Teva Hits Highest Since 2018 as 3Q Revenue Beats Estimates

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00:00total revenue last quarter coming in at 4.48 billion dollars that was a beat when it comes

00:06to the consensus figure unpack that a little bit for us where exactly is the growth coming from

00:11and how sustainable is it well hi katie and thanks for having me on um yeah we had a good quarter

00:18three and as you say 4.5 billion up three percent but i think the detail uh is where i think the

00:25excitement is uh our innovative portfolio which is something that's relatively new to teva you know

00:31when i came on board three years ago it was a generics company and now we're transitioning

00:35it to a world-class biopharma company and to do that we need to have an innovative branded portfolio

00:41and that was up 33 percent uh and it grew and it's now total over 800 million for q3 and that was led

00:48by estero up 38 percent uh a treatment for tired of dyskinesia and you said you have 24 percent

00:54between for schizophrenia and then ajovia up 19 percent so good growth across the portfolio

00:59and i think that's what excited people now they really see this transition of the company and and

01:04and although our generics business was up two percent what they're seeing now is this change

01:09in portfolio is changing our gross margin dynamics which of course feeds down to the ebitda and to the

01:14eps and so you know the opportunity to grow value for shareholders at teva i think is becoming clearer

01:20for investors so i think that's one of the significant things the other thing that is

01:24worth noting is we did announce that we have concluded our negotiations with ira and cms

01:30right guard to esteto and that was in line with of modeling that we set out in 2023 when we gave

01:37guidance of a two and a half billion revenue for 27 and we now committed with confidence to the fact

01:42that we can hit that two and a half billion and we can hit peak sales of over three billion so i think

01:47that removed an uncertainty from the stock as well as with all those tailwinds that i just spoke about

01:52i think that's probably why we are where we are today right yeah i'm glad you brought up esteto and

01:57certainly when it comes to those price negotiations i know that was a hot topic on the call you talk

02:02about this transition that you've been navigating the company through when you think of being primarily

02:07known as a generics companies into what you're describing of course when it comes to biosimilars and

02:12biopharmaceuticals and branded medications there i take a look at some of the details of your report

02:17i know that sales of generics which is still your core business missed estimates there i mean is that

02:23a ship that you are focused on writing having those sales come back for the generics business maybe in

02:30line with expectations are you really focused more on the growth areas such as branded medications

02:35well you know we're doing both but what i'm what i think people we try to make them think about a

02:42generics business it's a big business and we don't look at it on a quarterly basis or even a yearly basis

02:47we look at on a two-year kagar and the reason why we ask people to look at it over two years is because

02:52some years we have more launches than others because obviously drugs lose their pattern and we can't

02:57predict exactly equally when that's going to happen and so we get you know some launches in one year and

03:02less launches in the other and so because of that we say look at over two-year kagar if you look at how

03:07our generics business has performed the last three years it's actually outperformed expectations

03:12considerably what we've said going forward is that our generics business will probably do a two percent

03:17kagar going forward because it's a very big business but that is a good return on on that business

03:23being such a size it is but as our innovative business continues to grow at the speed it is as a

03:28company we are changing our profitability we're changing our sustainability and the ability to

03:34keep these results going forward so i think that transition our generics business is helping fuel it

03:40because obviously we use the revenue and the cash that those throws off to fuel our pipeline now our

03:44pipeline also created quite a bit of excitement on our q3 earnings because we have a late stage

03:49innovative pipeline so as much as our portfolio has grown at 33 currently that's on the market we're

03:55going to be adding a long-acting treatment for schizophrenia next year we'll be adding a

03:59treatment for asthma the year after that and then we'll be adding a treatment for a rare disease drug

04:04sma the year after that and then the year after that we'll be adding a treatment for using and cd so

04:09we have a lot coming through and i think that's the way to think of the company in its totality

04:13and so i think when it comes to generics it has a job to do and i think growing at two percent

04:18over those multiple year period will be a good uh way of modeling the company well richard i did want to

04:23ask about one of those generic drugs you launched the first u.s generic glp-1 indicated for weight

04:30loss how much weight are you guys putting behind that effort because it is a very competitive space

04:37here glp-1s it is indeed and you know we do see significant opportunity at the same time when this

04:44sort of discussion started three years ago with regard to the glp-1s firstly we did launch victos and

04:49we have launched saxender this year so we're in that first genericized market but obviously people

04:54are talking about the big glp-1s which will be coming off patent in the next few years and what

04:59we've decided to do is we've partnered with people on those to make sure we can commercialize those

05:04products but we didn't invest in manufacturing capability to do that we let other people do that

05:10so as much as we see it as a significant opportunity we also understood the uncertainty around

05:14that area around pricing around volume and things like that so it will be something that helps drive

05:20our growth but it won't be a significant growth driver because we have a broad range of generic

05:26products coming to the market and we have over 10 biosimilars coming to the market in the short medium

05:30term so we have a lot of other things that are going to drive our generic growth outside of the glp-1s

05:35although we will participate in that market yeah appreciate the context there when it comes to glp-1s

05:41a hot topic of conversation something else i did want to get your uh thoughts on richard and this

05:46is something you and i have spoken about before is the sale of your raw ingredients business you

05:51announced today that that sale process it actually fell through you were in talks with an unnamed buyer

05:57originally i know that you had said that uh this would go through by the end of the year so bring us

06:03up to speed there i mean are you trying to re-engage with any other potential buyers is the uh active

06:08ingredients business still for sale at this point so yeah there's a few questions within that question

06:14so let me unpick them and hopefully i can do uh justice but so firstly we are still uh wanting to

06:21divest the business we think it's a very good business it's the number two api business in the

06:25world and it's and it's not based in china or india so that creates a real differentiation particularly

06:31with the geopolitical situation that i think has been discussed the last six to 12 months so

06:37we see it as real value that said as we divest this business it's not just about divesting it

06:42and obviously getting uh uh an amount of money for that this is a partner we have to work with for

06:47the next 10 15 years because it will supply us with api and so we need to make sure that the service

06:53agreements we have with that part are the ones that benefit teva over the short medium and long term

06:58um and so because of that you know we want to make sure this deal is right this deal is right

07:01for us this deal is right for our shareholders and um we're in a position to say that we don't think we've got

07:06there right now uh we do think the market's changed we do think you know where we are as

07:11a company we strengthen our ourselves as a company so our need to do a sale in a certain time period has

07:17diminished and so we can be more thoughtful about this and make sure we get the deal that's right

07:21for teva and right for our shareholders uh but it's still an attractive business but strategically it's

07:26not one we're going to keep long term because as we transform into this by a pharma company it's not

07:30something that will be strategically aligned to that all right

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