Teva Pharmaceutical Industries Ltd. Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Pivot to Growth Strategy: Focus on 4 pillars - growth engines (innovative portfolio, biosimilars), sustained generics powerhouse, focus the business. Achieved 3 years of consecutive growth (4% in 2023, 11% in 2024, 2% in 2025).
• Innovation Pipeline:
  • Olanzapine LAI: Submission in Dec 2025, EU submission in Q2 2026.
  • DARI program: Completed targeted enrollment, enrolling to accelerate study.
  • Duvakitug: Phase III for UC and CD, to announce 2 new indications in 2026.
  • Anti-IL-15: Royalty Pharma funding for vitiligo Phase II/III, celiac Phase II study.
  • Emrusolmin: Phase II study enrolling quickly; AJOVY recognized by NEJM for pediatrics episodic migraine.
• Transformation Program: Aim to achieve $700 million net savings by 2027, with $70 million saved in 2025, on track to hit 2/3 by end of 2026.
• Financial Performance: 2025 revenues $17.3B (+5%), EBITDA $5.3B (+12%), EPS $2.93 (+19%), free cash flow $2.4B (+16%), net debt to EBITDA 2.5x.

Segment Performance

• Innovative Portfolio:
  • AUSTEDO: $2.26 billion in 2025, up 35%; Q4 2025: $725 million, up 40%. TRx growth 10%, milligram volume up 19%, with AUSTEDO XR accounting for 60% of new patients.
  • UZEDY: $191 million in 2025, up 63%; Q4 2025: $55 million, up 28%. TRx volume grew 123% YOY, with over 83% of NBRx from transitioning patients or treatment-naive.
  • AJOVY: $673 million in 2025, up 30%; Q4 2025: $211 million, up 43%. Leads in 30 markets across Europe and international.
  • Combined, innovative portfolio hit $3.1 billion in 2025 (+35%), with Q4 2025 surpassing $1 billion.
• Generics Business: Flat in 2025 vs 2024, excluding Japan. 2-year CAGR of 6%, with U.S. up 2%, international up 1%, Europe down 2%.
• Biosimilars Business: 10 assets in market globally, 6 to launch by end of 2027, 10 more to launch from 2028; aim to grow by $400 million by 2027.

Guidance

• 2026 Revenue: $16.4B to $16.8B (1% growth to 2% decline vs 2025, excluding milestones and Japan divestment).
• Non-GAAP Gross Margin: 54.5% to 55.5%.
• Non-GAAP Earnings per Share: $2.57 to $2.77.
• Free Cash Flow: $2B to $2.4B.
• Product-Specific Guidance:
  • AUSTEDO: $2.4B to $2.55B for 2026, driven by underlying growth in TRx and milligram volume.
  • UZEDY: $250M to $280M for 2026, based on strong TRx volume and market expansion.
  • AJOVY: $750M to $790M for 2026, on continued market share growth and new geographies.

Risks

• Market Competition: Competitive landscape in innovative and generics segments could impact revenue and margins.
• Regulatory Delays: Delays in regulatory approvals for pipeline products could slow growth.
• Pricing Pressures: Payer environment and pricing dynamics in the U.S. could affect product margins and sales.

Question and Answer

Q: David Amsellem of Piper Sandler asks about AUSTEDO and UZEDY net pricing dynamics and volume growth.

A: Richard Francis responds on AUSTEDO's strong fundamentals, disciplined pricing, and UZEDY's market mix and TRx growth.

Q: Louise Chen of Scotiabank asks about disconnect between pipeline excitement and Street perception and AUSTEDO 2027 guidance.

A: Richard Francis and Eric Hughes discuss pipeline speed surprising the market and AUSTEDO's long-term growth drivers.

Q: Ash Verma of UBS asks about R&D funding and TL1A maintenance data expectations.

A: Richard Francis and Eric Hughes address R&D funding strategy and positive expectations for TL1A maintenance data.

Q: Jason Gerberry of Bank of America asks about 2026 gross margin and vitiligo data robustness.

A: Eli Kalif discusses gross margin outlook and Eric Hughes details vitiligo study endpoints.

Q: Christopher Schott of JPMorgan asks about IL-15 development timelines and AUSTEDO inventory/rebate impact.

A: Eric Hughes elaborates on IL-15 timelines and Richard Francis clarifies AUSTEDO inventory/rebate breakdown.

Q: Umer Raffat of Evercore ISI asks about sales and marketing spend, Royalty Pharma milestone, and vitiligo expectations.

A: Eli Kalif addresses sales and marketing spend and Royalty Pharma milestone, Eric Hughes comments on vitiligo data competitiveness.

Q: Leszek Sulewski of Truist asks about biosimilars launch cadence, BD strategy, and R&D philosophy.

A: Richard Francis discusses biosimilars launch plans, BD activity, and Eric Hughes outlines R&D philosophy driven by data.

Q: Dennis Ding of Jefferies asks about R&D philosophy and BD in biotech space.

A: Eric Hughes explains R&D philosophy based on data and disciplined BD strategy for biotech space