Teva at Leerink’s Global Healthcare Conference: Strategic Growth Insights

On Wednesday, March 12, 2025, Teva Pharmaceuticals (NYSE: TEVA) presented at Leerink’s Global Healthcare Conference 2025, outlining a robust growth strategy while acknowledging challenges in the generics market. CEO Richard Francis highlighted the company’s strategic pivot towards innovation and efficiency, aiming for sustainable growth amidst competitive pressures.

Key Takeaways

• Teva is focusing on a growth strategy driven by innovation and efficiency.
• AUSTEDO is projected to significantly increase revenue by 2027.
• The company is navigating challenges in the US generics market, particularly with Revlimid.
• Teva aims to achieve its 2027 financial targets, including EBITDA growth.
• Business development is focused on late-stage opportunities in Europe.

Financial Results

• Teva reported a 9% growth in the last year, with a guidance of over 5% growth for the current year.
• AUSTEDO is expected to generate $2 billion this year, growing to $2.5 billion by 2027.
• AJOVY sales reached $500 million, with a projection of $600 million this year.
• The US generics business faces a significant impact from the loss of Revlimid revenue next year.

Operational Updates

• The innovative portfolio includes investments in olanzapine, TL1A, and a dual-action rescue inhaler.
• Teva aims to stabilize and grow its generics business, which constitutes 65% of its operations outside the US.
• Cost reduction initiatives include a value acceleration program and an organizational effectiveness program.

Future Outlook

• Teva plans to accelerate its pipeline and maximize opportunities in its innovative portfolio.
• The company is preparing to launch olanzapine next year, targeting a less crowded market.
• TL1A, in partnership with Sanofi, is entering Phase III trials for IBD, with additional indications to be announced.
• The dual-action rescue inhaler, with a pediatric indication, is expected to launch in 2027.

Q&A Highlights

• Concerns about margin guidance were addressed with confidence in achieving 2027 targets.
• The steep drop-off in tardive dyskinesia market growth was attributed to Medicare Part D changes.
• The predictability of the US generics business was acknowledged as challenging due to competition and product launches.
• Business development strategies focus on late-stage European opportunities to align with strategic goals.

Teva’s presentation at the conference provided a comprehensive view of its strategic priorities and growth ambitions. For a detailed analysis, refer to the full transcript below.

Full transcript - Leerink’s Global Healthcare Conference 2025:

Mark, Analyst: us. I used to cover Teva a long time ago and have known the name for a while, and Richard and I know each other from trips I’ve taken to visit him over in Europe, but he was at a different firm back then. And now he’s running Teva. And it’s really been very interesting as someone who doesn’t cover the stock to kind of watch what Teva has been doing.

And it’s really been going great. I mean, so far so good. You’ve really done some great things there. Talk about just what’s been working, like what was the strategy and like what’s kind of how this was like the box checking of the past couple of years that’s kind of got us to this point.

Richard Francis, CEO, Teva: Yes. So firstly, Mark, thanks for having us. I really appreciate it. So yes, I mean, it’s an exciting time at Severn. I think people are very proud of the last two years of what the company has achieved because obviously, we’ve had many years of challenging times with trying to pay down debt.

And one could argue just trying to stay in business. But the last two years with the pivot to growth strategy has really aligned the company on what we want to do and how we want to do it. And so in the last two years, we’ve invested heavily in our innovative business, innovative pipeline, and we’ve stabilized our generics business, actually grown it. And it really comes down to just four simple pillars that the company has behind. Deliver on our growth engines, which is all about accelerating Aesthedo, Usedi and AJOVY and investing and building capability in that.

Step up innovation, the pillar two, which is we’ve got an innovative pipeline. When I came and I spoke to Eric Hughes, Head of R and D, and I was like, Eric, this is a good pipeline. Let’s just invest in it. And so we invested heavily in that and accelerated it through the clinic, be that olanzapine, be that RTL1a, now Daria ICSLABA. We’ve got some good data on that, which shows Teva is I say to people Teva is a biopharma company that has a world class generics business.

And then our third pillar, which is credit generics powerhouse, we are bleeding generics. 65% of our business is outside The U. S, which is very consistent. And in The U. S, we did have some ups and downs, but we’ve stabilized that business and we’ve grown that business.

So I think in the last two years, what people have seen is a very focused company is very focused on execution, is very focused on capital allocation to those specific areas, which means we take capital from other areas because we’ve kept our P and L very tight if you look at our OpEx. And I think that’s allowed people to look at Teva in a very, very different way. And so we’ve had a lot of good conversations over the last two years. And I’ve always said they sort of started with this strategy seems like it’s fiction. But over the two years it’s become nonfiction because we’ve executed and we’ve delivered.

And I think I would argue the best is to come because we’re just at the beginning of the strategy. The first part was return to growth, which I think people thought was challenging, but we’ve had eight quarters of growth now. We’ve changed the fundamentals around Asteado, which when we arrived at this strategy was peak sales of $1,400,000,000 We could do $2,000,000,000 this year. We’re going to do $2,500,000,000 by $2,027,000,000,000 dollars and that is not peak. So I think we’ve really delivered in driving that growth.

But now it’s all about acceleration. How do we bring the pipeline through quicker? How do we maximize the opportunities we have in our innovative portfolio? And how do we continue to grow our generics business because that throws off a lot of cash that pays down our debt, but also invests in our innovative pipeline. So a lot of good stuff the last two years, but it’s just the beginning.

Do you

Mark, Analyst: feel like the whole organization is now completely, okay, this is what we’re doing, we’re on board, everyone’s comfortable? Because I know when I was covering the company for a while, it felt like there was just a lot of head fakes going on. It’s like two years we’re doing this, and then it would, okay, then we’re doing that, and is everybody on board?

Richard Francis, CEO, Teva: Well, look, yes, no, it’s a great question. And what I’d say is there’s no way you could do what we’ve done in twenty four months without everybody being absolutely committed. And I think the reason why people have been so behind this strategy is first, it’s super clear. And we’ve made decisions so fast on reducing resource here, adding it here. So there was no ambiguity and we executed every month.

So firstly, it was clear. The second thing is we’ve never wavered. And the final thing is the Teva people is is an amazing company and they really want to clear direction and they really wanted to know can we return to growth? If this was it, what it will take, we’ll do it. And the only reason why I can sit here two years on is because 36,000 people did it and they did it in unison.

So impressive really.

Mark, Analyst: I want to jump into the innovative portfolio. But before we do that, when I was listening to the last conference call, there seemed to be some issues and with respect to margin guidance and just in the context of, okay, well, how are we going to get to these longer term goals, these three or four year goals, whatever is, given this year’s numbers. So maybe you can just spend a year or two just explaining people, okay, this is what’s going on here.

Richard Francis, CEO, Teva: Yes. No, that’s a good question. I appreciate you asking it. So look, it’s interesting. So when we started this journey two years ago, nobody thought we could grow.

We grew the first year 6% and we grew 9% last year. And we’ve given guidance, which is remarkable because this is six, seven years of decline, right? So this is not just edging into growth, this is growing really well. And then we gave guidance this year, which we always give a range of the high range is over 5% and we grow the top line and the EBITDA. And people went to the mid range and said, but the mid range, particularly in EBITDA, you’re not growing it.

And I think I learned then that no matter what you do at Teva over two years, you mustn’t forget some of the legacy issues. And so then people start to say, can this company hit its 27 targets? And so we have high confidence we’re going to do this. We have a very detailed plan. And so I think what happened there is people I often say we’re the victims of our success.

So they thought we’re 6%, nine % is just going to keep on going. And although I think 5% on a that CAGR was really healthy for any company, but particularly Teva, I think that’s probably made people sit up and say, okay, are they convinced? And so what I’ve said to people is, let me be clear, we’ll get to the 27 targets because next year we will grow EBITDA. We’ll grow EBITDA in absolute money, absolute dollars and we’ll grow EBITDA as a percentage, we will. And then we’ll grow EBITDA obviously in ’27.

So we are going to hit the 27 targets. And I think that’s probably the gap that people needed to have filled in. And so that’s what I sort of reiterated is this year is all about still investing in growth and I still think we’ll have a good year. But next year, we will grow EBITDA and we will grow it as a percentage and we’ll grow it again in 27% and hit our 30%.

Mark, Analyst: Yes. Let’s talk about AUSTEDO, which is a product that I have been watching very carefully and the company has done a great job. What’s so interesting to me is when the two players, obviously, it’s Neurocrud and you and the tardive dyskinesia market, and together, it was roughly $4,000,000,000 ish in The U. S. Last year, and that was a 30% growth rate from the year before.

And yet, if you put the guidance together for this year, it’s more like a 13% growth rate, right, midpoint of the range of guiding for both companies. And I guess the question is why such a steep drop off in market growth? And you’re both talking about it, so clearly something’s going on behind the scenes.

Richard Francis, CEO, Teva: Yes. Well, look, I think firstly, I think what I’d say I’m really impressed with what we’ve done on the static because we sort of I think we’re behind in the market and we came in and we resourced it well, we brought in capability and people. I think we’ve transformed the direction of that product. I think one thing to consider on us though, don’t forget we’ve had the change in Medicare Part D. And so although we get low income subsidy, we get a phase in, we still get hit by that.

And so that is part of something that Right.

Mark, Analyst: You’re both feeling that.

Richard Francis, CEO, Teva: Yes. We both feel that. But look, what I always talk about is, I think it’s great we’re having discussion is $2,000,000,000 enough. And we’re absolutely going to hit $2,500,000,000 in 2027, but that is not the peak. Yes.

We’re going to keep growing this because there’s 1,350,000, seven hundred thousand patients who have yet to be put on treatment. So the potential is huge. So for us, it’s about what can we how can we maximize Aesthedo. But this year, that’s the slight, I think, drag me on our growth rate. But that doesn’t change the ambition around $2,500,000,000 and then beyond.

Mark, Analyst: Well, it’s interesting listening to both companies, it feels like every couple of years, the number of TD patients, the opportunity seems to actually grow. So that’s why I was kind of asking. So obviously, we have the Medicare change this year. Was there anything

Richard Francis, CEO, Teva: No, no. Look, I think, in short answer to that one, no. We, as you saw last year’s results were very strong. We’re really growing.

Mark, Analyst: Very strong. And maybe that’s just it. Last year was just such a growth anomaly a little bit. You over indexed last year because of everything you put into Well,

Richard Francis, CEO, Teva: there comes a point

Mark, Analyst: where Yes, there

Richard Francis, CEO, Teva: comes a point where, although I will never say this to the team, so hope they’re not watching. But you keep building the base, growing big percentage on a big ever increasing basis becomes harder than math. But no, I think, look, we have a great team. There’s more to come in Aesthedo. People ask me how we’ve managed to perform so well so quickly from a very labored start.

We have a super talented team. We invest very, very thoughtfully, but we understand the complexity of this market really, really well. And when I say it’s going to keep getting better, when you think about all the things we do, some of it’s about bringing patients to the market who have yet to be diagnosed, some of it’s about getting those patients prescribed. Some of it’s about making sure they’re on the right milligram. Some of it’s about making sure they’re here and they’re compliant.

All these things, it’s multifactorial. I think we have excellent programs on all of them. I think they will all continue to get traction as we move forward.

Mark, Analyst: Yes. Well, Neurocrine was up here literally in the same spot yesterday, basically saying that Teva took market share from us. They increased the share of voice, and now we got to get back to share of voice. So they’re going to try to increase their share of voice back. And so I don’t know whether your response is, well, we’re going to keep increasing our share voice.

No. You feel comfortable where you are now.

Richard Francis, CEO, Teva: We don’t talk about anybody else. No, I mean, seriously, internally, we don’t. There are seven hundred thousand patients not on therapy. So for me, I’ve just said to the team all the time, two point five billion in twenty seven billion.

Mark, Analyst: ’2 point ’5 billion.

Richard Francis, CEO, Teva: And then we’ll do this. And that’s what we do and we’re single-minded on that. If that means we grow market share and whatever, that’s fine. But it’s not about that. It’s about helping these patients, understand the unmet need and executing on that.

And so for us, once again, I go back to the quality of our strategy, the quality of our plans, the quality of our execution. And for me, that’s why we’re doing so well.

Mark, Analyst: At OUS, do you feel like there’s a good opportunity over there? Yes.

Richard Francis, CEO, Teva: We do. We’re we’ve submitted it to Europe. So I think we’re hopeful about a set of being brought to the market next year. By the way, we’ll bring a Lanza beam to the market in Europe. Yes.

So once again, going back to the Pivot2Go strategy, we looked at all our innovative products and said, okay, these should be we don’t need to get these to The U. S, but these can actually go global. And so actually AUSTEDO, we also have in China, and we’re looking at how we expand that footprint because that’s what you should do as a biopharma company. You don’t just get into one market. Because of the footprint Especially a company like Teva, you have the footprint already.

Exactly. And AJOVY, we’re knocking it out of the park in Europe in a very competitive space. And so we have a real capability from the sales and marketing that we can leverage with olanzapine and with Aesteta.

Mark, Analyst: So the LAI market was tough like last year, it doesn’t feel and yet you put this Euzetti out, the risperidone LAI. How How did it do so well in such a I mean, it’s crowded.

Richard Francis, CEO, Teva: Yes. The

Mark, Analyst: market’s not growing and yet you come in and, I mean, the numbers are really strong.

Richard Francis, CEO, Teva: Yes. Look, I think it goes back to those core fundamentals. We’re really good at commercializing products. I mean, really good, right? And we do that because we have really capable teams, really well thought strategies.

We understand the market. In schizophrenia, the patient journey is absolutely critical. It’s really difficult. A schizophrenia patient can be somebody who’s in an institution, can be somebody who’s homeless, can be somebody who’s a functioning professional in the working environment. It’s very, very to be able to really penetrate that market where there’s very established people, you have to have two things, a great product, which we have, like a very good differentiated product, but we have to have a commercial capability to get into those institutions, get into the hospitals, to get on formaries, to get KOLs to understand our product and to get, obviously, payers to pay for it.

So I think what we’ve done, and I like the fact that you’ve raised it in a really crowded competitive market where some big players are really ingrained in that market and come in and disrupted it so effectively, so quickly. So that builds on to olanzapine, which we’re filing this year and will launch next year, which isn’t a crowded market because there’s only one AI that’s not used at all because the black box. So when I talk about this great commercial team and I talk about YucEDI, then remember everybody we go to with olanzapine, be it the payer, be it the forming committee at the hospital, be it our patient services, be it the physicians, be it the nurse practitioners, all the same. And so they are obviously, they really like Yuceti, but they’re already excited about olanzapine.

Mark, Analyst: This is more differentiated, like you said. There’s just there’s nothing there for olanzapine.

Richard Francis, CEO, Teva: Well, exactly. And also it is elansapine is considered the most efficacious product. It is used on the severe patients. And if you think about it, the severe patients need compliance, like they need it. And so that’s why I think there’s a big unmet need that we’re excited about.

But we have the two things I want people to be left with there is what we’ve done in AUSTEDO and what we’ve done in Yucedi and what we’ve done in AJOVY, which is a product that everybody forgot. We’ve now hit $500,000,000 it’s going to be $600,000,000 this year. It shows when it comes to commercializing products, we’re really good.

Mark, Analyst: So does this product have bigger I mean, do you have bigger thoughts for it than Newseady as far as just peak sales just because it just seems it should be, right?

Richard Francis, CEO, Teva: Yes. I mean, look, you have

Mark, Analyst: You have all the other respiritones. You don’t have the other

Richard Francis, CEO, Teva: Yes, exactly. And you have, I think, it’s 20% of the schizophrenia market is olanzapine as a molecule. It’s the largest. And people want to have a long acting. So, yes, we see that as a significant potential we’re excited about.

Mark, Analyst: Yes, yes, yes. So talk about this TL1A market. Obviously, I don’t know as much of that market as I understand the neuroscience market, which I focus on so much. Tell us about how you’re going to compete. It just seems like when I was looking at us, there’s a lot of players here.

Richard Francis, CEO, Teva: So how

Mark, Analyst: does yours going to stand out? And obviously, you have a good partner.

Richard Francis, CEO, Teva: So look, firstly, it’s a by the time we launch, it’s going to be a $31,000,000,000 30 2 billion dollars market. That’s big. If you look at the amount of UC and CD patients, it’s close to $5,000,000 But then you look at how many patients cycle through therapies and how many patients end up on surgery, it is really high. So there’s a high level of unmet medical need. So for us, when we look at TUBAKI TURK in the Phase II, the two things that stood out to me were, okay, very good efficacy in Phase II, but the safety and the tolerability was excellent.

And if you look at all the products in the market that you highlight, there’s a lot of there’s some with black box, there’s some with monitoring required, there’s a complexity to it. With ours, the dropout rate in the clinical in the Phase II was minimal. I mean, I think in the Crohn’s, which is a placebo controlled randomized study, the only TL1A to have that. I think Eric talks about one or two. I mean, this is remarkably well tolerated drug.

And it has no it has very low neutralizing antibodies, which is critical in a disease area where you’re having to cycle because you don’t want to take away options from going forward. So I think we really think this is a big opportunity in IBD. But don’t forget because of this mechanism of action, as we’ve seen from other people of Tier 1a, there’s multiple indications this can go into. And I remind people, if we only were in IBD, this is transformative for Teva. But if we move into more indications, two, three, four, five, and people talk about up to 10.

If one is transformational for Teva, then the multitude, even if you could argue they only get a small percentage of whatever indication they’re going to, it’s I mean, it’s an absolute game changer.

Mark, Analyst: So talk to what’s the plan here kind of quick?

Richard Francis, CEO, Teva: So the plan is so we’re obviously partnering with Sanofi, which is excellent because they have that appetite because of the experience with Dupixent. Yes. So they know A lot

Mark, Analyst: of the market, yes.

Richard Francis, CEO, Teva: And they want to have a big blockbuster because Dupixent does come to an end at some point. So we’re going to go into Phase three this year for the IBD, and then we’re going to announce two more indications this year for other areas that we’re going to take our DUVICA2. But we also have a list of other indications that we’re going to go into. And one of the reasons for picking Sanofi is we knew this all along and we thought we don’t we want to leverage that capability, not just in development, but that capability about creating a pipeline and a product, which often people talk about. But I think we can argue Dupixent is probably one of the best at doing that.

And so we really want to leverage that. So they’re very excited. We’re excited, and we’re going to move at full speed on that.

Mark, Analyst: So the opportunity is really this is a efficacious product, but it’s just better tolerability. It’s a better safety profile than the competition.

Richard Francis, CEO, Teva: Absolutely. We’re going

Mark, Analyst: to move into all these different markets and it’s going to work in multiple markets and this is going to be a multibillion dollar

Richard Francis, CEO, Teva: Absolutely.

Mark, Analyst: And you share it with

Richard Francis, CEO, Teva: And we get 50% of the profits. So I mean, then we get the milestones. I mean, I don’t want to discount that and we have a milestone, which we by the way, we didn’t put in our guidance when you talked about people being a bit when we enter Phase III this year, we’ll get $500,000,000 from Sanofi. We didn’t put that in our guidance. It’s real money.

It’s real money. I mean, it’s real money for anybody. It’s definitely real money, but I think that’s important to just to highlight. And then

Mark, Analyst: the other product is the Dual Action Rescue Inhaler. Talk about that product a little bit, the market, obviously, there’s some competition, but what’s the hook for your product?

Richard Francis, CEO, Teva: So by the way, isn’t it great that we’ve just we’re spending I don’t know how long we’ve done here so far. All we’re talking about is innovation.

Mark, Analyst: We’re talking

Richard Francis, CEO, Teva: about Steta. We’re talking about what you said. We’re talking about We can

Mark, Analyst: talk about generics if you want. I just want to hear about this other stuff.

Richard Francis, CEO, Teva: But I want to remind you that’s because TEBA is a bi it’s AZ. There are ten million patients in The United States who the guidelines say should be on a dual action rescue inhaler. There’s only one out there, which is AZ. They’re creating the market and they’re a great respiratory company, will come in 2027. The differentiation is we will have a pediatric indication, which is twenty five percent of the population.

Mark, Analyst: So How did they miss that?

Richard Francis, CEO, Teva: Well, they’re going for the big opportunity, the big population, they get seventy five percent one could argue. So they And you’re surprised they missed anything. Are they going to do a pediatric as well? I would imagine at

Mark, Analyst: some point in May, anything. Are they going to do a pediatric as well?

Richard Francis, CEO, Teva: I would imagine at some point they may. But right now, we’re coming into the market with a simpler device and the pediatric indication. And so we come in, we follow them. You always want to be first to the market, but maybe in this situation, it’s quite nice to have somebody create the market who are good at doing that. We come in, we differentiate the pediatric indication and 25% of a very big market is very meaningful for us again.

Mark, Analyst: How is the inhaler different? You said it was a better inhaler.

Richard Francis, CEO, Teva: Yes, it’s just very simple. So ours is a I sure wish I had the demo here. Eric Hughes, our R and D, he always brings it with him to show it. It’s just a would you a click inhaler, so you open it up, inhale, and that’s it as opposed to have to time it, which the AZ-one does. So I think from a compliance point of view, obviously, we pick that because children want the simplest device, but I think adults probably will.

So we’ll probably pick up a bit of the bigger market just because we have a very simple device. And there’s another thing, we’ve been making devices for thirty years at our Western facility in New Jersey, actually it’s not in New Jersey, in The U. S. And so when it comes to devices and making the right devices, we’re really good at that because that comes a bit from our generic system.

Mark, Analyst: No, I remember all those devices and stuff. Before we leave the Innovator, we really didn’t talk about AJOVY at all, but what’s been I mean, that’s a crowded category. How have you been able to break through?

Richard Francis, CEO, Teva: I think it comes back to the Pivot’s great strategy, it’s focus. It came in, this is I’ll deliver on our growth engines, Asteado, Yuceti, and AJOVY. So we focused on it.

Mark, Analyst: Is there more resources behind it now or the past two years than the previous two years?

Richard Francis, CEO, Teva: Yes, there are more resources in some of our markets, absolutely. But there’s more focus, there’s more expectation. There’s more planning about execution and about accountability. And so because of that, I think the team in Europe and International Markets has done a great job in The U. S.

As well with growing market share. So I know it sounds really basic, but some of it’s resource, but a lot of it’s about focus and expectations, making sure we have the right plans and executing. So but AJOVI, I don’t think anybody talked about it, it did $500,000,000 last year. It’s going to do $600,000,000 this year, and that’s a product that everybody sort of discounted. So you think about

Mark, Analyst: A crowded market, you’re competing against Lilly and Amgen, and is the Amgen even

Richard Francis, CEO, Teva: And the orals as well. And the orals. And the orals. And the orals. But we’re actually, I think, bucking the trend and growing that product really well.

I think it grew 18% last year, which is a big number in a product that all. And I think that shows as much as people appreciate all those, there is a compliance benefit from having injectables still. So just once again goes back to that capability we have of commercializing product.

Mark, Analyst: So let’s talk about The U. S. Generics business. And I always think, when you’re modeling U. S.

Generics, the first thing you have to do is kind of, okay, where are the big, lumpy, big wins that you get, and I don’t know how long you get those big wins. Sometimes they’re planned for a year, sometimes six months, sometimes so just talk us through like how to think about the growth for this year, the next couple of years and break out the lumpy stuff for everybody.

Richard Francis, CEO, Teva: So firstly, I always remind people that roughly 65% of our business is ex U. S. Generics business. It’s really important. And as you saw last year that grew at mid single digit in Europe and high double digit in international markets.

That’s really important because this is a big business, right? So ex U. S, very predictable growth, steady growth, good profitability. In The U. S, you’re right, it’s lumpy because you have good products that come along and you benefit from those and then you have fallow years where you have less launches.

But we’ve stabilized that a bit in recent years from a decline and then we’ve managed to get The U. S. Back to growth. But to answer your question, how is it going to go going forward? Well, we have a big product in our generic Revlimid and that will have competition next year.

And I think and so that’s going to obviously significantly impact The U. S. Business and The U. S. Joint business and our generic business as a whole.

And so that’s one of the reasons why people are asking us about what happens in ’twenty six. And we’re saying, well, we’re going to have the Revlimid, which is going to disappear. And we’ve actually said

Mark, Analyst: You have to model it that way. I mean, if you’re going to do, I don’t know, $1,000,000,000 of Revlimid this year, next year it’s $200,000,000 like you have to model that.

Richard Francis, CEO, Teva: Exactly. We’re actually modeling it pretty much to zero. Okay. Okay. Because we’re very I don’t want to say conservative, but everything we predict, we try and predict with maybe slightly a more measured approach, so we don’t look at things going our way.

So Revlimid pretty much disappears. But as I said earlier, we’re still going to grow EBITDA. We’re still going to grow the percentage OP. And how we’re doing that? By the way, the company is there’s three things we’re doing is our revenue will continue to grow in Aesthedo, Youssefedi and AJOVY.

We also have other complex generics we’re launching. We’re launching four biosimilars as well in the next eighteen months, possibly five, both in The U. S. And another four in Europe. So our revenue is going to grow, so that helps net out.

But then from a profitability, because we want to keep growing our EBITDA, we have two important programs. One is a manufacturing of what we call a value acceleration program, which we started mid last year, and this is to reduce our cost of goods. So in the past, after the Activist acquisition, we closed 40 sites. But the sites we had to remain with, we never drove efficiencies in them. So we haven’t really reduced our cost of goods over the last number of years.

And in Generics, you

Mark, Analyst: need to reduce your cost

Richard Francis, CEO, Teva: of goods. I can’t

Mark, Analyst: believe we’re still talking about this because we feel like it was like ten years ago. I know.

Richard Francis, CEO, Teva: I know.

Mark, Analyst: With a different CEO, but Yes.

Richard Francis, CEO, Teva: So a slightly different story. So our value acceleration program, we’re going to reduce our COGS over the next three years. And then we have an organizational effectiveness program, which we’ve launched this year, which is about Teva was we never really designed Teva for what it needs to do, because we just kept adding companies to it. And so to become a biopharma company with the right capabilities in the right places, how do we do that? And this is about reducing cost by simplification.

And so those two programs, which primarily hit the cost element of it, allow us to offset all of Revlimid and allow us to drive gross margins and allow us to hit 27 target.

Mark, Analyst: Yes. So, well, I guess if you just eliminated Revlimid right now from this year, what’s kind of the growth ex Revlimid this year? Like is there growth in the business ex Revlimid?

Richard Francis, CEO, Teva: Yes. I mean, when you think about what we’re launching in both U. S. And Europe, I mean, obviously We’re

Mark, Analyst: just U. S. For a second, like just U.

Richard Francis, CEO, Teva: S. So we launched Can

Mark, Analyst: you grow without Revlimid?

Richard Francis, CEO, Teva: We can, yes, absolutely. We launched Fyctoza, we launched Oquatide, we launched many, many small molecules. So we have a number of complex generics. I think we announced two years ago, we had 13 to launch, we announced this year, we have 10 to launch over the next ten, two years at complex generics. But we launched all the other generics as well.

And don’t forget, we’re improving our manufacturing base because there are some products we can sell a lot more of. We just have constrained lines. So there’s products which even now when I look on the metrics, we can sell more of. And we’re unconstraining those lines as we speak because that’s part of the value acceleration program. So yes, we can.

We just got to keep launching those complex generics and that’s where we need to get better.

Mark, Analyst: And is the pipeline there?

Richard Francis, CEO, Teva: The pipeline is there. For ’26,

Mark, Analyst: for ’27.

Richard Francis, CEO, Teva: We’re not short of pipeline. I mean, the one thing about you need as probably you know from the time you did cover Teva, you need to have great commercial market go to market model. You need to have a great pipeline and great manufacturing. We have a great pipeline. We just didn’t launch it on time.

So we spent a lot of effort in the last two years simplifying our processes, focusing on the high value generics and making sure we get the right file into the FDA, get the right CapEx in manufacturing so we can launch on time. And by the way, we haven’t cracked this. This is not a journey you do in twenty four months, but we’ve significantly improved it and we’ll keep improving it. So pipeline, we have a big pipeline. Now it’s about getting to the market on time optimally.

Mark, Analyst: It also sounds like behind the scenes if you excluded Victoza not Victoza

Richard Francis, CEO, Teva: Revlimid.

Mark, Analyst: Revlimid and you look at kind of the core of your generics business, the gross margin is increasing behind the scene. That’s what it sounds like that’s going on.

Richard Francis, CEO, Teva: Well, that’s our aim, right? I mean, part of that is about manufacturing efficiencies that’s going to drive gross margin. But are

Mark, Analyst: we seeing that this year or is that you’re saying maybe next year or the year after?

Richard Francis, CEO, Teva: See that? It depends on the product mix. As we launch products that I mentioned, the Victozas and Ecretas, obviously, they have a high gross margin as to some of our biosimilars. But the manufacturing is a core element to make sure that base business we have, we’re continuing improving or at least maintaining the gross margin. So those things are in place.

And what excites me is we don’t have those all up and running at real efficiency yet, but we will That’s okay. That’s to come. That’s still to come.

Mark, Analyst: That’s to come, yes.

Richard Francis, CEO, Teva: So I think you don’t complete a transformation of the turnaround in twenty four months. I think we’ve done a huge amount, but there’s still good things to come, which is our one line.

Mark, Analyst: So 65% of the generics business, which is ex U. S, which is less lumpy, just talk about what is the natural growth rate that you see for the next year, 2%, three %, four %, like how do we is this a 2% to 4% grower? Like what’s natural?

Richard Francis, CEO, Teva: Yes. So we’ve I would say it’s that. It’s sort of 2% to 41% and I Europe because Europe is so big. It’s such a big business. And we’re number one in most markets.

So when you have, say, a bigger base, we launched pretty much every product. You can’t really change the trajectory. So I think two to four is a good we’re looking at. Now we’ve outperformed that the last two years. And so your question could be as well, we outperformed it, can’t you keep that going?

Part of that is we’ve started to deal with the fundamentals around supply chain and manufacturing. So we had some constrained lines and we managed to release that. And sometimes you just get more launches in one year. But I think a two to four is a really good forward CAGR to look at, which is really healthy first because it’s very profitable, throws up a lot of cash, which helps us pay down debt, but also helps us invest in our innovative portfolios.

Mark, Analyst: Yes. Yes. Talk about, I guess, just our last kind of time here with business development and how you think about what you’re doing here. I mean, because you got to pay off the debt. Yes, true.

We’ve got this innovative pipeline we have to invest in. What’s going on in business development? How are you thinking about that?

Richard Francis, CEO, Teva: So despite our balance sheet, our balance sheet is improving so dramatically, so quickly. As you can see, we’ve had all the rating agencies improve the outlook last year for us. And our commitment to get to net two times net debt to EBITDA, we’re well on track to do. And we’ll do that before 2027. Yes.

So then business development, we always knew this day would come. So we’ve been really active in business development, looking at opportunities, particularly in euro, because that’s where our capability and that’s where we have room. I mean, our commercial team is so good. I want to give them more There’s a

Mark, Analyst: lot of U. S. Companies here who don’t know what to do OUS. They’re looking for partners.

Richard Francis, CEO, Teva: Well, they can send them my way then. But at the same time, what I would say is so open for business, but capital allocation is really important at Teva. And we have, as you said, a great pipeline. We have great products. We have Asteta.

We have Youssetti. We have Lanzarbeit. So whatever we bring in from the outside, better deserve that capital because we have a lot of organic growth potential.

Mark, Analyst: Is it going

Richard Francis, CEO, Teva: to be

Mark, Analyst: early stage or are they going to be later stage?

Richard Francis, CEO, Teva: We’re going to later stage. We don’t want to take on any risk, right? So we want things that are

Mark, Analyst: Proven mechanisms, proven to follow our strategy kind of thing?

Richard Francis, CEO, Teva: Yes. And we’re not going to have a moonshot and hope for the best. Once again, don’t allocate capital to something like that when we have really good returns within the company organically. So that’s how we think at late stage, we’ll be able to put commercial team behind it accreted to the top line and the bottom line relatively quickly and continues on our innovative journey.

Mark, Analyst: So neuroscience is still an area of focus for Immunology?

Richard Francis, CEO, Teva: Yes. I mean, the one thing about immunology, we’ve obviously talked about TL1 or 2V2, which can go to multiple indications. So that’s sort of pretty big, but we have an IL-fifteen, anti IL-fifteen behind it, which also we’re in two indications already. So immunology, yes, but we have quite a big pipeline already. Yes.

Good. Thank you.

Mark, Analyst: Thanks for joining us. Good to

Richard Francis, CEO, Teva: see you again. Good to see

Mark, Analyst: you again, too.

Richard Francis, CEO, Teva: Thanks for your time.

Mark, Analyst: Good luck with everything.

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