Teva delivered its tenth consecutive quarter of growth, primarily fueled by the strong performance of its innovative portfolio, AUSTEDO, UZEDY, and AJOVY. The company is progressing with its 'Pivot to Growth' strategy, advancing a robust late-stage pipeline and executing on transformation programs to achieve significant cost savings. While the generics business faced tough comparisons, management remains confident in its long-term trajectory and reaffirmed most full-year guidance, raising the lower end of the EPS range.
Highlights
5
Achieved 10th consecutive quarter of growth, with Q2 revenue up 1% to $4.2 billion (local currency, ex-Japan BV).
Innovative portfolio (AUSTEDO, UZEDY, AJOVY) grew 27% year-over-year, contributing an additional $95 million to full-year guidance.
Non-GAAP gross margin expanded by 130 basis points year-over-year to 54.6%, driven by positive portfolio mix.
Free cash flow grew strongly by 47% to $476 million, driven by higher net income and working capital improvements.
Concerns
3
Global Generics business declined 2% (ex-Japan BV) due to tough prior-year comparisons and phasing of generic Revlimid shipments.
TAPI revenue was down 11% in Q2, attributed to seasonality and timing of shipments, though full-year growth is still expected.
Uncertainty regarding the impact of potential US and European tariffs on pharmaceuticals, with details still emerging.
Guidance & targets
23
Category
Target
Timeline
Confidence
Full-year 2025 Revenue
$16.8 billion to $17.2 billion
high materiality
FY25
High
Full-year 2025 Non-GAAP Gross Margin
53% to 54%
medium materiality
FY25
High
Full-year 2025 Non-GAAP Operating Income
Midpoint or above of guidance range
high materiality
FY25
High
Full-year 2025 Adjusted EBITDA
Midpoint or above of guidance range
high materiality
FY25
High
Full-year 2025 Non-GAAP EPS
$2.50 to $2.65
high materiality
FY25
High
Full-year 2025 Free Cash Flow
$1.6 billion to $1.9 billion
medium materiality
FY25
High
Full-year 2025 AUSTEDO Revenue
$2 billion
high materiality
FY25
High
Full-year 2025 UZEDY Revenue
$190 million to $200 million
high materiality
FY25
High
Full-year 2025 AJOVY Revenue
$630 million to $640 million
high materiality
FY25
High
Full-year 2025 Global Generics Revenue Growth
Flat to low single digit
medium materiality
FY25
High
Full-year 2025 TAPI Revenue Growth
Growth
low materiality
FY25
Medium
Net Debt to EBITDA
2x
high materiality
FY27
High
Operating Margin
30%
high materiality
FY27
High
Net Savings from Transformation Programs
$700 million
high materiality
FY25-FY27
High
Biosimilar Sales
$400 million additional sales
medium materiality
FY27
High
Innovative Sales
$3.5 billion to $4 billion
high materiality
FY27
High
Innovative Sales
Greater than $5 billion
high materiality
FY30
High
Olanzapine LAI Launch
Launch next year
high materiality
CY26
High
Duvakitug Phase III Program Start
Q4 this year
high materiality
Q4 · FY25
High
Emrusolmin Phase II Enrollment
Fully enrolled in 2026
medium materiality
CY26
High
Anti-TSLP IL-13 Entry into Humans
First half of 2027
low materiality
H1 CY27
High
Restructuring Cash Outflow
$70 million to $100 million
medium materiality
FY25
High
Operating Expenses Phasing
Increase sequentially in Q3 before stepping down in Q4
low materiality
Q3 FY25, Q4 FY25
High
Segment performance
3
Segment
Revenue
YoY
QoQ
Margin
Innovative Portfolio
Strong performance driven by AUSTEDO, UZEDY, and AJOVY, leading to increased full-year guidance for all three products. AUSTEDO's growth is fueled by TRx and XR conversion.
Decline attributed to tough prior-year comparisons (11% growth in Q2 2024) and phasing of generic Revlimid shipments. Excluding these, the U.S. generics business grew, indicating underlying health.
—
-2%
—
—
TAPI
Q2 decline considered an anomaly, not indicative of normal results, due to seasonality and timing of shipments. Full-year growth is still expected.
—
-11%
—
—
Operational metrics
16
Non-GAAP Operating Margin
27.1%Up 170 bps YoY
Q2 FY25
Benefited from lower R&D expenses due to decreased nonrecurring milestone payments for biosimilars collaboration.
Net Debt
$15.1 billion
Q2 FY25
Gross debt reduced to $17.2 billion at end of Q2 from $17.8 billion at end of 2024 due to repayments, partially offset by FX.
Net Debt to EBITDA
Just over 3x
Q2 FY25
On track to achieve 2x by 2027.
Transformation Program Savings Achieved
20%
Q2 FY25
Achieved 20% of the overall net savings target of $700 million, showing good momentum and execution.
Transformation Program Initial Savings
$70 million
H2 FY25
Expected initial savings in the second half of 2025, translating to an annualized run rate of approximately $140 million.
Restructuring Costs
$154 million
Q2 FY25
Mainly related to optimization of Teva Global organization and operations for ongoing transformation programs.
Non-GAAP Operating Expenses as % of Revenue
27% to 28%
FY27
Targeted range for 2027, despite continuous investment in the business.
Innovative Portfolio Combined Revenue Growth
23%YoY
FY25
Expected growth for AUSTEDO, AJOVY, and UZEDY combined in 2025.
AUSTEDO Milligram Growth
34%
Q2 FY25
Fueled by growth of XR formulation, which changes TRx dynamics as patients move to XR.
Biosimilar Launches
5
H2 FY25 to FY27
Additional biosimilar launches expected to contribute to the $400 million additional sales target by 2027.
Olanzapine LAI Peak Sales Potential
$1.5 billion to $2 billion
Peak
Combined peak sales potential for the long-acting schizophrenia franchise, including olanzapine LAI.
DARI Peak Sales Potential
$1 billion
Peak
Peak sales potential for the dual-action asthma rescue inhaler.
Duvakitug Peak Sales Potential
$10 billion
Peak
Total peak sales potential for the pipeline, including duvakitug in its listed indications.
$16.8 billion to $17.2 billion (revenue); $2.50 to $2.65 (non-GAAP EPS)USD
FY25
Pricing policy impact
—
—
Product franchise net sales
$495 millionUSD
Q2 FY25
Pipeline clinical milestones
3programs
Current
Regulatory approvals filings
Submission on track
Q4 2025
Therapeutic drug market share
—
—
Price volume mix decomposition
34%%
Q2 FY25
Geographic regional revenue growth
1%%
Q2 FY25
Clinical trial efficacy safety data
Protection of the gut lining
Capital Markets Day
Business development capacity deal appetite
—
—
Deals & partnerships
3
Fosun PharmaStrategic partnership to advance PD-1 IL-2 rapidly
Capitalizing on burgeoning infrastructure in China and unmet medical need. Supports Teva's Pivot to Growth partnership strategy.
UndisclosedDivestiture of Japanese business venture
Closed on March 31, 2025. Marketed mainly generics and some legacy innovative products. Consistent with strategy to focus on profitable growth and capital allocation framework.
UndisclosedTAPI divestiture
Still in active and advanced discussions. Final decision expected in the third quarter, aiming for the best outcome for shareholders.
Risks & headwinds
6
IRA negotiation impact on AUSTEDOOngoing
Undisclosed discount range
Mitigation: Currently in negotiations with CMS; no further details provided until conclusion.
Potential US and European tariffs on pharmaceuticalsShort-term to long-term
Undisclosed, but confirmed tariffs absorbed into 2025 guidance
Mitigation: Flexible supply chain, over 50% of US products manufactured domestically, minimal reliance on China for key starting materials. Seeking clarity on specific details and implementation timing to manage thoughtfully.
Tough prior-year comparisons for Global Generics businessQ2 FY25 and potentially Q3 FY25
Mitigation: Underlying strength of generics business, upcoming launches of 15 complex generics, multiple other generics, and 8 biosimilars by 2027. Confident in flat to low single-digit growth for FY25 generics.
Phasing and timing of generic Revlimid shipmentsQ3 FY25 and Q4 FY25
Impacted Q2 FY25 generics performance
Mitigation: Ordering patterns have changed, leading to less predictability. Company has other factors growing its generics business to offset volatility.
Increased competition on generic product launchesOngoing
Not quantified, but cited as a factor for generics performance
Mitigation: Focus on complex generics and biosimilars, which have different competitive dynamics. Robust pipeline of new launches.
Delay in timing of certain generic launchesOngoing
Not quantified, but cited as a factor for generics performance
Mitigation: Diversified generics portfolio and biosimilar pipeline to mitigate impact of individual launch delays.
What to watch in Q3 FY25
1
TAPI Divestiture Final Decision
Q3 FY25
CurrentActive and advanced discussions
TargetFinal decision announced
Why it matters
The divestiture of TAPI is a key component of Teva's strategy to focus on profitable growth and optimize its portfolio, with implications for capital allocation and financial structure.
So before I hand the baton to Eric, I just wanted to give you an update on how we feel about the full year and our guidance for 2025. Now we're confident to hit our guidance in 2025, and when you think of it from a revenue point of view, the way we're going to get there has slightly changed, and I think it's changed in a positive way. As you can see by this slide, our innovative portfolio is going to overdeliver on what we thought at the start of the year, and we've raised guidance across all of the products, AUSTEDO, UZEDY and AJOVY, totaling an additional $95 million for the year. Our GX business, as I've said, we predict will either be flat or low single-digit growth, and because of that, we believe from a revenue point of view, we will hit our mid or slightly below our midpoint of our revenue guidance, but Eli will go into a bit more detail on that and the confidence we still have in our EBITDA and our EPS. So with that, I'll hand over to Eric. Eric Hughes (Executives): Thank you, Richard. As Richard mentioned, we are fortunate to have 3 Phase III programs with a relatively high probability of success running right now with a large patient impact. Our schizophrenia program with olanzapine LAI can approach a diagnosed patient population of 4.7 million. Our DARI program in asthma can potentially impact 39 million patients that are diagnosed with asthma. And finally, duvakitug, our potential best-in-class TL1A molecule can treat 4.1 million. So our Phase III program, which is running at full speed now can impact a large patient population. In addition, we have a burgeoning and strong Phase II program with emrusolmin and multiple system atrophy and anti-IL-15 in celiac disease and vitiligo. So very exciting both Phase III and Phase II programs running at full speed. Our olanzapine LAI program is on track with our expected submission in the fourth quarter of this year. We'll be presenting our full maintenance out to 48 weeks and our period 2 of the study with both the efficacy and safety in the third quarter of this year. To date, we've seen no PDSS, and we're pleased with the data maturity that we have now, and it's all on track. I'm excited about our dual action rescue inhaler program. It's a large asthma study. It's driven by asthma exacerbations, and our enrollment is on track for the end of this year. Now duvakitug in partnership with Sanofi is right on track. Just to remind everyone, this is a large study. Both indications will be over 1 year. We're testing 2 doses in the study, and there's over 1,000 patients for each indication, both ulcerative colitis and Crohn's disease. And we are anticipated to be starting that Phase III program in the fourth quarter of this year. Our emrusolmin program is moving right on track. We started enrollment at the end of last year, and this is a robust Phase II study, placebo-controlled. And I'm pleased to say that our enrollment is actually exceeding our expectations at this point. So we're looking to have this study fully enrolled in 2026. Now we did announce a partnership with Fosun Pharma. This is a strategic partnership where we're advancing our PD-1 IL-2 rapidly. We're capitalizing on the burgeoning infrastructure in China and the patient unmet medical need there. So this is a strategic partnership that really supports our Pivot to Growth partnership strategy. Our anti-IL-15 program is moving right on track. We believe we have a differentiated anti-IL-15 molecule with greater potency, great PK, low antidrug antibodies and we are excited to show some biomarker data at our Capital Markets Day, showing a potential impact on -- by a single dose of our molecule on the protection of the gut, as you can see in the graph on the right, where we protected the bump in this biomarker showing a protection of the gut lining with 1 dose of anti-IL-15. So very exciting data. We're looking forward to more in the future. And finally, I just want to touch base on our anti-TSLP IL-13 program. This is an AI-generated antibody with a novel dual-specific activity for both a well-known IL-13 and anti-TSLP target. We think this is a very active way of treating type 2-driven diseases, and we're looking forward to bringing that into humans in the first half of 2027. And with that, I'm going to pass it off to Eli Kalif. Eliyahu Kalif (Executives): Thank you, Eric, and good morning and good afternoon to everyone. I would like to start today with the following key messages that demonstrate our consistent execution over the last few quarters, including Q2. First, Q2 came in with a solid performance driven by our fast-growing innovative portfolio despite tough year-over-year comparables of our generics business. Second, we continue to improve and strengthen our balance sheet, more specifically, reduced our working capital days and leverage, which was recognized by the leading credit rating agencies in their most recent upgrades to Teva's credit ratings. Third, we remain confident in and on track for achieving our 30% operating margin target by 2027 and have already made tangible progress in implementing targeted programs to deliver approximately $700 million of net savings by 2027. And lastly, while we continue to wait for clarity around potential U.S. tariffs on pharmaceuticals, including further details on what was announced earlier this week for Europe, we have absorbed the already confirmed tariff into our 2025 guidance, which remains unchanged. Now moving to Slide 30 to review our Q2 2025 financial results, starting with our GAAP performance. Please note that throughout my remarks, I will refer to revenue growth in local currency terms unless I specify otherwise. I would also like to remind everyone that on March 31, 2025, we closed the divestitures of our business ventures in Japan, which marketed mainly generics products along with some legacy innovative products. This divestiture was consistent with our strategy to focus on profitable growth as well as our capital allocation framework. During the presentation, I will be referring to certain results that exclude the contribution from this Japan business venture from Q2 2024 to provide you with a like-for-like comparison of our Q2 2025 financial results. For your reference, we have a slide in the appendix showing the contribution from the business venture from Q1 2024 through Q1 2025, the last quarter in which we consolidated the business. Our Q2 results were solid with revenue of approximately $4.2 billion, growing 2% in U.S. dollars or 1% in local currency, excluding the Japan BV. As Richard highlighted earlier, this was our 10th consecutive quarter growth, driven by continued strong momentum in our key innovative products, AUSTEDO, AJOVY and UZEDY despite a tough prior year comparables in our generics revenue. GAAP net income and EPS were $282 million and $0.24, respectively. FX movements during the quarter, net of hedging effects positively impacted revenue by $49 million, but had a minimal impact on operating income compared to the second quarter of 2024. Now looking at our non-GAAP performance. Our non-GAAP gross margin, excluding Japan, increased by 130 basis points year-over-year to 54.6%. This increase in gross margin was higher than our original expectation, driven by positive shift in portfolio mix, especially with AUSTEDO's continued growth and impact of the sale of certain product rights in Europe, partially offset by lower revenue from legacy innovative products like COPAXONE. Non-GAAP operating margin increased by approximately 170 basis points year-over-year to 27.1% and benefited from lower R&D expenses in the second quarter of 2025, mainly due to a decrease in nonrecurring milestone payments for certain biosimilars collaboration. Overall, we ended the quarter with a non-GAAP earnings per share of $0.66, an increase of $0.05 or 10% year-over-year. Total non-GAAP adjustments in the second quarter of 2025 were $486 million. This included approximately $154 million of restructuring costs, mainly related to optimization of the Teva Global organization and operations in connection with our ongoing transformation programs. Our free cash flow grew strongly by 47% to $476 million, mainly driven by higher net income as well as working capital improvements. Turning to Slide 31. We continue to strengthen our balance sheet to support our Pivot to Growth strategy and the journey towards an investment-grade credit ratings. During the second quarter, we refinanced approximately $2.3 billion of near-term debt maturities, mainly in 2026, 2027 and 2029 to better align them with our free cash flow generation. Importantly, we did that while keeping our post refinancing cost of capital at similar levels, demonstrating our improved credibility and profile in the market. This significant ongoing improvement in our balance sheet is recognized by the leading credit rating agencies. All three major agencies have upgraded Teva credit ratings over the last 12 months, including 2 rating upgrades prior to the refinancing in the second quarter. Our gross debt reduced to $17.2 billion at the end of Q2 compared to $17.8 billion at the end of 2024 due to the repayments of $1.4 billion of notes at maturity, partially offset by exchange rate fluctuations. Our net debt was $15.1 billion, and the net debt to EBITDA remained just over 3x. As I highlighted during our Capital Market Day in May, we are on track to achieve 2x net debt to EBITDA by 2027 and an investment-grade rating while still making deliberate investment in the business to execute on the accelerated phase of our Pivot to Growth journey. Moving to Slide 32, as we announced last quarter, we are transforming Teva with the targeted programs to deliver sustainable margin improvements without compromising our ability to innovate and invest in our long-term growth. These programs are expected to deliver approximately $700 million of net savings between 2025 and 2027. These transformation programs, together with the ongoing portfolio shift towards high-growth and margin innovative products provide a clear path to achieving our 30% operating margin targeted by 2027 by expanding gross margin to be between 57% to 58%, while keeping operating expenses in the range of 27% to 28% of revenue despite continuous investment in the business. We have kicked off these programs to transform our operation with a tangible progress already in place as of today. We expected roughly 2/3 of the $700 million savings to be realized between '25 and '26, including approximately $70 million of initial savings in the second half of this year. The savings in the second half translated to an annualized run rate of approximately $140 million or about 20% of the overall net savings target. With a clear action plan of these programs, along with our expected growth trajectory led by our innovative portfolio, we are confident in growing adjusted EBITDA in 2026 and in 2027, both in U.S. dollars and margin terms. In relation to these programs, we recorded approximately $150 million of restructuring costs in the second quarter and expected an overall cash outflow of $70 million to $100 million in 2025. Both the expected savings in the second half and these cash outflows are already considered in our full year guidance range for 2025. Moving to the next slide to our 2025 non-GAAP outlook. As I mentioned earlier🔁, our performance in Q2 and the first half has been solid, delivering revenue growth despite a tough prior year comparables and improving margins and cash flow while making significant progress on our transformation programs to achieve our 2027 financial targets. Based on our year-to-date results and the current view of the second half, we are reaffirming our 2025 outlook range for revenue, operating profit and adjusted EBITDA, while increasing the lower end of our EPS range by $0.05. Let me provide some color on the assumptions that we have factored into our guidance, starting with revenue. First of all, our innovative portfolio is delivering very well across our 3 key products: AUSTEDO, AJOVY and UZEDY, with a strong first half performance, we have increased our combined guidance for them by approximately $100 million at the midpoint. With increased expectations of our combined 2025 revenue outlook for these 3 products, it's around $2.9 billion versus $2.3 billion in 2024, reflecting growth of approximately 23% year-over-year. Second, FX movements have favorably impacted our revenue since the beginning of Q2, mainly due to the weaker USD versus the euro. While our hedging programs offset some of these FX benefits, overall, we do see a net positive impact on our revenue guidance range as compared to our May guidance. However, as Richard discussed earlier, we expected our global generics revenue for a full year in 2025 to be flat to modestly growing in local currency as compared to 2024. This is mainly due to the tough prior year comparables and increased competition on product launches as well as the delay in timing of📎 certain generic launches. Overall, with the pluses and minuses that I just talked about, we still expect our revenue to be in our 2025 guidance range of $16.8 billion to $17.2 billion, although based on our current trajectory, we are likely going to be around or slightly below the midpoint. Moving to the other elements of our financial outlook. We continue to expect our non-GAAP gross margin to be between 53% to 54% for the full year. Given our year-to-date gross margin performance, we expect our gross margin for the year to be above and at the midpoint of this range with a sequential improvement from Q3 to Q4. We are also reaffirming our non-GAAP outlook for adjusted EBITDA and operating income. As reflected by the increased revenue outlook, we expect to continue strengthen in our innovative portfolio in the second half, combined with the expected savings of approximately $70 million from our transformation programs and the FX benefit. These factors are expected to offset the impact of relative softness in generics and with incremental profit. So I think that to sum it, we're going to be above the midpoint, close to the higher range. I think there is another point here that Richard mentioned on the capital allocation. I think this is about timing. yes, we are constantly looking on BD and also to understand how those ones can actually interpretate higher multiples for us in terms of the trajectory of the growth aligned with our strategy. But most importantly, when we're talking about shareholder buybacks or any kind of capital return to our shareholders, we are still in a trajectory to enhance our free cash flow to make sure that we enable to fuel our business, managing our working capital and our growth as well as allowing us the flexibility to do these type of things. So we are constantly reviewing that one. And once we'll have kind of more information around that one, we'll share with you. Operator (Operator): Our final question for today comes from Keonhee Kim of Morningstar. Keonhee Kim (Analysts): Just a quick one on the SELARSDI progress. Yes, I just wanted to ask how the product rollout is going. Do you know if the landscape is similar to what we saw with HUMIRA, where it will take some quarters before the biosimilar really picks up? Or does this kind of space look a little differently? Richard Francis (Executives): Great. Thanks, Kim. Thanks for your question. So what I'd say to sort of step back is every biosimilar sort of can play out slightly differently, and we're aware of that. I think I've been communicating that for the last 2 years. HUMIRA is different -- biosimilar HUMIRA is different biosimilar SELARSDI different from biosimilar STELARA. So -- and we're okay with that because I think we have a very agile team in the U.S. here who understands the different dynamics based on the different pathway to the physician, the different -- whether it's a pharmacy benefit or not. That said, I think the team has started to execute on this well because of that capability we have. And so I think we see this as a good opportunity. And that's one of the things that is fueling our confidence in our revenue growth in our biosimilars. But I think the overarching is this is a portfolio play strategically. We aim to bring 20 biosimilars to the market. I won't try and pick the ones that are going to be the superstars now because it's different. It's very dynamic. And as I said, we're okay with that because we're going to bring 8 biosimilars to the market by 2027. We don't need all of those to be superstars. We'll work hard to make sure they are, but we don't. That's why we're confident in being able to double our revenue to $800 million for our biosimilars by 2027. So hopefully💬, that answers the question, good start in one of our products, but also good performance about others that we have in the U.S. So thanks for your question. And I think with that, I think we have gone over a bit, so I apologize for that, but we wanted to make sure we had a chance to answer as many questions as we could. I appreciate your time and your interest in Teva, and I look forward to catching up with you, many of you over our roadshow. So thank you very much. Goodbye. Operator (Operator): Thank you all for joining. You may now disconnect your lines.
Q&A highlights
7
What is the expected range of discounts for AUSTEDO under IRA negotiation, and how does it compare to the first round?
Management declined to comment on the IRA negotiations for AUSTEDO, stating that they are in the middle of discussions with CMS and will make an announcement once a conclusion is reached.
“Unfortunately, I'm going to give a very boring answer. We're not going to comment on anything to do with the IRA because we are in the middle of negotiations with CMS. So you'll have to wait until we get to a conclusion of that before we make any announcement.”
asked by Unknown Analyst · answered by Richard Francis
3 min read7 chapters
Detailed Narrative
01
Pivot to Growth Strategy Delivers Consistent Performance
Teva's 'Pivot to Growth' strategy, initiated in 2023, has resulted in 10 consecutive quarters of growth. The strategy is built on four pillars: delivering on growth engines (innovative portfolio), stepping up innovation (late-stage pipeline), sustaining generics powerhouse, and focusing the business (transformation programs). The company reported Q2 revenue of $4.2 billion, up 1% in local currency (excluding Japan divestiture), with adjusted EBITDA up 7% and non-GAAP EPS up 10%.
02
Innovative Portfolio Exceeds Expectations
The innovative portfolio, comprising AUSTEDO, UZEDY, and AJOVY, continues to be the primary growth driver. AUSTEDO sales reached $495 million in the U.S., up 22%, leading to a raised full-year guidance bottom end to $2 billion. UZEDY sales grew 120% to $54 million, with full-year guidance raised to $190 million-$200 million. AJOVY also saw strong performance, up 31% to $155 million, with guidance increased to $630 million-$640 million. The combined guidance for these three products was raised by approximately $95 million for the year.
03
Robust Late-Stage Pipeline and Innovation
Teva's late-stage pipeline includes three Phase III programs: olanzapine LAI for schizophrenia, DARI for asthma, and duvakitug for ulcerative colitis and Crohn's disease. These programs collectively have the potential to impact large patient populations and generate over $10 billion in peak sales. Olanzapine LAI is on track for Q4 2025 submission, DARI enrollment is on track for year-end, and duvakitug Phase III is anticipated to start in Q4 2025. The company also has promising Phase II programs and is advancing an AI-generated antibody, anti-TSLP IL-13, into humans in H1 2027.
04
Generics Business Navigates Tough Comparisons
The Global Generics business declined 2% (excluding Japan BV), primarily due to challenging prior-year comparisons, including the strong launch of Victoza in Q2 2024, and phasing📎 issues with generic Revlimid shipments. Despite this, management expressed confidence in the underlying health of the generics business, noting that excluding these factors, the U.S. generics business grew. The full-year guidance for generics remains flat to low single-digit growth, supported by 15 complex generics, multiple other generics, and 8 biosimilars expected to launch by 2027.
05
Teva Transformation and Cost Savings on Track
The company's transformation program aims to generate $700 million in net savings between 2025 and 2027, with two-thirds expected by the end of 2026. Teva has already achieved 20% of these savings, demonstrating strong execution. These savings, combined with the shift towards high-margin innovative products, are expected to drive the company towards its target of 30% operating margin by 2027. Restructuring costs of $150 million were recorded in Q2, with an expected cash outflow of $70 million-$100 million for 2025.
06
Balance Sheet Strengthening and Capital Allocation
Teva continues to strengthen its balance sheet, reducing gross debt to $17.2 billion and maintaining net debt to EBITDA just over 3x. The company refinanced $2.3 billion of near-term debt maturities, improving its debt profile. The goal is to achieve 2x net debt to EBITDA by 2027 and an investment-grade rating. Capital allocation priorities include business development through in-licensing and eventually returning capital to shareholders once leverage targets are met.
07
Tariff Impact and Supply Chain Resilience
Management addressed concerns regarding potential U.S. and European tariffs on pharmaceuticals. While the confirmed tariffs are absorbed into the 2025 guidance, there is still ambiguity regarding the details of recent announcements, particularly for Europe. Teva emphasized its strong and flexible supply chain, with over 50% of U.S. products manufactured domestically and minimal reliance on China for key starting materials, positioning the company to mitigate potential impacts.
AI-generated summary of the company’s earnings call. Not investment advice.