Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) today reported
results for the year and the quarter ended December 31, 2017.
FY 2017
Q4 2017
Revenues $22.4 billion $5.5 billion Cash flow from operations $3.5
billion $1.2 billion GAAP earnings (loss) per share ($16.26)
($11.41) Non-GAAP EPS $4.01 $0.93
2018 Business outlook:
- Revenues are expected to be $18.3 -
18.8 billion
- Non-GAAP EPS is expected to be
$2.25-2.50
Kåre Schultz, Teva’s President and CEO, said, “2017 was a
challenging year for Teva. Starting 2018 we are focused on meeting
our financial obligations and ensuring a much more solid and
sustainable business model going forward. We are making strong
progress on the restructuring plan, and I am optimistic about the
progress made and remain confident in our ability to deliver on our
targets in the coming year.
Teva remains a recognized world-class leader in global
healthcare, delivering unique value through accessible treatments
and innovative medicines. By improving our financial profile
through stabilization of our operating profit and cash flow, we
will be better positioned to continue serving patients
worldwide.”
Goodwill Impairment In 2017, we noted significant adverse
challenges in the U.S. generics market and the economic
environment. These challenges included: (i) additional pricing
pressure in the U.S. generics market as a result of customer
consolidation into larger buying groups capable of extracting
greater price reductions; (ii) pricing challenges due to government
regulation; (iii) accelerated FDA approval of additional generic
versions of off-patent medicines, resulting in increased
competition for these products; (iv) delays in new launches of
certain of our generic products; (v) originator strategies to
maintain market share, reducing the value of newly launched complex
or novel generics (vi) changes to traditional distribution model,
and (vii) the recently-enacted U.S. tax reform legislation is
expected to limit our ability to achieve targeted tax efficiencies
compared to prior estimates. Consequently, we recorded goodwill
impairments of $17.1 billion, mainly with respect to our U.S.
generics reporting unit.
During the fourth quarter of 2017, we noted further
deterioration in the U.S. generics market and economic environment,
further limitations on our ability to influence generic medicines
pricing in the long term and a decrease in value from future
launches. These developments included: (i) additional pricing
pressure in the U.S. generics market as a result of customer
consolidation into larger buying groups capable of extracting
greater price reductions; (ii) pricing challenges due to government
regulation; (iii) accelerated FDA approval of additional generic
versions of off-patent medicines, resulting in increased
competition for these products; (iv) originator strategies to
maintain market share, reducing the value of newly launched complex
or novel generics; (v) changes to traditional distribution model;
and (vi) the recently-enacted U.S. tax reform legislation, which is
expected to limit our ability to achieve targeted tax efficiencies
compared to prior estimates.
Consequently, we recorded goodwill impairments totaling $17.1
billion in 2017, mainly with respect to our U.S. generics reporting
unit.
2017 Annual Results
Revenues in 2017 were $22.4 billion, an increase of 2%,
or 6% in local currency terms, compared to 2016, primarily due to:
(i) an increase in our generic medicines segment from the inclusion
of Actavis Generics revenues for the full year of 2017 as compared
to five month in 2016, partially offset by the adverse market
dynamics in the United States; (ii) the acquisition of Anda in the
fourth quarter of 2016; and (iii) a decrease in revenues of our
specialty medicines segment due to generic competition to certain
key products.
Exchange rate differences, including the impact of
Venezuela, between 2017 and 2016 negatively impacted our revenues
by $914 million, our GAAP operating income by $290 million and our
non-GAAP operating income by $335 million. Adjustments to the
exchange rates used for the Venezuelan bolivar and the November 30,
2017 deconsolidation of our subsidiaries in Venezuela resulted in a
decrease of $1,062 million in revenues, a decrease of $249 million
in GAAP operating income and a decrease of $323 million in non-GAAP
operating income, compared to results in 2016. In light of the
political and economic conditions in Venezuela, we excluded changes
in revenues and operating profit in Venezuela from any discussion
of local currency results.
GAAP gross profit was $10.8 billion in 2017, down 9%
compared to 2016. GAAP gross profit margin for the year was
48.4%, compared to 54.1% in 2016. Non-GAAP gross profit was
$12.2 billion in 2017, down 9% compared to 2016. Non-GAAP gross
profit margin was 54.7% in 2017, compared to 61.3% in 2016. The
decrease in GAAP gross profit as a percentage of revenues primarily
reflects lower profitability of our generic medicines segment,
higher amortization of purchased intangible assets, lower
profitability of our specialty medicines segment and the inclusion
of Anda, and lower profitability of our other activities, partially
offset by lower inventory step-up expenses, inventory related
expenses in connection with the devaluation in Venezuela and lower
costs related to regulatory actions taken in certain facilities.
The decrease in non-GAAP gross profit as a percentage of revenues
primarily reflects lower profitability of our generic medicines
segment, lower profitability of our specialty medicines segment due
to loss of exclusivity of key products, the inclusion of Anda as
well as lower profitability of our other activities.
Research and Development (R&D) expenses in 2017 were
$1.8 billion, a decrease of 12.5% compared to 2016. R&D
expenses excluding equity compensation expenses and purchase of
in-process R&D in 2017 were $1.6 billion, or 7.1% of revenues,
compared to $1.7 billion, or 7.6%, in 2016. R&D expenses
related to our generic medicines segment were $702 million,
compared to $659 million in 2016. R&D expenses related to our
specialty medicines segment were $884 million, compared to $998
million in 2016.
Selling and Marketing (S&M) expenses in 2017 were
$3.7 billion, a decrease of 5.3% compared to 2016. S&M expenses
excluding amortization of purchased intangible assets and equity
compensation expenses were $3.4 billion, or 15.2% of revenues, in
2017, compared to $3.7 billion, or 17.0% of revenues, in 2016.
S&M expenses related to our generic medicines segment were $1.6
billion, a decrease of 8% compared to $1.7 billion in 2016. S&M
expenses related to our specialty medicines segment were $1.7
billion, a decrease of 13% compared to $1.9 billion in 2016.
General and Administrative (G&A) expenses in 2017
were $1.3 billion, an increase of $45 million compared to 2016.
G&A expenses excluding equity compensation expenses and other
expenses were $1.2 billion in 2017, or 5.5% of revenues, compared
to $1.2 billion and 5.4% in 2016.
Operating loss was $17.5 billion in 2017, compared to
operating income of $2.2 billion in 2016. Non-GAAP operating
income was $6.1 billion, down 11% compared to $6.8 billion in
2016.
Adjusted EBITDA (non-GAAP operating income, which
excludes amortization and certain other items, and excluding
depreciation expenses) for 2017 was $6.7 billion, down 9% compared
to 2016.
In 2017, financial expenses were $895 million, compared
to $1.3 billion in 2016. Non-GAAP financial expenses were
$908 million in 2017, compared to $442 million in 2016.
GAAP income tax expenses in 2017 were $1.9 billion or 11%
on a pre-tax loss of $18 billion. In 2016, the provision for income
taxes was $521 million or 63% on pre-tax income of $824 million.
The provision for non-GAAP income taxes for 2017
amounted to $788 million on pre-tax non-GAAP income of $5.2
billion, for an annual tax rate of 15.3%. The provision for
non-GAAP income taxes in 2016 was $1.1 billion on pre-tax non-GAAP
income of $6.4 billion, for an annual tax rate of 17.4%.
GAAP net loss attributable to Teva and GAAP diluted
loss per share were $16.3 billion and $16.26, respectively, in
2017, compared to net income attributable to Teva of $329 million
and a gain per share of $0.07 in 2016. Non-GAAP net income
attributable to ordinary shareholders for calculating diluted EPS
and non-GAAP diluted EPS were $4.3 billion and $4.01,
respectively in 2017, compared to $5.2 billion and $5.14 in
2016.
Non-GAAP information: Net non-GAAP adjustments in 2017
were $20.6 billion. Non-GAAP net income and non-GAAP EPS for the
year were adjusted to exclude the following items:
- an impairment of goodwill of $17.1
billion, mainly related to our U.S. generics reporting unit;
- impairment of long-lived assets of $3.8
billion, mainly related to revaluation of generic products acquired
from Actavis Generics, discontinued Actavis Generics products and
Rimsa products, product and marketing rights related to our
business venture in Japan and an impairment of property, plant and
equipment of $544 million
- amortization of purchased intangible
assets totaling $1.4 billion, of which $1.2 billion is included in
cost of goods sold and the remaining $209 million in selling and
marketing expenses;
- restructuring expenses of $535
million;
- charge due to deconsolidation of our
subsidiaries in Venezuela of $396 million;
- legal settlements and loss
contingencies of $500 million ;
- contingent consideration of $154
million;
- equity compensation of $129
million;
- acquisition and integration expenses of
$105 million;
- other R&D expenses of $221
million;
- inventory step-up of $67 million;
- costs related to regulatory actions
taken in certain facilities of $47 million;
- financial income of $13 million;
- other non-GAAP items of $160
million;
- gain on sale of business of $1.1
billion;
- minority interest adjustment of
negative $270 million; and
- tax effect and other income tax items
of $2.7 billion (includes $1.0 billion U.S Tax Cuts and Job Act
effect)
We believe that excluding such items facilitates investors'
understanding of Teva’s business. See the attached tables for a
reconciliation of our U.S. GAAP results to the adjusted non-GAAP
figures.
In light of conditions in Venezuela, we concluded that as of
November 30, 2017, we do not meet the accounting criteria for
control over our wholly-owned subsidiaries in Venezuela and that we
no longer have significant influence over such subsidiaries.
Therefore, effective November 30, 2017, we deconsolidated the
investment in our subsidiaries in Venezuela, recording
deconsolidation charges of $396 million.
Cash flow from operations generated during 2017 was $3.5
billion, down 33% compared to $5.2 billion in 2016. Free cash flow,
excluding net capital expenditures, was $2.7 billion compared to
$4.4 billion in 2016, a decrease of 38%. The decrease was mainly
due to business performance as well as higher payments for legal
settlements.
Total balance sheet assets were $70.6 billion as of
December 31, 2017, compared to $86.1 billion as of September 30,
2017 and $93.1 billion as of December 31, 2016. The decrease from
September 30, 2017 was mainly due to impairment of goodwill and
long-lived assets.
Cash and investments at December 31, 2017 decreased to
$1.1 billion, compared to $0.9 billion at September 30, 2017 and to
$1.9 billion at December 31, 2016.
As of December 31, 2017, our debt was $32.5 billion, a
decrease of $2.2 billion compared to $34.7 billion as of September
30, 2017, and a decrease of $3.3 billion compared to $35.8 billion
as of December 31, 2016. The decrease was mainly due to $4.4
billion of net debt repayments on our various term loans, our
revolving credit facility and other short term loans, partially
offset by foreign exchange fluctuations of $1.1 billion. The
portion of total debt classified as short-term as of December 31,
2017 was 11%.
Total shareholders’ equity was $17.4 billion at December
31, 2017, compared to $30.3 billion at September 30, 2017 and to
$35.0 billion at December 31, 2016.
Fourth Quarter 2017
Results
Revenues in the fourth quarter of 2017 were $5.5 billion,
down 16% compared to the fourth quarter of 2016, primarily due to
the decrease in revenues of our specialty medicines segment due to
generic competition for our key products and the challenging market
dynamics in the U.S. generics market. Excluding the impact of
foreign exchange fluctuations, revenues decreased 12%.
Exchange rate differences including the impact of
Venezuela between the fourth quarter of 2017 and the fourth quarter
of 2016 reduced revenues by $274 million, GAAP operating income by
$118 million and non-GAAP operating income by $181 million.
In the fourth quarter of 2017, the company announced that it
would not be paying annual bonuses for 2017 due to the financial
results of the company being significantly below the company’s
original annual operating plan for the year. As a result, in the
fourth quarter of 2017, we reversed amounts accrued for such
bonuses during the first three quarters of 2017 and made no further
accrual for such bonuses.
GAAP gross profit was $2.5 billion in the fourth quarter
of 2017, down 25% compared to the fourth quarter of 2016. GAAP
gross profit margin was 46.6% in the quarter, compared to
52.2% in the fourth quarter of 2016. Non-GAAP gross profit
was $2.8 billion in the fourth quarter of 2017, down 26% from the
fourth quarter of 2016. Non-GAAP gross profit margin was
52.2% in the fourth quarter of 2017, compared to 59.4% in the
fourth quarter of 2016.
Research and Development (R&D) expenses in the fourth
quarter of 2017 were $360 million, down 47% compared to the fourth
quarter of 2016 mainly due to portfolio optimization ,various
efficiency measures as well as the reversal of the annual bonus
accrual. R&D expenses excluding equity compensation expenses
and purchase of in-process R&D in the fourth quarter of 2017
were $310 million or 5.7% of quarterly revenues, compared to $514
million or 7.9% in the fourth quarter of 2016. R&D expenses
related to our generic medicines segment were $149 million,
compared to $211 million in the fourth quarter of 2016, a decrease
of 29%. R&D expenses related to our specialty medicines segment
were $162 million, a decrease of 45% compared to $296 million in
the fourth quarter of 2016.
Selling and Marketing (S&M) expenses in the fourth
quarter of 2017 were $865 million, a decrease of 23% compared to
the fourth quarter of 2016. S&M expenses excluding amortization
of purchased intangible assets and equity compensation expenses
were $791 million, or 14.5% of revenues, in the fourth quarter of
2017, compared to $1.1 billion, or 17% of revenues, in the fourth
quarter of 2016 mainly due to various efficiency measures as well
as the reversal of the annual bonus accrual. S&M expenses
related to our generic medicines segment were $382 million, a
decrease of 30% compared to $549 million in the fourth quarter of
2016, mainly due to lower expenses in Venezuela following exchange
rate adjustments as well as certain other efficiency measures.
S&M expenses related to our specialty medicines segment were
$372 million, a decrease of 26% compared to $506 million in the
fourth quarter of 2016. The decrease was mainly due to cost
reduction and efficiency measures in our commercial operations,
aligning with the life cycle of our product portfolio.
General and Administrative (G&A) expenses in the
fourth quarter of 2017 were $492 million, compared to $360 million
in the fourth quarter of 2016. G&A expenses excluding equity
compensation expenses were $477 million in the fourth quarter of
2017, or 8.7% of revenues, compared to $344 million and 53% in the
fourth quarter of 2016.
GAAP operating loss was $13.0 billion in the fourth
quarter of 2017, compared to an operating loss of $0.1 billion in
the fourth quarter of 2016. Non-GAAP operating income was
$1.4 billion, down 29%, compared to $1.9 billion in the fourth
quarter of 2016.
Adjusted EBITDA (non-GAAP operating income, which
excludes amortization and certain other items, and excluding
depreciation expenses) was $1.5 billion, down 27% compared to $2.1
billion in the fourth quarter of 2016.
GAAP financial expenses for the fourth quarter of 2017
were $191 million, compared to $777 million in the fourth quarter
of 2016. This decrease is mainly due to an impairment of our
monetary assets balance sheet items related to Venezuela in the
fourth quarter of 2016. Non-GAAP financial expenses were
$209 million in the fourth quarter of 2017, compared to $233
million in the fourth quarter of 2016.
We recorded a GAAP income tax benefit for the fourth
quarter of 2017 of $1.5 billion, or 11% on pre-tax loss of $13.2
billion., GAAP income taxes in the fourth quarter of 2016
were $57 million, or 6% on pre-tax loss of $914 million.
Non-GAAP income taxes for the fourth quarter of 2017 were
$183 million on pre-tax non-GAAP income of $1.2 billion, for a
quarterly tax rate of 15.6%. Non-GAAP income taxes in the fourth
quarter of 2016 were $218 million on pre-tax non-GAAP income of
$1.7 billion, for a quarterly tax rate of 12.7%.
GAAP net loss attributable to Teva and GAAP diluted
loss per share were $11.6 billion and a loss of $11.41,
respectively, in the fourth quarter of 2017, compared to a GAAP net
loss of $973 million and a loss of $1.10, respectively, in the
fourth quarter of 2016. Non-GAAP net income attributable to
ordinary shareholders for calculating diluted EPS and non-GAAP
diluted EPS were $1.0 billion and $0.93, respectively, in the
fourth quarter of 2017, compared to $1.5 billion and $1.38 in the
fourth quarter of 2016.
For the fourth quarter of 2017, the weighted average
outstanding shares for the fully diluted earnings per share
calculation was 1,017 million on a GAAP basis and 1,018 million on
a non-GAAP basis. The number of average weighted diluted shares
outstanding used for the fully diluted share calculation for the
fourth quarter of 2016 was 1,015 million shares on a GAAP basis and
1,076 million on a non-GAAP basis. The number of shares on a
non-GAAP basis in 2016 includes the potential dilution resulting
from our mandatory convertible preferred shares, which had a
dilutive effect on our non-GAAP earnings per share.
As of December 31, 2017, the fully diluted share count for
calculating Teva's market capitalization was approximately 1,086
million shares.
Non-GAAP information: Net non-GAAP adjustments in the
fourth quarter of 2017 were $12.5 billion. Non-GAAP net income and
non-GAAP EPS for the quarter were adjusted to exclude the following
items:
- impairment of goodwill of $11.0
billion, mainly related to our U.S. generics reporting unit;
- impairment of long lived assets of $3.2
billion, mainly related to revaluation of generics products
acquired from Actavis Generics, as well as discontinued Actavis
Generics and Rimsa products and an impairment of property, plant
and equipment of $392 million
- deconsolidation of our subsidiaries in
Venezuela of $396 million;
- amortization of purchased intangible
assets totaling $356 million, of which $291 million is included in
cost of goods sold and the remaining $65 million in selling and
marketing expenses;
- restructuring expenses of $235
million;
- other R&D expenses of $45
million;
- acquisition, integration and related
expenses of $18 million;
- contingent consideration income of $25
million;
- equity compensation expenses of $26
million;
- legal settlements and loss
contingencies of $176 million;
- other non GAAP items of
$41million;
- gain on sale of business of $1.1
billion;
- minority interest adjustment of
negative $226 million; and
- tax benefit and other income tax items
of $1.7 billion (includes $1.0 billion U.S Tax Cuts and Job Act
Effect)
We believe that excluding such items facilitates investors'
understanding of its business. See the attached tables for a
reconciliation of the GAAP results to the adjusted non-GAAP
figures.
Cash flow from operations generated during the fourth
quarter of 2017 was $1.2 billion, a decrease of 17% compared to the
fourth quarter of 2016. Free cash flow, excluding net capital
expenditures, was $0.9 billion, down 16% compared to the fourth
quarter of 2016.
Segment Results for the Fourth Quarter
2017
Generic Medicines Segment
Three Months Ended December 31, 2017
2016 (U.S. $ in millions / % of Segment Revenues)
Revenues $ 3,114 100.0% $ 3,716 100.0% Gross profit
1,271 40.8% 1,835 49.4% R&D expenses 149 4.8% 211 5.7% S&M
expenses 382 12.2% 549 14.8% Segment profit* $ 740 23.8% $ 1,075
28.9%
_______________
* Segment profit consists of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization and certain other
items.
Generic Medicines Revenues
Generic medicines revenues in the fourth quarter of 2017 were
$3.1 billion, a decrease of 16% compared to the fourth quarter of
2016.
Generic revenues consisted of:
- U.S. revenues of $1.2 billion, a
decrease of 15% compared to the fourth quarter of 2016, mainly due
to challenging market dynamics including pricing declines resulting
from customer consolidation into large buying groups and
accelerated FDA approvals for additional generic versions of
competing off-patent medicines, partially offset by new product
launches.
- European revenues of $1.1 billion, flat
compared to the fourth quarter of 2016, or a decrease of 8% in
local currency terms, compared to the fourth quarter of 2016,
mainly due to the exclusion of revenues of Actavis U.K., which was
divested in January 2017.
- ROW revenues of $864 million, a
decrease of 31%, or an increase of 2% in local currency terms,
compared to the fourth quarter of 2016. The increase in local
currency terms was mainly due to increased sales in Russia and
Israel.
- Our OTC revenues related to PGT were
$217 million, a decrease of 46% compared to $399 million in the
fourth quarter of 2016. In local currency terms, revenues increased
9%. PGT’s in-market sales excluding Venezuela were $353 million in
the fourth quarter of 2017, an increase of $45 million, or 10% in
local currency terms, compared to the fourth quarter of 2016.
- API sales to third parties of $181
million (which are included in the market revenues above) were flat
compared to the fourth quarter of 2016.
Generic medicines revenues comprised 57% of our total revenues
in the fourth quarter of 2017, the same as in the fourth quarter of
2016.
Generic Medicines Gross Profit
Gross profit of our generic medicines segment in the fourth
quarter of 2017 was $1.3 billion, a decrease of 31% compared to
$1.8 billion in the fourth quarter of 2016. The lower gross profit
was mainly due to higher production expenses, market dynamics in
the United States as well as lower revenues in Venezuela following
the continued currency devaluation.
Gross profit margin for our generic medicines segment in the
fourth quarter of 2017 decreased to 40.8%, compared to 49.4% in the
fourth quarter of 2016.
Generic Medicines Profit
Our generic medicines segment generated profit of $740 million
in the fourth quarter of 2017, a decrease of 31% compared to the
fourth quarter of 2016. Generic medicines profitability as a
percentage of generic medicines revenues was 23.8% in the fourth
quarter of 2017, down from 28.9% in the fourth quarter of 2016.
Specialty Medicines Segment
Three Months Ended December 31, 2017
2016 (U.S. $ in millions / % of Segment Revenues)
Revenues $ 1,795 100.0% $ 2,203 100.0% Gross profit
1,515 84.4% 1,926 87.4% R&D expenses 162 9.0% 296 13.4% S&M
expenses 372 20.7% 506 23.0% Segment profit* $ 981 54.7% $ 1,124
51.0%
_______________
* Segment profit is comprised of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization and certain other
items.
Specialty Medicines Revenues
Specialty medicines revenues in the fourth quarter of 2017 were
$1.8 billion, down 19% compared to the fourth quarter of 2016. The
decrease in specialty medicines revenues compared to the fourth
quarter of 2016 was primarily due to lower sales of our CNS
products and the November 2017 divestiture of certain women health
products in the United States. In addition, in the fourth quarter
of 2016, we also benefited from a payment of $150 million, which we
received in connection with our agreement to sell our royalties and
other rights in Ninlaro® (ixazomib) to a subsidiary of Takeda.
U.S. specialty medicines revenues were $1.2 billion, down 32%
compared to the fourth quarter of 2016. European specialty
medicines revenues were $476 million, an increase of 24%, or 14% in
local currency terms, compared to the fourth quarter of 2016. ROW
specialty revenues were $154 million, up 51%, or 49% in local
currency terms, compared to the fourth quarter of 2016. The
increase in specialty medicines revenues in ROW compared to the
fourth quarter of 2016 was primarily due to reclassification of
income from certain intangible assets which were previously
recorded in G&A accounts. Specialty medicines revenues
comprised 33% of our total revenues in the quarter, compared to 34%
in the fourth quarter of 2016.
The following table presents revenues by therapeutic area and
key products for our specialty medicines segment for the three
months ended December 31, 2017 and 2016:
Three Months Ended December 31
December 31,
Percentage Change 2017 2016 2017 – 2016
(U.S. $ in millions) CNS $ 984 $ 1,243 (21%) Copaxone® 821
1,015 (19%) Azilect® 40 88 (55%) Nuvigil® 9 25 (64%) Respiratory
293 325 (10%) ProAir® 102 139 (27%) QVAR® 61 116 (47%) Oncology 283
268 6% Bendeka® and Treanda® 157 150 5% Women's Health 68 122 (44%)
Other Specialty* 167 245 (32%)
Total Specialty
Medicines $ 1,795 $ 2,203
(19%)
Global revenues of COPAXONE® were $821 million in
the fourth quarter of 2017, a decrease of 19% compared to the
fourth quarter of 2016.
In October 2017, the FDA approved a generic version of Copaxone
40 mg /mL and an additional generic version of COPAXONE 20 mg/mL. A
generic version of COPAXONE 40 mg /mL was launched in the U.S.
market. In the EU, a non-substitutable version of COPAXONE 40 mg/mL
was approved.
COPAXONE revenues in the United States were $622 million, down
25% compared to $829 million in the fourth quarter of 2016, mainly
due to generic competition, which resulted in higher rebates and
lower volumes, partially offset by a price increase of 7.9% in
January 2017, for both the 20 mg/mL and 40 mg/mL versions. At the
end of the fourth quarter of 2017, according to December 2017 IQVIA
(formerly IMS Health) data, our U.S. market share for the COPAXONE
products in terms of new and total prescriptions were 27.8% and
25.7%, respectively. Copaxone revenues outside the United States
were $199 million, an increase of 7%, or flat in local currency
terms, compared to the fourth quarter of 2016.
Our global AZILECT® revenues were $40 million, a decrease
of 55% compared to the fourth quarter of 2016 following the
introduction of generic competition to AZILECT in the United States
in 2017.
Revenues of our respiratory products were $293 million in
the fourth quarter of 2017, down 10% compared to $325 million in
the fourth quarter of 2016. ProAir® revenues in the
quarter were $102 million, down 27% compared to the fourth quarter
of 2016. QVAR® global revenues were $61 million in
the fourth quarter of 2017, down 47% compared to the fourth quarter
of 2016. Both ProAir and QVAR were affected by negative net pricing
effects.
Revenues of our oncology products were $283 million in
the fourth quarter of 2017, up 6% compared to the fourth quarter of
2016. Revenues of TREANDA® and BENDEKA® were $157
million, up 5% compared to the fourth quarter of 2016.
Specialty Medicines Gross Profit
Gross profit of our specialty medicines segment was $1.5 billion
in the fourth quarter of 2017, down 21% compared to $1.9 billion in
the fourth quarter of 2016. Gross profit margin for our specialty
medicines segment in the fourth quarter of 2017 was 84.4%, compared
to 87.4% in the fourth quarter of 2016.
Specialty Medicines Profit
Our specialty medicines segment profit was $1.0 billion in the
fourth quarter of 2017, down 13% compared to the fourth quarter of
2016.
Specialty medicines profit as a percentage of segment revenues
was 54.7% in the fourth quarter of 2017, up from 51.0% in the
fourth quarter of 2016.
The following tables present details of our multiple sclerosis
franchise and of our other specialty medicines for the three months
ended December 31, 2017 and 2016:
Multiple Sclerosis Three months ended December
31, 2017 2016 (U.S.$ in millions / % of
MS Revenues) Revenues $ 821 100.0% $ 1,015 100.0%
Gross profit 747 91.0% 927 91.3% R&D expenses 11 1.3% 30 3.0%
S&M expenses 66 8.1% 81 7.9% MS
profit $ 670 81.6% $ 816 80.4%
Other
Specialty Three months ended December 31, 2017
2016 U.S.$ in millions / % of Other Specialty
Revenues Revenues $ 974 100.0% $ 1,188 100.0% Gross
profit 768 78.9% 999 84.1% R&D expenses 151 15.5% 266 22.4%
S&M expenses 306 31.5% 425 35.8%
Other Specialty profit $ 311 31.9% $ 308 25.9%
In December 2017, our Biologics License Application for
fremanezumab was accepted for filing by the FDA and was
granted fast track designation for the prevention of cluster
headache. On February 2, 2018, the EMA accepted a Marketing
Authorization Application for fremanezumab.
Celltrion is our sole source for API production for fremanezumab
and also for Celltrion’s products CT-P10 (biosimilar candidate to
Rituxan® US) and CT-P6 (biosimilar candidate to Herceptin® US). In
January 2018, Celltrion received an FDA warning letter for its
facility in Incheon, South Korea. It is likely that the remediation
by Celltrion of the issues addressed in the warning letter will
result in a delayed approval of the biosimilar products by the FDA.
We are in active dialogue with the FDA in an effort to maintain our
priority date for the approval of fremanezumab.
Other Activities
Other revenues, primarily sales of third-party
products for which we act as distributor, mostly in the United
States via Anda, as well as in Israel and Hungary, sales of medical
devices, contract manufacturing services related to products
divested in connection with the Actavis Generics acquisition and
other miscellaneous items, were $550 million in the fourth quarter
of 2017, compared to $573 million, in the fourth quarter of
2016.
Outlook for 2018 Non-GAAP
Results
FY 2018
Revenues $18.3-18.8 billion Non-GAAP Operating Income $4.0-4.3
billion EBITDA $4.7-5.0 billion Non-GAAP EPS $2.25-2.50 Weighted
average number of shares 1,030 million Free Cash flow $2.6-2.8
billion
These estimates reflect management`s current expectations for
Teva's performance in 2018. Actual results may vary, whether as a
result of market conditions, exchange rate fluctuations, or other
factors. In addition, the non-GAAP figures exclude the amortization
of purchased intangible assets, costs related to certain regulatory
actions, inventory step-up, legal settlements and reserves,
impairments and related tax effects.
Dividends
As part of our restructuring plan, in December 2017, we
announced an immediate suspension of dividends on our ordinary
shares and ADSs and that dividends on our mandatory convertible
preferred shares will be evaluated on a quarterly basis per current
practice.
Teva has suspended dividends on its mandatory convertible
preferred shares in the fourth quarter of 2017, due to its negative
net retained earnings
Conference Call
Teva will host a conference call and live webcast along with a
slide presentation on Thursday, February 8, 2018 at 8:00 a.m. ET.
to discuss its fourth quarter and annual 2017 results and overall
business environment. A question & answer session will
follow.
In order to participate, please dial the following numbers (at
least 10 minutes before the scheduled start time): United States
1-866-869-2321; Canada 1-866-766-8269 or International +44(0) 203
0095710; passcode: 5279244. For a list of other international
toll-free numbers, click here.
A live webcast of the call will also be available on Teva's
website at: ir.tevapharm.com. Please log in at least 10 minutes
prior to the conference call in order to download the applicable
audio software.
Following the conclusion of the call, a replay of the webcast
will be available within 24 hours on the Company's website. The
replay can also be accessed until March 8, 2018, 9:00 a.m. ET by
calling United States 1-866-247-4222; Canada 1-866-878-9237 or
International +44(0) 1452550000; passcode: 5279244.
About Teva
Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a
leading global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions used by millions of patients
every day. Headquartered in Israel, Teva is the world’s largest
generic medicines producer, leveraging its portfolio of more than
1,800 molecules to produce a wide range of generic products in
nearly every therapeutic area. In specialty medicines, Teva has a
world-leading position in innovative treatments for disorders of
the central nervous system, including pain, as well as a strong
portfolio of respiratory products. Teva integrates its generics and
specialty capabilities in its global research and development
division to create new ways of addressing unmet patient needs by
combining drug development capabilities with devices, services and
technologies. Teva's net revenues in 2017 were $22.4 billion. For
more information, visit www.tevapharm.com.
Non-GAAP Financial Measures
This press release contains certain financial information that
differs from what is reported under accounting principles generally
accepted in the United States ("GAAP"). These non-GAAP financial
measures, including, but not limited to, non-GAAP EPS, non-GAAP
operating income, non-GAAP gross profit, non-GAAP gross profit
margin, adjusted EBITDA, non-GAAP financial expenses, non-GAAP
income taxes, non-GAAP net income and non-GAAP diluted EPS are
presented in order to facilitates investors' understanding of our
business. We utilize certain non-GAAP financial measures to
evaluate performance, in conjunction with other performance
metrics. The following are examples of how we utilize the non-GAAP
measures: our management and board of directors use the non-GAAP
measures to evaluate our operational performance, to compare
against work plans and budgets, and ultimately to evaluate the
performance of management; our annual budgets are prepared on a
non-GAAP basis; and senior management’s annual compensation is
derived, in part, using these non-GAAP measures. See the attached
tables for a reconciliation of the GAAP results to the adjusted
non-GAAP figures. Investors should consider non-GAAP financial
measures in addition to, and not as replacements for, or superior
to, measures of financial performance prepared in accordance with
GAAP. We are not providing forward looking guidance for GAAP
reported financial measures or a quantitative reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP measure because we are unable to predict with
reasonable certainty the ultimate outcome of certain significant
items without unreasonable effort.
Cautionary Note Regarding Forward-Looking Statements
This press release contains forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of
1995, which are based on management’s current beliefs and
expectations and are subject to substantial risks and
uncertainties, both known and unknown, that could cause our future
results, performance or achievements to differ significantly from
that expressed or implied by such forward-looking statements.
Important factors that could cause or contribute to such
differences include risks relating to:
- our generics medicines business,
including: that we are substantially more dependent on this
business, with its significant attendant risks, following our
acquisition of Allergan plc’s worldwide generic pharmaceuticals
business; consolidation of our customer base and commercial
alliances among our customers; the increase in the number of
competitors targeting generic opportunities and seeking U.S. market
exclusivity for generic versions of significant products; price
erosion relating to our generic products, both from competing
products and increased regulation; delays in launches of new
generic products; our ability to take advantage of high-value
biosimilar opportunities; efforts of pharmaceutical companies to
limit the use of generics including through legislation and
regulations; the difficulty and expense of obtaining licenses to
proprietary technologies; returns, allowances and chargebacks; and
investigations of the calculation of wholesale prices;
- our specialty medicines business,
including: competition for our specialty products, especially
COPAXONE®, our leading medicine, which faces competition from
existing and potential additional generic versions and
orally-administered alternatives; our ability to achieve expected
results from investments in our product pipeline; competition from
companies with greater resources and capabilities; and the
effectiveness of our patents and other measures to protect our
intellectual property rights;
- our substantially increased
indebtedness and significantly decreased cash on hand, which may
limit our ability to incur additional indebtedness, engage in
additional transactions or make new investments, and may result in
a further downgrade of our credit ratings; and our inability to
raise debt or borrow funds in amounts or on terms that are
favorable to us;
- our business and operations in general,
including: failure to effectively execute the recently announced
restructuring plan; uncertainties related to, and failure to
achieve, the potential benefits and success of our new senior
management team and organizational structure; harm to our pipeline
of future products due to the expected review of our R&D
programs; our ability to develop and commercialize additional
pharmaceutical products; potential additional adverse consequences
following our resolution with the U.S. government of our FCPA
investigation; compliance with sanctions and other trade control
laws; manufacturing or quality control problems, which may damage
our reputation for quality production and require costly
remediation; interruptions in our supply chain; disruptions of our
or third party information technology systems or breaches of our
data security; the failure to recruit or retain key personnel;
variations in intellectual property laws that may adversely affect
our ability to manufacture our products; challenges associated with
conducting business globally, including adverse effects of
political or economic instability, major hostilities or terrorism;
significant sales to a limited number of customers in our U.S.
market; our ability to successfully bid for suitable acquisition
targets or licensing opportunities, or to consummate and integrate
acquisitions; and our prospects and opportunities for growth if we
sell assets ;
- compliance, regulatory and litigation
matters, including: costs and delays resulting from the extensive
governmental regulation to which we are subject; the effects of
reforms in healthcare regulation and reductions in pharmaceutical
pricing, reimbursement and coverage; governmental investigations
into sales and marketing practices; potential liability for patent
infringement; product liability claims; increased government
scrutiny of our patent settlement agreements; failure to comply
with complex Medicare and Medicaid reporting and
payment obligations; and environmental risks;
- other financial and economic risks,
including: our exposure to currency fluctuations and restrictions
as well as credit risks; potential impairments of our intangible
assets; potential significant increases in tax liabilities; and the
effect on our overall effective tax rate of the termination or
expiration of governmental programs or tax benefits, or of a change
in our business;
and other factors discussed in our Annual Report on Form 20-F
for the year ended December 31, 2016, including in the section
captioned “Risk Factors,” and in our other filings with the U.S.
Securities and Exchange Commission, which are available at
www.sec.gov and www.tevapharm.com. Additional information will be
set forth in our Annual Report on Form 10-K that will be filed for
the year ended Dec. 31, 2017, which should be read in conjunction
with these financial results. Forward-looking statements speak only
as of the date on which they are made, and we assume no obligation
to update or revise any forward-looking statements or other
information contained herein, whether as a result of new
information, future events or otherwise. You are cautioned not to
put undue reliance on these forward-looking statements.
Consolidated
Statements of Income (Loss)
(U.S. dollars in
millions, except share and per share data)
Three months ended Year ended December
31, December 31, 2017 2016 2017
2016 Unaudited Unaudited Audited
Audited Net revenues 5,459 6,492 22,385 21,903
Cost of sales 2,917 3,102 11,560 10,044
Gross profit
2,542 3,390 10,825 11,859
Research and development expenses
360 684 1,848 2,111
Selling and marketing expenses 865 1,129
3,656 3,860
General and administrative expenses 492 360
1,330 1,285
Goodwill impairment 11,000 900 17,100 900
Other asset impairments, restructuring and other items 3,865
998 5,074 1,419
Legal settlements and loss contingencies 176
225 500 899
Other income (1,199) (769) (1,199) (769)
Operating income (loss) (13,017) (137) (17,484) 2,154
Financial expenses – net 191 777 895 1,330
Income (loss)
before income taxes (13,208) (914) (18,379) 824
Income taxes
(benefit) (1,471) 57 (1,933) 521
Share in (profits) losses
of associated companies, net (7) 3 3 (8)
Net income
(loss) (11,730) (974) (16,449) 311
Net loss attributable to
non-controlling interests (195) (1) (184) (18)
Net
income (loss) attributable to Teva (11,535) (973) (16,265) 329
Dividends on preferred shares 65 65 260 261
Net income
(loss) attributable to Teva's ordinary shareholders (11,600)
(1,038) (16,525) 68
Earnings per share attributable to
ordinary shareholders: Basic ($) (11.41) (1.11) (16.26)
0.07
Diluted ($) (11.41) (1.10) (16.26) 0.07
Weighted
average number of shares (in millions): Basic 1,017
1,015 1,016 955
Diluted 1,017 1,015 1,016 961
Non-GAAP net income attributable to ordinary
shareholders:* 1,014 1,415 4,335 4,983
Non-GAAP net income
attributable to Teva:** 1,014 1,480 4,335 5,244
Non-GAAP earnings per share attributable to ordinary
shareholders:* Basic ($) 0.93 1.41 4.01 5.22
Diluted
($) ** 0.93 1.38 4.01 5.14
Weighted average number of
shares (in millions): Basic 1,017 1,015 1,016 955
Diluted 1,018 1,076 1,018 1,020
* See
reconciliation attached. **Dividends on the mandatory convertible
preferred shares of $261 million for the year ended December 31,
2016, and dividend of $65 for the three months ended December 31,
2016 are added back to non-GAAP net income attributable to ordinary
shareholders, since such preferred shares had a dilutive effect on
non-GAAP earnings per share.
Condensed
Consolidated Balance Sheets
(U.S. dollars in
millions)
(Audited)
December 31, 2017 2016 ASSETS
Current assets: Cash and cash equivalents 963 988 Trade
receivables 7,128 7,523 Inventories 4,924 4,954 Prepaid expenses
1,100 1,629 Other current assets 701 1,293 Assets held for sale 566
841
Total current assets 15,382 17,228
Deferred taxes,
deferred charges and other assets 574 625
Other non-current
assets 932 1,235
Property, plant and equipment, net
7,673 8,073
Identifiable intangible assets, net 17,640
21,487
Goodwill 28,414 44,409
Total assets
70,615 93,057
LIABILITIES & EQUITY
Current liabilities: Short-term debt 3,646 3,276 Sales
reserves and allowances 7,881 7,839 Trade payables 2,069 2,157
Employee-related obligations 549 859 Accrued expenses 3,014 3,405
Other current liabilities 724 836 Liabilities held for sale 38 116
Total current liabilities 17,921 18,488
Long-term
liabilities: Deferred income taxes 3,277 5,413 Other taxes and
long-term liabilities 1,843 1,639 Senior notes and loans 28,829
32,524
Total long-term liabilities 33,949 39,576
Equity: Teva shareholders’ equity: 17,359 33,337
Non-contolling interests 1,386 1,656
Total equity 18,745
34,993
Total liabilities and equity 70,615 93,057
Condensed
Consolidated Cash Flow
(U.S. Dollars in
millions)
Three months ended Year ended December
31, December 31, 2017 2016 2017
2016 Unaudited Unaudited Audited
Audited Operating activities: Net income
(loss) (11,730) (974) (16,449) 311
Net change in operating
assets and liabilities 392 119 (363) 1,219
Items not
involving cash flow 12,517 2,280 20,319 3,695
Net cash
provided by operating activities 1,179 1,425 3,507 5,225
Net cash provided by (used in) investing activities 1,592
(797) 2,164 (35,740)
Net cash provided by (used in)
financing activities (2,506) (701) (5,750) 25,217
Translation adjustment on cash and cash equivalents 18 (496)
54 (660)
Net change in cash and cash
equivalents 283 (569) (25) (5,958)
Balance of cash
and cash equivalents at beginning of period 680 1,557 988 6,946
Balance of cash and cash equivalents
at end of period 963 988 963 988
Non-GAAP
reconciliation items
(U.S. Dollars in
millions)
Three months ended Year ended December
31, December 31, 2017 2016 2017
2016 Unaudited Unaudited Audited
Audited Amortization of purchased intangible assets 356 182
1,444 993 Goodwill impairment 11,000 900 17,100 900 Legal
settlements and loss contingencies 176 225 500 899 Other asset
impairments, restructuring and other items 3,218 132 3,782 746
Other R&D expenses 45 164 221 426 Inventory step-up - 140 67
383 Acquisition, integration and related expenses 18 77 105 261
Restructuring expenses 235 91 535 245 Costs related to regulatory
actions taken in facilities (1) 30 47 153 Equity compensation 26 38
129 121 Contingent consideration (25) (2) 154 83 Gain on sales of
business (1,083) (27) (1,083) (720) Venezuela deconsolidation
charge 396 - 396 - Other non-GAAP items 41 131 160 203 Financial
expense (income) (18) 544 (13) 888 Tax effect and other income tax
items* (1,654) (161) (2,721) (593) Impairment of equity
investment─net 45 - 47 3 Minority interest changes (226) (11) (270)
(76) *Includes $1.0 billion U.S Tax Cuts and Job Act Effect
Reconciliation
between net income (loss) attributable to ordinary shareholders and
earnings per share
as reported under
US GAAP to non-GAAP net income attributable to ordinary
shareholders and earnings per share
Year ended December 31, 2017 Year ended December
31, 2016 U.S. dollars and shares in millions (except per
share amounts) GAAP
Non-GAAP Adjustments
Dividends on Preferred
Shares
Non-GAAP
% of Net Revenues
GAAP
Non-GAAP Adjustments
Dividends on Preferred
Shares
Non-GAAP
% of Net Revenues
Gross profit (1) 10,825 1,419 - 12,244 55% 11,859 1,559 -
13,418 61% Operating income (1)(2) (17,484) 23,557 - 6,073 27%
2,154 4,693 - 6,847 31% Net income attributable to ordinary
shareholders (1)(2)(3)(4) (16,525) 20,600 - 4,075 18% 68 4,915 261
5,244 24% Earnings per share attributable to ordinary shareholders
- diluted (5) (16.26) 20.27 - 4.01 0.07 5.07 - 5.14
(1) Amortization of purchased intangible assets 1,235 881
Inventory step-up 67 383 Costs related to regulatory actions taken
in facilities 47 153 Equity compensation 23 14 Other COGS related
adjustments(6) 47 128 Gross profit adjustments 1,419 1,559
(2) Goodwill impairment 17,100 900 Legal settlements and loss
contingencies 500 899 Impairment of long-lived assets 3,782 746
Other R&D expenses 221 426 Acquisition, integration and related
expenses 105 261 Restructuring expenses 535 245 Amortization of
purchased intangible assets 209 112 Equity compensation 106 107
Contingent consideration 154 83 Gain on sale of business (1,083)
(720) Venezuela deconsolidation charge 396 - Other operating
related expenses 113 75 22,138 3,134 Operating income
adjustments 23,557 4,693 (3) Finance expense (Income) (13)
888 (7) Tax effect and other income tax items* (2,721) (593)
Changes in minority interest (270) (76) Impairment of equity
investment─net 47 3 Net income adjustments 20,600
4,915 (4) Non-GAAP net income attributable to ordinary
shareholders for the year ended December 31, 2016 includes an add
back of $261 million of accrued dividends on preferred shares since
they had a dilutive effect on earnings per share. (5) The
non-GAAP weighted average number of shares was 1,016 million for
the year ended December 31, 2017. Non-GAAP earnings per share can
be reconciled with GAAP earnings per share by dividing each of the
amounts included in footnotes 1-3 above by the applicable weighted
average share number. (6) Includes for 2016, $133 million in
inventory-related expenses in connection with the devaluation in
Venezuela. (7) Includes $1.0 billion U.S tax cuts and jobs
act effect
Reconciliation
between net income (loss) attributable to ordinary shareholders and
earnings per share
as reported under
US GAAP to non-GAAP net income attributable to ordinary
shareholders and earnings per share
Three months ended December 31, 2017 Three months
ended December 31, 2016 U.S. dollars and shares in millions
(except per share amounts) GAAP
Non-GAAP Adjustments
Dividends on Preferred
Shares
Non-GAAP
% of Net Revenues
GAAP
Non-GAAP Adjustments
Dividends on Preferred
Shares
Non-GAAP
% of Net Revenues
Gross profit (1) 2,542 305 - 2,847 52% 3,390 469 - 3,859 59%
Operating Profit (loss) (1)(2) (13,017) 14,402 - 1,385 25% (137)
2,081 - 1,944 30% Net income (loss) attributable to ordinary
shareholders (1)(2)(3)(4) (11,535) 12,549 - 1,014 19% (1,038) 2,453
65 1,480 23% Earnings per share attributable to ordinary
shareholders - diluted (5) (11.41) 12.34 - 0.93 (1.10) 2.48 - 1.38
(1) Amortization of purchased intangible
assets 291 170 Inventory step-up - 140 Costs related to regulatory
actions taken in facilities (1) 30 Equity compensation 5 4 Other
COGS related adjustments(6) 10 125 Gross profit adjustments 305 469
(2) Goodwill impairment 11,000 900 Legal settlements and
loss contingencies 176 225 Impairment of long-lived assets 3,218
132 Other R&D expenses 45 164 Acquisition, integration and
related expenses 18 77 Restructuring expenses 235 91 Amortization
of purchased intangible assets 65 12 Equity compensation 21 34
Contingent consideration (25) (2) Gain on sale of business (1,083)
(27) Venezuela deconsolidation charge 396 - Other operating related
expenses 31 6 14,097 1,612 Operating profit
adjustments 14,402 2,081 (3) Finance expense (18) 544 Tax
effect and other income tax items* (1,654) (161) Changes in
minority interest (226) (11) Impairment of equity investment─net 45
- Net income adjustments 12,549 2,453 (4)
Non-GAAP net income attributable to ordinary shareholders for the
three months ended December 31, 2016 includes an add back of $65
million of accrued dividends on preferred shares since they had a
dilutive effect on earnings per share. (5) The non-GAAP
weighted average number of shares was 1,018 and 1,076 million for
the three months ended December 31, 2017 and 2016, respectively.
Non-GAAP earnings per share can be reconciled with GAAP earnings
per share by dividing each of the amounts included in footnotes 1-3
above by the applicable weighted average share number.
Segment
Information
Generic Medicines Three months ended December
31, Percentage Change 2017 2016 2017 -
2016 Unaudited, U.S.$ in millions / % of Segment Revenues
Revenues $ 3,114 100.0% $ 3,716 100.0% (16%) Gross profit
1,271 40.8% 1,835 49.4% (31%) R&D expenses 149 4.8% 211 5.7%
(29%) S&M expenses 382 12.2% 549
14.8% (30%) Segment profit* $ 740 23.8% $ 1,075 28.9%
(31%)
Specialty Medicines Three months ended
December 31, Percentage Change 2017 2016
2017 - 2016 Unaudited, U.S.$ in millions / % of Segment
Revenues Revenues $ 1,795 100.0% $ 2,203 100.0% (19%) Gross
profit 1,515 84.4% 1,926 87.4% (21%) R&D expenses 162 9.0% 296
13.4% (45%) S&M expenses 372 20.7% 506
23.0% (26%) Segment profit* $ 981 54.7% $ 1,124
51.0% (13%)
_______________
* Segment profit consists of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization and certain other
items. Beginning in 2016, our OTC business is included in our
generics medicines segment. The data presented have been conformed
to reflect these changes for all relevant periods.
Segment
Information
Generic Medicines Year ended December 31,
Percentage Change 2017 2016 2017 - 2016
Audited, U.S.$ in millions / % of Segment Revenues Revenues
$ 12,257 100.0% $ 11,990 100.0% 2% Gross profit 5,115 41.7% 5,696
47.5% (10%) R&D expenses 702 5.7% 659 5.5% 7% S&M expenses
1,584 12.9% 1,727 14.4% (8%) Segment
profit* $ 2,829 23.1% $ 3,310 27.6% (15%)
Specialty Medicines Year ended December 31,
Percentage Change 2017 2016 2017 - 2016
Audited, U.S.$ in millions / % of Segment Revenues Revenues
$ 7,914 100.0% $ 8,674 100.0% (9%) Gross profit 6,877 86.9% 7,558
87.1% (9%) R&D expenses 884 11.2% 998 11.5% (11%) S&M
expenses 1,660 20.9% 1,899 21.9% (13%)
Segment profit* $ 4,333 54.8% $ 4,661 53.7% (7%)
_______________
* Segment profit consists of gross profit for the segment, less
R&D and S&M expenses related to the segment. Segment profit
does not include G&A expenses, amortization, inventory step up
and certain other items. See note 20 to our consolidated financial
statements and “Operating Income” below for additional information.
Additional
information
MS Specialty Three months ended December
31, Percentage Change 2017 2016 2017 -
2016 Unaudited, U.S.$ in millions / % of MS Specialty
Revenues Revenues $ 821 100.0% $ 1,015 100.0% (19%)
Gross profit 747 91.0% 927 91.3% (19%) R&D expenses 11 1.3% 30
3.0% (63%) S&M expenses 66 8.1% 81
7.9% (19%) MS profit $ 670 81.6% $ 816 80.4% (18%)
Other Specialty Three months ended December
31, Percentage Change 2017 2016 2017 -
2016 Unaudited, U.S.$ in millions / % of Specialty
Revenues Revenues $ 974 100.0% $ 1,188 100.0% (18%)
Gross profit 768 78.9% 999 84.1% (23%) R&D expenses 151 15.5%
266 22.4% (43%) S&M expenses 306 31.5% 425
35.8% (28%) Other Specialty profit $ 311 31.9% $ 308
25.9% 1%
Additional
information
MS Specialty Year ended December 31,
Percentage Change 2017 2016 2017 - 2016
Audited, U.S.$ in millions / % of MS Specialty Revenues
Revenues $ 3,801 100.0% $ 4,223 100.0% (10%) Gross profit
3,478 91.5% 3,857 91.3% (10%) R&D expenses 69 1.8% 95 2.2%
(27%) S&M expenses 346 9.1% 327
7.8% 6% MS profit $ 3,063 80.6% $ 3,435 81.3% (11%)
Other Specialty Year ended December 31,
Percentage Change 2017 2016 2017 - 2016
Audited, U.S.$ in millions / % of Specialty Revenues
Revenues $ 4,113 100.0% $ 4,451 100.0% (8%) Gross profit 3,399
82.6% 3,701 83.1% (8%) R&D expenses 815 19.8% 903 20.3% (10%)
S&M expenses 1,314 31.9% 1,572
35.3% (16%) Other Specialty profit $ 1,270 30.9% $ 1,226
27.5% 4%
Reconciliation of our
segment profit to consolidated income before income
taxes Three months ended December 31, 2017
2016 Unaudited, U.S.$ in millions Generic medicines
profit $ 740 $ 1,075 Specialty medicines profit 981
1,124 Total segment profit 1,721 2,199 Profit of other activities
25 40 Total profit 1,746 2,239 Amounts not allocated
to segments: Amortization 356 182 General and administrative
expenses 492 360 Other asset impairments, restructuring and other
items 3,865 998 Goodwill impairment 11,000 900 Inventory step-up -
140 Other R&D expenses 45 164 Costs related to regulatory
actions taken in facilities (1) 30 Legal settlements and loss
contingencies 176 225 Venezuela deconsolidation charge 396 - Gain
on sales of business (1,083) (27) Other unallocated amounts (1)
(483) (596) Consolidated operating loss (13,017)
(137) Financial expenses - net 191 777 Consolidated loss before
income taxes $ (13,208) $ (914) (1) Includes for 2016, $133 million
in inventory related-expenses in connection with the devaluation in
Venezuela.
Reconciliation of our segment
profit to consolidated income before income taxes
Year ended December 31, 2017 2016 Audited,
U.S.$ in millions Generic medicines profit $ 2,829 $ 3,310
Specialty medicines profit 4,333 4,661 Total segment profit 7,162
7,971 Profit of other activities 86 68 Total profit 7,248 8,039
Amounts not allocated to segments: Amortization 1,444 993 General
and administrative expenses 1,330 1,285 Other asset impairments,
restructuring and other items 5,074 1,419 Goodwill impairment
17,100 900 Inventory step-up 67 383 Other R&D expenses 221 426
Costs related to regulatory actions taken in facilities 47 153
Legal settlements and loss contingencies 500 899 Venezuela
deconsolidation charge 396 - Gain on sales of business (1,083)
(720) Other unallocated amounts (364) 147 Consolidated operating
income (loss) $ (17,484) $ 2,154 Financial expenses - net 895 1,330
Consolidated income (loss) before income taxes (18,379) 824 (1)
Includes for 2016, $133 million in inventory related-expenses in
connection with the devaluation in Venezuela.
Revenues by Activity and Geographical Area
(Unaudited)
Three Months Ended
December 31,
Percentage Change
Percentage Change
2017 2016 2017 - 2016 2017 - 2016
U.S. $ in millions
in local currencies
Generic Medicines United States $ 1,186 $ 1,395 (15%) (15%) Europe
1,064 1,069 § (8%) Rest of the World. 864 1,252 (31%)
2% Total Generic Medicines 3,114 3,716 (16%) (7%) Specialty
Medicines United States 1,165 1,717 (32%) (32%) Europe 476 384 24%
14% Rest of the World. 154 102 51% 49% Total
Specialty Medicines. 1,795 2,203 (19%) (20%) Other Revenues United
States 310 350 (11%) (11%) Europe 71 72 (1%) (8%) Rest of the
World. 169 151 12% 4% Total Other Revenues 550
573 (4%) (7%) Total Revenues $ 5,459 $ 6,492 (16%) (12%) *In
light of the political and economic conditions in Venezuela, we
exclude the quarterly changes in revenues and operating profit in
Venezuela from any discussion of local currency results. § Less
than 0.5%.
Revenues by
Activity and Geographical Area (Audited)
Year Ended December 31,
Percentage Change
Percentage Change
2017 2016 2017 - 2016 2017 - 2016
(U.S. $ in millions) in local currencies Generic
Medicines United States $ 5,036 $ 4,556 11% 11% Europe 3,994 3,563
12% 11% Rest of the World 3,227 3,871 (17%) 10% Total Generic
Medicines 12,257 11,990 2% 10% Specialty Medicines United States
5,686 6,724 (15%) (15%) Europe 1,780 1,598 11% 10% Rest of the
World 448 352 27% 27% Total Specialty 7,914 8,674 (9%) -9% Other
Revenues United States 1,251 369 239% 239% Europe 308 248 24% 22%
Rest of the World 655 622 5% 0% Total Other Revenues 2,214
1,239 79% 76% Total Revenues $ 22,385 $ 21,903 2% 6%
_______________
*In light of the political and economic
conditions in Venezuela, we exclude the quarterly changes in
revenues and operating profit in Venezuela from any discussion of
local currency results.
Revenues by Product line (Unaudited)
Three Months Ended
December 31,
Percentage Change
2017 2016 2017 - 2016 U.S. $ in
millions Generic Medicines $ 3,114 $
3,716 (16%) OTC 304 412 (26%) API 181 181 §
Specialty
Medicines 1,795 2,203 (19%) CNS 984 1,243
(21%) Copaxone® 821 1,015 (19%) Azilect® 40 88 (55%) Nuvigil® 9 25
(64%) Respiratory 293 325 (10%) ProAir® 102 139 (27%) Qvar® 61 116
(47%) Oncology 283 268 6% Bendeka® and Treanda® 157 150 5% Women's
Health 68 122 (44%) Other Specialty 167 245 (32%)
All Others
550 573 (4%) Total $ 5,459 $
6,492 (16%) Revenues by Product
line (Audited)
Year Ended December 31,
Percentage Change
2017 2016 2017 - 2016 U.S. $ in
millions Generic Medicines $ 12,257 $
11,990 2% OTC 1,157 1,361 (15%) API 753 776 (3%)
Specialty Medicines 7,914 8,674 (9%)
CNS 4,426 5,283 (16%) Copaxone® 3,801 4,223 (10%) Azilect® 170 410
(59%) Nuvigil® 61 200 (70%) Respiratory 1,270 1,274 § ProAir® 501
565 (11%) Qvar® 361 462 (22%) Oncology 1,135 1,139 § Bendeka® and
Treanda® 658 661 § Women's Health 426 458 (7%) Other Specialty* 657
520 26%
All Others 2,214 1,239 79%
Total $ 22,385 $ 21,903 2% * Includes
aggregate payments of $150 million related to the Ninlaro®
transaction in the first half of 2017. § Less than 0.5%.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20180208005651/en/
Teva Pharmaceutical Industries Ltd.IR Contacts:United
StatesKevin C. Mannix, 215-591-8912orIsraelRan Meir,
972 (3) 926-7516orTomer Amitai, 972 (3) 926-7656orPR
Contacts:IsraelIris Beck Codner, 972 (3) 926-7208orUnited
StatesKaelan Hollon, 202-412-7076
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