Q1 2025 Teva Pharmaceutical Industries Ltd Earnings Call

Christopher Stevo: Hello and welcome to the Q1 2025 Teva Pharmaceutical Industries Ltd earnings conference call. My name is Alex and I'll be coordinating the call today.

Hello, and welcome to the Q1 2025, Teva Pharmaceutical Industries Ltd earnings Conference call.

Alex: My name is Alex and I'll be coordinating the call today.

Operator: If you'd like to ask a question once the presentation has finished, please press star followed by one on your telephone keypad.

Alex: If you'd like to ask a question about the presentation has finished please press star followed by one on your telephone keypad.

Christopher Stevo: And I hand it over to your host, Christopher Stevo, Head of Investor Relations to begin. Please go ahead. Thank you, Alex.

Christopher Steve: Your host Christopher Steve <unk> head of Investor Relations to begin. Please go ahead.

Alex: Thank you Alex good morning, everyone.

Richard Francis: Good morning, everyone.

Richard Francis: In the course of this call, we're going to be making some forward-looking statements, and any statements we make are valid only as of today, and we undertake no obligation to update them in the future. And if you have any additional questions on our forward-looking statements, you can see the relevant sections of our SEC filings under Forms 10-K and 10-Q.

Alex: In the course of this call, we're going to be making some forward looking statements and any statements. We make are valid only as of today and we undertake no obligation to update them in the future and if you have any additional questions on our forward looking statements you can see the relevant sections of our SEC filings and our forms 10-K.

Alex: And 10-Q.

Richard Francis: Additionally, during today's call, all comments made to revenue growth year-over-year will be in local currency terms unless otherwise noted by one of us.

Alex: Additionally, during today's call all comments made to revenue growth year over year.

Alex: We'll be in local currency terms, unless otherwise noted by one of us.

Richard Francis: And with that, I will turn it over to Richard Francis. Thank you, Chris, and good morning and good afternoon, everybody. Thank you for joining the call.

Alex: And with that I'll turn it over to Richard Francis.

Richard Francis: Thank you, Chris and good morning, and good afternoon, everybody. Thank you for joining the call.

Richard Francis: Looking forward to talking to you through this agenda today where myself, Eric Kalif, my CFO, and Eric Hughes, the head of R&D. We're going to go through the business update for Q1, but also we're going to give you an insight into the path towards our 2027 targets and the confidence and the high level of confidence we have in achieving them. Now, as you remember, this all started in 2023 with the pivot to growth strategy being launched, and this was to return the company to growth. And as you can now see, this is our ninth consecutive quarter of growth.

Richard Francis: Looking forward to talking to you through this agenda today or myself, Eric lead my CFO and I are accused the head of R&D.

Richard Francis: Go through the business update for Q1, but also we're going to give you an insight into the path towards our 2027 targets and the confidence and the high level of confidence we have in achieving those.

Richard Francis: Now as you remember this.

Richard Francis: We'll start to get into 2023 with the pivot to growth strategy being launched and this was to return the company to growth and as you can now see this is our ninth consecutive quarter of growth.

Richard Francis: And this has been driven by executing on our pillars. Deliver on our growth engines, step up innovation, sustain the generic spare house, and focus the business. And as you'll see throughout the presentation, delivering on our growth engines, we continue to perform strongly with Esteto, Ajovi, and Yaceti.

Richard Francis: And this has been driven by executing on all pillars and deliver on our growth engine step up innovation.

Richard Francis: Sustained the generics powerhouse and focus the business and as you'll see throughout the presentation delivering on our growth engines. We continue to poll performed strongly with instead of Adobe and <unk>.

Richard Francis: Eric will give you some insight into the progress we've made on our pipeline and why we're excited about it. The filing of Alanzapine in the second half of this year and the progress to the Phase 3 trial to do the cure. You'll see once again, our generics business continues to grow and that will soon be supported by our biosimilar launches, which I'll talk through later in the presentation.

Richard Francis: Eric will give you some insight into the progress we've made on our pipeline and why we're excited about it.

Richard Francis: Finding of Olanzapine in the second half of this year and the progress to the phase III trial for <unk> for Q2.

Richard Francis: You will see once again, our generics business continues to grow.

Richard Francis: And that will soon be supported by our Biosimilar launches, which I'll talk to later in the presentation.

Richard Francis: We're constantly focused on capital allocation and allocating our capital to the highest areas of return to drive growth.

Richard Francis: We are constantly focused on capital allocation and allocating our capital to the highest areas of.

Richard Francis: If you turn to drive growth.

Richard Francis: As for TAPI, I can tell you that we are still in advanced discussions and I can't comment further until we make an announcement.

Speaker Change: <unk> I can tell you that we are still in advanced discussions and I can't comment further until we make the announcement.

Richard Francis: So now moving on to the results. As you can see, revenue was up 5% to $3.9 billion, adjusted EBITDA was up 3% and our non-GAAP EPS was up to $0.52, up 8%. Good free cash flow for the quarter and our net debt EBITDA is just above 3. Now to move on to the next slide, as you can see. And I've mentioned it already, but I will mention it again. This is our ninth consecutive quarter of growth. really emphasising the fact that this strategy, the focus and the prioritisation we've put around innovative brands is driving growth on a ninth consecutive quarter.

Richard Francis: So now moving on to the results.

Richard Francis: As you can see revenue was up 5% to $3 9 billion adjusted.

Richard Francis: Adjusted EBITDA was up 3% and our non-GAAP EPS was up to 52.

Richard Francis: Up 8%.

Richard Francis: Good free cash flow for the quarter and our net debt to EBITDA is just above three.

Richard Francis: Yeah.

Richard Francis: Now to move on to the next slide as you can see.

Richard Francis: And I mentioned, it already but I will mention it again this is our ninth consecutive quarter of growth.

Richard Francis: Really emphasizing the fact that the <unk>.

Richard Francis: <unk> at the focus and the prioritization, we've put around innovative brands is driving growth.

Richard Francis: On our ninth consecutive quarter now, let me go into a bit more detail as to what is driving this.

Richard Francis: Now, let me go into a bit more detail as to what is driving this. I think this is a really important slide and a really important time for Teva to show this slide. What you'll see is the growth was spearheaded by an innovative brand. They reached 589 million sales. That's a 45% increase over last year. And this was led by Esteto growing at 39% globally, Jovi up 26% globally, and Yoseti doubling to 39 million. Now I'm pleased to show that our generics business continues to grow in this quarter up 3% and we have another quarter of growth for TAP.

Richard Francis: And I think this is a really important slide and a really important time for Teva to show this slide.

Richard Francis: What youll see is the growth was spearheaded by innovative brands.

Richard Francis: They reached 589 million sales, that's a 45% increase over last year.

Richard Francis: And this was led by a steady growing at 14, 39% globally Adobe up 26% globally.

Richard Francis: And you said it.

Richard Francis: Doubling to $39 million.

Richard Francis: Now I'm pleased to say to show that our generics business continues to grow in this quarter up 3% and then we have another quarter of growth for choppy.

Richard Francis: But let me double click now and go into some of the detail here.

Richard Francis: But let me double click now go into some of the detail here so starting with this setup.

Richard Francis: So starting with Estetica. really good performance across the world, but this is primarily led by the U.S. And as you can see, the U.S. business is up 40%. So congratulations to the team here.

Richard Francis: Good performance across the world, but this is primarily led by the U S. So as you can see the U S business is up 40% so congratulations to the team here.

Richard Francis: And this is really driven by two factors. First, the combined effects continues to grow at TRX, but also the continued penetration of Estetto XR. And as you can see, we now have more than 60% of new patients on Estetto XR. Now the benefits are clear, and I think Eric and I have talked about those quite a lot. It reduces pill burden, it creates an optimal dosing, and subsequently leads to better patient adherence and compliance. And as you can see here, the U.S. milligram's growth is up 38%.

Richard Francis: And this is really driven by two factors first the combined effects of continues to grow at <unk>, but also the.

The continued penetration of <unk> XR and as you can see we now have more than 60% of new patients on <unk>.

Richard Francis: Now the benefits are clear and I think Eric and I have talked about those quite a lot and reduces pill burden.

Richard Francis: Optimal dosing and subsequently leads to better patient adherence and compliance and as you can see here U S milligrams growth is up 38%.

Richard Francis: And because of this good start to the year, we are narrowing the guidance here and just raising the bottom end by $50 million to $1.950 billion for the year.

Richard Francis: And because of this good start to the year, we are narrowing the guidance here, but just raising the bottom end by $50 million to 1.9501 billion for the year.

Richard Francis: Now to move on to Yosette. The TRX continues to grow at 177%, and we have gained over 60% of the share of the Risperidone long-acting market. And what this means is going forward, we need to start to compete more broadly in the long actin market. So that's including patients not treated with the oral or the long actin respirator. Now we believe we have confidence in doing this because of the strong product profile we have that Eric and I once again talk a lot about. The fact that you can reach therapeutic dose within 24 hours without supplementary therapy is a very big positive for physicians as well as the subcutaneous needle and the fact that it doesn't have to be stored in a So good growth there from your study.

Richard Francis: Now to move on to your study.

Richard Francis: You said he continues with its strong momentum.

Pleased to show that the <unk> continues to grow and up 177%. Obviously this was on a small base, but I think what is pleasing to see here is that we've now gained over 60% of the shaft there spirit long acting market.

Richard Francis: Now what this means is going forward, we need to start to compete more broadly in the long acting market. So that's including patients not treated with the oral or the long acting with spirit.

Speaker Change: Now we believe we have confidence in doing this because of the strong product profile, we have that Eric and I. Once again talk a lot about the fact that you can reach therapeutic dose within 24 hours without supplementary therapies is a very big positive for physicians as well as the subcutaneous needle and the fact that it doesn't have to be stored in our fridge.

Speaker Change: So good growth debt from your study.

Richard Francis: Now, moving on to Ajovi. Ajovi up 26 percent, reconfirming our guidance for 600 million. And once again, what pleases me about this is it shows that we can execute on our innovative brands globally, not just in the U.S., and good growth we're seeing in Europe and good growth in international markets. And some nice data points here that I just want to reference. We are the number one preventative CGRP injectable in the top U.S. headache centers. and we are the number one preventative CGRP and injectables in 28 markets across Europe and internationally. So these three products really show our ability to drive innovative brands when we bring them to the market.

Speaker Change: Now moving onto Jovi, JV up 26% Reconfirming, our guidance for $600 million.

Speaker Change: Once again, what pleases me about this is it shows that we can execute on our innovative brands globally not just in the U S and good growth we've seen in Europe and good growth in international markets and some nice data points here that I just want to reference we are the number one preventative <unk> injectable in the top U S headaches.

Centers.

Speaker Change: And we are the number one preventative C J P an injectable <unk>.

Speaker Change: <unk> in 28 markets across Europe and international.

Speaker Change: So these three products really show our ability to drive innovate innovative brands when we can bring to the market. So congratulations to all the people they're responsible for this.

Richard Francis: So congratulations to all the people that are responsible.

Richard Francis: Now as I move on to our generics business. As you can see, we continue to grow our genomics business up 3% year-on-year and as you can see, we grew this across all of our regions, 5% in the US, 1% in Europe and 2% in international markets. Now, this is a slower growth than we've had in previous years. And this was really because of the prior comparisons where we had a number of launches across all of our markets. And in Europe, we had a number of tenders which were not repeated in Q1. We also saw the slowdown in inflationary in many of our international and European markets that has also impacted.

Now as I move on to our generics business.

Speaker Change: As you can see we continue to grow our generics business up 3% year on year.

Speaker Change: And as you can see we grow this grew this across all of our regions, 5% in the U S. One in Europe and two in international markets now.

Speaker Change: Now this is a slower growth than we've had in previous years.

Speaker Change: And this was really because of the prior comparisons while we had a number of launches across all of our markets and in Europe. We had a number of tenders, which will not be repeated in Q1. We also saw the slowdown in inflationary.

Speaker Change: In many of our international and European market. So that has also impacted us.

Richard Francis: Now, what I'd like to point out, Q1 represents the high watermark, likely high watermark for 2025, so just factor that in as you consider our generics business going forward.

Speaker Change: Now what I'd like to point out Q1 represents the high watermark likely high watermark for 2025, So just factor that in as you consider our generics business going forward.

Richard Francis: Now I'd like to take a moment to talk about biosimilar business and we've talked about this. from a point of view that we have a portfolio strategy play and we're going to bring multiple products to the market and we're starting to see that happen now. As you can see in Q1, we launched two products in the United States by a similar Qumiran, by a similar Solaris. So congratulations to the team for bringing those to the market. But in 25 to 27, we have another five products to launch. And some of these, depending on FDA approval, could actually come in 2025.

Speaker Change: Now I'd like to take a moment to talk about our Biosimilar business, we talked about this.

Speaker Change: From our point of view that we have a portfolio strategy play and we're going to bring multiple products to the market.

Speaker Change: And we're starting to see that happen now as you can see in Q1.

Speaker Change: We launched two products in the United States Biosimilar Humira Biosimilar Soliris.

Speaker Change: So congratulations to the team for bringing those to the market, but in 25 to 27, we have another five products to launch and some of these depending on FDA approval could actually come in 2025.

Richard Francis: But this just emphasizes the fact that we have a number of portfolio biosimilars coming to the market. And this gives us a real chance to grow our biosimilar business at a faster rate than we have in the past.

Speaker Change: But there's just emphasizes the fact that we have a number of portfolio.

Speaker Change: Biosimilars coming to the market and this gives us a real chance to grow our biosimilar business at a faster rate than we have in the past.

Richard Francis: Now I want to take a bit of time. That's Q1 and I focused on driving the business in Q1 and giving you an outlook on that.

Speaker Change: Now I want to take a bit of time, that's Q1 and are focused on driving.

Speaker Change: The business in Q1, and given your outlook on that now want to take a moment to talk about why we are so confident about hitting our 2027 targets and this really comes down to two areas of focus one is how do we keep driving the top line.

Richard Francis: Now I want to take a moment to talk about why we are so confident about hitting our 2027 targets. And this really comes down to two areas of focus. One is how do we keep driving the top line? and the second is how do we manage our OPEX and capital allocation. So let me start with the first one. So as you can see here, we have multiple growth drivers for 2027. Touching upon some of the brands I've just spoken about, in our innovative portfolio of Estetto and Ajovi, we see continued growth in these over this period, and we're confident about hitting $2.5 billion of sales for Estetto in 2027.

Speaker Change: And the second is how do we manage our opex and capital allocation. So let me start with the first one.

Speaker Change: So as you can see here, we have multiple growth drivers for 2027.

Speaker Change: You bought some of the brands I've just spoken about.

Speaker Change: Innovative portfolio of instead of an Adobe we see continued growth in these over this period and we are confident about hitting $2 $5 billion of sales.

Speaker Change: The first step in 2027.

Richard Francis: But this will also be supported by Yosetti, as you've seen, good growth with Yosetti, and that will be joined by Alanzapine in the second half of next year as that comes to the market. So we'll have a nice long-acting franchise in schizophrenia. Now, as we think about our generics business, we think about that being stable from 25 to 27. And in our generics business, we include OTC and biosimilars. But just like to point out, that means we'll be offsetting the generics revlimid impact by 2027. And then if you factor in our legacy innovative brands like Paxson and Bendeca, we anticipate they will continue their slow decline.

Speaker Change: But this will also be supported by your city as you're seeing good growth with <unk> and that will be joined by Olanzapine in the second half of next year is that come to the market. So we'll have a nice long acting franchise in schizophrenia.

Speaker Change: Now as you think about our generics business, we think about that being stable from 25 to 27.

Speaker Change: And our generics business, we include OTC and Biosimilars, but just like to point out that means we'll be offsetting the generics revlimid impact by 2027, and then if you factor in our legacy energy brands like Pac sentiment Deca, we anticipate they will continue their slow decline decline.

Richard Francis: What is worth pointing out on this slide is that this growth is predominantly driven by our innovative portfolio, which is a high margin business.

Speaker Change: What is worth pointing out on this slide is that this growth is predominantly driven by our innovative portfolio, which is a high margin business.

Richard Francis: Now, if I move on to the next slide, I'd like to talk to you about how we're thinking about capital allocation and operations.

Speaker Change: Now if I move on to the next slide I'd like to talk to you about how we're thinking about capital allocation and Opex.

Richard Francis: But this is more fundamental than this. This is really about transforming Teva from a pure-play generics company into a leading biopharmaceutical. I'm going to do this by primarily focusing on three areas. First is modernizing the organization, leveraging our regional hubs, driving more automation, reducing layers. And then prioritizing resource allocation, reducing costs in functions like GNA and TGO, and making sure we allocate them to the growth drives I just mentioned on the previous slide. And then optimizing our external spend. We have a lot of suppliers, and we have an opportunity to consolidate those and really optimize our procurement.

Speaker Change: But this is more fundamental in this this is really about transforming teva from a pure play generics company into a leading biopharmaceutical company.

Speaker Change: I'm going to do this by primarily focusing on three areas.

Speaker Change: First is modernizing the organization.

Speaker Change: Leveraging our regional hubs driving more automation reducing layers.

Speaker Change: And then price prioritizing resource allocation, reducing costs and functions like G&A, and <unk> and making sure we allocate them to the growth drivers I just mentioned on the previous slide.

Speaker Change: And then optimizing all external spend we have a lot of supplies and that we have an opportunity to consolidate those and really optimize our procurement.

Richard Francis: Now when we do that we're going to end up with in 2027 700 million of net savings. and that is after the reinvestment in our growth portfolio that I've just mentioned and our pipeline while offsetting the generic Revlimid profit loss in 2026. So as you can see, we have a very clear path to achieving 30% operating margin in 2027.

Speaker Change: Now when we do that we ended up with in 2027 $700 million of net savings and that is after the reinvestment in our growth portfolio that I've, just mentioned and our pipeline while offsetting the generic revlimid profit loss in 2026. So as you can see we have a very clear path to achieve.

Speaker Change: Having 30% operating margin in 2027 now.

Eliyahu Kalif: Now with that, I would like to hand over to Eliyahu Kalif, who's going to walk you through the financials and a bit more detail on that 30% operating margin. Over to you, Eliyahu. Thank you, Richard, and good morning and good afternoon to everyone.

Speaker Change: Now with that I would like to hand over to Alexey <unk>, who is going to walk you through the financials in a bit more detail on that 30% operating margin, which you Ali.

Alexey: Thank you Richard and good morning, and good afternoon to everyone.

Eliyahu Kalif: I really would like to start with the following key messages that I believe are important and I would like you to take away from our call today. Firstly, Q1 came with a solid performance demonstrating our constant execution. Secondly, our continued improvements on strengthening our balance sheet and more specifically our working capital and leverage. Third, our confidence in the targeted programs to deliver approximately $700 million of net savings in line with our Pivotal Growth Strategy, solidifying our 30% operating profit margin targeted by 2027. And lastly, the new confirmed U.S. tariffs have been absorbed within our full year updated guidance for 2025.

Speaker Change: I really would like to start with the following key messages.

I believe are important and I would like you to take away from our call today.

Speaker Change: Firstly Q1 came with a solid performance demonstrating our constant execution.

Speaker Change: Secondly, our continued improvement on threatening our balance sheet and more specifically, our working capital and leverage.

Speaker Change: Third our confidence in the targeted programs to deliver approximately $700 million of net savings in line with our pivot to growth strategy solidifying our 30% operating profit margin targeted by 2027 and lastly, the new confirmed <unk> have been absorbed within our full year.

Speaker Change: Year updated guidance for 2025.

Eliyahu Kalif: Now moving to slide 18 to review our Q1 2025 financial results. Starting with our GAP performance, please note that throughout my remarks, I will refer to revenue growth, mainly in local currency terms, unless I specify otherwise. Q1 was financially solid, with a revenue of approximately $3.9 billion, growing at 2% in U.S. dollars or 5% in local currency, net of negative FX impact of approximately $100 million after edging. This is our ninth consecutive quarter of growth since we established our Pivotal Growth Strategy in May 23. We saw a strong momentum in our innovative products, particular on Osteto, Ajovi, and Uzeti.

Speaker Change: Now moving to slide 18 to review our Q1 2025 financial result.

Speaker Change: Starting with our GAAP performance.

Speaker Change: Please note that throughout my remarks, I will refer to revenue growth mainly in local currency terms unless I specify otherwise.

Speaker Change: Q1 was financially solid with revenue of approximately $3 9 billion growing at 2% in U S dollars or 5% in local currency net of negative FX impact of approximately $100 million after hedging.

Speaker Change: This is our ninth consecutive quarter of growth since we established our pivot to growth strategy in May 23.

Speaker Change: We saw a strong momentum in our.

Speaker Change: Innovative products particular on instead of Adobe and use Eddie for generics, we saw broad based growth across all the regions.

Eliyahu Kalif: For generics, we saw broad-based growth across all the regions. gap net income and earnings per share were $240 million and $0.18 respectively.

Speaker Change: GAAP net income and earnings per share were $240 million and 18, respectively. Now, let's look on our non-GAAP performance. Our non-GAAP gross margin grew by 140 basis points year over year to 52, 8%.

Eliyahu Kalif: Now, let's look on our non-gap performance. Our non-gap gross margin grew by 140 basis points year-over-year to 52.8%. The main drivers of this increase were positive shift in the portfolio mix, especially of steadily strong continued growth, partially offset by negative FX impact. Our gross margin in Q1 was slightly better than our normal seasonality and our internal expectation for Q1, benefiting from favorable timing of shipments and improved product mix towards the end of the quarter. About two-thirds of that gross margin improved flow through to operating margins, which grew by 100 basis points year-over-year. We ended the quarter with a non-gap earning per share of $0.52, an increase of $0.04 or 8% year-over-year.

Speaker Change: The main drivers of this increase were positive shift in the portfolio mix, especially osterloh strong continued growth, partially offset by negative FX impact.

Speaker Change: Gross margin in Q1 were slightly better than our own normal seasonality and our internal expectation for Q1 benefiting from favorable timing of shipments and improved product mix towards the end of the quarter.

Speaker Change: About two thirds of that gross margin improved flow through to operating margin, which grew by 100 basis points year over year, we ended the quarter with a non-GAAP earning per share of 52.

Speaker Change: An increase of <unk>, <unk> or 8% year over year total non-GAAP adjustment in the first quarter of 2025 were $388 million.

Eliyahu Kalif: Total non-gap adjustments in the first quarter of 2025 were $388 million.

Eliyahu Kalif: Turning to slide 19. We have significantly transformed our balance sheet and cash generation capability over the last five years to enable growth. I'm really proud of our team's efforts across operational and commercial processes, which have led to improved networking capital as a percentage of revenue and reduced cash conversion days, while at the same time creating a more nimble supply chain.

Speaker Change: Turning to slide 19.

Speaker Change: We have significantly transformed our balance sheet and cash generation capability over the last five years to enable growth I'm really proud of our team's efforts across the operational and commercial processes, which have led to improved networking capital as a percentage of revenue and reduced cash conversion days.

Speaker Change: While at the same time, creating a more nimble supply chain.

Eliyahu Kalif: These efforts have unlocked approximately $1.7 billion of capital since the end of 2021, which we have consistently deployed to reduce leverage and reinvest in the business. Our gross debt at the end of Q1 was $16.7 billion compared to $17.8 billion at the end of the year. This decrease in our gross debt was mainly due to a repayment of $1.4 billion of notes at maturity, partially offset by exchange rate fluctuations. Our net debt was $15 billion and the net debt to EBITDA remained just over three times.

Speaker Change: These efforts have unlocked approximately $1 7 billion of capital since the end of 2021, which we have consistently deployed to reduce leverage and reinvest in the business.

Speaker Change: Our gross debt at the end of Q1 was $16 7 million compared to $17 8 billion at the end of the year.

Speaker Change: This decrease in our gross debt was mainly due to repayment of a $1 4 billion of notes at maturity, partially offset by exchange rate fluctuations.

Speaker Change: Our net debt was $15 billion and the net debt to EBITDA remains just over three times.

Eliyahu Kalif: As I mentioned in January, our free cash flow guidance represents a slight decrease compared to 2024, mainly due to our deliberate efforts to streamline our account receivable securitization program, as well as taking into account higher scheduled legal settlement outflows this year. I believe excluding such legal payments highlights the improvement in our underlying cash generation, which has consistently led to a cash conversion in line with our long-term targets of 80% or more.

Speaker Change: As I mentioned in January our free cash flow guidance represent a slight decrease compared to 2024, mainly due to our deliberate efforts to streamline our account receivable securitization program as well as taking into account higher scheduled legal settlement outflows this year.

Speaker Change: I believe excluding such legal payments highlights the improvement in our underlying cash generation, which has consistently led to a cash conversion in line with our long term target of 80% or more.

Eliyahu Kalif: As we have moved into our growth acceleration phase of our strategy, we are now focusing on further enhancements to free up additional capital which can reinvest in our business.

Speaker Change: As we have moved into our growth acceleration phase of authority.

Speaker Change: We are now focusing on further enhancement to free up additional capital, which can reinvest in our business.

Eliyahu Kalif: On slide 20. I know that all of you have questions about tariffs and I wanted to address this for you. While the situation regarding trade and tariffs remain dynamic, based on what we know today, and the tariffs that are already in place on China, we have absorbed this impact in our revised guidance for 2025, and we do not see any material impact on our business.

Speaker Change: On slide 20.

Speaker Change: I know that all of you have questions about <unk> and I wanted to address it for you.

Speaker Change: While the situation regarding trade and tariffs remain dynamics based on what we know today and the tariffs that are already in place in China. We have absorbed this impact in our revised guidance for 2025 and would you do and we do not see any material impact on our business.

Eliyahu Kalif: Importantly, I want to remind everyone that Teva has a substantial U.S. manufacturing footprint. A significant amount of the U.S. innovative revenue is U.S. manufactured, including Osteto, our largest product. Our U.S. manufacturing footprint includes eight manufacturing sites, the largest among the generic players.

Speaker Change: Fortunately I want to remind.

Speaker Change: And everyone that Teva has a substantial U S manufacturing footprint a.

Speaker Change: A significant amount of the U S. Innovative revenue is a U S. Manufactured include <unk>, our largest product our U S. Manufacturing footprint include eight manufacturing sites the largest among the generics players.

Eliyahu Kalif: Teva is also uniquely positioned, given our very limited exposure to China and India, from a sourcing perspective. While we continue to closely watch on ongoing development, we are taking proactive measures in our supply chain to mitigate potential risk. At this point, we feel well positioned in our ability to navigate the potential impact from the US tariffs.

Speaker Change: Teva is also uniquely positioned given our very limited exposure to China, and India from a sourcing perspective.

Speaker Change: While we continue to closely watch on ongoing development, we are taking a proactive measures in our supply chain to mitigate potential risk at this point, we feel well positioned in our ability to navigate the potential impact from the U S tariffs.

Eliyahu Kalif: Moving to slide 21. As Richard mentioned earlier, we are transforming Teva with the targeted programs to become a world-class biopharma company. Our commitment remains clear to deliver sustainable margin improvement without compromising our ability to innovate and to invest in our long-term growth.

Speaker Change: Moving to slide.

Speaker Change: 'twenty one.

Speaker Change: As Richard mentioned earlier referenced throwing teva with a targeted programs to become a world class, but from our company.

Speaker Change: Our commitment remains clear to deliver sustainable margin improvement without compromising our ability to innovate and to invest in our long term growth.

Eliyahu Kalif: What you see from this slide is that overall, this transformation program will deliver approximately 700 million of net savings between 2025 and 2027 and provide us a clear path to our 30 percent operating margin targeted by expanding gross margin to be between 57 to 58 percent by 2027, while keeping operating expenses at the range of 27 to 28 percent of revenue. Despite continuous investment in a growth and pipeline.

Speaker Change: What do you see from this slide is that overall this transformation program, we will deliver approximately $700 million of net savings between 2025, and 2027 and provide us a clear path to our 30% operating margin targeted by expanding gross margin to be between 57% to 58%.

Speaker Change: By 2027, while keeping operating expenses at the range of 27% to 28% of revenue.

Speaker Change: Despite continued investment in our growth and pipeline.

Eliyahu Kalif: on slide 22. I really want to spend time and to show you the bridge between our current margins and our 30% target in 2027 and how savings from this transformation program, as well as the ongoing portfolio shift towards high growth and margin innovative products are enabling us to achieve our operating marketing goals. Over the next couple of years, we expect to expand our operating margin by approximately 400 basis points.

Speaker Change: On slide 22.

Speaker Change: Really want to spend time and to show you the bridge between our current margin.

Speaker Change: Our 30% target in 2027, and how saving from this transformation program as well as the ongoing portfolio shift towards high growth and margin innovative products are enabling us to achieve our operating margin goals.

Speaker Change: Over the next couple of years, we expect to expand our operating margin by approximately 400 basis points as we have communicated before during this period, we will experience the impact of revenue cliff from generic Revlimid in 2026, as well as headwinds in 2027 related IRA Medicare part D.

Eliyahu Kalif: As we have communicated before, during this period, we'll experience the impact of revenue cliff from generic Revenmid in 2026, as well as headwinds in 2027-related IRA-Medicare Part D negotiations for Rostedo. While we are not providing specific revenue and operating profit guidance for 2026 and 2027 today, the transformation programs and our expected growth trajectory led by our innovative portfolio give us the confidence to grow EBITDA in 2026 and in 2027, both in dollars and margin terms. We are transforming Teva into a structurally higher gross margin business through improvement in our portfolio mix and transforming of our manufacturing cost base, network simplification, and procurement optimization.

Speaker Change: <unk> negotiation for a studio.

Speaker Change: While we are not providing specific revenue and operating profit guidance for 2026 and 2027 today.

Speaker Change: Transformation programs and our expected growth trajectory led by our innovative portfolio give us the confidence to grow EBITDA in 2026 and in 2010 to seven both in dollars and margin terms.

Speaker Change: We are transforming teva into a structurally higher gross margin business through improvement in our portfolio mix and transforming of our manufacturing cost base networks, the simplification and procurement optimization.

Eliyahu Kalif: With a significant gross margin expansion, our OPEC... transforming from transforming programs will allow us to keep OPEX as a percentage of revenues stable through 2027 as we redirect significant savings in our GNA towards our innovative portfolio and pipeline which in turn enable us to drive both short-term and long-term growth. With these dynamics, we expect to extend our operating margin in 2026 by 125 basis points to 200 basis points, more than offsetting profit headwinds related to General Crevelmead within the same year, and by another 125 basis points to 250 basis points in 2027.

Speaker Change: With a significant gross margin expansion our opex.

Speaker Change: Transforming from transporting program will allow us to keep opex as a percentage of revenue stable through 2027, as the redirects significant savings in our G&A toward our innovative portfolio and pipeline, which in turn enable us to drive both short term and long term growth.

Speaker Change: With these dynamics, we expect to expand our operating margin in 2026 by 125 basis points to 200 basis points.

Speaker Change: Then offsetting profit headwinds related to generic revlimid within the same year and by another 125 basis points to 250 basis points in 2027.

Eliyahu Kalif: It is also important to note that our strong revenue growth and margin trajectory, alongside our ongoing deleveraging during this period, will allow us to achieve our target of two times net debt to EBITDA ratio by 2027.

Speaker Change: It is also important to note that our strong revenue growth and margin trajectory alongside.

Speaker Change: Our ongoing deleveraging during this period will allow us to achieve our target of two times net debt to EBITDA ratio by 2027.

Eliyahu Kalif: Now let's discuss our updated 2025 Nangap Outlook on slide 23. As I mentioned earlier, our performance in Q1 was solid, delivering revenue growth, improved margin and cash flow while navigating the impact of macroeconomic headwinds, including negative FX improvement movements.

Speaker Change: Now, let's discuss our updated.

Speaker Change: 2025, non-GAAP outlook on slide 23.

Speaker Change: As I mentioned earlier, our performance in Q1 was solid delivering revenue growth in <unk>.

Speaker Change: Both margin and cash flow, while navigating the impact of macroeconomic headwinds, including negative FX improvement movements.

Eliyahu Kalif: Before I get into the details of our revised guidance, you may recall from our Q4 call in January that 2025 guidance included a full year contribution from both SEWA API and the Japanese generic business. It excluded any my son payments from Sanofi but did include Teva's 50% share of the Wakedog R&D expenses. While we are still in ongoing discussion on the sales of Teva API Business, Teva concluded the divestiture of its business venture in Japan, as planned, on March 31st, 2025. Accordingly, we are revising our 2025 guidance today to reflect the inclusion of only the actual Q1 contribution from the Japan business venture and removing the nine months expected contribution from the divested business.

Speaker Change: Before I get into the details of our revised guidance you may recall from our Q4 call in January.

Speaker Change: 2025 guidance included a full year contribution from both server API and the Japanese generic business.

Speaker Change: It excluded any milestone payments from Sanofi, but did include Teva, 50% share of <unk> R&D expenses.

Speaker Change: While we are still in ongoing discussion on the sales of server API business.

Speaker Change: <unk> concluded the divestiture of its business venture in Japan as planned on March 31 2025.

Speaker Change: Accordingly, we are revising our 2025 guidance today to reflect the inclusion of only the actual Q1 contribution from the Japan business venture and removing the nine months expected contribution from the divested business for.

Eliyahu Kalif: For the rest of the year, we have now excluded approximately $250 million and $40 million for the revenue and operating profit, respectively, for the Japan business venture.

Speaker Change: For the rest of the year, we have now excluded approximately $250 million and $40 million for the revenue and operating profit respectively for the Japan business venture.

Eliyahu Kalif: Next to the 2024 actual results, we have included a 2024 pro forma reflecting Japan contribution in the equivalent period to assist you with the modeling a year-over-year comparison. In terms of the underlining changes in the guidance, as Richard highlighted earlier, with a strong Q1 performance, we have increased the low end of our expected revenue range by $50 million for Rostedo. With this element in mind, we now expect our 2025 revenue to be between $16.8 billion and $17.2 billion. This reflects a reduction of $200 million to the top end of our range or $100 million at the midpoint of our original revenue guidance from $17.1 billion to $17.2 billion.

Speaker Change: Next to the 2024 actual result included a 2020 for pro forma reflecting Japan contribution in the equivalent period to assist you with modeling our year over year comparison.

Speaker Change: In terms of the underlying changes in the guidance as Richard highlighted earlier with a strong Q1 performance. We have increased the low end of our expected revenue range by $50 million for a steady.

Speaker Change: With this element in mind, we now expect our 2025 revenue to be between $16 8 billion and $17 2 billion. This reflects a reduction of $200 million to the top end of our range or $100 million at the midpoint of our original revenue guidance from seven.

Centene.

Speaker Change: $1 billion to $17 billion.

Eliyahu Kalif: Our revised guidance reflects slightly higher growth of approximately 4% at the midpoint versus 2024 pro forma, given the lower growth and margin profile of the divested Japan business. While we are going to see majority of the savings from our transformation programs materialize between 2026 and 2027, we do expect to start seeing the savings in the second half of 2025. Combining that with our Q1 performance and the visibility we have today, we are raising the lower end of our 2025 NANGAP outlook for operating income and EBITDA by 200 million or by 100 million at the midpoint.

Speaker Change: Our revised guidance reflects slightly higher growth of approximately 4% at the midpoint versus 2024 per forma given the lower growth and margin profile of the divested Japan business.

Speaker Change: While we are going to see majority of the savings from our transformation programs materialize between 26 and 27, we do expect to start seeing the savings in the second half of 'twenty five.

Speaker Change: Combining that with our Q1 performance.

Speaker Change: And the visibility we have today, we are raising the lower end of our 2025 non-GAAP outlook for operating income and EBITDA by $200 million or by $100 million at the midpoint Accordingly, our earnings per share guidance range is increased by 10.

Eliyahu Kalif: Accordingly, our earning per share guidance range is increased by 10 cents to be between $2.45 and $2.65.

Speaker Change: To be between $2 45.

Speaker Change: And $2 65.

Eliyahu Kalif: Now, let me double-click on some thoughts on the quarterly phasing for the rest of the year, especially as it relates to Q2. We continue to expect our non-GAP gross margin to be between 53 to 54% for the full year. Given that the timing of the shipments and our product mix help our Q1 margins slightly, we expect flat to slightly higher gross margins in the second quarter when compared to the first, with a further progress expected in the second half of the year driven by revenue trajectory and portfolio mix. As a reminder, our fourth quarter gross margins are expected to reflect a step down in the general equivalent revenue, consistent with the quarterly cadence we have seen in recent years.

Speaker Change: Now, let me double click on some thoughts on quarterly phasing for the rest of the year, especially as it relates to Q2 we.

Speaker Change: We continue to expect our non-GAAP gross margin to be between 53% to 54% for the full year.

Speaker Change: Given that the timing of the shipments and our product mix helped our Q1 margins slightly we expect flat to slightly higher gross margin in the second quarter when compared to the first with further progress expected in the second half of the year driven by our revenue trajectory and portfolio mix.

Speaker Change: As a reminder, our fourth quarter gross margin are expected to reflect a step down in the generic revlimid revenue consistent with the quarterly cadence we have seen in recent years.

Eliyahu Kalif: In addition, we continue to expect our operating expenses to be between 27% to 28% of revenue for the full year, with the second half being lower than the first, driven by operating leverage in line with expected ramp-up in revenue.

Speaker Change: In addition, we continue to expect our operating expenses to be between 27% to 28% of revenue for the full year with the second half being lower than the first driven by operating leverage in line with expected ramp up in revenue our guidance continue to be excluded any contribution from <unk>.

Eliyahu Kalif: Our guidance continues to exclude any contribution from potential development milestone payments from our partner Sanofi for the phase 3 initiation of our anti-TL1A program, Deva Keto, who will revise our guidance to include these milestone payments when they earned. And also, as I just said earlier, the revised guidance already absorbed the immaterial impact of the confirmed tariff.

Speaker Change: Pension development milestone payments from our partner Sanofi for the phase III initiation of our anti <unk> program. We were keto, we will revise our guidance to include this milestone payments when they earned.

Speaker Change: And also as I, just said earlier, the revised guidance already absorbed the immaterial impact of the confirm tariff.

Eliyahu Kalif: Moving to slide 24. We showcase our consistent capital allocation strategy, which is clear and designed to fuel our long-term growth and innovation, while strengthening our balance sheet through further deleveraging and meeting our financial commitments.

Speaker Change: Moving to slide 24.

Speaker Change: We showcased our consistent capital allocation strategy, which is clear.

Speaker Change: And designed to fuel our long term growth and innovation, while strengthening our balance sheet through a further delever.

Speaker Change: Deleveraging and meeting our financial commitments.

Eliyahu Kalif: And finally, before I conclude my review of the first quarter results and hand it over to Eric, I want to reconfirm our 2027 financial targets. And based on what I just said, on 2026 and 2027, we are laser focused on our execution and are on track to achieve these targets.

Speaker Change: And finally before I conclude my review of the first quarter results and hand, it over to Eric.

Speaker Change: I want to reconfirm, our 2027 financial targets and based on what I. Just said on 2026 and 2027, we are laser focused on our execution and are on track to achieve these targets.

Eric Hughes: With this, I will now hand it over to Eric to discuss our pipeline.

Speaker Change: With this I will now hand, it over to Eric to discuss our pipeline.

Eric Hughes: Thank you, Eli. Let me start by going over our progress of our programs in development. So starting with the Lanzapine LAI, we're excited to be presenting the long-term safety data for our period two of our phase three study this month at the PsychElevate meeting, and we're on track for our submission in the second half of this year. Our DARI program, our Dual Action Rescue Inhaler program, and asthma. I'm happy to say that the study is initiating around the globe. I've been on three different continents and racked up the frequent flyer miles, and I'm happy to see that we've progressed above our targets on site initiations, and we're on target for full enrollment of the study by the end of this year, with results in the second half of next year.

Eric: Thank you Ali.

Eric: Let me start by going over our progress of our.

Eric: Programs in development, so starting with <unk>, we're excited to be presenting the long term safety data.

Eric: For our period two of our phase III studies. This month at the Psych elevate meeting and we're on track for a submission in the second half of this year, our Dart program, our dual action rescue Inhaler program in asthma I'm happy to say that the study is initiating around the globe and on three different continents, and racked up the frequent flyer miles and.

Eric: I'm happy to see that we progress above our targets on site initiations and we're on target for full enrollment of this study by the end of this year with results in the second half of next year. Our <unk> program is on target for startup phase III with our partner Sanofi in both ulcerative colitis, and Crohn's disease, and finally <unk>.

Eric Hughes: Our Duva-Keytuk program is on target for start of phase three with our partner Sanofi in both ulcerative colitis and Crohn's disease. And finally, Emra Solman is a very important unmet medical need in multiple system atrophy. We believe we have a differentiated product and we're actively enrolling that study now with a target of full enrollment by the second half of next year. And we're advancing our IL-15 and our anti-PD-1, IL-2 program in the clinic now. So, a lot of great progress, good work by the team and our programs in development.

Eric: Is.

Eric: Very important unmet medical need and multiple system atrophy, we believe we haven't differentiated product and we're actively enrolling that study now with a target of full enrollment by the second half of next year and we're advancing our IL 15 in our anti PD one.

Eric: IL two program in the clinic now so a lot of great progress good work by the team and our programs in development.

Eric: Now.

Eric Hughes: Development and clinical work doesn't end with approval of a drug. Our lifecycle management is an active role of what we do here. And I'm very proud to talk about where we've come with Osteto-XR. As an illustration on the top here, I show, you know, what we launched the product with, with a BID medication with multiple different pill sizes. And then on the bottom, I show what we've achieved with Osteto-XR by introducing a titration kit and a one pill, once a day presentation. So what does that mean? So you can see with the Osteto-BID, to get the top dose, you have to write nine different prescriptions.

Eric: Development and clinical work that doesn't end with approval of a drug or lifecycle management is an active role in what we do here and I'm very proud to talk about where we've come with our sterile XR as an illustration on the top tier I show, what we've launched the product with the PID.

Eric: Medication with multiple different.

Eric: Tool sizes, and then on the bottom I show, what we've achieved with <unk> XR by introducing a titration kit and a one pill once a day presentation. So what does that mean, so you can see with the <unk> to get the top dose you would have the right nine different prescriptions with the titration.

Eric Hughes: With the titration kit and the single pill once a day XR, that just takes four prescriptions. So that's a reduction of five prescriptions to get to the top dose. That means it's a lot easier for a physician to get the patient their optimal dose and also decreases the co-pays the patient has to deal with. So we've really made it a lot easier to get people started on Osteto. And I think that that's a great benefit for. Osteo-XR means a lot of other things, too. When depending on the dose you're on, you can have a 50 to 75% reduction in your pill burden, which is very meaningful for patients.

Eric: Kit and a single pill once a day XR that just takes four prescriptions. So that's a reduction of five prescriptions to get to the top dose that means it's a lot easier for a physician to get the patients there.

Eric: They are optimal dose and also decrease the co pays the patient has to deal with so we've really made it a lot easier to get people started on et cetera, and I think that's a great benefit for patients.

Eric: <unk> XR it means a lot of other things too.

Eric: Depending on the dose Huron you can have a 50% to 75% reduction in your pill burden, which is very meaningful for patients.

Eric Hughes: Also, what's very important that in our studies of our titration kit, we now get 95% of our patients up into the dose range, according to our label, greater than 24 milligrams. So that's a real benefit, making sure that the optimal dose based on the patient's experience is achieved and that that helps with not only getting the best efficacy, but also potentially improving their adherence. And finally, as one would expect, Osteo-XR is really easy to use as reported by our patients and 98% of them. So altogether, this means that, you know, for new prescriptions, greater than 60% of the patients are choosing Osteo-XR.

Eric: Also what's very important in our studies of our titration kit, we now get 95% of our patients up into the dose range. According to our label greater than 24 milligram, So thats, a real benefit making sure that the optimal dose based on the <unk>.

Eric: Patients experience is achieved and that that helps with not only getting the best efficacy, but also potentially improving their adherence and finally as one would expect Australia XR is really easy.

Eric: Easy to use as reported by our patients and 98% of them. So altogether. This means that for new prescriptions greater than 60% of the patients are choosing our sterile XR. We're very proud of this work we've done in our lifecycle management.

Eric Hughes: We're very proud of this work we've done in LifeCycle.

Eric Hughes: Something else that we've been very proud of and there was a lot of excitement about was our Duva-Ki-Tuc program. We presented our phase two results at the ECHO conference and we actually just represented some of the data at the DDW conference this month. But back in ECHO when Dr. Reinisch and Dr. Jairath presented the ulcerative colitis and Crohn's disease data and the late breakers, there was a lot of excitement.

Eric: Something else that we've been very proud of and really there was a lot of excitement about was are due to key took program.

Eric: We presented our phase II results at the <unk> Conference and we actually just represented some of the data at the DW Conference. This.

Eric: This month, but back in Echo when Dr. <unk> and Dr. J, Ralph presented ne ulcerative colitis, and Crohn's disease data in the late Breakers. There was a lot of excitement. It was really the talk of the town when it comes to new treatments and also requires in Crohn's disease, but I want to emphasize we are on track for starting our phase III program.

Eric Hughes: It was really the talk of the town when it comes to new treatments and ulcerative colitis and Crohn's disease. But I want to emphasize we are on track for starting our phase three program, Sanofi, second half of this year, and we're in development of our strategy of new indications.

Eric: Santa Fe's second half of this year and we're in development of our strategy of new indications in the future.

Eric Hughes: And finally, I just want to emphasize, you know, Olanzapine LAI, we believe this is a great new product in development that will build upon our franchise and long-acting injectables on top of the Zeti. The Zeti's been doing great as Richard had progressed. And we're very happy with the activity of our Olanzapine LAI. It's similar to oral Olanzapine. As I mentioned, we'll be presenting the data at PsychElevate with our Period 2 safety later this month. We had a productive meeting with the FDA for the pre-NDA meeting on April 9th. And finally, you know, we're on track for our NDA submission second half.

Eric: And finally I just want to emphasize once made earlier. We believe this is a great new product that are in development that will build upon our franchise and long acting injectables on top of <unk> is that he has been doing greatest.

Eric: Richard.

Eric: And we're very happy with the activity of our alliance with <unk> similar to oral Olanzapine as I mentioned, we'll be presenting the psyche.

Eric: <unk>, a fake elevate with our period to safety later this month.

Eric: Had a productive meeting with the FDA for the pre NDA meeting on April 9th and finally, we're on track for our NDA submission in the second half of this year and with that I'll pass it off to Richard for final comments.

Richard Francis: And with that, I'll pass it off to Richard for final. Thank you, Eric, and thank you, Eli. So I'd just like to remind everybody that the growth we've seen in Q1 in the last two years, we have plans to continue that as part of the Pivot to Growth strategy. As you can see, we're in the acceleration phase, and this will be driven by Osteto-JV-Euclidean-Lanzapine, as we've highlighted, and that will soon be supported by DARI, our ASPA product. And then, as you see, beyond 28, we have multiple opportunities to continue to drive growth in our innovative portfolio.

Richard Francis: Thank you Eric and thank you Ali.

Speaker Change: So I'd just like to remind everybody.

Speaker Change: The growth we've seen in Q1 in the last two years, we have plans to continue that as part of the pivot to growth strategy. As you can see we're in the acceleration phase.

Speaker Change: This will be driven by instead of a JV you said the olanzapine as we've highlighted and that will soon be supported by Terry asked about product and then as you see beyond 2008, we have multiple opportunities to continue to drive growth in our innovative portfolio.

Richard Francis: as well as this being supported by the growth in generics which includes our biosimilars business. So we have a clear target to hitting our 30% operating profit beyond 2027. Final thoughts, Q1, good solid start to the year, revenue up 5%, great contribution from our innovative portfolio. I think we've highlighted a very clear path towards 30% operating margin. And you'll see that start to come through next year and then finalize in 2027. And also the fact that we're on track for our Lansbeen submission and the start of our phase three in Dubuque.

Speaker Change: As well as it has been supported by the growth in generics.

Speaker Change: Which includes our Biosimilars business. So we have a clear target to hitting our 30% operating profit beyond 2027.

Speaker Change: Now.

Speaker Change: Final thoughts Q1, good solid start to the year revenue up 5% great contribution from our innovative portfolio I think we've highlighted a very clear path towards 30% operating margin and youll see that start to come through next year.

Speaker Change: And then finalize in 2027 and also the fact that we're on track for Olanzapine submission and the start of our phase III in dedicated now to close I just wanted to invite everybody to attend the accelerate an innovation strategy day.

Richard Francis: Now, to close, I just want to invite everybody to attend the Accelerate an Innovation Strategy Day. This is where we'll highlight in even more detail this second phase of the Pivot to Growth Strategy where we accelerate growth, so I look forward to seeing many of you there in person.

Speaker Change: Later this month in New York This is where I will highlight in even more detail. This second phase of the pivot to growth strategy, while we accelerate growth. So I look forward to seeing many of you there.

Speaker Change: In person.

Operator: And with that, I'll hand it over for questions. Thank you. As a reminder, if you'd like to ask a question, please press star followed by one on your telephone keypad. If you'd like to remove your question, you can press star followed by two.

Speaker Change: And with that I'll hand, it over for questions.

Speaker Change: Thank you.

Speaker Change: As a reminder, if you'd like to ask a question. Please press star followed by one on your telephone keypad.

Speaker Change: To remove your question you can press star followed by <unk>.

David Amsellem: Our first question for today comes from David Amsellem of Piper Sandler.

Speaker Change: Our first question for today comes from David <unk> of Piper Sandler. Your line is now open. Please go ahead.

David Amsellem: Your line is now open, please go ahead. Thanks.

Speaker Change: Yeah.

David Amsellem: So I wanted to take a step back from the details on the savings and how you get there in 27 and ask a general question regarding what Teva wants to be. On one hand, you talk about being a generics powerhouse. On the other hand, there's this transition to being a global biopharma company. And I realize it's not an either-or, but can you help us better understand where your generics business, particularly your oral solids business, fits in with the overall strategy and particularly how you're thinking about generics R&D as it relates to, again, this new Teva going forward?

Speaker Change: Thanks, So I wanted to take a step back from the details on the savings and.

Speaker Change: How you get there in 2007 and ask a general question regarding what.

Speaker Change: <unk> wants to be on one hand, you talk about being a generics powerhouse on the other hand, there is this transition to being a global Biopharma company and I realize it's not an either or but can you help us better understand where your generics business, particularly oral solids business fits in.

Speaker Change: With the overall.

Speaker Change: Strategy.

Speaker Change: And particularly how you're thinking about.

Generics R&D.

Speaker Change: As it relates to again this.

Speaker Change: This new.

Speaker Change: And this new Teva going forward. So that's number one and then number two.

David Amsellem: So that's number one.

David Amsellem: And then number two, regarding the savings, is this sort of the beginning or sort of the destination, if you will, in terms of savings? In other words, is there the potential to extract even more efficiencies as we think longer term beyond 27? Thanks.

Speaker Change: Regarding the savings.

Speaker Change: Is is this sort of the beginning or sort of the destination. If you will in terms of savings in other words is there the potential to extract even more efficiencies.

Speaker Change: As we think longer term beyond 2007.

Richard Francis: Hi, David. Thanks for the question. So to answer the first question, when we started this Pivot2Growth. Teva was a pure play generics company and now I think we've shown and this court is a great example of the amount of progress we've made on driving our innovative portfolio in the market as well as the pipeline which Eric just highlighted. So I think we're well on our way to becoming a leading biopharmaceutical company. But I would remind you that in Pivot2Growth, we have four pillars. The third pillar on Pivot2Growth is a sustainable generics powerhouse. And we think that's an important part of this journey that we're on.

David: Hi, David Thanks for the question.

Speaker Change: So to answer the first question.

David: When we started this pivot to growth.

Speaker Change: Journey Teva was a pure play generics company.

Speaker Change: And now I think we've shown in this quarter is a great example of the amount of progress we've made on driving innovative portfolio in the market as well as the pipeline, which Eric just highlighted so I think we are.

Speaker Change: Well on our way to becoming a leading biopharmaceutical company, but I would remind you that in pivot to growth. We have four pillars, the third pillar and pivot to growth is it sustainable generics powerhouse.

Speaker Change: That's an important part of this journey that we're on.

Richard Francis: We see the benefits of having a powerhouse in our company. It helps fuel our innovation, fuel discipline to our cost base. So we think they are complementary.

Speaker Change: We see the benefits of having a powerhouse.

Speaker Change: A company that helps fuel our innovation.

Speaker Change: Fuel discipline to our cost base. So we think they are complementary.

Richard Francis: So I hope that answers your question. With regards to savings, is this $700 million a destination or is it a journey? It is a journey. I think what you've seen with the last two and a half years at Teva, capital allocation is really important to us. And so we're always thinking about how do we fuel our long-term growth drivers. And to do that, we have to be very thoughtful about how we spend our money. And so I think this era of cost efficiency, harmonization, frugality will continue. Obviously, this is the first big step forward, but it's something which we'll constantly look at.

Speaker Change: The balance of your question with regards to savings is this $700 million destination or is it a journey. It is a journey.

Speaker Change: I think what <unk> seen with that with the last two and a half years of Teva capital allocation is really important to us and so we're always thinking about how do we fuel our long term growth drivers and to do that we have to be very thoughtful about how we spend our money and so I think this.

Speaker Change: Era of cost efficiency.

Speaker Change: Harmonization frugality will continue.

Speaker Change: This is the first big step forward, but its something which we'll constantly look at because we have so many opportunities to drive this company forward from a growth perspective, we have to think carefully about making sure we think about costs in their allocation care specifically.

Richard Francis: Because we have so many opportunities to drive this company forward from a growth perspective, we have to think carefully about making sure we think about cost and their allocation care specifically. So I hope that answers your question, David.

Speaker Change: Specifically so balance of your question David Thank you for the question.

David Amsellem: Thank you for the question. Thank you.

Jason Gerberry: Our next question comes from Jason Gerberry of Bank of America.

Speaker Change: Thank you. Our next question comes from Jason <unk> of Bank of America.

Jason Gerberry: Your line is now open, please go ahead. Hey guys, thanks for taking my questions. So Richard, one for you, when you read the Section 232 investigation into pharma, I'd love to get your perspective on sort of the core issue in that, which is an over-reliance on critical medicines. Um you know, there's there's an insinuation that I guess there's subsidies coming from the Chinese government regarding certain medicines and so what do you think is the practical solution here? Um because it's expensive, more expensive to make these products in the US. And so do you think it requires governmental subsidies to truly achieve the solution that's desired here?

Speaker Change: So I'll open. Please go ahead.

Speaker Change: Hey, guys. Thanks for taking my questions.

Richard Francis: So Richard once a year just when you read the section 232.

Speaker Change: Destination and to pharma I'd love to get your perspective on sort of the core issue in that which is an over reliance on critical medicines.

Speaker Change: Theres, an insinuation that I guess there is subsidy is coming from the Chinese government regarding certain medicines and so what do you think it's a tactical solution here.

Speaker Change: Because it's expensive more expensive to make these products in the U S and so do you think it requires governmental subsidies to truly achieve this solution that's desired here.

Jason Gerberry: You know, I know it's probably not a question you want to answer, but given you're the leader in the U.S. generic space, I think you offer some unique perspective here on an issue that's caused a lot of consternation in the market.

Speaker Change: I know, it's probably not a question you want to answer but given your.

Speaker Change: Leader in the U S generic space I think you offer some unique perspective here on an issue that has caused a lot of consternation in the market.

Jason Gerberry: And then so my second question is just with the Stato, it is sold in Israel, which is an OECD country. So just curious, what's the price there? Because, you know, under most favored nations, whatever that looks like, I just wonder if that price is meaningfully below the U.S. price level. Thanks.

Speaker Change: And then so my second question is just with the stereo.

Speaker Change: Is sold in Israel, which is OECD countries. So just curious what's the price there because.

Speaker Change: Under most favorite nation, whatever that looks like I, just wonder if that price is meaningfully below the U S price level.

Speaker Change: Okay.

Richard Francis: Hi, Jason. Thanks for the question. So when we think about... What could happen in the US? Let me just reiterate what Eli said. As it currently stands when it comes down to the tariffs, I think we've mitigated what we currently see in front of us now and we've worked hard to think about how we would adjust that if anything changes. And I think we've shown the agility in our organization to address certain macro changes like this. So I'd say that for one.

Jason: Hi, Jason Thanks for the question and.

Speaker Change: So when we think about.

Speaker Change: What could happen in the U S. Let me just reiterate what Alex said as it currently stands when it comes down to the the tariffs I think we've.

Speaker Change: Mitigated where what we currently see in front of US now and we've worked hard to think about how we would adjust that if anything changes and I think we've shown the agility in our organization to address.

Speaker Change: Macro changes like this so I would say that for one second which is a slightly.

Richard Francis: The second, which is a slightly more philosophical question, because what could happen? I really like to talk about what could happen. What I would say is where is Teva positioned within this world? Well, I think because we do not rely on China from a manufacturing point of view, and we have a very limited exposure to India. I think that coupled with the fact that we have nine sites in the United States, and by the way, Estetta, which I'm going to talk a bit about later, is manufactured in the United States. I think that supply chain gives us a real strength in this dynamic market.

Speaker Change: More philosophical question, because what could happen I really like to talk about what could happen what I would say is we're as Teva positioned.

Speaker Change: Within this world well I think because we do not rely on China.

Speaker Change: From a manufacturing point of view and we have a very limited exposure to India I think that coupled with the fact that we have nine sites in the United States and by the way instead of which I'm going to talk a bit about later is manufactured in the United States I think that footprint gives us.

Speaker Change: And that supply chain gives us a real strength in this dynamic market.

Richard Francis: But to your point, how should we think about medicines in the United States? How should we think about generic medicines in the United States? I think there is a good opportunity for debate. I think we are one of the largest suppliers in one in 14 scripts in the United States of the type of script. And I think we'd like to definitely be part of that conversation, which we are to make sure that the U.S. does continue to benefit from our generics portfolio. But it's very dynamic. So it's one that seems to be changing almost on a daily basis.

Speaker Change: But to your point.

Speaker Change: How should we think about medicine in the United States, how should we think about generic medicines in the United States I think there is a good opportunity for debate I think we are.

Speaker Change: One of the largest suppliers a one in 2014 scripts in the United States at the type of script and I think we'd like to do.

Speaker Change: Definitely be part of that conversation, which we are to make sure that the U S does continue to benefit from.

Speaker Change: And our next portfolio, but it is very dynamic. So it's one that seems to be changing almost on a daily basis, but we are definitely in the conversation trying to help the administration on that with regard to <unk> I think it's just worth pointing out we have very limited sales outside the United States.

Richard Francis: But we are definitely in the conversation trying to help the administration on that.

Richard Francis: With regard to Esteto, I think it's just worth pointing out. We have very limited sales outside the United States. And so I think the the pricing discussions, they're really not going to impact us. Our focus is on driving the U.S. business. I would like to point out, though, that as we do start to expand our innovative portfolio, it will go globally, but it will always start in the U.S. and we'll be very thoughtful about the dynamic situation when we come to launch in other markets. But thanks for your question, Jason.

Speaker Change: I think the the <unk>.

Speaker Change: Pricing discussions there.

Speaker Change: Really not going to impact us all focuses on driving the U S business.

Speaker Change: I would like to point out, though that as we do start to.

Speaker Change: Expand our innovative portfolio. It will go globally, but it always starts in the U S and we'll be very thoughtful about the dynamic situation when we come to launch in other markets.

Speaker Change: But thanks for your question Jason.

Umer Raffat: Thank you. Our next question comes from Umer Raffat of Evercore ISI. The line is now open, please go ahead. I have two, if I may. First, I just wanted to be super, super, super clear about 2026 and what you're saying. Should we be expecting a flat ISHI bid da versus 25 as our base case? Because I noticed you said the transformation cost cuts, quote unquote, offset the generic rev limit. But when you spoke about 27, you used the words, generic rev limit is, quote unquote, compensated. So presumably, generic rev limit is only partially offset in 26 and you'd need help from other stuff like Austedo to offset the other half.

Speaker Change: Thank you. Our next question comes from Matt <unk> of Evercore ISI.

Speaker Change: Please go ahead.

Matt: Thanks for taking my question guys.

Speaker Change: I have two if I may 1st I, just wanted to be Super Super Super clear about 2026 on what you are saying should we be expecting a flattish EBITDA versus 25 as a base case, because I noticed you said the transformation cost cuts quote unquote offset the generic revlimid, but when you spoke about 27, you used the words generic revlimid is cool and cold.

Speaker Change: Compensated so presumably generic revlimid is only partially offset and 26% you'd need help from other stuff like all started to offset the other half. So that's is that a flattish EBITDA in 2020 six as a base case and then secondly.

Umer Raffat: So at best, is that a flattish EBITDA in 26 as a base case? And then secondly, Eliyahu, I noticed net debt went up by $500 million versus where it was in December. And I can see why it could be flattish because there wasn't a lot of free cash flow generated in 1Q. But why would it go up by $500 million? Thank you.

Speaker Change: Ali I noticed net debt went up by $500 million versus where it was in December and I can see why it could be flattish because there wasn't a lot of free cash flow generated in <unk>, but why would it go up by $500 million. Thank you.

Richard Francis: Hi Umer, thanks for the question. So I can be very clear on 2026. EBITDA will go up in absolute dollars and our OP will go up. So just to be very clear about that. And what I'd like to highlight is that some of these organizational effectiveness programs we're putting in place will move very rapidly on them. So a significant amount of those will hit in 2026. And don't forget, we have the continue to show strong growth as that will play into it. But to be very clear, our EBITDA in absolute dollars will go up next year as it will in a percent.

Matt: Hi, Matt Thanks for the question.

Speaker Change: So it can be very clear on 2026.

Matt: EBITDA will go up in absolute dollars.

Matt: <unk> will go up.

Matt: So just to be very clear about that.

Matt: And what I'd like to highlight is that some of these organizational effectiveness programs. We're putting in place will move very rapidly on them. So a significant amount of those will hit in 2026 and don't forget we have the innovative business continued to show strong growth a solid plan to it but to be very clear our EBITDA in absolute dollars will go up.

Matt: Sure as it will in a percentage.

Eliyahu Kalif: Over to you, Eli, for the next... Thank you for the question. Yeah, you're right. And what we saw this quarter, mainly due to the close of Japan business, we actually, as part of it, we need to share the cash between the BV. So if you actually refer to slide 55 in the appendix, when you see the trend on the net debt and the components of that one, usually we are sitting on around 2 billion of cash balance. This distributes the residual cash that belongs to the partner post the close as a dividend around 380 million.

Ali: Over to Ali for the next question.

Matt: Yes. Thank you for the question, yes, you're right.

Matt: And what we saw this quarter, mainly due to the close of Japan business, we actually are.

Matt: As part of it we need to share the cash between the BV. So if you can refer to slide 55, and the pending so when you see the trend on the net debt and the components of that one you usually we are sitting on around 2 billion of cash balance this quarter. It went down to $1 seven because we distribute the residual cash debt.

Matt: Belongs to the partner both the post the close.

Matt: Is the dividend at around $380 million and then if you think about how the euro got kind of reevaluate by end of March we actually also got kind of a $200 million of ethics, so those element versus too how we end up.

Eliyahu Kalif: And then if you think about how the euro got kind of re-evaluated by end of March, we actually also got kind of a 200 million dollar of FX. So those elements versus to how we end up at year end at 40.5 give us this half a billion to the 15th. Thanks for the question, Umer.

Matt: And a year end at $40 five gave us this half a billion two 2015.

Matt: Thank you thanks for the question.

Ash Verma: Our next question comes from Ash Verma of UBS. Your line is now open, please go ahead. Yeah, hi, thanks for taking our questions as well here.

Speaker Change: Our next question comes from Ash Verma of UBS. Your line is now open. Please go ahead.

Ash Verma: Yes, hi, thanks for taking our questions here. So maybe just on the potential tariff scenario can you talk about your ability to pass through potential price increases for generics to Pbms and how does that mean for commercial versus government channel.

Ash Verma: So maybe just on the potential tariff scenario, can you talk about your ability to pass through potential price increases for generics to PBMs, and how does that vary for commercial versus government channel?

Ash Verma: And then secondly, on the cost optimization bucket that you talked about, can you expand a little bit on what sits within the second bucket here, prioritizing the resource allocation? Just want to make sure that the investment in the business continues despite the initial Okay, hi Ash, good to hear from you.

Speaker Change: And then secondly on the cost optimization bucket that you talked about.

Speaker Change: Can you expand a little bit on what chipset in the second bucket here prioritizing the resource allocation just wanted to make sure that the investment in the business continues.

Speaker Change: <unk> initiatives.

Speaker Change: Okay.

Speaker Change: Good to hear from you.

Richard Francis: I'm probably going to tag-team this with Eli, so I think... Only speaking on the tariffs, probably the simplest way to think about this is we've had the ability to mitigate tariffs as they stand here. And we also, as I've said, contingency planned for any other eventuality that could happen. And I think that's an important aspect of it. Now, the opportunity to pass through and have that as a simplistic approach is something that we've leveraged less. I think we need to think a bit more about the ability to leverage other aspects of our supply chain and the fact that we do have a significant footprint in the United States.

Speaker Change: I'm, probably going to tag team this with Ellie.

Speaker Change: So I think.

Speaker Change: Speaking on the terrorists probably the simplest way to think about this is we've had the ability to mitigate tariffs as they.

Speaker Change: <unk> here.

Speaker Change: And we also as Ive said contingency plans.

Speaker Change: Any other eventuality that could happen.

Speaker Change: And I think that's an important aspect of it now the opportunity to pass through and have that.

Speaker Change: Simplistic approach is something that.

Speaker Change: We've leveraged less I think we need to think a bit more about the ability to leverage other aspects of our supply chain and the fact that we do have a significant footprint in the United States. So that's sort of one so I'll start with that on the tariffs on the second part on the efficiency savings and the.

Richard Francis: So that's sort of one.

Richard Francis: So I'll start with that on the tariffs. On the second part, on the efficiency savings and the OPEX, what is really important to understand as we drive our pivot to growth strategy, we see the opportunity to drive significant revenue in our innovative business going forward. And to do that, we really need to think about how we allocate capital, where we drive efficiencies. So when you think about it, And I think your question was, are we cutting too much and are we not able to invest in our business? Absolutely not. The reason why we've driven this, and we've driven this with such purpose, is to make sure that we do think about capital allocation.

Speaker Change: Opex, what is really important to understand.

Speaker Change: As we drive our pivot to growth strategy, we see the opportunity to drive significant revenue and our innovative business going forward and to do that we really need to think about how we allocate capital where we drive efficiencies. So when you think about it.

Speaker Change: And I think your question was are we cutting too much in a way.

Speaker Change: To invest in our business absolutely not.

Speaker Change: The reason why we've driven this and we've done this with such purpose is to make sure that we do think about capital allocation and so the innovative portfolio that we have in the United States that will also start to be launched in other European markets. In the next couple of years and the pipeline that Eric has will be resourced appropriately that is why we're taking this action now.

Eliyahu Kalif: And so the innovative portfolio that we have in the United States that will also start to be launched in other European markets in the next couple of years, and the pipeline that Eric has, will be resourced appropriately. That is why we're taking this action now to improve our capital allocation across the organization.

Speaker Change: To improve our capital allocation across the organization, but maybe I can attitude to add any other comments, yes, and I think as you mentioned into the second paragraph related to the prioritization of resources the location from which on slide.

Eliyahu Kalif: But maybe, Eliyahu, I can hand it to you to add any other comments. Yes. And I think, Ash, you mentioned into the second paragraph related to prioritization resources allocation from Richard's slide. And I think the main element there is that we are constantly looking on how we're able to rationalize our manufacturing footprint. And today we're actually running 35 sites, if I exclude the TAPI sites, and we're actually planning to get it below 30 sites by 2027. And with this one coming a few other elements that's driving also our ability to run more lean manufacturing activities, and our ability to also structure some organizational element inside our manufacturing cost base.

Speaker Change: And I think the main element there is that we are constantly looking at how we're able to rationalize our manufacturing footprint.

Speaker Change: And today, we're actually running a 35 sites if I exclude the <unk> sites.

Speaker Change: And we're actually planning to get it below 30 sites by 2027 and with this one come in a few other elements that's driving also our ability.

Speaker Change: To run and more lean manufacturing and activities and our ability to also structured some organizational element in <unk>.

Speaker Change: Our manufacturing cost base, so all in all and according to what Richard mentioned this is about our ability to really.

Eliyahu Kalif: So all in all, according to what Richard mentioned, this is about our ability to really become a bar-former company and to react to actually any element related to cost.

Speaker Change: Become a biopharma company and to react to actually any element related to cost.

Richard Francis: Yeah, and I think maybe just to close out, I think the simplistic way of thinking about it, Ash, is... and TGO down in Kosovo. that allows us to invest more in R&D and sales and marketing and because that TGO cost reduction impacts COGS, that also gives us a nice lift in our gross margin. Thanks for the question, Ash.

Speaker Change: Yeah, and I think maybe just to close I think the simplistic way to think about the ashes.

Speaker Change: <unk> and <unk> down in costs.

Speaker Change: That allows us to invest more in R&D and sales and marketing.

Speaker Change: And because of that <unk> cost reduction impacts Cogs that also gives us a nice lift in our gross margin.

Speaker Change: Thanks for the question.

Chris Schott: Thank you.

Chris Schott: Our next question comes from Chris Schott of JP Morgan. Your line is now open, please go ahead. All right, great. Thanks so much for the questions and all the color on the restructuring details today. Maybe just building on some of the earlier comments on the timing of the $700 million, as we think about $26 million versus $27 million. I guess I was a bit surprised the magnitude of operating margin improvement in $26 million is somewhat similar to $27 million, despite it seems like most of the Revlimid headwinds hitting next year. So can you move something to get my hands a little bit around the gating of the improvements there?

Chris Schott: Thank you. Our next question comes from Chris Schott of Jpmorgan.

Speaker Change: Your line it sounds open. Please go ahead.

Chris Schott: Okay, great. Thanks, so much for the questions and all the color on the restructuring details today, maybe just building on some of the earlier comments on the timing of the $700 million as we think about 2006 versus 27, I guess I was a bit surprised the magnitude of operating margin improvement in 2006 is somewhat similar to 2007 despite.

Chris Schott: It seems like most of the Revlimid headwinds hitting next year. So can you maybe somebody who might have a little bit around the gating of the improvements there.

Chris Schott: And then the second question, maybe on the same... On the net savings, I know there's some reinvestment. What's the gross number we're talking about here? So I guess how much is being freed up to be reinvested? I know $700 is flowing through, but what's the reinvestment kind of scale that we're thinking about here as well? Thanks.

Chris Schott: And then the second question maybe on the same theme on the net savings I know, there's some reinvestment what is the what's the gross number we're talking about here. So I guess, how much is being freed up to be reinvested I know 700 is flowing through but whats the reinvestment kind of scale that we're thinking about here as well. Thanks so much.

Richard Francis: Hi Chris, nice to hear from you. So I'll once again tag team this with Eli, so starting with the question. on how we make an impact, such an impact in 2026. So I think it's best to think of this in three ways. Excuse me. We're driving this improvement in EBITDA and operating margin by three aspects. One is our revenue. One is our cost of goods and one is our OPEX management. And so if you think about the revenue, as you've seen, our innovative revenue continues to perform really well. Esteto, Yoseti and Ajovi. And we see no reason why we can't continue to grow those products well into 2026.

Speaker Change: Hi, Chris Nice to hear from you. So I'll once again tag team this with Ali so starting with.

Chris Schott: The question.

Chris Schott: On how we make an impact such an impact in 2026, So I think it is.

Chris Schott: Best to think of this in three ways.

Chris Schott: Excuse me we are driving this.

Chris Schott: Improvement in EBITDA and operating margin by three aspects one is our revenue.

Chris Schott: One is the cost of goods and <unk>.

Chris Schott: Opex management and say if you think about the revenue as you've seen our innovative revenue continues to perform really well instead of you said <unk> and Adobe.

Chris Schott: And we see no reason why we can't continue to grow those products well into 2026 and those are high gross margin products, it's important to remember that.

Richard Francis: And those are high gross margin products. It's important to remember that. Then when we think about some of the impacts of what Eliyahu just mentioned about manufacturing and our improvement in the efficiencies there, that will reduce our cost of goods, which once again will start to impact 2026. We do get more of that in 2027, but it does start to impact in 2026. That improves our gross margin there. And then finally, the OPEX savings that we make, a significant amount of those do hit us in 2026. And don't forget, some of that does allow us to continue to invest in our innovative portfolio to make sure we can continue to grow that.

Speaker Change: And then when you think about some of the impacts of what Alex just mentioned about manufacturing and our improvement in.

Speaker Change: The efficiencies that that will reduce our cost of goods, which once again will start to impact 2006, we do get more of that in 2000 and somebody does start to impact in 'twenty six improves our gross margin and then finally, the opex savings that we make.

Speaker Change: <unk> amount of those do hit us in 2026.

Speaker Change: And don't forget some of that does allow us to continue to invest in.

Speaker Change: Innovative portfolio to make sure. We can you can you continue to grow that side sort of amplifies that.

Richard Francis: So that sort of amplifies that. So we have a very clear plan on this, Chris. It's very well laid out. We know exactly what we need to execute. I think we have a high degree of confidence that we can do that in 2026 and definitely by 2027. But I hope that answers most of your questions.

Speaker Change: We have a very clear plan on this crisis very well laid out we know exactly what we need to execute I think we have a high degree of confidence that we can do that in 2006 and definitely by 27.

Speaker Change: I hope that answers.

Speaker Change: Most of your question about going to hand, it to <unk> may be.

Eliyahu Kalif: I'm going to hand it to Eliyahu to maybe take that question around net savings. Chris, thanks for the question. So, to make it kind of, you know, a bit simple, if you think about us growing the business, it means that we need to invest more in aquaculture. What we're doing here is that part of those kind of savings, allowing us to keep at the OPEX range between 27 to 28% as a percentage of revenue, although from dollar perspective, we are growing our OPEX numbers, but the percentage stay more or less the same because we're growing revenue, which mean that element that's supposed to actually increase the OPEX is offset by those savings.

Speaker Change: <unk> take that question around net savings.

Chris Schott: Yes, Chris Thanks for the question so.

Speaker Change: To make it kind of a.

Speaker Change: A bit simple if you think about us growing the business. It means that we need to invest more in opex.

Speaker Change: What we're doing here is that they are.

Speaker Change: Part of those kind of savings, allowing us to keep at the Opex range between 27%, 28% as a percentage of revenue although.

From dollar perspective, we're growing our opex numbers, but the percentage stay more or less the same because we are growing revenue, which mean.

Speaker Change: That element that as opposed to actually increase the opex is offset by those savings and then optically what you will see you will see that actually the gross profit is actually increasing in the range of around 400 basis point now when you mentioned about the phasing I think that we try to be transparent as much as we can at this stage.

Eliyahu Kalif: And then optically, what you will see, you will see that actually the gross profit is actually increasing at the range of around 400 basis points. Now, when you mention about phasing, I think that we try to be transparent as much as we can at this stage. And on the slide on the bridge that I explained on the right side, we phase the 25, 6, and 7 and provide a kind of meaningful range of expansions on the basis points. And at that point, to go into kind of a more specific, I think that we will see it in our coming capital market day when you can get you kind of a more color around the phasing.

Speaker Change: And on the slide on the bridge that I explained on the right side, we faced the 25, 6% and seven and provide a kind of a meaningful range of expansions on on the basis points and at that point to go into kind of a more specific I think that we will see it coming capital market day, when you can get to you.

Speaker Change: For more color around the phasing.

Eliyahu Kalif: Thanks, Eliyahu. Thanks, Chris.

Speaker Change: Great. Thank you Thanks Ali.

Chris Schott: Thanks, Chris.

Yifeng Liu: Thank you.

Speaker Change: Thank you.

Yifeng Liu: Our final question for today comes from Yifeng Liu of HSBC. Your line is now open. Please go ahead. Thanks very much for... Comment on both similar LAI Portfolio How do you... Thank you very much. Thank you, Yifeng.

Speaker Change: Our final question for today comes from Fang Li of HSBC.

Speaker Change: Your line is now open. Please go ahead.

Speaker Change: Thanks, very much for taking my questions could you. Please comment on Biosimilars on that maybe what you're seeing this year, so far versus previous years.

Speaker Change: How are you thinking about.

Speaker Change: Yes.

Speaker Change: Next couple of years.

Speaker Change: Maybe just on your LOI for failure.

Speaker Change: We hear some of the new emergence antipsychotic therapy, which is a new mechanism of action how do you see this.

Speaker Change: Rick evolves in polka contacts with monotherapy.

Speaker Change: <unk> therapy.

Speaker Change: Thank you.

Richard Francis: So let me take those questions. I think that was a broad question. I don't think we see any real difference in the dynamics of this, but I always remind people to think about the parts of the market as the U.S. and Europe. They're very different markets in how they operate and the ability to penetrate them. So as you've highlighted, we started to see our portfolio come to the market in the U.S. as well as Europe over the next few years. So what I would say in the U.S. I think it's still a slow and steady and it depends on the product and it depends on the channel but we're excited that we have two new biosimilars in Q1 and I think that the team in the US is very capable of navigating what is an emerging market.

Speaker Change: So let me take those questions the biosimilar market.

Speaker Change: I think it was.

Speaker Change: A poll question I don't think we see any real difference in the dynamics of this.

Speaker Change: But I always remind people to think about the biosimilar market as the U S and Europe. They are very different markets and how they operate and the ability to penetrate them. So as you've highlighted we have we started to see our portfolio come to the market in the U S as well as Europe over the next few years.

Speaker Change: So what I would say in the U S.

Speaker Change: I think it's still a slow and steady and it depends on the product.

Speaker Change: And it depends on the channel.

Speaker Change: But we're excited that we have two new biosimilars in Q1, and I think that the team in the U S is very capable of navigating what is an emerging market.

Richard Francis: And then in Europe we do have the opportunity to launch a biosimilar product this year and we'll have more coming in the subsequent years where the penetration, the uptake is a lot quicker based on the healthcare systems there and what you've seen with biosimilars.

Speaker Change: And then in Europe, we do have the opportunity to launch a biosimilar product. This year and we will have more coming in the subsequent years, where the penetration. The uptake is a lot quicker based on the health care systems down and what <unk> seen with Biosimilars, but I think it's important to understand that our biosimilar portfolio will become more global as the years go on and has an extensive pause button laporta, hence the reason.

Richard Francis: But I think it's important to understand that our biosimilar portfolio will become more global as the years go on and it's an extensive biosimilar portfolio, hence the reason why we believe that can actually drive some good growth between now and 2027.

Speaker Change: And while we believe that can actually drive.

Speaker Change: Some good growth between now and 2027.

Eric Hughes: With regard to your LAI question, I'm going to hand it over to Eric because I want to make sure he has one question to answer today. So with regard to the LAI question, I think what we've seen in the schizophrenia market is that the need for efficacy and safety, well, they have a real history on that. And so what we've seen when we launched YOSETI, The Respirado market has really good traction and the team has done a great job with Yosetti. That's because we've developed a product which is very physician-friendly and very patient-friendly. The uptake into that competitive LAI market has been really good.

Speaker Change: With regards to your question on.

Speaker Change: <unk> is a bit of a dialogue going to hand it over.

Speaker Change: Eric because I want to make sure. He has one question to answer today.

Speaker Change: So with regard to the NII question I think what we've seen in <unk>.

Speaker Change: The schizophrenia market is.

Speaker Change: Is that the need for efficacy and safety.

Speaker Change: Well they have a real history on that and so what we've seen when we launch <unk>.

Speaker Change: Switching to the respiratory market, we've got really good traction and the team has done a great job with your study.

Speaker Change: Because we developed a product which is very physician friendly very patient friendly.

Speaker Change: Taken to that compared to the AG market has been at AI market has been really good.

Eric Hughes: We believe that we can expand into other molecules. That history of efficacy and safety physicians take very seriously when initiating any patient who has schizophrenia. I think with Olanzapine, don't forget Olanzapine is considered the most efficacious treatment for schizophrenia and the fact that there hasn't been a long-acting Olanzapine available that's widely used, should I say, I think there's real excitement about the product we're going to bring to market next year and we'll actually be bringing to the European market as well. So when it comes to new therapies entering, I think that is always looked at with enthusiasm.

Speaker Change: And we believe that we can expand into other molecules I think.

Speaker Change: That history of efficacy and safety physicians take very.

Speaker Change: Seriously when initiating any patients.

Speaker Change: Schizophrenia, I think with Olanzapine don't forget Olanzapine is considered the most efficacious treatment for schizophrenia, and the fact that there hasnt been a long acting olanzapine available that's widely used should I say.

Speaker Change: I think there's real excitement about the product, we're going to bring to market.

Speaker Change: Next year, and we'll actually be bringing to the European market as well.

Speaker Change: So when it comes to new therapies entering I think that is always.

Eric Hughes: I think it's great for patients. But I think physicians with such a condition also want to have a certainty of efficacy and safety and outcomes.

Speaker Change: Looked at with enthusiasm I think it's great for patients, but I think physicians with such a condition also want to have a certainty of efficacy and safety and outcomes, but maybe I'll hand that off to Eric to comment more yes. Thank you Richard Yes, Theres a few things I just want to add to what Richard just said so.

Eric Hughes: But maybe I'll hand that on to Eric to comment more. Yeah, thank you, Richard. Yeah, there's a few things I just wanna add to what Richard just said. So we're always welcome new mechanism of actions for the treatment of schizophrenia. Schizophrenia has a wide need for new treatments. There's still a large unmet medical need for patients with schizophrenia. The good news is with the treatments we have today, we can treat them. But the real value for long-acting injectables is addressing the adherence problem. That's the real reason that people still fail. They relapse, they get hospitalized, and their disease progresses.

Speaker Change: We're always welcome new mechanism of actions for the treatment of schizophrenia schizophrenia has a Y then.

Speaker Change: Wide need for new treatments, there is still a large unmet medical need for patients with schizophrenia. The good news.

Speaker Change: With the treatments we have today, we can treat them, but the real value for our long acting injectables is addressing the adherence problem, but that's the real reason that people still fail they relapse they get hospitalized.

Speaker Change: <unk> progresses so.

Eric Hughes: So new MOAs are welcome, but right now, getting a long-acting injectable and having a formulation that's as easy to use as we've developed for Uzeti and we're submitting for Olanzapine, this is using, as Richard said, a tried and true and tested MOA that people know. Now we're advancing it into a better way of giving it. And that really will impact what we need to do for patients. So we're very pleased with this franchise we're building and what we'll bring to the care of patients Thanks, Eric. Thanks for the time and for the questions. Thank you.

Speaker Change: New <unk> are welcome, but right now you're.

Speaker Change: Getting a long acting injectable and having a formulation that is easy to use as we've developed for <unk> and were submitting.

Richard Francis: Submitting for <unk>. This evening as Richard said, a tried and true and tested.

Richard Francis: Most people know now we're advancing it into a better way of giving it and that really will impact what we need to do for patients. So we're very pleased with this franchise, we're building and what we'll bring to the care of patients with schizophrenia.

Eric: Thanks, Eric Thanks for the question.

Operator: At this time, we currently have no further questions, so I'll hand back to the management team for any further remarks. So thank you everybody who dialed in. Thank you for your interest in Teva and your questions today. And I look forward to updating you in person at our Capital Markets Day later this month in New York. Thank you. Thank you all for joining today's call. You may now disconnect your lines. www.microsoft.com.ca

Speaker Change: Thank you at this time, we currently have no further questions. So I'll hand back to the management team for any further remarks.

Speaker Change: So thank you everybody who dialed in thank you for your interest in Teva on your questions today, and I look forward to updating you in person at our capital markets Day later this month and yield thank you.

Speaker Change: Thank you all for joining today's call you may now disconnect your lines.

Speaker Change: [music].

Speaker Change: Yeah.