Teva’s branded drugs spark investor optimism
The pharmaceutical company recorded its 11th consecutive quarter of growth, with revenue of $4.5 billion, thanks to sales of its brand-name drugs Austedo, Ajovy and Uzedy, which jumped 33%.
Investors in Teva have long forgotten the days when the company had the power to “move” the local stock exchange, a time, up until about ten years ago, when Teva was known as “the people’s stock.”
On Wednesday, that phenomenon returned after a long hiatus. Leading indexes on the Tel Aviv Stock Exchange had been trading lower until 2:00 PM, when the pharmaceutical company released its strong third-quarter financial results. The report boosted Teva’s stock and reversed the direction of trading across the entire exchange.
Teva ended the day with a 17.2% gain, the largest increase on the exchange, on a turnover of 417.6 million shekels, also the highest of the day, nearly four times the average of the past 90 trading sessions. Although Teva has yet to reclaim its position as the largest company on the local exchange, it overtook Bank Hapoalim, reaching a market capitalization of roughly 90 billion shekels.
What prompted the surge in investor confidence? The results themselves, which exceeded expectations and marked Teva’s 11th consecutive quarter of growth. Revenue totaled $4.5 billion, slightly above analysts’ forecast of $4.3 billion, representing a 3% increase compared to the same period last year.
On the operating side, Teva reported a profit of $882 million, compared to a loss of $51 million in the same quarter last year, which had included legal expenses and write-offs. The operating profit margin was 19.7% for the quarter, rising to $1.2 billion, or 28.9% of revenue, when excluding one-time items. Net income reached $910 million, or 78 cents per share, 11 cents above expectations.
Importantly, analysis of growth sources indicates that CEO Richard Francis’s strategy is gaining traction, with the company increasingly emphasizing branded drugs over generics.
Teva’s three proprietary drugs - Austedo, Ajovy, and Uzedy - grew 33% in the third quarter, generating $830 million in revenue. This growth in higher-margin products was a key factor in the improvement of overall profitability.
Austedo, Teva’s leading drug for movement disorders caused by neurological diseases, generated $618 million in revenue, a 38% increase compared to the prior year. Following this strong performance, Teva raised its annual revenue forecast for Austedo by $50-100 million, now expecting $2-2.1 billion in 2025.
This development was particularly significant because Austedo was the only drug for which Teva had to negotiate a price reduction with U.S. health insurers under the Inflation Reduction Act. Investors were reassured by Teva’s confirmation that these negotiations concluded without impacting its revenue forecast, which anticipates $2.5 billion from Austedo next year and $3 billion at peak sales.
Ajovy contributed $168 million in revenue, up 19%, with expected annual sales of $630-640 million. Uzedy, Teva’s newest branded drug for schizophrenia, earned $43 million in the quarter and is projected to generate $190-200 million in 2025, its first full marketing year. Teva anticipates Uzedy could eventually reach $1.5-2 billion in annual revenue.
Upon the release of the results, Francis said:
“Our innovative portfolio driving the 11th consecutive quarter of growth in the third quarter reflects the accelerating momentum of our transformation and the strength of our innovation-led Pivot to Growth strategy. Our key growth drivers—particularly our innovative medicines—delivered a 33% increase in local currency, underscoring their impact on both patient outcomes and our financial performance. As we continue executing our strategy, we remain firmly on track to reach our 30% non-GAAP operating profit margin by 2027 and around $700 million of net savings target.”
Over the past two quarters, Teva has undertaken restructuring, including laying off 8% of its workforce, resulting in $190 million in expenses so far this year.
In light of these results, Teva slightly updated its guidance for 2025. Revenues are now projected at $16.8-17 billion, with operating profit (excluding one-time items) of $4.4-4.6 billion and cash flow of $1.6-1.9 billion. Growth is expected to come entirely from branded drugs, with generics remaining flat. The forecast does not include potential impacts of new tariffs but does account for $250 million in expected revenue from collaboration agreements with Sanofi.
Teva’s pipeline also sparked optimism. CEO Francis estimated the total annual sales potential of drugs in advanced development at $11 billion. Olanzapine, for schizophrenia, is expected to receive FDA approval next year. Alongside Uzedy, these drugs could address 80% of the 4.7 million schizophrenia patients in the U.S. and Europe. Duvakitug, for intestinal diseases such as Crohn’s, may launch in 2029 and is projected to achieve annual sales of $5 billion.
Teva signals that the days of struggling with debt and slow growth are behind it. CFO Eli Kalif suggested the company could begin implementing shareholder value initiatives after 2027. He also noted a shift in the investor base from hedge funds to more stable institutional investors, who anticipate dividends or acquisitions.
On the less positive side, exclusive talks to sell the TAPI active ingredients division concluded without results. Revenue for the division fell 4% to $125 million, though Teva attributes this to seasonal trends and is continuing the sale process.
