☒
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Israel
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Not Applicable
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(State or other jurisdiction of
incorporation or organization)
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(IRS Employer
Identification Number)
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5 Basel Street, Petach Tikva, ISRAEL
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4951033
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(Address of principal executive offices)
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(Zip code)
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Title of each class
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Trading
Symbol(s)
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Name of each exchange
on which registered
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||
American Depositary Shares, each representing one Ordinary Share
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TEVA
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New York Stock Exchange
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Large accelerated filer
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☒
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Accelerated filer
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☐
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|||
Non-accelerated
filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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PART I.
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Item 1.
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4
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5
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6
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7
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9
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10
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Item 2.
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45
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Item 3.
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75
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Item 4.
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75
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PART II.
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Item 1.
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76
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Item 1A.
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76
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Item 2.
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77
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Item 3.
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77
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Item 4.
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77
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Item 5.
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77
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Item 6.
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78
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79
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•
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our ability to successfully compete in the marketplace, including: that we are substantially dependent on our generic products; 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; competition for our specialty products, especially COPAXONE
®
, our leading medicine, which faces competition from existing and potential additional generic versions, competing glatiramer acetate products and orally-administered alternatives; the uncertainty of commercial success of AJOVY
®
or AUSTEDO
®
; competition from companies with greater resources and capabilities; delays in launches of new products and our ability to achieve expected results from investments in our product pipeline; ability to develop and commercialize biopharmaceutical products; efforts of pharmaceutical companies to limit the use of generics, including through legislation and regulations and the effectiveness of our patents and other measures to protect our intellectual property rights;
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•
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our substantial indebtedness, which may limit our ability to incur additional indebtedness, engage in additional transactions or make new investments, 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;
|
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•
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our business and operations in general, including: uncertainty regarding the magnitude, duration, and geographic reach of the
COVID-19
pandemic and its impact on our business, financial condition, operations, cash flows, and liquidity and on the economy in general; our ability to successfully execute and maintain the activities and efforts related to the measures we have taken or may take in response to the
COVID-19
pandemic and associated costs therewith; effectiveness of our restructuring plan announced in December 2017; our ability to attract, hire and retain highly skilled personnel; our ability to develop and commercialize additional pharmaceutical products; compliance with anti-corruption sanctions and trade control laws; manufacturing or quality control problems; interruptions in our supply chain, including due to potential effects of the
COVID-19
pandemic on our operations and business in geographic locations impacted by the pandemic and on the business operations of our suppliers; disruptions of information technology systems; breaches of our data security; variations in intellectual property laws; challenges associated with conducting business globally, including adverse effects of the
COVID-19
pandemic, political or economic instability, major hostilities or terrorism; significant sales to a limited number of customers; our ability to successfully bid for suitable acquisition targets or licensing opportunities, or to consummate and integrate acquisitions; our prospects and opportunities for growth if we sell assets; and potential difficulties related to the operation of our new global enterprise resource planning (ERP) system;
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•
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compliance, regulatory and litigation matters, including: increased legal and regulatory action in connection with public concern over the abuse of opioid medications in the U.S. and our ability to reach a final resolution of the remaining opioid-related litigation; costs and delays resulting from the extensive governmental regulation to which we are subject or delays in governmental processing time due to modified government operations due to the
COVID-19
pandemic, including effects on product and patent approvals due to the
COVID-19
pandemic; the effects of reforms in healthcare regulation and reductions in pharmaceutical pricing, reimbursement and coverage; governmental investigations into S&M 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;
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•
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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;
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June 30,
|
December 31,
|
|||||||
2020
|
2019
|
|||||||
ASSETS
|
||||||||
Current assets:
|
||||||||
Cash and cash equivalents
|
$ | 2,402 | $ | 1,975 | ||||
Accounts receivables, net of allowance for credit losses of $129 million and $135 million as of June 30, 2020 and December 31, 2019
|
4,545 | 5,676 | ||||||
Inventories
|
4,361 | 4,422 | ||||||
Prepaid expenses
|
956 | 870 | ||||||
Other current assets
|
448 | 434 | ||||||
Assets held for sale
|
69 | 87 | ||||||
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|
|
|
|||||
Total current assets
|
12,781 | 13,464 | ||||||
Deferred income taxes
|
483 | 386 | ||||||
Other
non-current
assets
|
560 | 591 | ||||||
Property, plant and equipment, net
|
6,122 | 6,436 | ||||||
Operating lease
right-of-use
|
489 | 514 | ||||||
Identifiable intangible assets, net
|
9,940 | 11,232 | ||||||
Goodwill
|
24,616 | 24,846 | ||||||
|
|
|
|
|||||
Total assets
|
$ | 54,991 | $ | 57,470 | ||||
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|
|||||
LIABILITIES AND EQUITY
|
||||||||
Current liabilities:
|
||||||||
Short-term debt
|
$ | 1,649 | $ | 2,345 | ||||
Sales reserves and allowances
|
5,201 | 6,159 | ||||||
Accounts payables
|
1,606 | 1,718 | ||||||
Employee-related obligations
|
544 | 693 | ||||||
Accrued expenses
|
1,755 | 1,869 | ||||||
Other current liabilities
|
995 | 889 | ||||||
|
|
|
|
|||||
Total current liabilities
|
11,751 | 13,674 | ||||||
Long-term liabilities:
|
||||||||
Deferred income taxes
|
975 | 1,096 | ||||||
Other taxes and long-term liabilities
|
2,411 | 2,640 | ||||||
Senior notes and loans
|
24,616 | 24,562 | ||||||
Operating lease liabilities
|
414 | 435 | ||||||
|
|
|
|
|||||
Total long-term liabilities
|
28,417 | 28,733 | ||||||
|
|
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|
|||||
Commitments and contingencies
|
||||||||
Total liabilities
|
40,167 | 42,407 | ||||||
|
|
|
|
|||||
Equity:
|
||||||||
Teva shareholders’ equity:
|
||||||||
Ordinary shares of NIS
|
57 | 56 | ||||||
Additional
paid-in
capital
|
27,374 | 27,312 | ||||||
Accumulated deficit
|
(6,747 | ) | (6,956 | ) | ||||
Accumulated other comprehensive loss
|
(2,703 | ) | (2,312 | ) | ||||
Treasury shares as of June 30, 2020 and December 31, 2019 — 107 million ordinary shares and 106 million ordinary shares, respectively
|
(4,128 | ) | (4,128 | ) | ||||
|
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|||||
13,852 | 13,972 | |||||||
|
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|
|||||
Non-controlling
interests
|
972 | 1,091 | ||||||
|
|
|
|
|||||
Total equity
|
14,824 | 15,063 | ||||||
|
|
|
|
|||||
Total liabilities and equity
|
$ | 54,991 | $ | 57,470 | ||||
|
|
|
|
Three months
ended |
Six months
ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net revenues
|
$ | 3,870 | $ | 4,177 | $ | 8,227 | $ | 8,326 | ||||||||
Cost of sales
|
2,107 | 2,284 | 4,402 | 4,577 | ||||||||||||
|
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|||||||||
Gross profit
|
1,763 | 1,893 | 3,826 | 3,749 | ||||||||||||
Research and development expenses
|
225 | 276 | 446 | 537 | ||||||||||||
Selling and marketing expenses
|
597 | 666 | 1,210 | 1,313 | ||||||||||||
General and administrative expenses
|
264 | 296 | 567 | 589 | ||||||||||||
Intangible assets impairments
|
120 | 561 | 768 | 1,030 | ||||||||||||
Other assets impairments, restructuring and other items
|
381 | 101 | 502 | 103 | ||||||||||||
Legal settlements and loss contingencies
|
13 | 646 | (12 | ) | 703 | |||||||||||
Other income
|
(9 | ) | (9 | ) | (22 | ) | (15 | ) | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating (loss) income
|
173 | (644 | ) | 364 | (510 | ) | ||||||||||
Financial expenses, net
|
223 | 206 | 448 | 425 | ||||||||||||
|
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|
|
|
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|
|||||||||
Income (loss) before income taxes
|
(51 | ) | (850 | ) | (84 | ) | (934 | ) | ||||||||
Income taxes (benefit)
|
(104 | ) | (179 | ) | (163 | ) | (170 | ) | ||||||||
Share in (profits) losses of associated companies, net
|
— | — | — | 4 | ||||||||||||
|
|
|
|
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|
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|
|||||||||
Net income (loss)
|
53 | (671 | ) | 78 | (768 | ) | ||||||||||
Net income (loss) attributable to
non-controlling
interests
|
(87 | ) | 18 | (131 | ) | 26 | ||||||||||
|
|
|
|
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|
|||||||||
Net income (loss) attributable to Teva
|
140 | (689 | ) | 209 | (794 | ) | ||||||||||
Earnings (loss) per share attributable to ordinary shareholders:
|
||||||||||||||||
Basic
|
$ | 0.13 | $ | (0.63 | ) | $ | 0.19 | $ | (0.73 | ) | ||||||
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Diluted
|
$ | 0.13 | $ | (0.63 | ) | $ | 0.19 | $ | (0.73 | ) | ||||||
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|||||||||
Weighted average number of shares (in millions):
|
||||||||||||||||
Basic
|
1,096 | 1,092 | 1,095 | 1,091 | ||||||||||||
|
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|||||||||
Diluted
|
1,100 | 1,092 | 1,098 | 1,091 | ||||||||||||
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Three months ended
|
Six months
ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
Net income (loss)
|
$ | 53 | $ | (671 | ) | $ | 78 | $ | (768 | ) | ||||||
Other comprehensive income (loss), net of tax:
|
||||||||||||||||
Currency translation adjustment
|
144 | 86 | (416 | ) | 133 | |||||||||||
Unrealized gain (loss) from derivative financial instruments
|
7 | (10 | ) | 37 | 37 | |||||||||||
Unrealized gain from
available-for-sale
|
— | 1 | — | 1 | ||||||||||||
Unrealized loss on defined benefit plans
|
— | (1 | ) | — | (1 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other comprehensive income (loss)
|
151 | 76 | (379 | ) | 170 | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total comprehensive income (loss)
|
204 | (595 | ) | (301 | ) | (598 | ) | |||||||||
Comprehensive income (loss) attributable to
non-controlling
interests
|
(85 | ) | 47 | (119 | ) | 49 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income (loss) attributable to Teva
|
$ | 289 | $ | (642 | ) | $ | (182 | ) | $ | (647 | ) | |||||
|
|
|
|
|
|
|
|
Teva shareholders’ equity
|
||||||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||||||
Number of
shares (in millions) |
Stated
value |
Additional
paid-in
capital
|
Retained
earnings (accumulated deficit) |
Accumulated other
comprehensive (loss) |
Treasury
shares |
Total Teva
shareholders’ equity |
Non-
controlling
interests |
Total
equity
|
||||||||||||||||||||||||||||
|
|
(U.S. dollars in millions)
|
|
|||||||||||||||||||||||||||||||||
Balance at March 31, 2020
|
1,201 | 56 | 27,342 | (6,887 | ) | (2,852 | ) | (4,128 | ) | 13,531 | 1,057 | 14,588 | ||||||||||||||||||||||||
Net Income (loss)
|
140 | 140 | (87 | ) | 53 | |||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
149 | 149 | 2 | 151 | ||||||||||||||||||||||||||||||||
Issuance of Shares
|
1 | * | * | * | ||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
32 | 32 | 32 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2020
|
1,202 | $ | 57 | $ | 27,374 | $ | (6,747 | ) | $ | (2,703 | ) | $ | (4,128 | ) | $ | 13,852 | $ | 972 | $ | 14,824 | ||||||||||||||||
|
|
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|
|
|
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|
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|
|
*
|
Represents an amount less than
$
0.5
million.
|
Teva shareholders’ equity
|
||||||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||||||
Number of
shares (in millions) |
Stated
value |
Additional
paid-in
capital |
Retained
earnings (accumulated deficit) |
Accumulated other
comprehensive (loss) |
Treasury
shares |
Total Teva
shareholders’ equity |
Non-controlling
interests |
Total
equity
|
||||||||||||||||||||||||||||
(U.S. dollars in millions)
|
||||||||||||||||||||||||||||||||||||
Balance at March 31, 2019
|
1,198 | 56 | 27,234 | (6,063 | ) | (2,359 | ) | (4,137 | ) | 14,732 | 1,089 | 15,821 | ||||||||||||||||||||||||
Net Income (loss)
|
(689 | ) | (689 | ) | 18 | (671 | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
47 | 47 | 29 | 76 | ||||||||||||||||||||||||||||||||
Issuance of Shares
|
* | * | ||||||||||||||||||||||||||||||||||
Issuance of Treasury Shares
|
(6 | ) | 9 | 3 | 3 | |||||||||||||||||||||||||||||||
Stock-based compensation expense
|
32 | 32 | 32 | |||||||||||||||||||||||||||||||||
Other
|
(2 | ) | (2 | ) | (2 | ) | ||||||||||||||||||||||||||||||
Transactions with
non-controlling
|
(8 | ) | (8 | ) | ||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2019
|
1,198 | $ | 56 | $ | 27,258 | $ | (6,752 | ) | $ | (2,312 | ) | $ | (4,128 | ) | $ | 14,122 | $ | 1,128 | $ | 15,251 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Represents an amount less than $0.5
million.
|
Teva shareholders’ equity
|
||||||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||||||
Number of
shares (in millions) |
Stated
value |
Additional
paid-in
capital |
Retained
earnings (accumulated deficit) |
Accumulated other
comprehensive (loss) |
Treasury
shares |
Total Teva
shareholders’ equity |
Non-controlling
interests |
Total
equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions)
|
||||||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
1,198 | 56 | 27,312 | (6,956 | ) | (2,312 | ) | (4,128 | ) | 13,972 | 1,091 | 15,063 | ||||||||||||||||||||||||
Net Income (loss)
|
209 | 209 | (131 | ) | 78 | |||||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
(391 | ) | (391 | ) | 12 | (379 | ) | |||||||||||||||||||||||||||||
Issuance of Shares
|
4 | * | * | * | ||||||||||||||||||||||||||||||||
Stock-based compensation expense
|
62 | 62 | 62 | |||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2020
|
1,202 | $ | 57 | $ | 27,374 | $ | (6,747 | ) | $ | (2,703 | ) | $ | (4,128 | ) | $ | 13,852 | $ | 972 | $ | 14,824 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
*
|
Represents an amount less than $0.5
million.
|
Teva shareholders’ equity
|
||||||||||||||||||||||||||||||||||||
Ordinary shares
|
||||||||||||||||||||||||||||||||||||
Number of
shares (in millions) |
Stated
value |
Additional
paid-in
capital |
Retained
earnings (accumulated deficit) |
Accumulated other
comprehensive (loss) |
Treasury
shares |
Total Teva
shareholders’ equity |
Non-controlling
interests |
Total
equity |
||||||||||||||||||||||||||||
(U.S. dollars in millions)
|
||||||||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
1,196 | 56 | 27,210 | (5,958 | ) | (2,459 | ) | (4,142 | ) | 14,707 | 1,087 | 15,794 | ||||||||||||||||||||||||
Net
I
ncome (loss)
|
(794 | ) | (794 | ) | 26 | (768 | ) | |||||||||||||||||||||||||||||
Other comprehensive income (loss)
|
147 | 147 | 23 | 170 | ||||||||||||||||||||||||||||||||
Issuance of shares
|
2 | * | * | |||||||||||||||||||||||||||||||||
Issuance of Treasury Shares
|
(8 | ) | 14 | 6 | 6 | |||||||||||||||||||||||||||||||
Stock-based compensation expense
|
64 | 64 | 64 | |||||||||||||||||||||||||||||||||
Transactions with
non-controlling
interests
|
(8 | ) | (8 | ) | ||||||||||||||||||||||||||||||||
Other
|
(8 | ) | (8 | ) | (8 | ) | ||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Balance at June 30, 2019
|
1,198 | $ | 56 | $ | 27,258 | $ | (6,752 | ) | $ | (2,312 | ) | $ | (4,128 | ) | $ | 14,122 | $ | 1,128 | $ | 15,251 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
* |
Represents an amount less than $0.5 million.
|
Six months ended
June 30,
|
||||||||
2020
|
2019
|
|||||||
Operating activities:
|
||||||||
Net income (loss)
|
$ | 78 | $ | (768 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by operations:
|
||||||||
Depreciation and amortization
|
781 | 893 | ||||||
Impairment of long-lived assets and assets held for sale
|
1,120 | 1,097 | ||||||
Net change in operating assets and liabilities
|
(1,002 | ) | (1,056 | ) | ||||
Deferred income taxes – net and uncertain tax positions
|
(502 | ) | (362 | ) | ||||
Stock-based compensation
|
62 | 64 | ||||||
Net loss (gain) from sale of investments and long-lived assets
|
24 | 6 | ||||||
Other items
|
17 | 11 | ||||||
|
|
|
|
|||||
Net cash provided by (used in) operating activities
|
578 | (115 | ) | |||||
|
|
|
|
|||||
Investing activities:
|
||||||||
Beneficial interest collected in exchange for securitized accounts receivables
|
769 | 746 | ||||||
Purchases of property, plant and equipment
|
(259 | ) | (237 | ) | ||||
Proceeds from sale of long lived assets
|
45 | 134 | ||||||
Other investing activities
|
10 | 58 | ||||||
|
|
|
|
|||||
Net cash provided by investing activities
|
565 | 701 | ||||||
|
|
|
|
|||||
Financing activities:
|
||||||||
Repayment of senior notes and loans and other long-term liabilities
|
(700 | ) | (157 | ) | ||||
Tax withholding payments made on shares and dividends
|
— | (52 | ) | |||||
Other financing activities
|
(3 | ) | (15 | ) | ||||
|
|
|
|
|||||
Net cash used in financing activities
|
(703 | ) | (224 | ) | ||||
|
|
|
|
|||||
Translation adjustment on cash and cash equivalents
|
(13 | ) | 21 | |||||
|
|
|
|
|||||
Net change in cash and cash equivalents
|
427 | 383 | ||||||
Balance of cash and cash equivalents at beginning of period
|
1,975 | 1,782 | ||||||
|
|
|
|
|||||
Balance of cash and cash equivalents at end of period
|
$ | 2,402 | $ | 2,165 | ||||
|
|
|
|
|||||
Non-cash
financing and investing activities:
|
||||||||
Beneficial interest obtained in exchange for securitized accounts receivables
|
$ | 728 | $ | 770 |
|
a.
|
Basis of presentation
|
|
b.
|
Significant accounting policies
|
|
c.
|
Revision of Previously Reported Consolidated Financial Statements
|
Net revenues
|
Cost of sales
|
|||||||||||||||||||||||||||
As reported
|
Adjustment
|
As revised
|
As reported
|
Adjustment
|
As revised
|
|||||||||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||||||||||
201
9
|
Q1 | 4,295 | (146 | ) | 4,149 | 2,440 | (146 | ) | 2,293 | |||||||||||||||||||
Q2 | 4,337 | (159 | ) | 4,177 | 2,443 | (159 | ) | 2,284 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Total | 8,632 | (306 | ) | 8,326 | 4,883 | (306 | ) | 4,577 |
June 30,
|
December 31,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Inventories
|
154 | — | ||||||
Property, plant and equipment, net
and others
|
176 | 98 | ||||||
Goodwill
|
11 | — | ||||||
Adjustments of assets held for sale to fair value
|
(272 | ) | (11 | ) | ||||
|
|
|
|
|||||
Total assets of the disposal group classified as held for sale in the consolidated balance sheets
|
$ | 69 | $ | 87 | ||||
|
|
|
|
Three months ended June 30, 2020
|
||||||||||||||||||||
North
America |
Europe
|
International
Markets |
Other activities
|
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Sale of goods
|
1,658 | 1,000 | 457 | 211 | 3,326 | |||||||||||||||
Licensing arrangements
|
17 | 3 | 1 | 1 | 22 | |||||||||||||||
Distribution
|
374 | — | 7 | — | 381 | |||||||||||||||
Other
|
(2 | ) | (2 | ) | 23 | 123 | 141 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 2,047 | $ | 1,001 | $ | 488 | $ | 335 | $ | 3,870 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Three months ended June 30, 2019
|
||||||||||||||||||||
North
America |
Europe
|
International
Markets |
Other activities
|
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Sale of goods
|
1,686 | 1,173 | 526 | 204 | 3,588 | |||||||||||||||
Licensing arrangements
|
35 | 10 | 2 | 1 | 48 | |||||||||||||||
Distribution
|
351 | § | 4 | — | 354 | |||||||||||||||
Other
|
— | § | 49 | 137 | 186 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 2,071 | $ | 1,183 | $ | 582 | $ | 342 | $ | 4,177 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2020
|
||||||||||||||||||||
North
America |
Europe
|
International
Markets |
Other
|
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Sale of goods
|
3,283 | 2,370 | 939 | 388 | 6,981 | |||||||||||||||
Licensing arrangements
|
42 | 15 | 4 | 2 | 63 | |||||||||||||||
Distribution
|
800 | 2 | 13 | — | 815 | |||||||||||||||
Other
|
4 | 17 | 97 | 252 | 369 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 4,129 | $ | 2,404 | $ | 1,053 | $ | 642 | $ | 8,227 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Six months ended June 30, 2019
|
||||||||||||||||||||
North
America |
Europe
|
International
Markets |
Other
|
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Sale of goods
|
3,324 | 2,433 | 994 | 390 | 7,141 | |||||||||||||||
Licensing arrangements
|
65 | 15 | 2 | 3 | 85 | |||||||||||||||
Distribution
|
729 | § | 10 | — | 739 | |||||||||||||||
Other
|
— | § | 97 | 264 | 362 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 4,118 | $ | 2,448 | $ | 1,103 | $ | 657 | $ | 8,326 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Sales Reserves and Allowances
|
||||||||||||||||||||||||||||||||
Reserves
included in Accounts Receivable, net |
Rebates
|
Medicaid and
other governmental allowances |
Chargebacks
|
Returns
|
Other
|
Total reserves
included in SR&A |
Total
|
|||||||||||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2019
|
$ | 87 | $ | 2,895 | $ | 1,109 | $ | 1,342 | $ | 637 | $ | 176 | $ | 6,159 | $ | 6,246 | ||||||||||||||||
Provisions related to sales made in current year period
|
193 | 2,588 | 434 | 4,325 | 216 | 50 | 7,613 | 7,806 | ||||||||||||||||||||||||
Provisions related to sales made in prior periods
|
— | (191 | ) | (105 | ) | (15 | ) | 18 | — | (293 | ) | (293 | ) | |||||||||||||||||||
Credits and payments
|
(206 | ) | (3,064 | ) | (505 | ) | (4,416 | ) | (211 | ) | (64 | ) | (8,260 | ) | (8,466 | ) | ||||||||||||||||
Translation differences
|
— | (9 | ) | — | (2 | ) | (2 | ) | (5 | ) | (18 | ) | (18 | ) | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at
June
3
0
, 2020
|
$ | 74 | 2,219 | $ | 933 | $ | 1,234 | $ | 658 | $ | 157 | $ | 5,201 | $ | 5,275 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reserves
included in Accounts Receivable, net |
Rebates
|
Medicaid and
other governmental allowances |
Chargebacks
|
Returns
|
Other
|
Total reserves
included in SR&A |
Total
|
|||||||||||||||||||||||||
(U.S.$ in millions)
|
||||||||||||||||||||||||||||||||
Balance at December 31, 2018
|
$ | 175 | $ | 3,006 | $ | 1,361 | $ | 1,530 | $ | 638 | $ | 176 | $ | 6,711 | $ | 6,886 | ||||||||||||||||
Provisions related to sales made in current year period
|
229 | 2,651 | 548 | 4,822 | 148 | 213 | 8,382 | 8,611 | ||||||||||||||||||||||||
Provisions related to sales made in prior periods
|
— |
7
|
— | (5 | ) | 3 | (4 | ) | 1 | 1 | ||||||||||||||||||||||
Credits and payments
|
(242 | ) | (2,975 | ) | (739 | ) | (4,936 | ) | (196 | ) | (206 | ) | (9,052 | ) | (9,294 | ) | ||||||||||||||||
Translation differences
|
— | 4 | — |
2
|
2
|
4
|
12 | 12 | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||
Balance at
June
3
0
, 2019
|
$ | 162 | 2,693 | $ | 1,170 | $ | 1,413 | $ | 595 | $ | 183 | $ | 6,054 | $ | 6,216 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
June 30,
2020
|
December 31,
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Finished products
|
$ | 2,281 | $ | 2,504 | ||||
Raw and packaging materials
|
1,282 | 1,183 | ||||||
Products in process
|
618 | 583 | ||||||
Materials in transit and payments on account
|
179 | 151 | ||||||
|
|
|
|
|||||
Total
|
$ | 4,361 | $ | 4,422 | ||||
|
|
|
|
Gross carrying amount
net |
Accumulated
amortization |
Net carrying amount
|
||||||||||||||||||||||
June 30,
|
December 31,
|
June 30,
|
December 31,
|
June 30,
|
December 31,
|
|||||||||||||||||||
2020
|
2019
|
2020
|
2019
|
2020
|
2019
|
|||||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||||||
Product rights
|
$ | 19,386 | $ | 19,663 | $ | 11,252 | $ | 10,640 | $ | 8,134 | $ | 9,023 | ||||||||||||
Trade names
|
599 | 600 | 144 | 126 | 455 | 474 | ||||||||||||||||||
In process research and development
|
1,352 | 1,735 | — | — | 1,352 | 1,735 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Total
|
$ | 21,336 | $ | 21,998 | $ | 11,396 | $ | 10,766 | $ | 9,940 | $ | 11,232 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(a) |
Identifiable product rights of $103 million, mainly due to updated market assumptions regarding price and volume of products acquired from Actavis Generics
; and
|
(b) |
IPR&D assets of $17 million, mainly due to generic pipeline products acquired from Actavis Generics
resulting from
development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date or discount rate
)
.
|
(a) |
Identifiable product right
of
$365 million, mainly due to updated market assumptions regarding price and volume of products acquired from Actavis Generics
that are
primarily marketed in the Unites States
;
and
|
|
|
|
|
(b)
|
IPR&D assets of $
196
million due to: (i) $
137
million of generic pipeline products acquired from Actavis Generics
resulting from
development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date or discount rate) in the United States and (ii) $
59
million related to a change in the assumption of the future market share of
certain
products within Teva’s Actavis Generics related pipeline in Europe.
|
(a) |
IPR&D assets of $348 million, primarily due to: (i) $211
million
related to AUSTEDO for the treatment of Tourette syndrome in pediatric patients in the United States
following clinical trial results received in February 2020, which failed to meet their primary endpoints;
and (ii) $117 million
related to generic pipeline products acquired from Actavis Generics
resulting from
development progress and changes in other key valuation indications (e.g., market size, competition assumptions, legal landscape, launch date) in the United States; and
|
(b) |
Identifiable product rights of $420 million,
mainly due to: (i) $232 million due to updated market assumptions regarding price and volume of products acquired from Actavis Generics; and
(
i
i) $165 million in
Japan in connection with ongoing regulatory pricing reductions and generic competition.
|
(a) |
Identifiable product rights of $569 million, mainly due to updated market assumptions regarding price and volume of products acquired from Actavis Generics
that are
primarily marketed in the United States
;
and
|
(b) |
IPR&D assets of $461 million, due to: (i) $277 million of generic pipeline products acquired from Actavis Generics
resulting from
;
(ii) $125 million related to lenalidomide (generic equivalent of Revlimid
®
) due to modified competition assumptions as a result of settlements between the innovator and other generic filers
; and
(iii) $59 million related to a change in the assumption of the future market share of
certain
products within Teva’s Actavis Generics related pipeline in Europe.
|
North America
|
Europe
|
International
Markets |
Other
|
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Balance as of December 31, 2019 (1)
|
$ | 11,091 | $ | 8,536 | $ | 2,532 | $ | 2,687 | $ | 24,846 | ||||||||||
Changes during the period:
|
||||||||||||||||||||
Goodwill reclassified as assets held for sale
|
— | — | (11 | ) | — | (11 | ) | |||||||||||||
Translation differences
|
(17 | ) | (33 | ) | (169 | ) | — | (219 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of June 30, 2020 (1)
|
$ | 11,074 | $ | 8,503 | $ | 2,352 | $ | 2,687 | $ | 24,616 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) |
Accumulated goodwill impairment as of June 30, 2020 and December 31, 2019 was approximately $21.0 billion.
|
|
•
|
|
Management believes a portion of the difference is due to sales projections of AJOVY and AUSTEDO in the International Markets reporting unit. Management continues to believe that the majority of analysts do not focus on this market in preparing their financial models and, as a result, have not attributed value to the launch potential in this reporting unit. Accordingly, management’s projections exceed those it believes are being used by analysts, particularly in International Markets. However, even if management were to conform to analyst expectations, the estimated fair value of the International Markets reporting unit would still exceed its carrying amount.
|
|
•
|
|
Management believes an additional difference is due to sales projections of AUSTEDO in the North America reporting unit, resulting in higher fair value as analyzed by management compared to Teva’s market capitalization. Management continues to believe that it has more accurate information based on its knowledge of the market and its growth and therefore no adjustment was incorporated to the fair value. However, even if management were to conform to analyst expectations, the estimated fair value of the North America reporting unit would still exceed its carrying amount.
|
|
•
|
|
Management continues to believe that market concerns regarding the uncertainty related to the opioid and price fixing litigation risks are impacting its market capitalization. Management believes that these concerns led to an acute reaction, which resulted in a decline in Teva’s share price and continues to impact the Company’s share price during 2020. Management believes developments in the opioids case are expected to clarify the outlook with regards to the opioid litigation, when the proposed settlement framework is finalized. Based upon Teva’s current estimates of fair value, even if management was to adjust the fair value of the North America reporting unit for this uncertainty, the estimated fair value would still exceed its carrying amount. If the outcome of the litigations were to vary materially from the proposed settlement framework as explained in note 10, this may lead to a goodwill impairment charge.
|
June 30,
2020 |
December 31,
2019 |
|||||||||||||||
Weighted average interest
rate as of June 30, 2020 |
Maturity
|
|||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||
Convertible debentures
|
0.25% | 2026 | $ | 514 | $ | 514 | ||||||||||
Current maturities of long-term liabilities
(1)
|
1,136 | 1,831 | ||||||||||||||
|
|
|
|
|||||||||||||
Total short-term debt
|
$ | 1,649 | $ | 2,345 | ||||||||||||
|
|
|
|
(1)
|
In July 2020, Teva repaid at maturity EUR 1,010 million of its 0.375% senior notes.
|
Weighted average interest
rate as of June 30, 2020 |
Maturity
|
June 30,
2020 |
December 31,
2019 |
|||||||||||||
(U.S. $ in millions)
|
||||||||||||||||
Senior notes EUR 1,010 million (1)
|
0.38 | % | 2020 | 1,136 | 1,131 | |||||||||||
Senior notes EUR 1,500 million
|
1.13 | % | 2024 | 1,680 | 1,673 | |||||||||||
Senior notes EUR 1,300 million
|
1.25 | % | 2023 | 1,457 | 1,451 | |||||||||||
Senior notes EUR 1,000 million
|
6.00 | % | 2025 | 1,124 | 1,120 | |||||||||||
Senior notes EUR 900 million
|
4.50 | % | 2025 | 1,012 | 1,008 | |||||||||||
Senior notes EUR 750 million
|
1.63 | % | 2028 | 837 | 833 | |||||||||||
Senior notes EUR 700 million
|
3.25 | % | 2022 | 787 | 784 | |||||||||||
Senior notes EUR 700 million
|
1.88 | % | 2027 | 786 | 782 | |||||||||||
Senior notes USD 3,500 million
|
3.15 | % | 2026 | 3,494 | 3,494 | |||||||||||
Senior notes USD 1,475 million
|
2.20 | % | 2021 | 1,474 | 1,474 | |||||||||||
Senior notes USD 3,000 million
|
2.80 | % | 2023 | 2,995 | 2,995 | |||||||||||
Senior notes USD 2,000 million
|
4.10 | % | 2046 | 1,985 | 1,985 | |||||||||||
Senior notes USD 1,250 million
|
6.00 | % | 2024 | 1,250 | 1,250 | |||||||||||
Senior notes USD 1,250 million
|
6.75 | % | 2028 | 1,250 | 1,250 | |||||||||||
Senior notes USD 1,000 million
|
7.13 | % | 2025 | 1,000 | 1,000 | |||||||||||
Senior notes USD 844 million
|
2.95 | % | 2022 | 855 | 856 | |||||||||||
Senior notes USD 789 million
|
6.15 | % | 2036 | 783 | 782 | |||||||||||
Senior notes USD 700 million (2)
|
2.25 | % | 2020 | 0 | 700 | |||||||||||
Senior notes USD 613 million
|
3.65 | % | 2021 | 618 | 618 | |||||||||||
Senior notes USD 588 million
|
3.65 | % | 2021 | 587 | 587 | |||||||||||
Senior notes CHF 350 million
|
0.50 | % | 2022 | 368 | 361 | |||||||||||
Senior notes CHF 350 million
|
1.00 | % | 2025 | 368 | 362 | |||||||||||
|
|
|
|
|||||||||||||
Total senior notes
|
|
25,846 | 26,496 | |||||||||||||
Other long-term debt
|
1.13 | % | 2026 | 1 | 1 | |||||||||||
Less current maturities
|
|
(1,136 | ) | (1,831 | ) | |||||||||||
Less debt issuance costs
|
|
(94 | ) | (103 | ) | |||||||||||
|
|
|
|
|||||||||||||
Total senior notes and loans
|
|
$ | 24,616 | $ | 24,562 | |||||||||||
|
|
|
|
(1) |
In July 2020, Teva repaid at maturity EUR 1,010 million of its 0.375% senior notes.
|
(2) |
In March 2020, Teva repaid at maturity $700 million of its 2.25% senior notes.
|
June 30,
|
December 31,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Cross-currency swap - net investment hedge
|
$ | — | $ | 1,000 | ||||
|
|
|
|
Fair value
|
||||||||||||||||
Designated as hedging
instruments
|
Not designated as hedging
instruments
|
|||||||||||||||
June 30,
2020
|
December 31,
2019
|
June 30,
2020
|
December 31,
2019
|
|||||||||||||
Reported under
|
(U.S. $ in millions)
|
|||||||||||||||
Asset derivatives:
|
||||||||||||||||
Other current assets:
|
||||||||||||||||
Option and forward contracts
|
$
|
—
|
|
$
|
—
|
|
$
|
40
|
|
$
|
32
|
|
||||
Liability derivatives:
|
||||||||||||||||
Other current liabilities:
|
||||||||||||||||
Cross-currency swaps - net investment hedge
|
|
—
|
|
|
(22
|
)
|
|
—
|
|
|
—
|
|
||||
Option and forward contracts
|
|
—
|
|
|
—
|
|
|
(52
|
)
|
|
(41
|
)
|
Financial expenses, net
|
|
|||||||||||||||
Three months ended,
|
Three months ended,
|
|||||||||||||||
June 30,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
|||||||||||||
Reported under
|
(U.S. $ in millions)
|
|||||||||||||||
Line items in which effects of hedges are
recorded |
$
|
223
|
|
$
|
206
|
|
$
|
151
|
|
$
|
76
|
|
||||
Cross-currency swaps - cash flow hedge
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
4
|
|
||||
Cross-currency swaps - net investment
hedge (2) |
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
14
|
|
||||
Interest rate swaps - fair value hedge (3)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Financial expenses, net
|
Other comprehensive income (loss)
|
|||||||||||||||
Six months ended,
|
Six months ended,
|
|||||||||||||||
June 30,
2020
|
June 30,
2019 |
June 30,
2020
|
June 30,
2019 |
|||||||||||||
Reported under
|
(U.S. $ in millions)
|
|||||||||||||||
Line items in which effects of hedges are recorded
|
$
|
448
|
|
$
|
425
|
|
$
|
(379
|
)
|
$
|
170
|
|
||||
Cross-currency swaps - cash flow hedge (1)
|
|
—
|
|
|
(1
|
)
|
|
—
|
|
|
(15
|
)
|
||||
Cross-currency swaps - net investment
hedge (2) |
|
(2
|
)
|
|
(15
|
)
|
|
(21
|
)
|
(6
)
|
||||||
Interest rate swaps - fair value hedge (3)
|
|
—
|
|
|
1
|
|
|
—
|
|
|
—
|
|
Financial expenses, net
|
Net revenues
|
|||||||||||||||
Three months ended,
|
Three months ended,
|
|||||||||||||||
June 30,
2020
|
June 30,
2019
|
June 30,
2020
|
June 30,
2019
|
|||||||||||||
Reported under
|
(U.S. $ in millions)
|
|||||||||||||||
Line items in which effects of hedges are recorded
|
$
|
223
|
|
$
|
206
|
|
$
|
(3,870
|
)
|
$
|
(4,177
|
)
|
||||
Option and forward contracts (4)
|
|
13
|
|
|
34
|
|
|
—
|
|
|
—
|
|
||||
Option and forward contracts economic hedge (5)
|
|
—
|
|
|
—
|
|
|
20
|
|
|
4
|
|
Financial expenses, net
|
Net revenues
|
|||||||||||||||
Six months ended,
|
Six months ended,
|
|||||||||||||||
June 30,
2020
|
June 30,
2019 |
June 30,
2020
|
June 30,
2019 |
|||||||||||||
Reported under
|
(U.S. $ in millions)
|
|||||||||||||||
Line items in which effects of hedges are recorded
|
$
|
448
|
|
$
|
425
|
|
$
|
(8,227
|
)
|
$
|
(8,326
|
)
|
||||
Option and forward contracts (4)
|
|
37
|
|
|
(7
|
)
|
|
—
|
|
|
—
|
|
||||
Option and forward contracts Economic hedge (5)
|
|
—
|
|
|
—
|
|
|
(40
|
)
|
|
4
|
|
(1) |
With respect to cross-currency swap agreements, Teva recognized gains which mainly reflect the differences between the fixed interest rate and the floating interest rate. In the fourth quarter of 2019, Teva terminated $588 million
in
cross-currency swap agreements against its outstanding 3.65% senior notes maturing in November 2021. The settlement of these transactions resulted in cash proceeds of $95 million. The cash flow hedge accounting adjustments of these instruments, which are recorded under senior notes and loans, are amortized under financial
expenses
over the life of the debt as additional interest expense.
,
net
|
(2) |
In each of the first and second quarters of 2017, Teva entered into a cross currency swap agreement with a notional amount of $500 million maturing in 2020. These cross currency swaps were designated as a net investment hedge of Teva’s foreign subsidiaries euro denominated net assets, in order to reduce the risk of adverse exchange rate fluctuations. With respect to these cross currency swap agreements, Teva recognized gains which mainly reflect the differences between the
float-for-float
|
(3) |
In the fourth quarter of 2016, Teva entered into an interest rate swap agreement designated as fair value hedge relating to its 2.8% senior notes due 2023 with respect to $500 million notional amount of outstanding debt. With respect to this interest rate swap agreement, Teva recognized a loss which mainly reflects the differences between the fixed interest rate and the floating interest rate. In the third quarter of 2019, Teva terminated this interest rate swap agreement. The settlement of these transactions resulted in a gain position of $10 million. The fair value hedge accounting adjustments of these instruments, which are recorded under senior notes and loans, are amortized under financial
expenses
over the life of the debt as additional interest expense.
,
net
|
(4) |
Teva uses foreign exchange contracts (mainly option and forward contracts) to hedge balance sheet items from currency exposure. These foreign exchange contracts are not designated as hedging instruments for accounting purposes. In connection with these foreign exchange contracts, Teva recognizes gains or losses that offset the revaluation of the balance sheet items also recorded under financial
expenses
,
net.
|
(5) |
Teva entered into option and forward contracts designed to limit the exposure of foreign exchange fluctuations on projected revenues and expenses recorded in euro, the British pound, the Russian ruble and some other currencies during the
period
for which such instruments are transacted. These derivative instruments do not meet the criteria for hedge accounting, however, they are accounted for as
an
economic hedge. These derivative instruments, which may include hedging transactions against future projected revenues and expenses, are recognized on the balance sheet at their fair value on a quarterly basis, while the foreign exchange impact on the underlying revenues and expenses may occur in subsequent quarters. Changes in the fair value of the derivative instruments are recognized in the same line item in the statements of income as the underlying exposure being hedged. In the first six months of 2020, the positive impact from these derivatives recognized under revenues was $40 million, partially offset by a $4 million negative impact recognized under cost of sales. The cash flows associated with these derivatives are reflected as cash flows from operating activities in the consolidated statements of cash flows.
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(U.S. $ in millions)
|
(U.S. $ in millions)
|
|||||||||||||||
Impairments of long-lived tangible assets (1)
|
$ | 277 | $ | 48 | $ | 352 | $ | 68 | ||||||||
Contingent consideration | 76 | 24 | 83 | (47 | ) | |||||||||||
Restructuring | 33 | 47 | 73 | 79 | ||||||||||||
Other | (6 | ) | (18 | ) | (5 | ) | 3 | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
$ | 381 | $ | 101 | $ | 502 | $ | 103 | ||||||||
|
|
|
|
|
|
|
|
(1) |
Including impairments related to exit and disposal activities
|
Three months ended June 30,
|
||||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Restructuring
|
||||||||
Employee termination
|
$ | 3 | $ | 36 | ||||
Other
|
30 | 11 | ||||||
|
|
|
|
|||||
Total
|
$ | 33 | $ | 47 | ||||
|
|
|
|
Six months ended June 30,
|
||||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Restructuring
|
||||||||
Employee termination
|
$ | 36 | $ | 56 | ||||
Other
|
36 | 23 | ||||||
|
|
|
|
|||||
Total
|
$ | 73 | $ | 79 | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Employee termination
costs |
Other
|
Total
|
||||||||||
(U.S. $ in millions )
|
||||||||||||
Balance as of January 1, 2020
|
$ | (208 | ) | $ | (7 | ) | $ | (215 | ) | |||
Provision
|
(36 | ) | (36 | ) | (73 | ) | ||||||
Utilization and other*
|
114 | 36 | 150 | |||||||||
|
|
|
|
|
|
|||||||
Balance as of June 30, 2020
|
$ | (130 | ) | $ | (7 | ) | $ | (137 | ) | |||
|
|
|
|
|
|
*
|
Includes adjustments for foreign currency translation.
|
Net Unrealized Gains (Losses)
|
Benefit Plans
|
|||||||||||||||||||
Foreign
currency translation adjustments |
Available-for-
sale securities
|
Derivative
financial instruments |
Actuarial gains
(losses) and prior service (costs) credits |
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Balance as of December 31, 2019
|
$ | (1,794 | ) | $ | — | $ | (420 | ) | $ | (98 | ) | $ | (2,312 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) before reclassifications
|
(428 | ) | — | 19 | — | (409 | ) | |||||||||||||
Amounts reclassified to the statements of income
|
— | — | 18 | — | 18 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net other comprehensive income (loss) before tax
|
(428 | ) | — | 37 | — | (391 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||
Net other comprehensive income (loss) after tax*
|
(428 | ) | — | 37 | — | (391 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of June 30, 2020
|
$ | (2,222 | ) | $ | — | $ | (383 | ) | $ | (98 | ) | $ | (2,703 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
* |
Amounts do not include a $12 million
gain
from foreign currency translation adjustments attributable to
non-controlling
interests.
|
Net Unrealized Gains (Losses)
|
Benefit Plans
|
|||||||||||||||||||
Foreign
currency translation adjustments |
Available-for-sale
securities |
Derivative
financial instruments |
Actuarial gains
(losses) and prior service (costs) credits |
Total
|
||||||||||||||||
(U.S. $ in millions)
|
||||||||||||||||||||
Balance as of December 31, 2018
|
$ | (1,878 | ) | $ | 1 | $ | (504 | ) | $ | (78 | ) | $ | (2,459 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Other comprehensive income (loss) before reclassifications
|
110 |
1
|
22 |
*
|
*
|
133 | ||||||||||||||
Amounts reclassified to the statements of income
|
— | — | 15 | — | 15 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net other comprehensive income (loss) before tax
|
110 |
1
|
37 |
*
|
*
|
148 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Net other comprehensive income (loss) after tax*
|
110 |
1
|
37 | (1 | ) | 147 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Balance as of June 30, 2019
|
$ | (1,768 | ) | $ | 2 | $ | (467 | ) | $ | (79 | ) | $ | (2,312 | ) | ||||||
|
|
|
|
|
|
|
|
|
|
*
|
Amounts do not include a $23 million
gain
from foreign currency translation adjustments attributable to
non-controlling
interests.
|
**
|
Represents an amount less than $0.5 million.
|
(a) |
North America segment, which includes the United States and Canada.
|
(b) |
Europe segment, which includes the European Union and certain other European countries.
|
(c) |
International Markets segment, which includes all countries other than those in the North America and Europe segments.
|
a.
|
Segment information:
|
Three months ended June 30,
|
||||||||||||
2020
|
||||||||||||
North America
|
Europe
|
International Markets
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Revenues
|
$ | 2,047 | $ | 1,001 | $ | 488 | ||||||
Gross profit
|
1,090 | 548 | 247 | |||||||||
R&D expenses
|
154 | 65 | 19 | |||||||||
S&M expenses
|
254 | 188 | 105 | |||||||||
G&A expenses
|
110 | 52 | 29 | |||||||||
Other (income) expenses
|
(2 | ) | (1 | ) | (2 | ) | ||||||
|
|
|
|
|
|
|||||||
Segment profit
|
$ | 573 | $ | 244 | $ | 97 | ||||||
|
|
|
|
|
|
Three months ended June 30,
|
||||||||||||
2019
|
||||||||||||
North America
|
Europe
|
International Market
s*
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Revenues
|
$ | 2,071 | $ | 1,183 | $ | 582 | ||||||
Gross profit
|
1,067 | 674 | 312 | |||||||||
R&D expenses
|
175 | 70 | 24 | |||||||||
S&M expenses
|
269 | 216 | 119 | |||||||||
G&A expenses
|
117 | 70 | 34 | |||||||||
Other (income) expenses
|
2 | 1 | (1 | ) | ||||||||
|
|
|
|
|
|
|||||||
Segment profit
|
$ | 504 | $ | 316 | $ | 136 | ||||||
|
|
|
|
|
|
Six months ended June 30,
|
||||||||||||
2020
|
||||||||||||
North America
|
Europe
|
International Markets
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Revenues
|
$ | 4,129 | $ | 2,404 | $ | 1,053 | ||||||
Gross profit
|
2,152 | 1,371 | 552 | |||||||||
R&D expenses
|
300 | 120 | 34 | |||||||||
S&M expenses
|
505 | 390 | 211 | |||||||||
G&A expenses
|
228 | 118 | 63 | |||||||||
Other (income) expenses
|
(4 | ) | (2 | ) | (8 | ) | ||||||
|
|
|
|
|
|
|||||||
Segment profit
|
$ | 1,123 | $ | 746 | $ | 253 | ||||||
|
|
|
|
|
|
Six months ended June 30,
|
||||||||||||
2019
|
||||||||||||
North America
|
Europe
|
International Markets*
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Revenues
|
$ | 4,118 | $ | 2,448 | $ | 1,103 | ||||||
Gross profit
|
2,107 | 1,404 | 582 | |||||||||
R&D expenses
|
340 | 136 | 46 | |||||||||
S&M expenses
|
537 | 431 | 234 | |||||||||
G&A expenses
|
230 | 119 | 70 | |||||||||
Other (income) expenses
|
(2 | ) | (1 | ) | (1 | ) | ||||||
|
|
|
|
|
|
|||||||
Segment profit
|
$ | 1,001 | $ | 719 | $ | 233 | ||||||
|
|
|
|
|
|
*
|
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c for additional information.
|
Three months ended
|
Six months ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2020
|
2019
|
2020
|
2019
|
|||||||||||||
(U.S. $ in millions)
|
(U.S. $ in millions)
|
|||||||||||||||
North America profit
|
$ | 573 | $ | 504 | $ | 1,123 | $ | 1,001 | ||||||||
Europe profit
|
244 | 316 | 746 | 719 | ||||||||||||
International Markets profit
|
97 | 136 | 253 | 233 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total reportable segments profit
|
914 | 956 | 2,121 | 1,954 | ||||||||||||
Profit of other activities
|
66 | 55 | 102 | 76 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total segments profit
|
979 | 1,011 | 2,223 | 2,029 | ||||||||||||
Amounts not allocated to segments:
|
||||||||||||||||
Amortization
|
249 | 285 | 507 | 568 | ||||||||||||
Other assets impairments, restructuring and other items
|
381 | 101 | 502 | 103 | ||||||||||||
Intangible asset impairments
|
120 | 561 | 768 | 1,030 | ||||||||||||
Legal settlements and loss contingencies
|
13 | 646 | (12 | ) | 703 | |||||||||||
Other unallocated amounts
|
44 | 62 | 93 | 136 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated operating income (loss)
|
173 | (644 | ) | 364 | (510 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Financial expenses, net
|
223 | 206 | 448 | 425 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Consolidated income (loss) before income taxes
|
|
$
|
(51
|
)
|
|
$
|
(850
|
)
|
|
$
|
(84
|
)
|
|
$
|
(934
|
)
|
|
|
|
|
|
|
|
|
North America
|
Three months ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 923 | $ | 946 | ||||
AJOVY
|
34 | 23 | ||||||
AUSTEDO
|
161 | 96 | ||||||
BENDEKA/TREANDA
|
103 | 125 | ||||||
COPAXONE
|
238 | 274 | ||||||
ProAir*
|
66 | 65 | ||||||
QVAR
|
51 | 60 | ||||||
Anda
|
374 | 351 | ||||||
Other
|
96 | 131 | ||||||
|
|
|
|
|||||
Total
|
$ | 2,047 | $ | 2,071 | ||||
|
|
|
|
*
|
Does not include revenues from the ProAir authorized generic, which are included under generic products.
|
North America
|
Six months ended
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 1,875 | $ | 1,913 | ||||
AJOVY
|
63 | 43 | ||||||
AUSTEDO
|
283 | 171 | ||||||
BENDEKA/TREANDA
|
208 | 247 | ||||||
COPAXONE
|
435 | 482 | ||||||
ProAir*
|
125 | 123 | ||||||
QVAR
|
97 | 124 | ||||||
Anda
|
800 | 729 | ||||||
Other
|
242 | 286 | ||||||
|
|
|
|
|||||
Total
|
$ | 4,129 | $ | 4,118 | ||||
|
|
|
|
*
|
Does not include revenues from the ProAir authorized generic, which are included under generic products.
|
Europe
|
Three months ended
June 30,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$
|
737
|
|
|
$
|
844
|
||
COPAXONE
|
84 | 107 | ||||||
Respiratory products
|
80 | 89 | ||||||
AJOVY
|
5 | 1 | ||||||
Other
|
95 | 142 | ||||||
|
|
|
|
|||||
Total
|
|
$
|
1,001
|
|
|
$
|
1,183
|
|
|
|
|
|
|
|
|
|
|||||
Europe
|
Six months ended June 30,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 1,769 | $ | 1,763 | ||||
COPAXONE
|
193 | 221 | ||||||
Respiratory products
|
186 | 181 | ||||||
AJOVY
|
9 | 1 | ||||||
Other
|
246 | 282 | ||||||
|
|
|
|
|||||
Total
|
$ | 2,404 | $ | 2,448 | ||||
|
|
|
|
International Markets
|
Three months ended
June 30,
|
|||||||
2020
|
2019*
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 426 | $ | 489 | ||||
COPAXONE
|
12 | 13 | ||||||
Other
|
50 | 80 | ||||||
|
|
|
|
|||||
Total
|
$ | 488 | $ | 582 | ||||
|
|
|
|
* |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c for additional information.
|
International Markets
|
Six months ended June 30,
|
|||||||
2020
|
2019*
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 875 | $ | 930 | ||||
COPAXONE
|
23 | 27 | ||||||
Other
|
154 | 147 | ||||||
|
|
|
|
|||||
Total
|
$ | 1,053 | $ | 1,103 | ||||
|
|
|
|
* |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c for additional information.
|
June 30, 2020
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(U.S. $ in millions)
|
||||||||||||||||
Cash and cash equivalents:
|
||||||||||||||||
Money markets
|
$ | 607 | $ | — | $ | — | $ | 607 | ||||||||
Cash, deposits and other
|
1,795 | — | — | 1,795 | ||||||||||||
Investment in securities:
|
||||||||||||||||
Equity securities
|
15 | — | — | 15 | ||||||||||||
Other, mainly debt securities
|
1 | — | 13 | 14 | ||||||||||||
Derivatives:
|
||||||||||||||||
Asset derivatives—options and forward contracts
|
— | 40 | — | 40 | ||||||||||||
Liability derivatives—options and forward contracts
|
— | (52 | ) | — | (52 | ) | ||||||||||
Contingent consideration*
|
— | — | (484 | ) | (484 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
|
$
|
2,418
|
|
|
$
|
(12
|
)
|
|
$
|
(471
|
)
|
|
$
|
1,935
|
|
|
|
|
|
|
|
|
|
December 31, 2019
|
||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Total
|
|||||||||||||
(U.S. $ in millions)
|
||||||||||||||||
Cash and cash equivalents:
|
||||||||||||||||
Money markets
|
$ | 577 | $ | — | $ | — | $ | 577 | ||||||||
Cash, deposits and other
|
1,398 | — | — | 1,398 | ||||||||||||
Investment in securities:
|
||||||||||||||||
Equity securities
|
42 | — | — | 42 | ||||||||||||
Other, mainly debt securities
|
2 | — | 12 | 14 | ||||||||||||
Derivatives:
|
||||||||||||||||
Asset derivatives—options and forward contracts
|
— | 32 | — | 32 | ||||||||||||
Liability derivatives—options and forward contracts
|
— | (41 | ) | — | (41 | ) | ||||||||||
Liability derivatives—interest rate and cross-currency swaps
|
— | (22 | ) | — | (22 | ) | ||||||||||
Contingent consideration*
|
— | — | (460 | ) | (460 | ) | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total
|
|
$
|
2,019
|
|
|
$
|
(31
|
)
|
|
$
|
(448
|
)
|
|
$
|
1,540
|
|
|
|
|
|
|
|
|
|
*
|
Contingent consideration represents liabilities recorded at fair value in connection with acquisitions.
|
Six months ended
June 30, 2020 |
||||
(U.S. $ in millions)
|
||||
Fair value at the beginning of the period
|
$ | (448 | ) | |
Revaluation of debt securitie
s
|
1 | |||
Adjustments to provisions for contingent consideration:
|
||||
Actavis Generics transaction
|
(15 | ) | ||
Eagle transaction
|
(67 | ) | ||
Settlement of contingent consideration:
|
||||
Eagle transactio
n
|
58 | |||
|
|
|||
Fair value at the end of the perio
d
|
$ | (471 | ) | |
|
|
Fair value*
|
||||||||
June 30,
|
December 31,
|
|||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Senior notes included under senior notes and loans
|
$ | 23,131 | $ | 22,686 | ||||
Senior notes and convertible senior debentures included under short-term debt
|
1,595 | 2,318 | ||||||
|
|
|
|
|||||
Total
|
$ | 24,726 | $ | 25,004 | ||||
|
|
|
|
*
|
Based on quoted market price. See note 7 for carrying value.
|
ITEM 2.
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|
• |
Revenues in the second quarter of 2020 were $3,870 million, a decrease of 7% in U.S. dollar or 5% in local currency terms, compared to the second quarter of 2019, mainly due to lower revenues from generics, OTC and COPAXONE in all regions and lower revenues from QVAR and BENDEKA/TREANDA in our North America segment, as well as reduced demand for certain products resulting from the impact the
COVID-19
pandemic had on purchasing patterns, partially offset by higher revenues from AUSTEDO, Anda and AJOVY in the U.S.
|
• |
Our North America segment generated revenues of $2,047 million and profit of $573 million in the second quarter of 2020. Revenues decreased by 1% compared to the second quarter of 2019, mainly due to a decrease in revenues of COPAXONE, generic products and BENDEKA/TREANDA, partially offset by higher revenues from AUSTEDO, Anda and AJOVY. Profit increased by 14%, mainly due to the favorable mix of products, including AUSTEDO and AJOVY, and lower expenses.
|
• |
Our Europe segment generated revenues of $1,001 million and profit of $244 million in the second quarter of 2020. Revenues decreased by 15%, or 13% in local currency terms, compared to the second quarter of 2019. This decrease was mainly due to reduced demand for certain products resulting from the impact the
COVID-19
pandemic had on purchasing patterns. The
COVID-19
pandemic led to increased demand in the first quarter and a correlating decrease in demand in the second quarter and also led to a decline in doctor visits by patients resulting in fewer prescriptions during the second quarter of 2020. The decrease is also attributed to price declines for oncology products as a result of generic competition and a decline in COPAXONE revenues due to competing glatiramer acetate products, partially offset by new generic product launches. Profit decreased by 23%, mainly due to lower revenues, partially offset by lower expenses.
|
• |
Our International Markets segment generated revenues of $488 million and profit of $97 million in the second quarter of 2020. Revenues decreased by 16%, or 9% in local currency terms, compared to the second quarter of 2019, mainly due to lower sales in Japan. Revenues in the second quarter of 2020 were also impacted by reduced demand for certain products resulting from the impact the
COVID-19
pandemic had on purchasing patterns. The
COVID-19
pandemic led to increased demand in the first quarter and a correlating decrease in demand in the second quarter. The revenues in the second quarter of 2020 included $16 million from a negative hedging impact. Profit decreased by 29%, mainly due to lower revenues and a negative hedging impact, partially offset by lower expenses.
|
• |
Impairments of identifiable intangible assets were $120 million in the second quarter of 2020, compared to $561 million in the second quarter of 2019. Impairment expenses in the second quarter of 2020 comprised of $103 million of identifiable product rights and $17 million of IPR&D assets.
|
• |
Other asset impairments, restructuring and other items were $381 million in the second quarter of 2020, compared to expenses of $101 million in the second quarter of 2019. The increase is primarily related to an agreement to sell certain assets from Teva’s business venture in Japan.
|
• |
Legal settlements and loss contingencies expenses were $13 million in the second quarter of 2020, compared to $646 million in the second quarter of 2019. The expense in the second quarter of 2020 was mainly due to the increase of a reserve for certain legal expenses and settlement contributions related to products liability claims in the United States, partially offset by proceeds received following a settlement of the FCPA derivative proceedings in Israel. The expense in the second quarter of 2019 was mainly related to the $85 million settlement paid in the opioid litigation brought by the Oklahoma Attorney General and an estimated provision made for certain other opioid cases.
|
• |
Operating income was $173 million in the second quarter of 2020, compared to operating loss of $644 million in the second quarter of 2019. The increase in the second quarter of 2020 was mainly due to higher legal settlements and loss contingencies charges in the second quarter of 2019 and lower intangible asset impairments charges in the second quarter of 2020, partially offset by higher other assets impairments, restructuring and other items in the second quarter of 2020.
|
• |
Financial expenses were $223 million in the second quarter of 2020, compared to $206 million in the second quarter of 2019. Financial expenses in the second quarter of 2020 and 2019 were mainly comprised of interest expenses of $241 million and $226 million, respectively.
|
• |
In the second quarter of 2020, we recognized a tax benefit of $104 million, on
pre-tax
loss of $51 million. In the second quarter of 2019, we recognized a tax benefit of $179 million, on
pre-tax
loss of $850 million. Our tax rate for the second quarter of 2020 was mainly affected by impairments in jurisdictions in which tax rates are higher than Teva’s average tax rate on its ongoing business operations and other changes to tax positions and deductions.
|
• |
Exchange rate movements during the second quarter of 2020, net of hedging, negatively impacted revenues by $79 million and operating income by $35 million, compared to the second quarter of 2019.
|
• |
As of June 30, 2020, our debt was $26,266 million, compared to $26,103 million as of March 31, 2020. This increase was mainly due to exchange rate fluctuations. In July 2020, we repaid at maturity debt of €1,010 million.
|
• |
Cash flow generated from operating activities during the second quarter of 2020 was $273 million, compared to cash flow used in operating activities of $227 million in the second quarter of 2019. The increase in the second quarter of 2020 was mainly due to favorable collection of payments from customers in the second quarter of 2020 resulting from increased sales in the first quarter.
|
• |
During the second quarter of 2020, we generated free cash flow of $582 million, which we define as comprising $273 million in cash flow generated from operating activities, $401 million in beneficial interest collected in exchange for securitized accounts receivables and $39 million in proceeds from sale of property, plant and equipment, partially offset by $131 million in cash used for capital investment. During the second quarter of 2019, we generated free cash flow of $168 million, comprising $227 million in cash flow used in operating activities, $384 million in beneficial interest collected in exchange for securitized accounts receivables and $20 million in proceeds from sale of property, plant and equipment and intangible assets, partially offset by $112 million in cash used for capital investment. The increase in the second quarter of 2020 resulted mainly from higher cash flow generated from operating activities.
|
Three months ended June 30,
|
||||||||||||||||
2020
|
2019
|
|||||||||||||||
(U.S. $ in millions / % of Segment
Revenues) |
||||||||||||||||
Revenues
|
$ | 2,047 | 100 | % | $ | 2,071 | 100.0 | % | ||||||||
Gross profit
|
1,090 | 53.3 | % | 1,067 | 51.5 | % | ||||||||||
R&D expenses
|
154 | 7.5 | % | 175 | 8.5 | % | ||||||||||
S&M expenses
|
254 | 12.4 | % | 269 | 13.0 | % | ||||||||||
G&A expenses
|
110 | 5.4 | % | 117 | 5.6 | % | ||||||||||
Other (income) expense
|
(2 | ) | § | 2 | § | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment profit*
|
$ | 573 | 28.0 | % | $ | 504 | 24.3 | % | ||||||||
|
|
|
|
|
|
|
|
* |
Segment profit does not include amortization and certain other items.
|
§ |
Represents an amount less than 0.5%.
|
Three months
ended
June 30,
|
Percentage
Change
|
|||||||||||
2020
|
2019
|
2019-2020
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Generic products
|
$ | 923 | $ | 946 | (2 | %) | ||||||
AJOVY
|
34 | 23 | 50 | % | ||||||||
AUSTEDO
|
161 | 96 | 67 | % | ||||||||
BENDEKA/TREANDA
|
103 | 125 | (18 | %) | ||||||||
COPAXONE
|
238 | 274 | (13 | %) | ||||||||
ProAir*
|
66 | 65 | 2 | % | ||||||||
QVAR
|
51 | 60 | (15 | %) | ||||||||
Anda
|
374 | 351 | 7 | % | ||||||||
Other
|
96 | 131 | (27 | %) | ||||||||
|
|
|
|
|||||||||
Total
|
$ | 2,047 | $ | 2,071 | (1 | %) | ||||||
|
|
|
|
* |
Does not include revenues from the ProAir authorized generic, which are included under generic products.
|
Product Name
|
Brand
Name |
Launch
Date |
Total Annual U.S.
Branded Sales at Time of Launch (U.S. $ in millions (IQVIA))
*
|
|||||
Deferasirox Tablets, 180mg
|
Jadenu
®
|
April | $ | 53 | ||||
Romidepsin Injection, 27.5 mg/5.5 mL (5 mg/mL)
|
** | April | — | |||||
Vigabatrin for Oral Solution, USP, 500mg
|
Sabril
®
|
May | $ | 254 | ||||
Everolimus Tablets, 2.5mg, 5mg & 7.5mg
|
Afinitor
®
|
June | $ | 401 |
* |
The figures presented are for the twelve months ended in the calendar quarter immediately prior to our launch or
re-launch.
|
** |
Approved via 505(b)(2) regulatory pathway; not equivalent to a brand product.
|
Generic Name
|
Brand Name
|
Total Annual U.S.
Branded Sales at Time of Launch (U.S. $ in millions
(IQVIA))
*
|
||||
Eliglustat Capsules, 84mg
|
Cerdelga
®
|
$ | 111 | |||
Icosapent Capsules, 500mg & 1000mg
|
Vascepa
®
|
$ | 972 | |||
Macitentan Tablets, 10mg
|
Opsumit
®
|
$ | 590 | |||
Pemetrexed Disodium Injection, 100mg vial
|
Alimta
®
|
$ | 255 |
* |
The figures presented are for the twelve months ended in the calendar quarter immediately prior to our launch or
re-launch.
|
Product
|
Potential
Indication(s)
|
Route of
Administration
|
Development Phase
(date entered phase 3) |
Comments
|
||||
CNS, Neurology and
Neuropsychiatry
|
||||||||
AUSTEDO (deutetrabenazine) | Dyskinesia in cerebral palsy | Oral | 3 (September 2019) | |||||
TV-46000
(risperidone LAI)
|
Schizophrenia | Subcutaneous | 3 (April 2018) | |||||
Migraine and Pain
|
||||||||
fremanezumab (anti CGRP) |
Post traumatic
headache
|
Subcutaneous | 2 | |||||
fibromyalgia | Subcutaneous | 2 | ||||||
fasinumab | Osteoarthritis pain | Subcutaneous | 3 (March 2016) | Developed in collaboration with Regeneron Pharmaceuticals, Inc. (“Regeneron”). See below table regarding phase 3 clinical trial results. | ||||
Respiratory
|
||||||||
AirDuo
®
Digihaler
®
|
Treatment of asthma in patients
aged 12 years and older
|
Oral inhalation | Approved by FDA (July 2019) | |||||
ArmonAir
®
DigiHaler
®
|
Treatment of asthma in patients aged 12 years and older | Oral inhalation | Approved by FDA (February 2020) | |||||
GoResp
®
DigiHaler
®
/ DuoResp
®
DigiHaler
®
|
Treatment of asthma in patients aged 12 years and older and COPD | Oral inhalation | Under regulatory review |
Three months ended June 30,
|
||||||||||||
2020
|
2019
|
|||||||||||
(U.S. $ in millions / % of Segment Revenues)
|
||||||||||||
Revenues
|
$ | 1,001 | 100% | $ | 1,183 | 100% | ||||||
Gross profit
|
548 | 54.7% | 674 | 56.9% | ||||||||
R&D expenses
|
65 | 6.5% | 70 | 5.9% | ||||||||
S&M expenses
|
188 | 18.8% | 216 | 18.3% | ||||||||
G&A expenses
|
52 | 5.2% | 70 | 5.9% | ||||||||
Other (income) expense
|
(1 | ) | § | 1 | § | |||||||
|
|
|
|
|
|
|||||||
Segment profit*
|
$ | 244 | 24.3% | $ | 316 | 26.7% | ||||||
|
|
|
|
|
|
* |
Segment profit does not include amortization and certain other items.
|
§ |
Represents an amount less than 0.5%.
|
Three months ended
June 30,
|
Percentage
Change
|
|||||||||||
2020
|
2019
|
2019-2020
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Generic products
|
$ | 737 | $ | 844 | (13 | %) | ||||||
COPAXONE
|
84 | 107 | (21 | %) | ||||||||
Respiratory products
|
80 | 89 | (11 | %) | ||||||||
AJOVY
|
5 | 1 | 477 | % | ||||||||
Other
|
95 | 142 | (33 | %) | ||||||||
|
|
|
|
|||||||||
Total
|
$ | 1,001 | $ | 1,183 | (15 | %) | ||||||
|
|
|
|
Three months ended June 30,
|
||||||||||||||||
2020
|
2019**
|
|||||||||||||||
(U.S. $ in millions / % of Segment Revenues)
|
||||||||||||||||
Revenues
|
$ | 488 | 100 | % | $ | 582 | 100 | % | ||||||||
Gross profit
|
247 | 50.8 | % | 312 | 53.7 | % | ||||||||||
R&D expenses
|
19 | 3.9 | % | 24 | 4.0 | % | ||||||||||
S&M expenses
|
105 | 21.4 | % | 119 | 20.5 | % | ||||||||||
G&A expenses
|
29 | 6.0 | % | 34 | 5.9 | % | ||||||||||
Other (income) expense
|
(2 | ) | § | (1 | ) | § | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment profit*
|
$ | 97 | 19.9 | % | $ | 136 | 23.4 | % | ||||||||
|
|
|
|
|
|
|
|
§ |
Represents an amount less than 0.5%.
|
* |
Segment profit does not include amortization and certain other items.
|
** |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements for additional information.
|
Three months ended
June 30,
|
Percentage
Change
|
|||||||||||
2020
|
2019*
|
2019-2020
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Generic products
|
$ | 426 | $ | 489 | (13 | %) | ||||||
COPAXONE
|
12 | 13 | (13 | %) | ||||||||
Other
|
50 | 80 | (38 | %) | ||||||||
|
|
|
|
|||||||||
Total
|
$ | 488 | $ | 582 | (16 | %) | ||||||
|
|
|
|
* |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements for additional information.
|
Three months ended
|
||||||||
June 30,
|
||||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
North America profit
|
$ | 573 | $ | 504 | ||||
Europe profit
|
244 | 316 | ||||||
International Markets profit
|
97 | 136 | ||||||
|
|
|
|
|||||
Total reportable segments profit
|
914 | 956 | ||||||
Profit of other activities
|
66 | 55 | ||||||
|
|
|
|
|||||
Total segments profit
|
979 | 1,011 | ||||||
Amounts not allocated to segments:
|
||||||||
Amortization
|
249 | 285 | ||||||
Other assets impairments, restructuring and other items
|
381 | 101 | ||||||
Intangible asset impairments
|
120 | 561 | ||||||
Legal settlements and loss contingencies
|
13 | 646 | ||||||
Other unallocated amounts
|
44 | 62 | ||||||
|
|
|
|
|||||
Consolidated operating income (loss)
|
173 | (644 | ) | |||||
|
|
|
|
|||||
Financial expenses, net
|
223 | 206 | ||||||
|
|
|
|
|||||
Consolidated income (loss) before income taxes
|
$ | (51 | ) | $ | (850 | ) | ||
|
|
|
|
Six months ended June 30,
|
||||||||||||||||
2020
|
2019
|
|||||||||||||||
(U.S. $ in millions / % of Segment Revenues)
|
||||||||||||||||
Revenues
|
$ | 4,129 | 100 | % | $ | 4,118 | 100.0 | % | ||||||||
Gross profit
|
2,152 | 52.1 | % | 2,107 | 51.2 | % | ||||||||||
R&D expenses
|
300 | 7.3 | % | 340 | 8.3 | % | ||||||||||
S&M expenses
|
505 | 12.2 | % | 537 | 13.0 | % | ||||||||||
G&A expenses
|
228 | 5.5 | % | 230 | 5.6 | % | ||||||||||
Other (income) expense
|
(4 | ) | § | (2 | ) | § | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment profit*
|
$ | 1,123 | 27.2 | % | $ | 1,001 | 24.3 | % | ||||||||
|
|
|
|
|
|
|
|
* |
Segment profit does not include amortization and certain other items.
|
§ |
Represents an amount less than 0.5%.
|
Six months ended June 30,
|
Percentage
Change
|
|||||||||||
2020
|
2019
|
2019-2020
|
||||||||||
(U.S. $ in millions)
|
||||||||||||
Generic products
|
$ | 1,875 | $ | 1,913 | (2 | %) | ||||||
AJOVY
|
63 | 43 | 47 | % | ||||||||
AUSTEDO
|
283 | 171 | 66 | % | ||||||||
BENDEKA/TREANDA
|
208 | 247 | (16 | %) | ||||||||
COPAXONE
|
435 | 482 | (10 | %) | ||||||||
ProAir*
|
125 | 123 | 2 | % | ||||||||
QVAR
|
97 | 124 | (22 | %) | ||||||||
Anda
|
800 | 729 | 10 | % | ||||||||
Other
|
242 | 286 | (16 | %) | ||||||||
|
|
|
|
|||||||||
Total
|
$ | 4,129 | $ | 4,118 | § | |||||||
|
|
|
|
* |
Does not include revenues from the ProAir authorized generic, which are included under generic products.
|
§ |
Represents an amount less than 0.5%.
|
Six months ended June 30,
|
||||||||||||||||
2020
|
2019
|
|||||||||||||||
(U.S. $ in millions / % of Segment Revenues)
|
||||||||||||||||
Revenues
|
$ | 2,404 | 100 | % | $ | 2,448 | 100 | % | ||||||||
Gross profit
|
1,371 | 57.1 | % | 1,404 | 57.4 | % | ||||||||||
R&D expenses
|
120 | 5.0 | % | 136 | 5.5 | % | ||||||||||
S&M expenses
|
390 | 16.2 | % | 431 | 17.6 | % | ||||||||||
G&A expenses
|
118 | 4.9 | % | 119 | 4.9 | % | ||||||||||
Other (income) expense
|
(2 | ) | § | (1 | ) | § | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment profit*
|
$ | 746 | 31.0 | % | $ | 719 | 29.4 | % | ||||||||
|
|
|
|
|
|
|
|
* |
Segment profit does not include amortization and certain other items.
|
§ |
Represents an amount less than 0.5%.
|
Six months ended
June 30, |
||||||||
2020
|
2019
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 1,769 | $ | 1,763 | ||||
COPAXONE
|
193 | 221 | ||||||
Respiratory products
|
186 | 181 | ||||||
AJOVY
|
9 | 1 | ||||||
Other
|
246 | 282 | ||||||
|
|
|
|
|||||
Total
|
$ | 2,404 | $ | 2,448 | ||||
|
|
|
|
Six months ended
June 30,
|
||||||||||||||||
2020
|
2019**
|
|||||||||||||||
(U.S. $ in millions / % of Segment
Revenues) |
||||||||||||||||
Revenues
|
$ | 1,053 | 100 | % | $ | 1,103 | 100 | % | ||||||||
Gross profit
|
552 | 52.5 | % | 582 | 52.7 | % | ||||||||||
R&D expenses
|
34 | 3.3 | % | 46 | 4.1 | % | ||||||||||
S&M expenses
|
211 | 20.0 | % | 234 | 21.2 | % | ||||||||||
G&A expenses
|
63 | 6.0 | % | 70 | 6.4 | % | ||||||||||
Other (income) expense
|
(8 | ) | (0.8 | %) | (1 | ) | § | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Segment profit*
|
$ | 253 | 24.0 | % | $ | 233 | 21.1 | % | ||||||||
|
|
|
|
|
|
|
|
§ |
Represents an amount less than 0.5%.
|
* |
Segment profit does not include amortization and certain other items.
|
** |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements.
|
2020
|
2019*
|
|||||||
(U.S. $ in millions)
|
||||||||
Generic products
|
$ | 875 | $ | 930 | ||||
COPAXONE
|
23 | 27 | ||||||
Other
|
154 | 147 | ||||||
|
|
|
|
|||||
Total
|
$ | 1,053 | $ | 1,103 | ||||
|
|
|
|
* |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements for additional information.
|
Six months ended June 30,
|
||||||||
2020
|
2019
|
|||||||
(U.S.$ in millions)
|
||||||||
North America profit
|
$ | 1,123 | $ | 1,001 | ||||
Europe profit
|
746 | 719 | ||||||
International Markets profit
|
253 | 233 | ||||||
|
|
|
|
|||||
Total reportable segments profit
|
2,121 | 1,954 | ||||||
Profit (loss) of other activities
|
102 | 76 | ||||||
|
|
|
|
|||||
Total segments profit
|
2,223 | 2,029 | ||||||
Amounts not allocated to segments:
|
||||||||
Amortization
|
507 | 568 | ||||||
Other asset impairments, restructuring and other items
|
502 | 103 | ||||||
Intangible asset impairments
|
768 | 1,030 | ||||||
Legal settlements and loss contingencies
|
(12 | ) | 703 | |||||
Other unallocated amounts
|
93 | 136 | ||||||
|
|
|
|
|||||
Consolidated operating income (loss)
|
364 | (510 | ) | |||||
|
|
|
|
|||||
Financial expenses, net
|
448 | 425 | ||||||
|
|
|
|
|||||
Consolidated income (loss) before income taxes
|
$ | (84 | ) | $ | (934 | ) | ||
|
|
|
|
• |
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. While qualitative factors and judgment also affect annual bonuses, the principal quantitative element in the determination of such bonuses is performance targets tied to the work plan, which is based on the
non-GAAP
presentation set forth below.
|
• |
amortization of purchased intangible assets;
|
• |
legal settlements and/or loss contingencies, due to the difficulty in predicting their timing and scope;
|
• |
impairments of long-lived assets, including intangibles, property, plant and equipment and goodwill;
|
• |
restructuring expenses, including severance, retention costs, contract cancellation costs and certain accelerated depreciation expenses primarily related to the rationalization of our plants or to certain other strategic activities, such as the realignment of R&D focus or other similar activities;
|
• |
acquisition- or divestment- related items, including changes in contingent consideration, integration costs, banker and other professional fees, inventory
step-up
and
in-process
R&D acquired in development arrangements;
|
• |
expenses related to our equity compensation;
|
• |
significant
one-time
financing costs and devaluation losses;
|
• |
unusual tax items;
|
• |
other awards or settlement amounts, either paid or received;
|
• |
other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, such as impacts due to changes in accounting, significant costs for remediation of plants, such as inventory write-offs or related consulting costs, or other unusual events; and
|
• |
corresponding tax effects of the foregoing items.
|
Three Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||||||||||||||||||
U.S. $ and shares in millions (except per share amounts)
|
||||||||||||||||||||||||||||||||||||||||||||||||
GAAP |
Excluded for
non-GAAP
measurement
|
Non-GAAP
|
||||||||||||||||||||||||||||||||||||||||||||||
Amortization
of purchased intangible assets |
Legal
settlements and loss contingencies |
Impairment
of long lived assets |
Other
R&D expenses |
Restructuring
costs |
Costs related to
regulatory actions taken in facilities |
Equity
compensation |
Contingent
consideration |
Other
non-GAAP
items |
Other
items |
|||||||||||||||||||||||||||||||||||||||
Cost of sales
|
2,107 | 219 | 6 | 6 | 16 | 1,859 | ||||||||||||||||||||||||||||||||||||||||||
R&D expenses
|
225 | (13 | ) | 5 | 233 | |||||||||||||||||||||||||||||||||||||||||||
S&M expenses
|
597 | 30 | 8 | 559 | ||||||||||||||||||||||||||||||||||||||||||||
G&A expenses
|
264 | 11 | 8 | 245 | ||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense
|
(9 | ) | (4 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies
|
13 | 13 | — | |||||||||||||||||||||||||||||||||||||||||||||
Other assets impairments, restructuring and other items
|
381 | 277 | 33 | 76 | (6 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Intangible assets impairments
|
120 | 120 | — | |||||||||||||||||||||||||||||||||||||||||||||
Financial expenses, net
|
223 | (5 | ) | 229 | ||||||||||||||||||||||||||||||||||||||||||||
Income taxes
|
(104 | ) | (231 | ) | 128 | |||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to
non-controlling
interests
|
(87 | ) | (105 | ) | 19 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total reconciled items
|
249 | 13 | 396 | (13 | ) | 33 | 6 | 30 | 76 | 15 | (342 | ) | — | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
EPS - Basic
|
0.13 | 0.42 | 0.55 | |||||||||||||||||||||||||||||||||||||||||||||
EPS - Diluted
|
0.13 | 0.42 | 0.55 |
Three Months Ended June 30, 2019
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. $ and shares in millions (except per share amounts)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP |
Excluded for
non-GAAP
measurement
|
Non-GAAP
|
||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization
of purchased intangible assets |
Legal
settlements and loss contingencies |
Impairment
of long lived assets |
Restructuring
costs |
Costs
related to
regulatory actions taken in facilities |
Equity
compensation |
Contingent
consideration |
Gain
on sale
of business |
Other
non-GAAP
items |
Other
items |
Corresponding
tax effect |
||||||||||||||||||||||||||||||||||||||||||
Cost of sales*
|
2,284 | 249 | 12 | 7 | 26 | 1,989 | ||||||||||||||||||||||||||||||||||||||||||||||
R&D expenses
|
276 | 6 | 271 | |||||||||||||||||||||||||||||||||||||||||||||||||
S&M expenses
|
666 | 35 | 10 | 621 | ||||||||||||||||||||||||||||||||||||||||||||||||
G&A expenses
|
296 | 12 | (2 | ) | 286 | |||||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense
|
(9 | ) | (9 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies
|
646 | 646 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Other assets impairments, restructuring and other items
|
101 | 48 | 47 | 24 | (18 | ) | — | |||||||||||||||||||||||||||||||||||||||||||||
Intangible assets impairments
|
561 | 561 | — | |||||||||||||||||||||||||||||||||||||||||||||||||
Financial expenses, net
|
206 | 8 | 198 | |||||||||||||||||||||||||||||||||||||||||||||||||
Income taxes
|
(179 | ) | (312 | ) | 134 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to
non-controlling
interests
|
18 | (8 | ) | 26 | ||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
Total reconciled items
|
285 | 646 | 609 | 47 | 12 | 35 | 24 | (9 | ) | 6 | — | (312 | ) | |||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||
EPS - Basic
|
(0.63 | ) | 1.23 | 0.60 | ||||||||||||||||||||||||||||||||||||||||||||||||
EPS - Diluted
|
(0.63 | ) | 1.23 | 0.60 |
* |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements for additional information.
|
Six Months Ended June 30, 2020
|
||||||||||||||||||||||||||||||||||||||||||||||||
U.S. $ and shares in millions (except per share amounts)
|
||||||||||||||||||||||||||||||||||||||||||||||||
GAAP |
Excluded for
non-GAAP
measurement
|
Non GAAP | ||||||||||||||||||||||||||||||||||||||||||||||
Amortization
of purchased intangible assets |
Legal
settlements and loss contingencies |
Impairment
of long- lived assets |
Restructuring
costs |
Costs
related to regulatory actions taken in facilities |
Equity
compensation |
Contingent
consideration |
Other non
GAAP items |
Other
items |
Corresponding
tax effect |
|||||||||||||||||||||||||||||||||||||||
Cost of sales
|
4,402 | 443 | 11 | 12 | 32 | 3,905 | ||||||||||||||||||||||||||||||||||||||||||
R&D expenses
|
446 | 9 | (17 | ) | 454 | |||||||||||||||||||||||||||||||||||||||||||
S&M expenses
|
1,210 | 64 | 17 | 1,129 | ||||||||||||||||||||||||||||||||||||||||||||
G&A expenses
|
567 | 21 | 12 | 535 | ||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense
|
(22 | ) | (3 | ) | (19 | ) | ||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies
|
(12 | ) | (12 | ) | — | |||||||||||||||||||||||||||||||||||||||||||
Other assets impairments, restructuring and other items
|
502 | 352 | 73 | 83 | (5 | ) | — | |||||||||||||||||||||||||||||||||||||||||
Intangible assets impairment
|
768 | 768 | — | |||||||||||||||||||||||||||||||||||||||||||||
Financial expenses, net
|
448 | 6 | 442 | |||||||||||||||||||||||||||||||||||||||||||||
Income taxes
|
(163 | ) | (465 | ) | 303 | |||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to
non-controlling
interests
|
(131 | ) | (169 | ) | 38 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
Total reconciled items
|
507 | (12 | ) | 1,121 | 73 | 11 | 60 | 83 | 18 | (163 | ) | (465 | ) | |||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||
EPS - Basic
|
0.19 | 1.12 | 1.32 | |||||||||||||||||||||||||||||||||||||||||||||
EPS - Diluted
|
0.19 | 1.12 | 1.31 |
Six months ended June 30, 2019
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
U.S. $ and shares in millions (except per share amounts)
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
GAAP |
Excluded for
non-GAAP
measurement
|
Non
GAAP |
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Amortization
of purchased intangible assets |
Legal
settlements and loss contingencies |
Impairment
of long- lived
assets
|
Acquisition,
integration and related expenses |
Restructuring
costs |
Costs
related to
regulatory actions
taken in
facilities |
Equity
compensation |
Contingent
consideration |
Gain
on
sale of
business |
Other
non
GAAP items |
Other
items |
Corresponding
tax effect |
Unusual
tax
item*
|
||||||||||||||||||||||||||||||||||||||||||||||||
Cost of sales**
|
4,577 | 497 | 16 | 14 | 61 | 3,988 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
R&D expenses
|
537 | 11 | 525 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
S&M expenses
|
1,313 | 71 | 20 | 1,223 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
G&A expenses
|
589 | 24 | (1 | ) | 566 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other (income) expense
|
(15 | ) | (9 | ) | (6 | ) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Legal settlements and loss contingencies
|
703 | 703 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other assets impairments, restructuring and other items
|
103 | 68 | 2 | 79 | (47 | ) | 1 | — | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Intangible assets impairment
|
1,030 | 1,030 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Financial expenses, net
|
425 | 6 | 419 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Corresponding tax effect
|
(170 | ) | (490 | ) | 61 | 259 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share in losses of associated companies – net
|
4 | 4 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income (loss) attributable to
non-controlling
interests
|
26 | (16 | ) | 42 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
Total reconciled items
|
568 | 703 | 1,098 | 2 | 79 | 16 | 69 | (47 | ) | (9 | ) | 60 | (10 | ) | (490 | ) | 61 | |||||||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||||
EPS - Basic
|
(0.73 | ) | 1.93 | 1.20 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
EPS - Diluted
|
(0.73 | ) | 1.93 | 1.20 |
* |
Interest disallowance as a result of the U.S Tax Cuts and Jobs Act.
|
** |
The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1c to our consolidated financial statements for additional information.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
* |
Filed herewith.
|
(1) |
Incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K filed on June 9, 2020.
|
(2) |
Incorporated by reference to Exhibit 10.1 to Current Report on Form 8-K filed on June 9, 2020.
|
TEVA PHARMACEUTICAL INDUSTRIES LIMITED | ||||||
Date: August 5, 2020 | By: |
/s/ Eli Kalif
|
||||
Name: |
Eli Kalif
|
|||||
Title: |
Executive Vice President,
Chief Financial Officer
(Duly Authorized Officer)
|
Exhibit 18
August 5, 2020
Board of Directors
Teva Pharmaceutical Industries Ltd.
5 Basel Street
Petach Tikva, Israel
Dear Directors:
We are providing this letter to you for inclusion as an exhibit to Teva Pharmaceutical Industries Ltd.s (the Company) Quarterly Report on Form 10-Q for the period ended June 30, 2020 (the Form 10-Q) pursuant to Item 601 of Regulation S-K.
We have been provided a copy of the Companys Form 10-Q. Note 1 therein describes a change in accounting principle related to the testing date of the annual goodwill impairment assessment from October 1 to June 30. It should be understood that the preferability of one acceptable method of accounting over another for a change in the date of the annual goodwill impairment assessment has not been addressed in any authoritative accounting literature, and in expressing our concurrence below we have relied on managements determination that this change in accounting principle is preferable. Based on our reading of managements stated reasons and justification for this change in accounting principle related to the testing date of the goodwill annual impairment assessment in the Form 10-Q, and our discussions with management as to their judgment about the relevant business planning factors relating to the change, we concur with management that such change represents, in the Companys circumstances, a change to a preferable accounting principle in conformity with Accounting Standards Codification 250, Accounting Changes and Error Corrections.
We have not audited any financial statements of the Company as of any date or for any period subsequent to December 31, 2019. Accordingly, our comments are subject to change upon completion of an audit of the financial statements covering the period of the accounting change.
Very truly yours,
/s/ Kesselman & Kesselman
Kesselman & Kesselman
Certified Public Accountants (Isr.)
A member of PricewaterhouseCoopers International Limited
Exhibit 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Kåre Schultz, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Teva Pharmaceutical Industries Limited; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. |
The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a. |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. |
The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
a. |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
b. |
any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: August 5, 2020
/s/ Kåre Schultz |
Kåre Schultz |
President and Chief Executive Officer |
Exhibit 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT
I, Eli Kalif, certify that:
1. |
I have reviewed this quarterly report on Form 10-Q of Teva Pharmaceutical Industries Limited; |
2. |
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. |
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report; |
4. |
The companys other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have: |
a. |
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b. |
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
c. |
evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d. |
disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the registrants fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. |
The companys other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions): |
a. |
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and |
b. |
any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting. |
Date: August 5, 2020
/s/ Eli Kalif |
Eli Kalif |
Executive Vice President, Chief Financial Officer |
Exhibit 32
CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Teva Pharmaceutical Industries Limited (the Company) on Form 10-Q for the period ended June 30, 2020 as filed with the Securities and Exchange Commission on the date hereof (the Report), we, Kåre Schultz, President and Chief Executive Officer of the Company, and Eli Kalif, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that:
(1) |
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and |
(2) |
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Dated: August 5, 2020
/s/ Kåre Schultz |
Kåre Schultz |
President and Chief Executive Officer |
/s/ Eli Kalif |
Eli Kalif |
Executive Vice President, Chief Financial Officer |