Teva Pharmaceutical Industries Ltd. Q1 FY2025 earnings call

• Pivot to Growth Strategy: Ninth consecutive quarter of growth driven by executing on pillars like innovation, sustaining generics powerhouse, and focusing the business.
• Innovative Brands Detail: Austedo XR has over 60% of new patients, U.S. sales up 40% with milligrams growth at 38%, guiding to raise the bottom end for Austedo to $1.950 billion. Ajovy is on track for $600 million. Uzedy has 60% share of risperidone long-acting market.
• Pipeline Progress: Olanzapine filing in H2 2025, Phase 3 trial start for duvakitug, DARI program initiating globally, emrusolmin enrolling patients, and IL-15/anti-PD-1 IL-2 programs in clinic.
• Transformation: Focus on modernizing organization, optimizing OPEX (aiming for $700 million net savings by 2027) to transition to leading biopharmaceutical company, with emphasis on resource allocation, cost reduction in G&A and TGO, and procurement optimization.

Innovative Brands: Revenue from innovative brands was $589 million, a 45% increase year-over-year. Austedo grew 39% globally (40% in the U.S.), Ajovy was up 26% globally and is on track for $600 million in sales, and Uzedy doubled to $39 million with over 60% share of the risperidone long-acting market. Generic Business: Grew 3% in the quarter, with growth across all regions including the U.S., Europe, and international markets.

• Revenue: 2025 revenue expected between $16.8 billion and $17.2 billion, with a slight reduction from prior guidance top end. Austedo guidance bottom end raised to $1.950 billion.
• Operating Margin: Target 30% operating margin by 2027, with transformation programs contributing to margin expansion through portfolio mix improvement and cost optimization.

• Tariffs: Impact on supply chain, but efforts made to mitigate and absorb impact in 2025 guidance. Teva has substantial U.S. manufacturing footprint and limited exposure to China/India for sourcing.
• Generic Revlimid: Revenue cliff in 2026, but offset by transformation savings and continued growth in innovative business.

Q: David Amsellem asked about how generics fit with the biopharma strategy and if savings are a destination.

A: Richard Francis stated generics are a complementary pillar of the Pivot to Growth strategy, and savings are a journey with constant focus on capital allocation.

Q: Jason Gerberry inquired about Section 232 investigation and Austedo pricing in Israel.

A: Richard Francis discussed mitigation of tariff impact and limited sales of Austedo outside U.S., focusing on U.S. business.

Q: Umer Raffat asked about 2026 EBITDA and net debt change.

A: Richard Francis said EBITDA in absolute dollars will increase in 2026, and Eli Kalif explained net debt change due to Japan business close and FX factors.

Q: Ash Verma asked about tariff pass-through and cost optimization.

A: Richard Francis and Eli Kalif discussed tariff mitigation efforts and cost optimization focusing on resource allocation for growth drivers.

Q: Chris Schott asked about 2026 margin improvement and net savings reinvestment.

A: Richard Francis and Eli Kalif explained margin improvement driven by revenue growth, cost of goods, and OPEX management, with savings phased for 2025-2027.

Q: Yifeng Liu asked about biosimilar dynamics and LAI portfolio.

A: Richard Francis discussed biosimilar market dynamics in U.S. and Europe, and Eric Hughes commented on LAI portfolio and schizophrenia treatment needs.