Teva Pharmaceutical Industries Limited

TEVA

US8816242098

Pharmaceuticals

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TEVA PHARMACEUTICAL INDUSTRIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

July 28, 2021 at 04:12 pm EDT

Business Overview
We are a global pharmaceutical company, committed to helping patients around the
world to access affordable medicines and benefit from innovations to improve
their health. Our mission is to be a global leader in generics, specialty
medicines and biopharmaceuticals, improving the lives of patients.
We operate worldwide, with headquarters in Israel and a significant presence in
the United States, Europe and many other markets around the world. Our key
strengths include our world-leading generic medicines expertise and portfolio,
focused specialty medicines portfolio and global infrastructure and scale.
Teva was incorporated in Israel on February 13, 1944 and is the successor to a
number of Israeli corporations, the oldest of which was established in 1901.
Our Business Segments
We operate our business through three segments: North America, Europe and
International Markets. Each business segment manages our entire product
portfolio in its region, including generics, specialty and OTC products. This
structure enables strong alignment and integration between operations,
commercial regions, R&D and our global marketing and portfolio function,
optimizing our product lifecycle across therapeutic areas.
In addition to these three segments, we have other activities, primarily the
sale of API to third parties, certain contract manufacturing services and an
out-licensing
platform offering a portfolio of products to other pharmaceutical companies
through our affiliate Medis.
The
COVID-19
Pandemic
As a leading global pharmaceutical company, Teva provides essential medicines to
millions of patients around the world every day. Our priorities remain focused
on the health and well-being of our employees and on our responsibility to
continue to provide our medicines to the nearly 200 million patients who depend
on us every day.
During the second quarter of 2021, we have not experienced material delays in
development, production and distribution of medicines or disruptions in our
supply chains. The supply chain supporting our key products - specialty,
generics and API - remains largely uninterrupted, with adequate product
inventory across our network and redundancy plans in place to address potential
shortfalls, if any. All our facilities that research, manufacture, order, pack,
distribute and provide critical customer and patient services are currently
functioning to meet demand for essential medicines for patients throughout the
world.
We did not have and do not expect to have a material impact on our ongoing
clinical research programs and product launches as a result of the
COVID-19
pandemic; however, during the second quarter of 2021, we have experienced
minimal delays in clinical trials due to cessation or slow-downs of recruitment
for patient studies and suspended regulatory inspections, raw material supply
issues, delays in regulatory approvals of new products due to reduced capacity
or
re-prioritization
of regulatory agencies and delays in
pre-commercial
launch activities. We may experience further delays if the pandemic continues
for an extended period of time. All of our new product launches have been
risk-assessed based on upcoming manufacturing and regulatory inspections.
The long-term effects of the pandemic cannot be predicted at this time and would
depend on the duration and severity of the pandemic and the restrictive measures
put in place to control its impact. In the first quarter of 2020, we experienced
increasing demand for certain medicines, as would be expected during a global
crisis of this nature. We saw a compensating effect with lower demand for
certain medicines during the second quarter of 2020 and continuing slightly
lower demand due to less physician and hospital activity in certain regions and
for certain medicines in the second half of 2020. Although no one can predict
future demand for pharmaceutical products, market dynamics or the scope or
duration of the financial and other challenges arising from the pandemic, it is
possible that we will continue to see variable demand during the remainder of
2021. While
COVID-19
continues to impact sales in certain markets and for certain products, we do not
currently anticipate a material negative impact on our 2021 financial results
due to the ongoing global pandemic.

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Highlights
Significant highlights in the second quarter of 2021 included:

     •    Revenues in the second quarter of 2021 were $3,910 million, an increase
          of 1%, or a decrease of 2% in local currency terms, compared to the
          second quarter of 2020, mainly due to lower revenues in our North America
          segment, mainly related to COPAXONE and Anda, partially offset by
          positive foreign currency impacts as well as higher revenues from generic
          products, OTC, AJOVY and COPAXONE in our Europe segment. Revenues were
          also affected by changes in demand for certain products resulting from
          the impact of the
          COVID-19
          pandemic.

• Our North America segment generated revenues of $1,943 million and profit


          of $521 million in the second quarter of 2021. Revenues decreased by 5%
          compared to the second quarter of 2020, mainly due to a decrease in

revenues from COPAXONE and Anda, partially offset by higher revenues from

generic products, AUSTEDO and AJOVY. Our North America segment has

experienced some reductions in volume due to less physician and hospital


          activity during the
          COVID-19
          pandemic, but has also experienced increase in demand for certain
          products related to the treatment of
          COVID-19

and its symptoms. In addition, the ability to promote certain specialty

products has been impacted by less physician visits by patients and less

physician interactions by our sales personnel. Profit decreased by 9%

compared to the second quarter of 2020, mainly due to lower gross profit,


          as well as higher R&D expenses.

• Our Europe segment generated revenues of $1,184 million and profit of

$343 million in the second quarter of 2021. Revenues increased by 18%, or

8% in local currency terms, compared to the second quarter of 2020. This


          increase was mainly due to changed buying patterns in the second quarter
          of 2020 as a result of significant customer stocking due to the
          COVID-19

pandemic in March 2020, and a decline in doctor and hospital visits by

patients resulting in fewer prescriptions during the second quarter of


          2020. Profit increased by 41%, mainly due to higher revenues.

• Our International Markets segment generated revenues of $485 million and

profit of $123 million in the second quarter of 2021. Revenues decreased

by 1%, or 3% in local currency terms, compared to the second quarter of

2020, mainly due to lower revenues in Japan resulting from the divestment

of the majority of the generic and operational assets of our Japanese

business venture, as well as regulatory price reductions and generic

competition to

off-patented

products in Japan and a negative impact from hedging activity, partially

offset by higher revenues in most other markets as well as lower revenues

in certain markets in the second quarter of 2020 resulting from reduced

demand due to the impact the

COVID-19

pandemic had on purchasing patterns. Profit increased by 27%, mainly due


          to the divestment in Japan mentioned above and a change in product
          portfolio mix.



     •    Impairments of identifiable intangible assets were $195 million in the

second quarter of 2021, compared to $120 million in the second quarter of


          2020. See note 5 to our consolidated financial statements.

• No goodwill impairments were recorded in the second quarters of both 2021


          and 2020.



     •    We recorded other asset impairments, restructuring and other items
          expenses of $28 million in the second quarter of 2021, compared to
          expenses of $381 million in the second quarter of 2020. See note 12 to
          our consolidated financial statements.

• Legal settlements and loss contingencies expenses were $6 million in the

second quarter of 2021, compared to $13 million in the second quarter of


          2020. See note 9 to our consolidated financial statements.

• Operating income was $582 million in the second quarter of 2021, compared


          to $173 million in the second quarter of 2020. This increase was mainly
          due to lower other assets impairments, restructuring and other items
          charges and higher profit in our Europe segment, partially offset by
          higher intangible asset impairment charges.

• Financial expenses were $274 million in the second quarter of 2021,

compared to $223 million in the second quarter of 2020. Financial

expenses in the second quarter of 2021 were mainly comprised of interest

expenses of $240 million and loss on revaluations of marketable

securities of $34 million (see note 16 to our consolidated financial

statements). Financial expenses in the second quarter of 2020 were mainly


          comprised of interest expenses of $241 million.



     •    In the second quarter of 2021, we recognized a tax expense of
          $98 million, on
          pre-tax

income of $308 million. In the second quarter of 2020, we recognized a


          tax benefit of $104 million, on
          pre-tax
          loss of $51 million. Our tax rate for the second quarter of 2021 was
          mainly affected by impairments, amortization and interest expense
          disallowance.



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• Exchange rate movements during the second quarter of 2021, including

hedging effects, positively impacted revenues by $135 million and


          operating income by $26 million, compared to the second quarter of 2020.



     •    As of June 30, 2021, our debt was $25,132 million, compared to

$24,986 million as of March 31, 2021. This increase was mainly due to

exchange rate fluctuations. In July 2021, we repaid $1,475 million of our


          2.2% senior notes at maturity. During July 2021, $500 million was drawn
          down under the RCF.



     •    Cash flow generated from operating activities during the second quarter
          of 2021 was $218 million, compared to $273 million in the second quarter
          of 2020. The decrease in the second quarter of 2021 was mainly due to

favorable collection of payments from customers in the second quarter of


          2020, which resulted from increased sales in the first quarter of 2020.



     •    During the second quarter of 2021, we generated free cash flow of

$625 million, which we define as comprising $218 million in cash flow

generated from operating activities, $405 million in beneficial interest


          collected in exchange for securitized accounts receivables and
          $115 million in proceeds from divestitures of businesses and other
          assets, partially offset by $113 million in cash used for capital
          investment. During the second quarter of 2020, we generated free cash

flow of $582 million, 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 and intangible assets,

partially offset by $131 million in cash used for capital investment. The

increase in the second quarter of 2021, resulted mainly from higher

proceeds from divestitures of businesses and other assets, partially

offset by lower cash flow from operating activities.




Results of Operations
Comparison of Three Months Ended June 30, 2021 to Three Months Ended June 30,
2020
Segment Information
North America Segment
The following table presents revenues, expenses and profit for our North America
segment for the three months ended June 30, 2021 and 2020:

                            Three months ended June 30,
                           2021                      2020
                        (U.S. $ in millions / % of Segment
                                     Revenues)
Revenues          $   1,943          100 %    $ 2,047         100 %
Gross profit          1,040         53.5 %      1,090        53.3 %
R&D expenses            162          8.4 %        154         7.5 %
S&M expenses            255         13.1 %        254        12.4 %
G&A expenses            106          5.5 %        110         5.4 %
Other income             (5 )            §         (2 )           §

Segment profit*   $     521         26.8 %    $   573        28.0 %

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.

North America Revenues
Our North America segment includes the United States and Canada. Revenues from
our North America segment in the second quarter of 2021 were $1,943 million, a
decrease of $104 million, or 5%, compared to the second quarter of 2020, mainly
due to a decrease in revenues from COPAXONE and Anda, partially offset by higher
revenues from generic products, AUSTEDO and AJOVY. Our North America segment has
experienced some reductions in volume due to less physician and hospital
activity during the
COVID-19
pandemic, but has also experienced increase in demand for certain products
related to the treatment of
COVID-19
and its symptoms. In addition, the ability to promote certain specialty products
has been impacted by less physician visits by patients and less physician
interactions by our sales personnel.

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Revenues by Major Products and Activities
The following table presents revenues for our North America segment by major
products and activities for the three months ended June 30, 2021 and 2020:

Three months

ended Percentage

June 30, Change
2021 2020 2020-2021
(U.S. $ in millions)
Generic products $ 951 $ 923 3 %
AJOVY 46 34 32 %
AUSTEDO 174 161 8 %
BENDEKA/TREANDA 106 103 3 %
COPAXONE 152 238 (36 %)
ProAir* 55 66 (16 %)
Anda 316 374 (16 %)
Other 144 147 (2 %)

Total $ 1,943 $ 2,047 (5 %)

* Does not include revenues from the ProAir authorized generic, which are
included under generic products.

Generic products
revenues in our North America segment (including biosimilars) in the second
quarter of 2021 were $951 million, an increase of 3% compared to the second
quarter of 2020, mainly due to higher revenues from epinephrine injectable
solution (the generic equivalent of EpiPen
®
and EpiPen Jr.
®
), Truxima (the biosimilar to Rituxan
®
) and ProAir
®
authorized generic, partially offset by lower volume and pricing of other
generic products.
Among the most significant generic products we sold in North America in the
second quarter of 2021 were Truxima (the biosimilar to Rituxan
®
), epinephrine injectable solution (the generic equivalent of EpiPen
®
and EpiPen Jr.
®
), albuterol sulfate inhalation aerosol (our ProAir authorized generic) and
lidocaine transdermal patch (the generic equivalent of Lidoderm Patch
®
).
In the second quarter of 2021, our total prescriptions were approximately
314 million (based on trailing twelve months), representing 8.8% of total U.S.
generic prescriptions according to IQVIA data.
AJOVY
revenues in our North America segment in the second quarter of 2021 increased by
32% to $46 million, compared to the second quarter of 2020, mainly due to growth
in volume. In the second quarter of 2021, AJOVY's exit market share in the
United Stated in terms of total number of prescriptions was 21.2%, compared to
16.1% in the second quarter of 2020.
AJOVY is indicated for the preventive treatment of migraine in adults. AJOVY was
launched in the U.S. in 2018, and was approved in Canada in April 2020. Our
auto-injector device for AJOVY became commercially available in the U.S. in
April 2020 and in Canada in April 2021. AJOVY is the only anti-CGRP product
indicated for quarterly treatment and in January 2021 we launched a new product
offering, providing a quarterly dose.
AJOVY is protected by patents expiring in 2026 in Europe and in 2027 in the
United States. Applications for patent term extensions have been submitted in
various markets around the world, and certain extensions in Europe and other
countries have already been granted until 2031. Additional patents relating to
the use of AJOVY in the treatment of migraine have also been issued in the
United States and will expire in 2035 and 2037. Such patents are also pending in
other countries. AJOVY will also be protected by regulatory exclusivity for 12
years from marketing approval in the United States and 10 years from marketing
approval in Europe. We have filed a lawsuit in the U.S. District Court for the
District of Massachusetts alleging that Eli Lilly & Co.'s ("Lilly") marketing
and sale of its galcanezumab product for the treatment of migraine infringes
nine Teva patents. Lilly then submitted IPR (inter partes review) petitions to
the Patent Trial and Appeal Board, challenging the validity of the nine patents
asserted against it in the litigation.

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The litigation in the district court was stayed pending resolution of the IPR
petitions. On February 18, 2020, the Patent Trial and Appeal Board issued
decisions on the first six IPRs, finding the six composition of matter patents
invalid as being obvious. On April 21, 2020, we filed notices of appeal in
connection with these decisions. On March 31, 2020 the Patent Trial and Appeal
Board ("PTAB") issued a decision upholding the three method of treatment patents
and on June 1, 2020, Lilly filed notices of appeal in connection with the
decisions on these three patents. The Court of Appeals for the Federal Circuit
heard oral argument for the IPR appeals on June 7, 2021 and we await those
decisions. The litigation stay ended following the IPR decisions by the PTAB,
and the parties are proceeding with the litigation. We also filed another suit
against Lilly on June 8, 2021, asserting two patents which issued that same day
and relate to the treatment of refractory migraine. The case has been assigned
to the same judge in the U.S. District Court for the District of Massachusetts
and Lilly's response to our complaint is due on August 27, 2021. In addition, in
2018 we entered into separate agreements with Alder Biopharmaceuticals, Inc. and
Lilly, resolving the European Patent Office oppositions that they filed against
our AJOVY patents. The settlement agreement with Lilly also resolved Lilly's
action to revoke the patent protecting AJOVY in the United Kingdom.
AUSTEDO
revenues in our North America segment in the second quarter of 2021 increased by
8%, to $174 million, compared to $161 million in the second quarter of 2020.
This increase was mainly due to growth in volume.
AUSTEDO was launched in the U.S. in 2017. It is indicated for the treatment of
chorea associated with Huntington disease and for the treatment of tardive
dyskinesia in adults.
AUSTEDO is protected in the United States by six Orange Book patents expiring
between 2031 and 2036 and in Europe by two patents expiring in 2029. We received
notice letters from two ANDA filers regarding the filing of their ANDAs with
paragraph (IV) certifications for certain of the patents listed in the Orange
Book for AUSTEDO. On July 1, 2021, we filed a complaint against Aurobindo,
asserting all six of the Orange Book patents, and a separate complaint against
Lupin, asserting four of the Orange Book patents. The suits were filed in the
U.S. District Court for the District of New Jersey.
BENDEKA
and
TREANDA
combined revenues in our North America segment in the second quarter of 2021
increased by 3% to $106 million, compared to the second quarter of 2020, mainly
due to higher sales of oncology products compared to sales in the second quarter
of 2020, which were impacted by the
COVID-19
pandemic, partially offset by the availability of alternative therapies and
continued competition from Belrapzo
®
(a
ready-to-dilute
bendamustine hydrochloride product from Eagle Pharmaceuticals, Inc. ("Eagle")).
In July 2018, Eagle prevailed in its suit against the FDA to obtain seven years
of orphan drug exclusivity in the United States for BENDEKA. On March 13, 2020,
this decision was upheld in the appellate court. As things currently stand, drug
applications referencing BENDEKA, TREANDA or any other bendamustine product will
not be approved by the FDA until the orphan drug exclusivity expires in December
2022. In April 2019, we signed an amendment to the license agreement with Eagle
extending the royalty term applicable to the United States to the full period
for which we sell BENDEKA and increased the royalty rate. In consideration,
Eagle agreed to assume a portion of BENDEKA-related patent litigation expenses.
There are 15 patents listed in the U.S. Orange Book for BENDEKA with expiry
dates in 2026 and 2031. In September 2019, a patent infringement action against
four of six ANDA filers for generic versions of BENDEKA was tried in the United
States District Court for the District of Delaware. On April 27, 2020, the
District Court upheld the validity of all of the asserted patents and found that
all four ANDA filers infringe at least one of the patents. Three of the four
ANDA filers have appealed the district court decision, but barring an adverse
appellate decision, these ANDA filers should be enjoined until the patents
expire in 2031. A litigation against the fifth ANDA filer was dismissed after
the withdrawal of its patent challenge, and the case against a sixth ANDA filer
is in the early stages of litigation. Recent suits against two filers of
505(b)(2) NDAs referencing BENDEKA are also in the initial stages of litigation.
Additionally, in July 2018, Teva and Eagle filed suit against Hospira, Inc.
("Hospira") related to its 505(b)(2) new drug application ("NDA") referencing
BENDEKA in the U.S. District Court for the District of Delaware. On December 16,
2019, the Delaware District Court dismissed the case against Hospira on all but
one of the asserted patents, which expires in 2031. Trial against Hospira on
that patent is scheduled to begin on November 15, 2021.
In addition to the settlement with Eagle regarding its bendamustine 505(b)(2)
NDA, between 2015 and 2020, we reached final settlements with 22 ANDA filers for
generic versions of the lyophilized form of TREANDA and one 505(b)(2) NDA filer
for a generic version of the liquid form of TREANDA, providing for the launch of
generic versions of TREANDA prior to patent expiration.

50
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COPAXONE
revenues in our North America segment in the second quarter of 2021 decreased by
36% to $152 million, compared to the second quarter of 2020, mainly due to
generic competition in the United States.
The market for MS treatments continues to develop, particularly with the
approval of generic versions of COPAXONE. Additionally, oral treatments for MS,
such as Tecfidera
®
, Gilenya
®
and Aubagio
®
, continue to present significant and increasing competition. COPAXONE also
continues to face competition from existing injectable products, as well as from
monoclonal antibodies, such as Ocrevus
®
.
ProAir
(HFA and RespiClick)
revenues in our North America segment in the second quarter of 2021 were
$55 million, a decrease of 16% compared to the second quarter of 2020. In
January 2019, we launched our own ProAir authorized generic in the United
States, following the launch of a generic version of Ventolin
®
HFA, another albuterol inhaler. Revenues from our ProAir authorized generic are
included in "generic products" above. During the second quarter of 2021, the
exit market share of our overall albuterol product, including our ProAir
authorized generic was 41.4%, making it the second largest in the market,
compared to 34.9% in the second quarter of 2020. Other generic versions of
ProAir were launched in 2020.
Anda
revenues in our North America segment in the second quarter of 2021 decreased by
16% to $316 million, compared to $374 million in the second quarter of 2020,
mainly due to lower demand by Anda's customers for generic products. Anda, our
distribution business in the United States, distributes generic, specialty and
OTC pharmaceutical products from various third party manufacturers to
independent retail pharmacies, pharmacy retail chains, hospitals and physician
offices in the United States. Anda is able to compete in the secondary
distribution market by maintaining high inventory levels for a broad offering of
products, competitive pricing and offering next day delivery throughout the
United States.
Product Launches and Pipeline
In the second quarter of 2021, we launched the generic version of the following
branded products in North America:

Total Annual U.S.

Branded Sales at Time

of Launch

(U.S. $ in millions
Launch
(IQVIA))
Product Name Brand Name Date *
Mesalamine Suppositories Canasa
® April $ 66
Isotretinoin Capsules, USP Absorica
® April $ 156
Erythromycin Tablets, USP n/a May $ 45
Tiopronin Tablets Thiola **
® May $ 81
Ivermectin Cream, 1% Soolantra
® June $ 111
Formoterol Fumarate Inhalation Solution ®
Perforomist June $ 300

* The figures presented are for the twelve months ended in the calendar quarter


    immediately prior to our launch or
    re-launch.

** Limited data is available for this product in IQVIA and as a result Teva

estimated the brand market based on data available in Travere Therapeutic's

10-K

for the year ended December 31, 2020.




Our generic products pipeline in the United States includes, as of June 30,
2021, 207 product applications awaiting FDA approval, including 72 tentative
approvals. This total reflects all pending ANDAs, supplements for product line
extensions and tentatively approved applications and includes some instances
where more than one application was submitted for the same reference product.
Excluding overlaps, the branded products underlying these pending applications
had U.S. sales for the twelve months ended March 31, 2021 exceeding
$106 billion, according to IQVIA. Approximately 72% of pending applications
include a paragraph IV patent challenge, and we believe we are first to file
with respect to 77 of these products, or 103 products including final approvals
where launch is pending a settlement agreement or court decision. Collectively,
these first to file opportunities represent over $76 billion in U.S. brand sales
for the twelve months ended March 31, 2021, according to IQVIA.

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IQVIA reported brand sales are one of the many indicators of future potential
value of a launch, but equally important are the mix and timing of competition,
as well as cost effectiveness. The potential advantages of being the first filer
with respect to some of these products may be subject to forfeiture, shared
exclusivity or competition from
so-called
"authorized generics," which may ultimately affect the value derived.
In the second quarter of 2021, we received tentative approvals for generic
equivalents of the products listed in the table below, excluding overlapping
applications. A "tentative approval" indicates that the FDA has substantially
completed its review of an application and final approval is expected once the
relevant patent expires, a court decision is reached, a
30-month
regulatory stay lapses or a
180-day
exclusivity period awarded to another manufacturer either expires or is
forfeited.

                                                            Total Annual U.S.

                                                             Branded Market

                                                           (U.S. $ in millions

                                                                (IQVIA))
Generic Name                              Brand Name                *
Lenalidomide Capsules, 2.5 mg and 20 mg               ®
                                             Revlimid     $

179


Pimavanserin Capsules, 34 mg                          ®
                                             Nuplazid     $                 173

* The figures presented are for the twelve months ended in the calendar quarter

immediately prior to our launch or

re-launch.




We have additional biosimilar products in development in various stages of
clinical trials and regulatory review.
Below is a description of key products in our specialty pipeline as of June 30,
2021:

                         Phase 2          Phase 3                Pre-Submission
Novel Biologics       Fremanezumab    Fasinumab
                      Fibromyalgia    Osteoarthritic
                                      Pain
                                      (March 2016)
                                      (1)

                      TEV-48574
                      Respiratory

                      TEV-53275
                      Respiratory

Small Molecules                       Deutetrabenazine   Risperidone LAI
                                      Dyskinesia in      Schizophrenia
                                      Cerebral Palsy     (2)
                                      (September 2019)

Digital Respiratory                                      Digihaler
                                                         ®
                                                         (budesonide and formoterol
                                                         fumarate dihydrate)
                                                         (EU)

                                                         QVAR
                                                         ®
                                                         Digihaler
                                                         ®
                                                         (beclomethasone dipropionate
                                                         HFA)
                                                         (U.S.)

(1) Developed in collaboration with Regeneron Pharmaceuticals, Inc.

("Regeneron"). Results for two phase 3 clinical trials, FACT OA1 and FACT

OA2, were released on August 5, 2020, indicating that the

co-primary

endpoints for fasinumab 1 mg monthly were achieved. Fasinumab 1 mg monthly

demonstrated significant improvements in pain and physical function over

placebo at week 16 and week 24, respectively. Fasinumab 1 mg monthly also

showed nominally significant benefits in physical function in two trials and


    pain in one trial, when compared to the maximum
    FDA-approved
    prescription doses of
    non-steroidal
    anti-inflammatory drugs for osteoarthritis. The FACT OA1 trial included an
    additional treatment arm, fasinumab 1 mg every two months, which showed

numerical benefit over placebo, but did not reach statistical significance.

In initial safety analyses from the phase 3 trials, there was an increase in

arthropathies reported with fasinumab. In a

sub-group

of patients from one phase 3 long-term safety trial, there was an increase in

joint replacement with fasinumab 1 mg monthly treatment during the

off-drug

follow-up

period, although this increase was not seen in the other trials to date.






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Active treatment of patients with fasinumab, which only involved dosing in an
optional second-year extension phase of one trial, has been discontinued
following a recommendation from the fasinumab program's Independent Data
Monitoring Committee that the program should be terminated, based on available
evidence obtained to date. The core efficacy data has already been obtained to
support potential fasinumab regulatory filings. Long-term safety data continues
to be gathered, and is expected to be reported in 2021. Currently, all
non-essential
activities and related expenditures for fasinumab have been put on hold. Next
steps will be assessed together with Regeneron, with the intention of discussing
data with the FDA.

(2) In January 2021, we announced positive results for a phase 3 clinical trial

designed to evaluate the efficacy of risperidone LAI. No new safety signals

were identified that are inconsistent with the known safety profile of other

risperidone formulations. The second phase 3 study evaluating long-term

safety and tolerability is ongoing.

Discontinued Project
During the second quarter of 2021, development of fremanezumab for an additional
indication was discontinued.
North America Gross Profit
Gross profit from our North America segment in the second quarter of 2021 was
$1,040 million, a decrease of 5%, compared to $1,090 million in the second
quarter of 2020. This decrease was mainly due to lower gross profit from Anda
and COPAXONE.
Gross profit margin for our North America segment in the second quarter of 2021
increased to 53.5%, compared to 53.3% in the second quarter of 2020. This
increase was mainly due to a change in the mix of products.
North America R&D Expenses
R&D expenses relating to our North America segment in the second quarter of 2021
were $162 million, an increase of 5%, compared to $154 million in the second
quarter of 2020.
For a description of our R&D expenses in the second quarter of 2021, see "-Teva
Consolidated Results-Research and Development (R&D) Expenses" below.
North America S&M Expenses
S&M expenses relating to our North America segment in the second quarter of 2021
were $255 million, flat compared to the second quarter of 2020.
North America G&A Expenses
G&A expenses relating to our North America segment in the second quarter of 2021
were $106 million, a decrease of 4%, compared to $110 million in the second
quarter of 2020.
North America Profit
Profit from our North America segment consists of gross profit less R&D
expenses, S&M expenses, G&A expenses and any other income related to this
segment. Segment profit does not include amortization and certain other items.
Profit from our North America segment in the second quarter of 2021 was
$521 million, a decrease of 9% compared to $573 million in the second quarter of
2020, mainly due to lower gross profit, as discussed above, as well as higher
R&D expenses.

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Europe Segment
The following table presents revenues, expenses and profit for our Europe
segment for the three months ended June 30, 2021 and 2020:

                            Three months ended June 30,
                           2021                      2020
                        (U.S. $ in millions / % of Segment
                                     Revenues)
Revenues          $   1,184         100%       $1,001        100%
Gross profit            661        55.8%          548       54.7%
R&D expenses             63         5.3%           65        6.5%
S&M expenses            209        17.7%          188       18.8%
G&A expenses             47         4.0%           52        5.2%
Other income           §             §            (1)         §

Segment profit*   $     343        28.9%         $244       24.3%

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than $1 million or 0.5%, as applicable.




Europe Revenues
Our Europe segment includes the European Union and certain other European
countries. Revenues from our Europe segment in the second quarter of 2021 were
$1,184 million, an increase of 18% or $183 million, compared to the second
quarter of 2020. In local currency terms, revenues increased by 8%, mainly due
to changed buying patterns in the second quarter of 2020 as a result of
significant customer stocking due to the
COVID-19
pandemic in March 2020, and a decline in doctor and hospital visits by patients
resulting in fewer prescriptions during the second quarter of 2020.
Revenues by Major Products and Activities
The following table presents revenues for our Europe segment by major products
and activities for the three months ended June 30, 2021 and 2020:

                          Three months ended
                                                      Percentage
                               June 30,                 Change
                           2021           2020        2020-2021
                         (U.S. $ in millions)
Generic products       $        878      $   737               19 %
AJOVY                            19            5              302 %
COPAXONE                        100           84               19 %
Respiratory products             85           80                7 %
Other                           102           95                7 %

Total                  $      1,184      $ 1,001               18 %



Generic products
revenues in our Europe segment in the second quarter of 2021, including OTC
products, increased by 19% to $878 million, compared to the second quarter of
2020. In local currency terms, revenues increased by 9% compared to the second
quarter of 2020, mainly due lower revenues in the second quarter of 2020, as a
result of significant changes in buying patterns and customer stocking due to
the
COVID-19
pandemic in March 2020. In addition, revenues in the second quarter of 2020 were
impacted by lower demand of generic products resulting from a decline in doctor
and hospital visits by patients resulting in fewer prescriptions, as well as
lower sales of OTC products resulting from lower demand for cough and cold
products, both due to the
COVID-19
pandemic.
AJOVY
revenues in our Europe segment in the second quarter of 2021 were $19 million,
compared to $5 million in the second quarter of 2020, mainly due to launches and
reimbursements in additional European countries.

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By the end of 2020, we launched AJOVY in most European countries and we are
moving forward with plans to launch in other European countries. For information
about AJOVY patent protection, see "-North America Revenues-Revenues by Major
Product" above.
COPAXONE
revenues in our Europe segment in the second quarter of 2021 increased by 19% to
$100 million, compared to the second quarter of 2020. In local currency terms,
revenues increased by 9%, mainly due to customer stocking due to the
COVID-19
pandemic in March 2020 resulting in significant changes in buying patterns in
the second quarter of 2020.
One European patent protecting COPAXONE 40 mg/mL was found invalid by the Board
of Appeal of the European Patent Office in September 2020. Two additional
patents expiring in 2030 are currently under opposition at the European Patent
Office. In certain countries, Teva remains in litigation against generic
companies on an additional COPAXONE 40 mg/mL patent that expires in 2030.
Respiratory products
revenues in our Europe segment in the second quarter of 2021 increased by 7% to
$85 million compared to the second quarter of 2020. In local currency terms,
revenues decreased by 4%, mainly due to lower sales in the United Kingdom,
partially offset by changes in buying patterns in the second quarter of 2020 as
a result of significant customer stocking due to the
COVID-19
pandemic in March 2020.
Product Launches and Pipeline
As of June 30, 2021, our generic products pipeline in Europe included 266
generic approvals relating to 50 compounds in100 formulations, with no European
Medicines Agency ("EMA") approvals received. In addition, approximately 1,161
marketing authorization applications are pending approval in 37 European
countries, relating to 118 compounds in 252 formulations. No applications are
pending with the EMA.
For information regarding our specialty pipeline, see "-North America Segment
-Product Launches and Pipeline" above.
Europe Gross Profit
Gross profit from our Europe segment in the second quarter of 2021 was
$661 million, an increase of 21% compared to $548 million in the second quarter
of 2020.
Gross profit margin for our Europe segment in the second quarter of 2021
increased to 55.8%, compared to 54.7% in the second quarter of 2020. This
increase was mainly due to a change in product mix.
Europe R&D Expenses
R&D expenses relating to our Europe segment in the second quarter of 2021 were
$63 million, a decrease of 4% compared to $65 million in the second quarter of
2020.
For a description of our R&D expenses in the second quarter of 2021, see "-Teva
Consolidated Results-Research and Development (R&D) Expenses" below.
Europe S&M Expenses
S&M expenses relating to our Europe segment in the second quarter of 2021 were
$209 million, an increase of 11% compared to $188 million in the second quarter
of 2020. This increase was mainly due to exchange rate fluctuations, as well as
lower expenses in the second quarter of 2020 attributed to restrictions related
to the
COVID-19
pandemic.
Europe G&A Expenses
G&A expenses relating to our Europe segment in the second quarter of 2021 were
$47 million, a decrease of 10% compared to $52 million in the second quarter of
2020.
Europe Profit
Profit from our Europe segment consists of gross profit less R&D expenses, S&M
expenses, G&A expenses and any other income related to this segment. Segment
profit does not include amortization and certain other items.
Profit from our Europe segment in the second quarter of 2021 was $343 million,
an increase of 41%, compared to $244 million in the second quarter of 2020. This
increase was mainly due to higher revenues, as discussed above.

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International Markets Segment
The following table presents revenues, expenses and profit for our International
Markets segment for the three months ended June 30, 2021 and 2020:

                                 Three months ended June 30,
                              2021                            2020
                         (U.S. $ in millions / % of Segment Revenues)
Revenues          $    485                100%       $    488           100%
Gross profit           270               55.7%            247          50.8%
R&D expenses            18                3.6%             19           3.9%
S&M expenses           105               21.7%            105          21.4%
G&A expenses            25                5.1%             29           6.0%
Other income            (1 )             §                 (2 )      §

Segment profit*   $    123               25.5%       $     97          19.9%

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.




International Markets Revenues
Our International Markets segment includes all countries in which we operate
other than those in our North America and Europe segments. The International
Markets segment includes more than 35 countries, covering a substantial portion
of the global pharmaceutical market. Our key international markets are Japan,
Russia and Israel. The countries in our International Markets segment include
highly regulated, pure generic markets, such as Israel, branded generics
oriented markets, such as Russia and certain Latin America markets and hybrid
markets, such as Japan.
On February 1, 2021, we completed the sale of the majority of the generic and
operational assets of our business venture in Japan.
Revenues from our International Markets segment in the second quarter of 2021
were $485 million, a decrease of $3 million, or 1%, compared to the second
quarter of 2020. In local currency terms, revenues decreased by 3% compared to
the second quarter of 2020, mainly due to lower revenues in Japan resulting from
the divestment mentioned above, as well as regulatory price reductions and
generic competition to
off-patented
products in Japan, and a negative impact from hedging activity, partially offset
by higher revenues in most other markets as well as lower revenues in certain
markets in the second quarter of 2020, resulting from reduced demand due to the
impact the
COVID-19
pandemic had on purchasing patterns.
Revenues by Major Products and Activities
The following table presents revenues for our International Markets segment by
major products and activities for the three months ended June 30, 2021 and 2020:

                      Three months ended
                                                  Percentage
                           June 30,                 Change
                     2021            2020         2020-2021
                     (U.S. $ in millions)
Generic products   $     407       $     426               (5 %)
COPAXONE                   7              12              (35 %)
Other                     71              50               42 %

Total              $     485       $     488               (1 %)



Generic products
revenues in our International Markets segment in the second quarter of 2021,
which include OTC products, decreased by 5% in both U.S. dollar and local
currency terms, to $407 million, compared to the second quarter of 2020. This
decrease was mainly due to lower sales in Japan resulting from the divestment
mentioned above, as well as regulatory price reductions and generic competition
to
off-patented
products in Japan, partially offset by higher revenues in most other markets as
well as lower revenues in certain markets in the second quarter of 2020,
resulting from reduced demand due to the impact the
COVID-19
pandemic had on purchasing patterns.

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COPAXONE
revenues in our International Markets segment in the second quarter of 2021 were
$7 million, a decrease of 35% compared to the second quarter of 2020. In local
currency terms, revenues decreased by 33%.
AJOVY
was launched in certain markets in our International Markets segment and we are
moving forward with plans to launch in other markets. On June 23, 2021, AJOVY
was approved for the preventive treatment of migraine in adults in Japan.
AUSTEDO
was launched in China for the treatment of chorea associated with Huntington
disease and for the treatment of tardive dyskinesia in early 2021. We continue
with additional submissions in various other countries.
International Markets Gross Profit
Gross profit from our International Markets segment in the second quarter of
2021 was $270 million, an increase of 9% compared to $247 million in the second
quarter of 2020.
Gross profit margin for our International Markets segment in the second quarter
of 2021 increased to 55.7%, compared to 50.8% in the second quarter of 2020.
This increase was mainly due to the divestment in Japan mentioned above and a
change in product portfolio mix.
International Markets R&D Expenses
R&D expenses relating to our International Markets segment in the second quarter
of 2021 were $18 million, a decrease of 8% compared to $19 million in the second
quarter of 2020.
For a description of our R&D expenses in the second quarter of 2021, see "-Teva
Consolidated Results-Research and Development (R&D) Expenses" below.
International Markets S&M Expenses
S&M expenses relating to our International Markets segment in the second quarter
of 2021 were $105 million, flat compared to the second quarter of 2020.
International Markets G&A Expenses
G&A expenses relating to our International Markets segment in the second quarter
of 2021 were $25 million, a decrease of 15% compared to $29 million in the
second quarter of 2020.
International Markets Profit
Profit from our International Markets segment consists of gross profit less R&D
expenses, S&M expenses, G&A expenses and any other income related to this
segment. Segment profit does not include amortization and certain other items.
Profit from our International Markets segment in the second quarter of 2021 was
$123 million, an increase of 27%, compared to $97 million in the second quarter
of 2020. This increase was mainly due to higher gross profit as discussed above.
Other Activities
We have other sources of revenues, primarily the sale of APIs to third parties,
certain contract manufacturing services and an
out-licensing
platform offering a portfolio of products to other pharmaceutical companies
through our affiliate Medis. Our other activities are not included in our North
America, Europe or International Markets segments described above.
Our revenues from other activities in the second quarter of 2021 were
$298 million, a decrease of 11% compared to the second quarter of 2020. In local
currency terms, revenues decreased by 13% compared to the second quarter of
2020, mainly due to a decrease in volumes from API and Medis resulting from the
COVID-19
pandemic.
API sales to third parties in the second quarter of 2021 were $199 million, a
decrease of 6% in both U.S. dollar and local currency terms compared to the
second quarter of 2020.

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Teva Consolidated Results
Revenues
Revenues in the second quarter of 2021 were $3,910 million, an increase of 1%,
or a decrease of 2% in local currency terms, compared to the second quarter of
2020. This decrease was mainly due to lower revenues in our North America
segment, mainly related to COPAXONE and Anda, partially offset by positive
foreign currency impacts as well as higher revenues from generic products, OTC,
AJOVY and COPAXONE in our Europe segment. Revenues were also affected by changes
in demand for certain products resulting from the impact of the
COVID-19
pandemic. See "-North America Revenues," "-Europe Revenues," "-International
Markets Revenues" and "-Other Activities" above.
Exchange rate movements during the second quarter of 2021, including hedging
effects, positively impacted revenues by $135 million, compared to the second
quarter of 2020. See note 8c to our consolidated financial statements.
Gross Profit
Gross profit in the second quarter of 2021 was $1,873 million, an increase of 6%
compared to the second quarter of 2020. This increase was mainly a result of the
factors discussed above under "-North America Gross Profit," "-Europe Gross
Profit" and "-International Markets Gross Profit."
Gross profit margin was 47.9% in the second quarter of 2021, compared to 45.5%
in the second quarter of 2020.
The increase in gross profit margin was mainly driven by higher profitability in
North America resulting from the change in mix of products sold as well as
network optimization activities, partially offset by lower sales of COPAXONE.
Research and Development (R&D) Expenses
Our R&D activities for generic products in each of our segments include both
(i) direct expenses relating to product formulation, analytical method
development, stability testing, management of bioequivalence and other clinical
studies and regulatory filings; and (ii) indirect expenses, such as costs of
internal administration, infrastructure and personnel.
Our R&D activities for specialty and biosimilar products in each of our segments
include costs of discovery research, preclinical development, early- and
late-clinical development and drug formulation, clinical trials and product
registration costs. These expenditures are reported net of contributions
received from collaboration partners. Our spending takes place throughout the
development process, including (i) early-stage projects in both discovery and
preclinical phases; (ii) middle-stage projects in clinical programs up to phase
3; (iii) late-stage projects in phase 3 programs, including where a new drug
application is currently pending approval; (iv) post-approval studies for
marketed products; and (v) indirect expenses, such as costs of internal
administration, infrastructure and personnel.
R&D expenses in the second quarter of 2021 were $248 million, an increase of 10%
compared to the second quarter of 2020.
In the second quarter of 2021, our R&D expenses related primarily to specialty
product candidates in the respiratory, migraine and headache therapeutic areas,
with additional activities in selected other areas and generic products
including biosimilars.
Our higher R&D expenses in the second quarter of 2021, compared to the second
quarter of 2020, were mainly due to an increase in respiratory and biosimilar
projects as well as various generics projects.
R&D expenses as a percentage of revenues were 6.3% in the second quarter of
2021, compared to 5.8% in the second quarter of 2020.
Selling and Marketing (S&M) Expenses
S&M expenses in the second quarter of 2021 were $615 million, an increase of 3%
compared to the second quarter of 2020. Our S&M expenses were primarily the
result of the factors discussed above under "-North America Segment- S&M
Expenses," "-Europe Segment- S&M Expenses" and "-International Markets Segment-
S&M Expenses."
S&M expenses as a percentage of revenues were 15.7% in the second quarter of
2021, compared to 15.4% in the second quarter of 2020.
General and Administrative (G&A) Expenses
G&A expenses in the second quarter of 2021 were $242 million, a decrease of 8%
compared to the second quarter of 2020.

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G&A expenses as a percentage of revenues were 6.2% in the second quarter of
2021, compared to 6.8% in the second quarter of 2020.
Intangible Asset Impairments
We recorded expenses of $195 million for identifiable intangible asset
impairments in the second quarter of 2021, compared to expenses of $120 million
in the second quarter of 2020. See note 5 to our consolidated financial
statements.
Goodwill Impairment
No goodwill impairments were recorded in the second quarters of both 2021 and
2020.
Other Asset Impairments, Restructuring and Other Items
We recorded expenses of $28 million for other asset impairments, restructuring
and other items in the second quarter of 2021, compared to expenses of
$381 million in the second quarter of 2020. For further details, as well as a
description of significant regulatory and other events, see note 12 to our
consolidated financial statements.
Legal Settlements and Loss Contingencies
In the second quarter of 2021, we recorded an expense of $6 million in legal
settlements and loss contingencies, compared to income of $13 million in the
second quarter of 2020. See note 9 to our consolidated financial statements.
Other Income
Other income in the second quarter of 2021 was $43 million, compared to
$9 million in the second quarter of 2020. The income in the second quarter of
2021 was mainly due to capital gains related to the sale of certain OTC assets.
Operating Income (Loss)
Operating income was $582 million in the second quarter of 2021, compared to
$173 million in the second quarter of 2020.
Operating income as a percentage of revenues was 14.9% in the second quarter of
2021, compared to 4.5% in the second quarter of 2020. This increase was mainly
due to lower other assets impairments, restructuring and other items charges and
higher profit in our Europe segment, partially offset by higher intangible asset
impairment charges.
Financial Expenses, Net
Financial expenses were $274 million in the second quarter of 2021, compared to
$223 million in the second quarter of 2020. Financial expenses in the second
quarter of 2021 were mainly comprised of interest expenses of $240 million and
loss on revaluations of marketable securities of $34 million (see note 16 to our
consolidated financial statements). Financial expenses in the second quarter of
2020 were mainly comprised of interest expenses of $241 million.
The following table presents a reconciliation of our segment profits to our
consolidated operating income (loss) and to consolidated income (loss) before
income taxes for the three months ended June 30, 2021 and 2020:

                                                                Three months

                           .                                        ended
                                                                  June 30,
                                                              2021            2020
                                                            (U.S. $ in millions)
North America profit                                      $        521       $  573
Europe profit                                                      343          244
International Markets profit                                       123           97

Total reportable segments profit                                   987          914
Profit of other activities                                          47           66

Total segments profit                                            1,034          979
Amounts not allocated to segments:
Amortization                                                       173

249



Other assets impairments, restructuring and other items             28          381

Goodwill impairment                                                 -            -

Intangible asset impairments                                       195          120
Legal settlements and loss contingencies                             6


Other unallocated amounts                                           50


Consolidated operating income (loss)                               582          173

Financial expenses, net                                            274          223

Consolidated income (loss) before income taxes            $        308       $  (51 )




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Tax Rate
In the second quarter of 2021, we recognized a tax expense of $98 million, on
pre-tax
income of $308 million. In the second quarter of 2020, we recognized a tax
benefit of $104 million, on
pre-tax
loss of $51 million. Our tax rate for the second quarter of 2021 was mainly
affected by impairments, amortization and interest expense disallowance.
The statutory Israeli corporate tax rate is 23% in 2021. Our tax rate differs
from the Israeli statutory tax rate, mainly due to generation of profits in
various jurisdictions in which tax rates are different than the Israeli tax
rate, tax benefits in Israel and other countries, as well as infrequent or
nonrecurring items.
Share In (Profits) Losses of Associated Companies, Net
Share in losses of associated companies, net in the second quarter of 2021 was
$11 million. We did not have any share in (profits) losses of associated
companies, net in the second quarter of 2020.
Net Income (Loss) Attributable to Teva
Net income was $207 million in the second quarter of 2021, compared to
$140 million in the second quarter of 2020. This increase was mainly due to the
increase in operating income, as discussed above.
Diluted Shares Outstanding and Earnings (Loss) per Share
The weighted average diluted shares outstanding used for the fully diluted share
calculation for the three months ended June 30, 2021 and 2020 were 1,109 million
and 1,100 million shares, respectively.
In computing diluted earnings per share for the three months ended June 30, 2021
and June 30, 2020, basic earnings per share were adjusted to take into account
the potential dilution that could occur upon the exercise of options and
non-vested
RSUs granted under employee stock compensation plans. No account was taken of
the potential dilution by the convertible senior debentures, since they had an
anti-dilutive effect on earnings per share.
Diluted earnings per share were $0.19 in the second quarter of 2021, compared to
diluted earnings per share of $0.13 in the second quarter of 2020.
Share Count for Market Capitalization
We calculate share amounts using the outstanding number of shares (i.e.,
excluding treasury shares) plus shares that would be outstanding upon the
exercise of options and vesting of RSUs and performance share units and the
conversion of our convertible senior debentures, in each case, at period end.
As of June 30, 2021 and 2020, the fully diluted share count for purposes of
calculating our market capitalization was approximately 1,129 million and
1,119 million, respectively.
Impact of Currency Fluctuations on Results of Operations
In the second quarter of 2021, approximately 47% of our revenues were
denominated in currencies other than the U.S. dollar. Because our results are
reported in U.S. dollars, we are subject to significant foreign currency risks.
Accordingly, changes in the rate of exchange between the U.S. dollar and the
local currencies in the markets in which we operate (primarily the euro, British
pound, Japanese yen, new Israeli shekel, Canadian dollar and Russian ruble)
impact our results.
During the second quarter of 2021, the following main currencies relevant to our
operations decreased in value against the U.S. dollar (each on a quarterly
average compared to quarterly average basis): Argentinian peso by 28%, Turkish
lira by 18%, Russian ruble by 2% and Japanese yen by 2%. The following main
currencies relevant to our operations increased in value against the U.S.
dollar: Australian dollar by 17%, Mexican peso by 16%, Swedish krona by 15%,
Chilean peso by 15%, British pound by 13%, Canadian dollar by 13%, euro by 9%
and Israeli shekel by 8%.

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As a result, exchange rate movements during the second quarter of 2021,
including hedging effects, positively impacted overall revenues by $135 million
and our operating income by $26 million, in comparison with the second quarter
of 2020.
In the second quarter of 2021, a negative hedging impact of $15 million was
recognized under revenues, and a minimal negative impact was recognized under
cost of sales. In the second quarter of 2020, a negative hedging impact of
$20 million was recognized under revenues and a negative impact of $1 million
was recognized under cost of sales.
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. See note 8c to our consolidated financial statements.
Commencing in the third quarter of 2018, the cumulative inflation in Argentina
exceeded 100% or more over a three-year period. Although this triggered highly
inflationary accounting treatment, it did not have a material impact on our
results of operations.
Comparison of Six Months Ended June 30, 2021 to Six Months Ended June 30, 2020
Unless specified otherwise, the factors used to explain quarterly changes on a
year-over-year basis are also relevant for the comparison of the results for the
six months ended June 30, 2021 and 2020. Where there are different factors
affecting the six months comparison, we have described them below.
Segment Information
North America Segment
The following table presents revenues, expenses and profit for our North America
segment for the six months ended June 30, 2021 and 2020:

                                   Six months ended June 30,
                              2021                             2020
                         (U.S. $ in millions / % of Segment Revenues)
Revenues          $     3,932              100 %      $     4,129         100 %
Gross profit            2,114             53.8 %            2,152        52.1 %
R&D expenses              322              8.2 %              300         7.3 %
S&M expenses              483             12.3 %              505        12.2 %
G&A expenses              218              5.5 %              228         5.5 %
Other income               (7 )      §                         (4 )    §

Segment profit*   $     1,098             27.9 %      $     1,123        27.2 %

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.




North America Revenues
Our North America segment includes the United States and Canada. Revenues from
our North America segment in the first six months of 2021 were $3,932 million, a
decrease of 4.8% compared to $4,129 million in the first six months of 2020.
Revenues by Major Products and Activities
The following table presents revenues for our North America segment by major
products and activities for the six months ended June 30, 2021 and 2020:

                                                        Percentage
                      Six months ended June 30,           Change
                       2021               2020          2020-2021
                        (U.S. $ in millions)
Generic products   $      2,004       $      1,875                7 %
AJOVY                        77                 63               21 %
AUSTEDO                     320                283               13 %
BENDEKA/TREANDA             197                208               (6 %)
COPAXONE                    315                435              (28 %)
ProAir*                     109                125              (13 %)
Anda                        605                800              (24 %)
Other                       305                338              (10 %)

Total              $      3,932       $      4,129               (5 %)




*   Does not include revenues from the ProAir authorized generic, which are
    included under generic products.



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North America Gross Profit
Gross profit from our North America segment in the first six months of 2021 was
$2,114 million, a decrease of 2%, compared to $2,152 million in the first six
months of 2020.
Gross profit margin for our North America segment in the first six months of
2021 increased to 53.8% compared to 52.1% in the first six months of 2020.
North America R&D Expenses
R&D expenses relating to our North America segment in the first six months of
2021 were $322 million, an increase of 7%, compared to $300 million in the first
six months of 2020.
North America S&M Expenses
S&M expenses relating to our North America segment in the first six months of
2021 were $483 million, a decrease of 4% compared to $505 million in the first
six months of 2020. This decrease was mainly due to lower S&M expenses related
to Anda and additional efficiency measures.
North America G&A Expenses
G&A expenses relating to our North America segment in the first six months of
2021 were $218 million, a decrease of 4%, compared to $228 million in the first
six months of 2020.
North America Profit
Profit from our North America segment in the first six months of 2021 was
$1,098 million, a decrease of 2%, compared to $1,123 million in the first six
months of 2020.
Europe Segment
The following table presents revenues, expenses and profit for our Europe
segment for the six months ended June 30, 2021 and 2020:

                                          Six months ended June 30,
                                     2021                             2020
                                (U.S. $ in millions / % of Segment Revenues)
Revenues                 $     2,398              100 %      $     2,404         100 %
Gross profit                   1,349             56.2 %            1,371        57.0 %
R&D expenses                     129              5.4 %              120         5.0 %
S&M expenses                     424             17.7 %              390        16.2 %
G&A expenses                     117              4.9 %              118         4.9 %
Other (income) expense            (1 )      §                         (2 )    §

Segment profit*          $       680             28.4 %      $       746        31.0 %

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.


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Europe Revenues
Our Europe segment includes the European Union and certain other European
countries. Revenues from our Europe segment in the first six months of 2021 were
$2,398 million, flat compared to the first six months of 2020. In local currency
terms, revenues decreased by 8%, compared to the first six months of 2020, as a
result of significant customer stocking due to the
COVID-19
pandemic in March 2020, partially offset by changes in buying patterns in the
second quarter of 2020.
Revenues by Major Products and Activities
The following table presents revenues for our Europe segment by major products
and activities for the six months ended June 30, 2021 and 2020:

                          Six months ended June 30,
                           2021               2020
                            (U.S. $ in millions)
Generic products       $      1,742       $      1,769
AJOVY                            35                  9
COPAXONE                        201                193
Respiratory products            179                186
Other                           242                246

Total                  $      2,398       $      2,404



Europe Gross Profit
Gross profit from our Europe segment in the first six months of 2021 was
$1,349 million, a decrease of 2% compared to $1,371 million in the first six
months of 2020.
Gross profit margin for our Europe segment in the first six months of 2021
decreased to 56.2% compared to 57.0% in the first six months of 2020, mainly due
to a change in the mix of products.
Europe R&D Expenses
R&D expenses relating to our Europe segment in the first six months of 2021 were
$129 million, an increase of 8% compared to $120 million in the first six months
of 2020.
Europe S&M Expenses
S&M expenses relating to our Europe segment in the first six months of 2021 were
$424 million, an increase of 9% compared to $390 million in the first six months
of 2020.
Europe G&A Expenses
G&A expenses relating to our Europe segment in the first six months of 2021 were
$117 million, a decrease of 1% compared to $118 million in the first six months
of 2020.
Europe Profit
Profit from our Europe segment in the first six months of 2021 was $680 million,
a decrease of 9% compared to first six months of 2020, mainly due to lower
revenues, as discussed above.
International Markets Segment
The following table presents revenues, expenses and profit for our International
Markets segment for the six months ended June 30, 2021 and 2020:

                                    2021                              2020
                                (U.S. $ in millions / % of Segment Revenues)
Revenues                 $    975                100 %       $     1,053         100 %
Gross profit                  530               54.4 %               552        52.5 %
R&D expenses                   35                3.6 %                34         3.3 %
S&M expenses                  201               20.7 %               211        20.0 %
G&A expenses                   51                5.2 %                63         6.0 %
Other (income) expense         (3 )       §                           (8 )      (0.8 %)

Segment profit*          $    245               25.2 %       $       253        24.0 %

* Segment profit does not include amortization and certain other items.

§ Represents an amount less than 0.5%.


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International Markets Revenues
Our International Markets segment includes all countries other than those in our
North America and Europe segments. Revenues from our International Markets
segment in the first six months of 2021 were $975 million, a decrease of
$78 million, or 7%, compared to the first six months of 2020. In local currency
terms, revenues decreased by 5% compared to the first six months of 2020.
Revenues in the first six months of 2020 included $20 million from a positive
hedging impact, which are included in "Other" in the table below. The hedging
impact in the first six months of 2021 was immaterial. See note 8c to our
consolidated financial statements.
Revenues by Major Products and Activities
The following table presents revenues for our International Markets segment by
major products and activities for the six months ended June 30, 2021 and 2020:

                                                            Percentage
                        Six months ended June 30,             Change
                      2021                  2020            2020-2021
                          (U.S. $ in millions)
Generic products   $       799         $           875               (9 %)
COPAXONE                    19                      23              (18 %)
Other                      157                     154                2 %

Total              $       975         $         1,053               (7 %)



International Markets Gross Profit
Gross profit from our International Markets segment in the first six months of
2021 was $530 million, a decrease of 4% compared to $552 million in the first
six months of 2020, mainly due to a negative impact from hedging activity as
well as regulatory price reductions and generic competition to off-patented
products in Japan.
Gross profit margin for our International Markets segment in the first six
months of 2021 increased to 54.4%, compared to 52.5% in the first six months of
2020.
International Markets R&D Expenses
R&D expenses relating to our International Markets segment in the first six
months of 2021 were $35 million, an increase of 3% compared to $34 million in
the first six months of 2020.
International Markets S&M Expenses
S&M expenses relating to our International Markets segment in the first six
months of 2021 were $201 million, a decrease of 4% compared to $211 million in
the first six months of 2020.
International Markets G&A Expenses
G&A expenses relating to our International Markets segment in the first six
months of 2021 were $51 million, a decrease of 19% compared to $63 million in
the first six months of 2020.
International Markets Profit
Profit from our International Markets segment in the first six months of 2021
was $245 million, a decrease of 3%, compared to $253 million in the first six
months of 2020. This decrease was mainly due to lower gross profit, partially
offset by lower S&M and G&A expenses.

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Other Activities
Our revenues from other activities in the first six months of 2021 decreased by
9% to $587 million, compared to the first six months of 2020. In local currency
terms, revenues decreased by 11%.
API sales to third parties in the first six months of 2021 were $376 million, a
decrease of 3% in both U.S dollar and local currency terms, compared to the
first six months of 2020.
Teva Consolidated Results
Revenues
Revenues in the first six months of 2021 were $7,892 million, a decrease of 4%,
or 7% in local currency terms, compared to the first six months of 2020.
Exchange rate movements during the first six months of 2021, including hedging
effects, negatively impacted revenues by $209 million, compared to the first six
months of 2020. See note 8c to our consolidated financial statements.
Gross Profit
Gross profit in the first six months of 2021 was $3,750 million, a decrease of
2% compared to the first six months of 2020. This decrease was mainly due to
lower gross profit from COPAXONE and Anda in our North America segment as well
as lower gross profit from generic products in our Europe segment, partially
offset by higher gross profit from generic products in our North America
segment.
Gross profit margin was 47.5% in the first six months of 2021, compared to 46.5%
in the first six months of 2020.
Research and Development (R&D) Expenses
R&D expenses in the first six months of 2021 were $501 million, an increase of
12% compared to the first six months of 2020.
R&D expenses as a percentage of revenues were 6.4% in the first six months of
2021, compared to 5.4% in the first six months of 2020.
Selling and Marketing (S&M) Expenses
S&M expenses in the first six months of 2021 were $1,200 million, a decrease of
1% compared to the first six months of 2020. Our S&M expenses were primarily the
result of the factors discussed above under "-North America Segment- S&M
Expenses," "-Europe Segment- S&M Expenses" and "-International Markets Segment-
S&M Expenses."
S&M expenses as a percentage of revenues were 15.2% in the first six months of
2021, compared to 14.7% in the first six months of 2020.
General and Administrative (G&A) Expenses
G&A expenses in the first six months of 2021 were $532 million, a decrease of 6%
compared to the first six months of 2020.
G&A expenses as a percentage of revenues were 6.7% in the first six months of
2021, compared to 6.9% in the first six months of 2020.
Intangible Asset Impairments
We recorded expenses of $274 million for identifiable intangible asset
impairments, in the first six months of 2021, compared to expenses of
$768 million in the first six months of 2020. See note 5 to our consolidated
financial statements.
Goodwill Impairment
No goodwill impairments were recorded in the first six months of both 2021 and
2020.
Other Asset Impairments, Restructuring and Other Items
We recorded expenses of $165 million for other asset impairments, restructuring
and other items in the first six months of 2021, compared to expenses of
$502 million in the first six months of 2020. See note 12 to our consolidated
financial statements.

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Legal Settlements and Loss Contingencies
In the first six months of 2021, we recorded expenses of $110 million in legal
settlements and loss contingencies, compared to income of $12 million in the
first six months of 2020. See note 9 to our consolidated financial statements.
Other Income
Other income in the first six months of 2021 was $48 million, compared to
$22 million in the first six months of 2020. The income in the second quarter of
2021 was mainly due to capital gains related to the sale of certain OTC assets.
Operating Income (Loss)
Operating income was $1,015 million in the first six months of 2021, compared to
$364 million in the first six months of 2020.
Operating income as a percentage of revenues was 12.9% in the first sixth months
of 2021, compared to 4.4% in the first six months of 2020.
Financial Expenses, Net
Financial expenses were $564 million in the first six months of 2021, compared
to $448 million in the first six months of 2020. Financial expenses in the first
six months of 2021 were mainly comprised of interest expenses of $479 million
and loss on revaluations of marketable securities of $98 million (see note 16 to
our consolidated financial statements). Financial expenses in the first six
months of 2020 were mainly comprised of interest expenses of $482 million,
partially offset by a gain of $29 million resulting from our hedging and
derivatives activities.
The following table presents a reconciliation of our segment profits to our
consolidated operating income (loss) and to consolidated income (loss) before
income taxes for the six months ended June 30, 2021 and 2020:

                                                              Six months ended
                           .                                      June 30,
                                                              2021           2020
                                                            (U.S. $ in millions)
North America profit                                      $      1,098      $ 1,123
Europe profit                                                      680          746
International Markets profit                                       245          253

Total reportable segments profit                                 2,023        2,121
Profit of other activities                                          87          102

Total segments profit                                            2,111        2,223
Amounts not allocated to segments:
Amortization                                                       414

507


Other assets impairments, restructuring and other items            165          502
Goodwill impairment                                                 -            -
Intangible asset impairments                                       274          768
Legal settlements and loss contingencies                           110          (12 )
Other unallocated amounts                                          132



Consolidated operating income (loss)                             1,015          364

Financial expenses, net                                            564          448

Consolidated income (loss) before income taxes            $        451      $   (84 )



Tax Rate
In the first six months of 2021, we recognized a tax expense of $159 million, on
pre-tax
income of $451 million. In the first six months of 2020, we recognized a tax
benefit of $163 million, on
pre-tax
loss of $84 million. Our tax rate in the first six months of 2021 was mainly
affected by impairments, amortization, legal settlements and interest expense
disallowance.

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Share in (Profits) Losses of Associated Companies, Net
Share in loss of associated companies, net in the first six months of 2021 was
$14 million. We did not have any share in (profits) losses of associated
companies, net in the first six months of 2020.
Net Income (Loss) Attributable to Teva
Net income was $284 million in the first six months of 2021, compared to
$209 million in the first six months of 2020.
Diluted Shares Outstanding and Earnings (Loss) per Share
The weighted average diluted shares outstanding used for the fully diluted share
calculation for the six months ended June 30, 2021 and 2020 was 1,108 million
and 1,098 million shares, respectively.
In computing diluted earnings per share for the six months ended June 30, 2021
and June 30, 2020, basic earnings per share were adjusted to take into account
the potential dilution that could occur upon the exercise of options and
non-vested
RSUs granted under employee stock compensation plans. No account was taken of
the potential dilution by the convertible senior debentures, since they had an
anti-dilutive effect on earnings per share.
Diluted earnings per share were $0.26 in the first six months of 2021, compared
to diluted earnings per share of $0.19 in the first six months of 2020.
Impact of Currency Fluctuations on Results of Operations
In the first six months of 2021, approximately 47% of our revenues were
denominated in currencies other than the U.S. dollar. Because our results are
reported in U.S. dollars, we are subject to significant foreign currency risks
and, accordingly, changes in the exchange rate between the U.S. dollar and local
currencies in markets in which we operate (primarily the euro, British pound,
Japanese yen, Israeli shekel, Canadian dollar and Russian ruble) impact our
results. During the first six months of 2021, the following main currencies
relevant to our operations decreased in value against the U.S. dollar:
Argentinian peso by 29%, Turkish lira by 18%, Brazilian real by 10%, Russian
ruble by 7% and Ukrainian hryvnia by 7% (all compared on a
six-month
average basis). The following main currencies relevant to our operations
increased in value against the U.S. dollar: Australian dollar by 17%, Swedish
krona by 15%, Chilean peso by 13%, British pound by 10%, euro by 9%, Canadian
dollar by 9% and new Israeli shekel by 7%.
As a result, exchange rate movements during the first six months of 2021
positively impacted overall revenues by $209 million and our operating income by
$12 million, in comparison to the first six months of 2020.
In the first six months of 2021, a positive hedging impact of $13 million was
recognized under revenues, and a minimal negative impact was recognized under
cost of sales. In the first six months of 2020, a positive hedging impact of
$40 million was recognized under revenues and a positive impact of $4 million
was recognized under cost of sales.
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. See note 8c to our consolidated financial statements.
Liquidity and Capital Resources
Total balance sheet assets were $49,195 million as of June 30, 2021, compared to
$49,004 million as of March 31, 2021.
Our working capital balance, which includes accounts receivables net of SR&A,
inventories, prepaid expenses and other current assets, accounts payables,
employee-related obligations, accrued expenses and other current liabilities,
was $1,196 million as of June 30, 2021, compared to $1,179 million as of
March 31, 2021.
Cash investment in property, plant and equipment in the second quarter of 2021
was $113 million, compared to $150 million in the first quarter of 2021.
Depreciation in both the second and first quarters of 2021 was $134 million.
Cash and cash equivalents and short-term and long-term investments as of
June 30, 2021 were $2,479 million, compared to $1,933 million as of March 31,
2021. The increase in the second quarter of 2021 was mainly due to cash flow
generated during the quarter.
Our cash on hand that is not used for ongoing operations is generally invested
in bank deposits as well as liquid securities that bear fixed and floating
rates.

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Our principal sources of short-term liquidity are our cash on hand, existing
cash investments, liquid securities and available credit facilities, primarily
our $2.3 billion unsecured syndicated revolving credit facility entered into in
April 2019 ("RCF").
The RCF agreement provides for two separate tranches, a $1.15 billion tranche A
and a $1.15 billion tranche B. Tranche A has a maturity date of April 8, 2022,
of which an amount of $1.065 billion was extended twice, initially to April 8,
2023 and then to April 8, 2024. Tranche B has a maturity date of April 8, 2024.
Loans and letters of credit will be available from time to time under each
tranche for Teva's general corporate purposes.
The RCF contains certain covenants, including certain limitations on incurring
liens and indebtedness and maintenance of certain financial ratios, including
the requirement to maintain compliance with a net debt to EBITDA ratio, which
becomes more restrictive over time. The net debt to EBITDA ratio limit was 5.50x
through June 30, 2021, gradually declines to 5.00x in the third and fourth
quarters of 2021, 4.50x in the first and second quarters of 2022, and continues
to gradually decline over the remaining term of the RCF to 3.50x in the first
quarter of 2023.
The RCF can be used for general corporate purposes, including repaying existing
debt. As of June 30, 2021, no amounts were outstanding under the RCF. During
July 2021, $500 million was drawn down under the RCF. Based on current and
forecasted results, we expect that we will not exceed the financial covenant
thresholds set forth in the RCF within one year from the date the financial
statements are issued.
Under specified circumstances, including
non-compliance
with any of the covenants described above and the unavailability of any waiver,
amendment or other modification thereto, we will not be able to borrow under the
RCF. Additionally, violations of the covenants, under the above-mentioned
circumstances, would result in an event of default in all borrowings under the
RCF and, when greater than a specified threshold amount as set forth in each
series of senior notes is outstanding, could lead to an event of default under
our senior notes due to cross acceleration provisions.
We expect that we will continue to have sufficient cash resources to support our
debt service payments and all other financial obligations within one year from
the date that the financial statements are issued.
Debt Balance and Movements
As of June 30, 2021, our debt was $25,132 million, compared to $24,986 million
as of March 31, 2021. This increase was mainly due to exchange rate
fluctuations.
In July 2021, we repaid $1,475 million of our 2.2% senior notes at maturity.
Our debt as of June 30, 2021 was effectively denominated in the following
currencies: 65% in U.S. dollars, 32% in euros and 3% in Swiss francs.
The portion of total debt classified as short-term as of June 30, 2021 was 14%,
compared to 11% as of March 31, 2021.
Our financial leverage was 69% as of June 30, 2021 and as of March 31, 2021.
Our average debt maturity was approximately 5.3 years as of June 30, 2021,
compared to 5.6 years as of March 31, 2021.
Total Equity
Total equity was $11,311 million as of June 30, 2021, compared to
$10,975 million as of March 31, 2021. This increase was mainly due to net income
of $221 million and a positive impact of $79 million from exchange rate
fluctuations.
Exchange rate fluctuations affected our balance sheet, as approximately 56% of
our net assets in the second quarter of 2021 (including both
non-monetary
and monetary assets) were in currencies other than the U.S. dollar. When
compared to March 31, 2021, changes in currency rates had a positive impact of
$79 million on our equity as of June 30, 2021, mainly due to the changes in
value against the U.S. dollar of: the Japanese yen by 7%, the Swiss franc by 4%,
the euro by 3%, the Croatian kuna by 3%, the Polish zloty by 2% and the Chilean
peso by 2%. All comparisons are on a
quarter-end
to
quarter-end
basis.
Cash Flow
We seek to continually improve the efficiency of our working capital management.
From time to time, as part of our cash management activities, we may make
decisions in our commercial and supply chain activities which may drive an
acceleration of receivable payments from customers or deceleration of payments
to vendors, having the effect of increasing or decreasing cash from operations
in an individual period. Such decisions had no material impact on our
year-to-date
operating cash flow measurement, but may impact
quarter-to-quarter
results.

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Cash flow generated from operating activities during the second quarter of 2021
was $218 million, compared to $273 million in the second quarter of 2020. The
decrease in the second quarter of 2021 was mainly due to favorable collection of
payments from customers in the second quarter of 2020, which resulted from
increased sales in the first quarter of 2020.
During the second quarter of 2021, we generated free cash flow of $625 million,
which we define as comprising $218 million in cash flow generated from operating
activities, $405 million in beneficial interest collected in exchange for
securitized accounts receivables and $115 million in proceeds from divestitures
of businesses and other assets, partially offset by $113 million in cash used
for capital investment. During the second quarter of 2020, we generated free
cash flow of $582 million, 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 and intangible assets, partially offset by
$131 million in cash used for capital investment. The increase in the second
quarter of 2021 resulted mainly from higher proceeds from divestitures of
businesses and other assets, partially offset by lower cash flow from operating
activities.
Dividends
We have not paid dividends on our ordinary shares or ADSs since December 2017.
Commitments
In addition to financing obligations under short-term debt and long-term senior
notes and loans, debentures and convertible debentures, our major contractual
obligations and commercial commitments include leases, royalty payments,
contingent payments pursuant to acquisition agreements and participation in
joint ventures associated with R&D activities.
In August 2020, we entered into a partnership agreement with biopharmaceutical
company Alvotech for the exclusive commercialization in the U.S. of five
biosimilar product candidates. The initial pipeline for this partnership
contains biosimilar candidates addressing multiple therapeutic areas, including
a proposed biosimilar to Humira
®
. Under this agreement, Alvotech is responsible for the development,
registration and supply of the biosimilar product candidates and Teva will
exclusively commercialize the products in the United States. We paid an upfront
payment in the third quarter of 2020 and additional upfront and milestone
payments in the second quarter of 2021 that were recorded as R&D expenses.
Additional development and commercial milestone payments of up to $450 million,
as well as royalty payments, may be payable by Teva over the next few years.
Teva and Alvotech will share profit from the commercialization of these
biosimilars. In March 2021, Abbvie sued Alvotech for allegedly misappropriating
confidential information relating to Humira
®
. Alvotech has disputed these claims. In addition, there is pending patent
litigation between Abbvie and Alvotech.
In September 2016, we entered into a collaborative agreement with Regeneron to
develop and commercialize Regeneron's pain medication product, fasinumab. We
share in the global commercial rights to this product with Regeneron (excluding
Japan, Korea and nine other Asian countries), as well as ongoing associated R&D
costs of approximately $1 billion. We made an upfront payment of $250 million to
Regeneron in the third quarter of 2016 and additional payments for achievement
of development milestones in an aggregate amount of $120 million were paid
during 2017 and 2018. The agreement stipulates additional development and
commercial milestone payments of up to $2,230 million, as well as future
royalties. For information regarding fasinumab, see "-North America Segment
-Product Launches and Pipeline" above.
In October 2016, we entered into a collaborative agreement with Celltrion to
commercialize Truxima
®
and Herzuma
®
, two biosimilar products for the U.S. and Canadian markets. We paid Celltrion
$160 million, of which we received an aggregate credit of $60 million as of
March 31, 2021. We share the profit from the commercialization of these products
with Celltrion. These two products, Truxima and Herzuma, were approved by the
FDA in November and December 2018, respectively and were launched in the United
States in November 2019 and March 2020, respectively. No additional milestone
payments are expected.
We are committed to pay royalties to owners of
know-how,
partners in alliances and certain other arrangements, and to parties that
financed R&D at a wide range of rates as a percentage of sales of certain
products, as defined in the agreements. In some cases, the royalty period is not
defined; in other cases, royalties will be paid over various periods not
exceeding 20 years.

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In connection with certain development, supply and marketing, and research and
collaboration or services agreements, we are required to indemnify, in
unspecified amounts, the parties to such agreements against third-party claims
relating to (i) infringement or violation of intellectual property or other
rights of such third party; or (ii) damages to users of the related products.
Except as described in our financial statements, we are not aware of any
material pending action that may result in the counterparties to these
agreements claiming such indemnification.
2021 Aggregated Contractual Obligations
There have not been any material changes in our assessment of material
contractual obligations and commitments as set forth in Item 7 of our Annual
Report on Form
10-K
for the year ended December 31, 2020.
Supplemental
Non-GAAP
Income Data
We utilize certain
non-GAAP
financial measures to evaluate performance, in conjunction with other
performance metrics. The following are examples of how we utilize the
non-GAAP
measures:

• our management and Board of Directors use the

non-GAAP

measures to evaluate our operational performance, to compare against work


          plans and budgets, and ultimately to evaluate the performance of
          management;



  •   our annual budgets are prepared on a
      non-GAAP
      basis; and

• senior management's annual compensation is derived, in part, using these

non-GAAP

measures. 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.

Non-GAAP


financial measures have no standardized meaning and accordingly have limitations
in their usefulness to investors. We provide such
non-GAAP
data because management believes that such data provide useful information to
investors. However, investors are cautioned that, unlike financial measures
prepared in accordance with U.S. GAAP,
non-GAAP
measures may not be comparable with the calculation of similar measures for
other companies. These
non-GAAP
financial measures are presented solely to permit investors to more fully
understand how management assesses our performance. The limitations of using
non-GAAP
financial measures as performance measures are that they provide a view of our
results of operations without including all events during a period and may not
provide a comparable view of our performance to other companies in the
pharmaceutical industry.
Investors should consider
non-GAAP
financial measures in addition to, and not as replacements for, or superior to,
measures of financial performance prepared in accordance with GAAP.
In arriving at our
non-GAAP
presentation, we exclude items that either have a
non-recurring
impact on the income statement or which, in the judgment of our management, are
items that, either as a result of their nature or size, could, were they not
singled out, potentially cause investors to extrapolate future performance from
an improper base. In addition, we also exclude equity compensation expenses to
facilitate a better understanding of our financial results, since we believe
that such exclusion is important for understanding the trends in our financial
results and that these expenses do not affect our business operations. While not
all inclusive, examples of these items include:

  •   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 marketable securities investment valuation gains/losses;



  •   unusual tax items;



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  •   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.



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The following tables present supplemental
non-GAAP
data, in U.S. dollar, which we believe facilitates an understanding of the
factors affecting our business. In these tables, we exclude the following
amounts:
The following table presents the GAAP measures, related non-GAAP adjustments and
the corresponding
non-GAAP
amounts for the applicable periods:

Three Months Ended June 30, 2021

U.S. $ and

shares in millions (except per share amounts)


                                                                          GAAP                                                                   Excluded for non-GAAP measurement                                                                   Non-GAAP
                                                                                                                                                                     Costs
                                                                                                                                                                  related to
                                                                                      Amortization           Legal           Impairment                           regulatory
                                                                                      of purchased        settlements         of long                               actions                                                Other
                                                                                       intangible          and loss            lived          Restructuring        taken in          Equity           Contingent         non-GAAP       Other
                                                                                         assets          contingencies         assets             costs           facilities      compensation       consideration        items*        items
Net revenues                                                               3,910                                                                                                                                                                         3,910
Cost of sales                                                              2,037                148                                                                         8                 6                                 50                       1,826

Gross profit                                                               1,873                148                                                                         8                 6                                 50                       2,084
Gross profit margin                                                         47.9 %                                                                                                                                                                        53.3 %
R&D expenses                                                                 248                                                                                                              5                                                            243
S&M expenses                                                                 615                 25                                                                                           8                                                            582
G&A expenses                                                                 242                                                                                                             11                                                            231
Other income                                                                 (43 )                                                                                                                                             (37 )                        (6 )
Legal settlements and loss contingencies                                       6                                      6                                                                                                                                     -
Other assets impairments, restructuring and other items                       28                                                      32                 (13 )                                                  (19 )           28                          -
Intangible assets impairments                                                195                                                     195                                                                                                                    -

Operating income (loss)                                                      582                173                   6              226                 (13 )              8                29                 (19 )           42                       1,034
Financial expenses, net                                                      274                                                                                                                                                            34             240

Income (loss) before income taxes                                            308                173                   6              226                 (13 )              8                29                 (19 )           42          34             794
Income taxes                                                                  98                                                                                                                                                           (36 )           133
Share in (profits) losses of associated companies - net                      (11 )                                                                                                                                                          (3 )            (8 )

Net income (loss)                                                            221                173                   6              226                 (13 )              8                29                 (19 )           42          (5 )           669
Net income (loss) attributable to
non-controlling
interests                                                                     14                                                                                                                                                            (3 )            18

Net income (loss) attributable to Teva                                       207                173                   6              226                 (13 )              8                29                 (19 )           42          (8 )           651

EPS - Basic                                                                 0.19                                                                                                                                                          0.40            0.59
EPS - Diluted                                                               0.19                                                                                                                                                          0.40            0.59


The
non-GAAP
diluted weighted average number of shares was 1,109 million for the three months
ended June 30, 2021.
Non-GAAP
income taxes for the three months ended June 30, 2021 were 17% on
pre-tax
non-GAAP
income.
*   Other
    non-GAAP

items include 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 certain accelerated depreciation expenses and


    inventory write offs, primarily related to the rationalization of our plants
    and other unusual events.



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  Table of Contents
                                                                                                                                  Three Months Ended June 30, 2020
                                                                                                                      U.S. $ and shares in millions (except per share amounts)
                                       GAAP                                                                                     Excluded for non-GAAP measurement                                                                                     Non-GAAP
                                                                                                                                                            Costs
                                                                                                                                                         related to
                                                     Amortization             Legal             Impairment                                               regulatory
                                                     of purchased          settlements           of long            Other                                  actions                                                     Other
                                                      intangible            and loss              lived              R&D            Restructuring         taken in            Equity             Contingent           non-GAAP         Other
                                                        assets            contingencies           assets          expenses              costs            facilities        compensation         consideration          items*          items
Net revenues                            3,870                                                                                                                                                                                                             3,870
Cost of sales                           2,107                  219                                                                                                 6                   6                                     16                           1,859

Gross profit                            1,763                  219                                                                                                 6                   6                                     16                           2,011
Gross profit margin                      45.5 %                                                                                                                                                                                                            52.0 %
R&D expenses                              225                                                                           (13 )                                                          5                                                                    233
S&M expenses                              597                   30                                                                                                                     8                                                                    559
G&A expenses                              264                                                                                                                                         11                                      8                             245
Other income                               (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                                                                                                                                                  -

Operating income (loss)                   173                  249                    13                396             (13 )                   33                 6                  30                    76               14                             979
Financial expenses, net                   223                                                                                                                                                                                              (5 )             229

Income (loss) before income taxes         (51 )                249                    13                396             (13 )                   33                 6                  30                    76               14            (5 )             751
Income taxes                             (104 )                                                                                                                                                                                          (231 )             128
Net income (loss)                          53                  249                    13                396             (13 )                   33                 6                  30                    76               14          (237 )             623
Net income (loss) attributable to
non-controlling
interests                                 (87 )                                                                                                                                                                                          (105 )              19

Net income (loss) attributable to
Teva                                      140                  249                    13                396             (13 )                   33                 6                  30                    76               14          (342 )             605

EPS - Basic                              0.13                                                                                                                                                                                            0.42              0.55
EPS - Diluted                            0.13                                                                                                                                                                                            0.42              0.55


The
non-GAAP
diluted weighted average number of shares was 1,100 million for the three months
ended June 30, 2020.
Non-GAAP
income taxes for the three months ended June 30, 2020 were 17% on
pre-tax
non-GAAP
income.
*   Other
    non-GAAP

items include 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 certain accelerated depreciation expenses and


    inventory write offs, primarily related to the rationalization of our plants
    and other unusual events.



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  Table of Contents
                                                                                                                               Six Months Ended June 30, 2021
                                                                                                                  U.S. $ and shares in millions (except per share amounts)
                                           GAAP                                                                             Excluded for non-GAAP measurement                                                                             Non-GAAP
                                                                                                                                               Costs
                                                                                                                                             related to
                                                         Amortization             Legal             Impairment                               regulatory
                                                         of purchased          settlements           of long                                  actions                                                       Other
                                                          intangible            and loss              -lived           Restructuring          taken in            Equity             Contingent           non-GAAP         Other
                                                            assets            contingencies           assets               costs             facilities        compensation         consideration          items*          items
Net revenue                                 7,892                                                                                                                                                                                             7,892
Cost of sales                               4,141                  363                                                                                13                  12                                     91                           3,663

Gross profit                                3,750                  363                                                                                13                  12                                     91                           4,228
Gross profit margin                          47.5 %                                                                                                                                                                                            53.6 %
R&D expenses                                  501                                                                                                                         10                                      5                             487
S&M expenses                                1,200                   52                                                                                                    18                                      -                           1,131
G&A expenses                                  532                                                                                                                         21                                      0                             510
Other (income) expense                        (48 )                                                                                                                                                             (37 )                           (11 )
Legal settlements and loss
contingencies                                 110                                        110                                                                                                                                                      -
Other assets impairments,
restructuring and other items                 165                                                            80                    69                                                          (16 )             33                               -
Intangible assets impairment                  274                                                           274                                                                                                                                   -

Operating income (loss)                     1,015                  414                   110                354                    69                 13                  60                   (16 )             92                           2,111
Financial expenses, net                       564                                                                                                                                                                              98               467

Income (loss) before income taxes             451                  414                   110                354                    69                 13                  60                   (16 )             92            98             1,644
Income taxes                                  159                                                                                                                                                                            (120 )             280
Share in (profits) losses of
associated companies - net                    (14 )                                                                                                                                                                            (1 )             (13 )

Net income (loss)                             306                  414                   110                354                    69                 13                  60                   (16 )             92           (24 )           1,377
Net income (loss) attributable to
non-controlling
interests                                      21                                                                                                                                                                              (6 )              28

Net income (loss) attributable to
Teva                                          284                  414                   110                354                    69                 13                  60                   (16 )             92           (30 )           1,350

EPS - Basic                                  0.26                                                                                                                                                                            0.97              1.23
EPS - Diluted                                0.26                                                                                                                                                                            0.96              1.22


The
non-GAAP
diluted weighted average number of shares was 1,108 million for the six months
ended June 30, 2021.
Non-GAAP
income taxes for the six months ended June 30, 2021 were 17% on
pre-tax
non-GAAP
income.
*   Other
    non-GAAP

items include 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 certain accelerated depreciation expenses and


    inventory write offs, primarily related to the rationalization of our plants
    and other unusual events.



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  Table of Contents
                                                                                                                               Six months ended June 30, 2020
                                                                                                                  U.S. $ and shares in millions (except per share amounts)
                                           GAAP                                                                             Excluded for non-GAAP measurement                                                                             Non-GAAP
                                                                                                                                                Costs
                                                                                                                                              related to
                                                         Amortization             Legal              Impairment                               regulatory
                                                         of purchased          settlements            of long-                                 actions                                                      Other
                                                          intangible            and loss               lived            Restructuring          taken in            Equity             Contingent          non-GAAP         Other
                                                            assets            contingencies            assets               costs             facilities        compensation         consideration         items*          items
Net revenue                                 8,227                                                                                                                                                                                             8,227
Cost of sales                               4,402                  443                                                                                 11                  12                                    32                           3,905

Gross profit                                3,826                  443                                                                                 11                  12                                    32                           4,322
Gross profit margin                          46.5 %                                                                                                                                                                                            52.5 %
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                                                                                                                                 -

Operating income (loss)                       364                  507                   (12 )             1,121                    73                 11                  60                    83              18             -             2,223
Financial expenses, net                       448                                                                                                                                                                               6               442

Income (loss) before income taxes             (84 )                507                   (12 )             1,121                    73                 11                  60                    83              18             6             1,781
Income taxes                                 (163 )                                                                                                                                                                          (465 )             303

Net income (loss) attributtible to
Teva                                           78                  507                   (12 )             1,121                    73                 11                  60                    83              18          (460 )           1,478
Net income (loss) attributable to
non-controlling
interests                                    (131 )                                                                                                                                                                          (169 )              38

Net income (loss)                             209                  507                   (12 )             1,121                    73                 11                  60                    83              18          (629 )           1,440

EPS - Basic                                  0.19                                                                                                                                                                                              1.32
EPS - Diluted                                0.19                                                                                                                                                                                              1.31


The
non-GAAP
diluted weighted average number of shares was 1,098 million for the six months
ended June 30, 2020.
Non-GAAP
income taxes for the six months ended June 30, 2021 were 17% on
pre-tax
non-GAAP
income.
*   Other
    non-GAAP

items include 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 certain accelerated depreciation expenses and


    inventory write offs, primarily related to the rationalization of our plants
    and other unusual events.



                                       75


--------------------------------------------------------------------------------
  Table of Contents
Non-GAAP
Tax Rate
Non-GAAP
income taxes in the second quarter of 2021 were $133 million, or 17%, on
pre-tax
non-GAAP
income of $794 million.
Non-GAAP
income taxes in the second quarter of 2020 were $128 million, or 17%, on
pre-tax
non-GAAP
income of $751 million. Our
non-GAAP
tax rate in the second quarter of 2021 was mainly affected by the mix of
products we sold and interest expense disallowance.
Non-GAAP
income taxes in the first six months of 2021 were $280 million, or 17%, on
pre-tax
non-GAAP
income of $1,644 million.
Non-GAAP
income taxes in the first six months of 2020 were $303 million, or 17%, on
pre-tax
non-GAAP
income of $1,781 million.
We expect our annual
non-GAAP
tax rate for 2021 to be between 17% to 18%, similar to our
non-GAAP
tax rate for 2020, which was 17%.
Off-Balance
Sheet Arrangements
Except for securitization transactions, which are disclosed in note 10(f) to our
consolidated financial statements included in our Annual Report on Form
10-K
for the year ended December 31, 2020, we do not have any material
off-balance
sheet arrangements.
Critical Accounting Policies
For a summary of our significant accounting policies, see note 1 to our
consolidated financial statements and "Critical Accounting Policies" included in
our Annual Report on Form
10-K
for the year ended December 31, 2020.
Recently Issued Accounting Pronouncements
See note 1 to our consolidated financial statements.

Latest news about Teva Pharmaceutical Industries Limited

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Alvotech Shares Rise After Signing Agreement to Expand Access to Humira Biosimilar Adalimumab-ryvk in US	Apr. 19	MT
Alvotech Signs Agreement to Expand Access to Humira Biosimilar Adalimumab-ryvk in US	Apr. 19	MT
Alvotech and Teva Announces U.S. FDA Approval of SELARSDI (ustekinumab-aekn), biosimilar to Stelara (ustekinumab)	Apr. 17	CI
Alvotech, Teva Win US FDA Approval for Selarsdi Injection to Treat Severe Plaque Psoriasis, Psoriatic Arthritis	Apr. 16	MT
Alvotech, Teva Get FDA Approval for Stelara Biosimilar Psoriasis Treatment	Apr. 16	DJ
Teva Pharmaceutical Unit Says Late-Stage Trial in China of Ajovy to Prevent Migraine Achieves Primary, Secondary Endpoints	Apr. 11	MT
Teva Confirms Efficacy and Safety of AJOVY for the Prevention of Migraine with Results from Phase 3 Trial in China	Apr. 11	CI
Teva Pharmaceuticals International, mAbxience Sign Licensing Deal for Oncology Biosimilar Candidate	Apr. 04	MT
UroGen Pharma Sues Teva Pharmaceuticals Over Alleged Patent Infringement of Jelmyto	Apr. 03	MT
US Appellate Court Vacates Ruling Maintaining Johnson & Johnson's Schizophrenia Drug Patent; Sends Back for Review	Apr. 01	MT
US Appellate Court Vacates Ruling Maintaining Johnson & Johnson's Schizophrenia Drug Patent; Sends Back for Review	Apr. 01	MT
Teva Pharmaceutical to Get $150 Million From Carlyle Group's Abingworth for Asthma Therapy With Launch Therapeutics	Apr. 01	MT
JPMorgan Upgrades Teva Pharmaceutical Industries to Neutral From Underweight, Adjusts Price Target to $14 From $11	Mar. 08	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $657,240, According to a Recent SEC Filing	Mar. 07	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $1,048,119, According to a Recent SEC Filing	Mar. 07	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $1,352,090, According to a Recent SEC Filing	Mar. 07	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $414,270, According to a Recent SEC Filing	Mar. 05	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $1,277,207, According to a Recent SEC Filing	Mar. 05	MT
Teva Pharmaceutical Industries Insider Sold Shares Worth $270,176, According to a Recent SEC Filing	Mar. 01	MT
Global markets live: Domino's Pizza, Walt Disney, Broadcom, Ryanair, Exxon Mobil, Goldman Sachs...	Feb. 26
Alvotech, Teva Say Simlandi Receives US FDA Approval as Interchangeable Humira Biosimilar	Feb. 26	MT
Exchange-Traded Funds Higher, Equity Futures Lower Pre-Bell Monday Ahead of Data-Packed Week	Feb. 26	MT
Teva Pharmaceutical's TEV-'574 Antibody Found to Be Safe in Studies	Feb. 20	MT
Teva Pharm to stay as unified drugmaker, sees big interest in API business, says CEO	Feb. 20	RE

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Company Profile

Teva Pharmaceutical Industries Ltd is a Israeli-based pharmaceutical company. The Company operates through three segments: North America, Europe and International Markets. Each business segment manages entire product portfolio in its region, including generics, specialty and over-the-counter (OTC) products. In addition to these three segments, The Company has other activities, primarily the sale of active pharmaceutical ingredients (API) to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

Sector

Pharmaceuticals

Calendar

2024-05-08 - Q1 2024 Earnings Release

More about the company

Income Statement Evolution

More financial data

Analysis / Opinion

Teva Pharmaceutical Industries isn't out of the woods yet

February 01, 2024 at 04:41 am EST

INTERVIEW - Richard Francis, CEO of Teva Pharmaceutical: solid quarter, full-year forecasts raised

August 02, 2023 at 03:19 pm EDT

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Ratings for Teva Pharmaceutical Industries Limited

Trading Rating

Investor Rating

ESG Refinitiv

B-

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Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

13.25 USD

Average target price

15.74 USD

Spread / Average Target

+18.76%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

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Teva Pharmaceutical Industries Limited

Equities

TEVA

US8816242098

Pharmaceuticals

TEVA PHARMACEUTICAL INDUSTRIES : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

EPS Revisions