.

that offerings. debt is didn't the ago. when a SX outlook couple an with I weeks active to is opportunity just here XXXX things We we note noticed governance. couple and refinancing, comes That have time. that some would But to it So come have normal the to may that debt potentially filed the giving SX it us an is good corporate market a you at eventually

in my of decide we of I a refinancing outlook the bit to $X expenses $X term. to billion finance mentioned doing years, cash in refinancing are little forward our minor expense near our it. And debt include that do coming XXXX at the looking if the maturities billion and extra assumptions some we Looking do actively some assumption in the interest going at flows an for range potentially

David Maris

you. Thank Great.

Operator

Thank you.

of next question. Gal ask Ronny Please comes of the from Our your question line Bernstein.

Aharon Gal

is Teva's $XXX to running above fill something COPAXONE opportunity Thank norm been a still first, I'm to $XXX bring why going regulatorily. generic the million second, taking questions. Is API still like Celltrion CapEx term? is fremanezumab It's which obviously finish, touch, the if or to that something you it $XXX everybody. longer that for essentially level mind, around is other that industry And will one million? the or – of kind companies. that for long move two the debate to is on above and or you're Because time stay one so fees, depend like this much is, expect seeing my you fee? over things has, million don't you morning, facilities it is Good facility facility for pays one

Kevin C. Mannix

what your you just clarify referring Ronny, question to, in $XXX the again can million? on you were second

Aharon Gal

CapEx, capital expenses. The

Sorry.

Kevin C. Mannix

CapEx.

Okay.

Kåre Schultz

So let facility. me and comment on fremanezumab Celltrion the the

the point view, from of finish-fill point pack not facility regulatory side, of inspected API was But and the site of of the facility. a was facility So manufacturing so a number, the from the same But the to the part is a that part facility huge it's speak. regulatory the view same side. It's facility.

Aharon Gal

Got it.

and consultants the to of came look assessment and couple compliance hire that and them come-in you in six do the this in January on months? telling of at the look fact do that to to XX, at kind letter. they're if go it a letter cycle independent little Celltrion kind So be to of just and this bit longer in I of that. has realistic that will that Is time look Because than at

Kåre Schultz

separate of the what happening for here is manufacturing by was that of not facility, a Yeah. us issue warning out close is which key that takes is exactly But letter. inspected The not issue completely key part in the API our it to the timing FDA.

approval be that the on FDA we based that the and be then get can can a see it. whether be So in a to in on of we dialogue time. dialogue the in we all and inspect with a result that, it's remains part where we'll that But a about seen will, with idea course, inspection of FDA good to hopefully conclude PAI

Michael McClellan

Yeah.

Ronny, we this plan in CapEx. The decrease XXXX million on CapEx for can a your question actually from take So I year. is $XXX

Aharon Gal

Yeah.

Michael McClellan

that it further biologics And biologics even sizeable except is strategic down one Germany, went have years to have coming making own we're amount large-scale of plant build manufacturing. the a are for to would our a in the we moves because spending key

we'd that, as normal probably the the absent $XXX more be industry. you So which million would see more in in range

Aharon Gal

thank you. Great,

Kevin C. Mannix

Okay. question. take Operator, we'll one more

Operator

Thank you.

question of comes of line Chris Your the from JPMorgan. next Schott

Chris Schott

much. very Thanks Great.

Just quick a couple ones here.

based And just of for CGRP coming back Does going keep absolute of to final really our how optimization. and quick think have expect you is spending. spending PDUFA maybe a on be thinking dialogue, doing us expectations, some the of we to update when you'd First, expect of to XXXX going as or back help some allow top-line here on top-line it question the whether then my clarity to something on sorry is the have think with that and/or we here, restructuring should date? XXXX? FDA or sense as XXXX on the much set or just the as we we're wait Is the this able the increases PDUFA do this, question ahead to of, do despite should the generic just to not My portfolio letter? think discontinuation R&D the to about price cetera, timing a event about we second of of optimization you guidance the this way product reflect about the Thanks et the very XXXX about to in get much. we coming portfolio warning Could you're really more just but R&D on either and just impact? was approval be

Kåre Schultz

do, Chris. much, Thank I three all think, I'll you very them. of

number. So to it's that dramatically XXXX. know? close to say taken And And going will we But and XXXX exactly regards as about forward. expect the our different XXXX, to part you overall be if you we of we about reduction could to say on in maybe wanted expect specific with then that have it the be what you plan. giving restructuring $X less CGRP, the don't And to it you you then a think was between not R&D we compared XXXX significant spending, billion slightly could

Chris Schott

to really My this wait if is to or going have to do prior – going allowed? for question to are approach expect have you based based PDUFA FDA the just to see on is clarity be the from your dialogues we to PDUFA

Kåre Schultz

I ongoing think, think once don't results. a we give that dialogue you because do give quarter I you you're once an we the will update but announce we where the will the updates that get of with will likely we know is something is you when to course, first in date, This most PDUFA we our FDA. not

effect So The I time this With when then are it's results the topic very to course, effect that But quarter and our XXXX process. should we see much are negative that on they from expect could in outlook. last you'll hear have next positive on slight XXXX the results us on of the we expect pretty a question we say and expect sense revenue, be results earnings. to and in of connection. we the neutral you course, on will to XXXX, announce included this have, regard in when the first the generics, slightly both that of call they in our the in small

Chris Schott

Thank you.

Kevin C. Mannix

for forward be you look everybody, Okay. very to much. the Thank available Well, questions all next throughout seeing week the joining additional of today. soon. week you, and you to we rest any and thank us take We'll

Operator

conclude Ladies today. and does conference gentlemen, our that for

UK or For code +XX-XXXXXXXXXX. reservation on accessed the on followed the dialing this those the for by country XXXX-XXX-XXXX number key. of you conference, wishing XXXXXXX within is Thank facility all you by to review # alternatively be The participating. replay can

disconnect. all may You

Kevin C. Mannix	Teva Pharmaceutical Industries Ltd.
Kåre Schultz	Teva Pharmaceutical Industries Ltd.
Michael McClellan	Teva Pharmaceutical Industries Ltd.
Brendan O'Grady	Teva Pharmaceutical Industries Ltd.
Douglas Tsao	Barclays Capital, Inc.
Louise Chen	Cantor Fitzgerald Securities
Vamil K. Divan	Credit Suisse Securities (NYSE:USA) LLC
Randall S. Stanicky	RBC Capital Markets LLC
Gregg Gilbert	Deutsche Bank Securities, Inc.
Liav Abraham	Citigroup Global Markets, Inc.
Umer Raffat	Evercore Group LLC
Jami Rubin	Goldman Sachs & Co. LLC
Ken Cacciatore	Cowen & Co. LLC
David Maris	Wells Fargo Securities LLC
Aharon Gal	Sanford C. Bernstein & Co. LLC
Chris Schott	JPMorgan Securities LLC

Teva Pharmaceutical Industries Limited (TEVA) 8 Feb 182017 Q4 Earnings call transcript