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What changed in TEVA PHARMACEUTICAL INDUSTRIES LTD's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of TEVA PHARMACEUTICAL INDUSTRIES LTD's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+602 added−620 removedSource: 10-K (2024-02-12) vs 10-K (2023-02-10)

Top changes in TEVA PHARMACEUTICAL INDUSTRIES LTD's 2023 10-K

602 paragraphs added · 620 removed · 467 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

150 edited+37 added−42 removed109 unchanged
Biggest changeOur device strategy is intended to result in “device consistency,” allowing physicians to choose the device that best matches a patient’s needs both in terms of ease of use and effectiveness of delivery of the prescribed molecule, and includes three main types of devices: (i) Digihaler, which captures and shares objective inhaler use data; (ii) a breath-actuated inhaler (“BAI”) used in QVAR RediHaler ® ; and (iii) RespiClick (U.S.) or Spiromax (EU), a novel inhalation-driven multi-dose dry powder inhaler (“MDPI”).
Biggest changeOur device strategy is intended to result in “device consistency,” allowing physicians to choose the device that best matches a patient’s needs both in terms of ease of use and effectiveness of delivery of the prescribed molecule, and includes three main types of devices: (i) RespiClick (U.S.) or Spiromax (EU), a novel inhalation-driven multi-dose dry powder inhaler (“MDPI”); (ii) Digihaler, which uses the same RespiClick technology but allows users to capture and share objective inhaler use data; and (iii) a breath-actuated inhaler (“BAI”) used in QVAR RediHaler ® . 10 Table of Contents Our portfolio of inhalers utilizing innovative MDPI platform includes: • ProAir RespiClick (albuterol sulfate) inhalation powder is a breath-actuated, multi-dose, dry-powder, short-acting beta-agonist inhaler for the treatment or prevention of bronchospasm with reversible obstructive airway disease and for the prevention of exercise-induced bronchospasm in patients four years of age and older.
In these so-called “pure generic” markets, physicians and patients have little control over the choice of generic manufacturer, and consequently generic medicines are not actively marketed or promoted to physicians or consumers. Instead, the relationship between the manufacturer and pharmacy chains and distributors, health funds and other health insurers is critical.
In these so-called “pure generic” markets, physicians and patients have little control over the choice of generic manufacturer, and consequently generic medicines are not actively marketed or promoted to physicians or consumers. Instead, the relationship between the manufacturer and pharmacy chains, distributors, health funds and other health insurers is critical.
We have built specialized “Patient Support Programs” to help patients adhere to their treatments, improve patient outcomes and, in certain markets, to ensure timely delivery of medicines and assist in securing reimbursement. These programs reflect the importance we place on supporting patients and ensuring better medical outcomes for them.
We have built specialized “Patient Support Programs” to help patients adhere to their treatments, improve patient outcomes and, in certain markets, ensure timely delivery of medicines and assist in securing reimbursement. These programs reflect the importance we place on supporting patients and ensuring better medical outcomes for them.
Our other activities are not included in our North America, Europe and International Markets segments described above. Research and Development Our R&D activities span the breadth of our business, including generic medicines (finished goods and API), biosimilars, innovative medicines and OTC medicines.
Our other activities are not included in our North America, Europe and International Markets segments described above. Research and Development Our R&D activities span the breadth of our business, including innovative medicines, generic medicines (finished goods and API), biosimilars and OTC medicines.
In our International Markets, our global scale and broad portfolio give us a significant competitive advantage over local competitors, allowing us to optimize our offerings through a combination of high quality medicines and unique go-to-market approaches. Furthermore, in significant markets such as Japan and Russia, governments have issued or are in process of issuing regulations designed to increase generic penetration.
In our International Markets, our global scale and broad portfolio give us a competitive advantage over local competitors, allowing us to optimize our offerings through a combination of high-quality medicines and unique go-to-market approaches. Furthermore, in significant markets such as Japan and Russia, governments have issued or are in process of issuing regulations designed to increase generic penetration.
We launched BENDEKA in the United States in January 2016. It is a liquid, low-volume (50 mL) and short-time 10-minute infusion formulation of bendamustine hydrochloride that we licensed from Eagle. • BENDEKA faces direct competition from Belrapzo ® (a ready-to-dilute bendamustine hydrochloride product from Eagle).
We launched BENDEKA in the United States in January 2016. It is a liquid, low-volume (50 mL) and short-time 10-minute infusion formulation of bendamustine hydrochloride that we licensed from Eagle. • BENDEKA faces direct competition from Belrapzo ® (a ready-to-dilute bendamustine hydrochloride product from Eagle) and from Vivimusta ® .
Operations We operate our business globally and believe that our global infrastructure provides us with the following capabilities and advantages: • global R&D facilities that enable us to have a broad global generic pipeline and product line, as well as a focused pipeline of innovative medicines; • API manufacturing capabilities that offer a stable, high-quality supply of key APIs, vertically integrated with our pharmaceutical operations; 13 Table of Contents • pharmaceutical manufacturing facilities approved by the FDA, EMA and other regulatory authorities located around the world, which offer a broad range of production technologies and the ability to concentrate production in order to achieve high quality and economies of scale; and • high-volume, technologically advanced distribution facilities for solid dosage forms, injectable and blow-fill-seal, which are available mainly in North America, Europe, Latin America, India and Israel and that allow us to deliver new products to our customers quickly and efficiently, providing a cost-effective, safe and reliable supply.
Operations We operate our business globally and believe that our global infrastructure provides us with the following capabilities and advantages: • global R&D facilities that enable us to have a broad global generic pipeline and product line, as well as a focused pipeline of innovative medicines; • API manufacturing capabilities that offer a stable, high-quality supply of key APIs, vertically integrated with our pharmaceutical operations; • pharmaceutical manufacturing facilities approved by the FDA, EMA and other regulatory authorities located around the world, which offer a broad range of production technologies and the ability to concentrate production in order to achieve high quality and economies of scale; and • high-volume, technologically advanced distribution facilities for solid dosage forms, injectable and blow-fill-seal, which are available mainly in North America, Europe, Latin America, India and Israel, and which allow us to deliver new products to our customers quickly and efficiently, providing a cost-effective, safe and reliable supply.
These capabilities provide us with the means to respond on a global scale to a wide range of therapeutic and commercial requirements of patients, customers and healthcare providers. Pharmaceutical Production We operate 39 finished dosage and packaging pharmaceutical plants in 27 countries. These plants manufacture solid dosage forms, sterile injectables, liquids, semi-solids, inhalers, transdermal patches and other medicinal products.
These capabilities provide us with the means to respond on a global scale to a wide range of therapeutic and commercial requirements of patients, customers and healthcare providers. Pharmaceutical Production We operate 36 finished dosage and packaging pharmaceutical plants in 27 countries. These plants manufacture solid dosage forms, sterile injectables, liquids, semi-solids, inhalers, transdermal patches and other medicinal products.
Please see the section entitled “Environmental” from Teva’s 2021 ESG Progress Report (which is located on our website) for more detailed information regarding our environmental goals and activities. Nothing on our website, including Teva’s 2021 ESG Progress Report or sections thereof, shall be deemed incorporated by reference into this Annual Report or any other filing with the U.S.
Please see the section entitled “Environmental” from Teva’s 2022 ESG Progress Report (which is located on our website) for more detailed information regarding our environmental goals and activities. Nothing on our website, including Teva’s 2022 ESG Progress Report or sections thereof, shall be deemed incorporated by reference into this Annual Report or any other filing with the U.S.
In the U.S., the Teva Employee Resource Group Network represents ten distinct ERGs, which have a key role in creating a culture of inclusion and bringing together employees with shared characteristics and life experiences. These ERGs foster opportunities for networking, mentoring, collaboration, community outreach, career development, leadership training and cultural exchanges.
In the U.S., the Teva Employee Resource Group Network represents ten distinct ERGs, which have a key role in creating a culture of inclusion and bringing together employees with shared characteristics and life experiences to foster opportunities for networking, mentoring, collaboration, community outreach, career development, leadership training and cultural exchanges.
You may review these filings on the website of the MAGNA system operated by the Israeli Securities Authority at www.magna.isa.gov.il or on the website of the Tel Aviv Stock Exchange (the “TASE”) at www.tase.co.il. Our 2022 ESG Progress report, which will provide enhanced ESG disclosures, is expected to be published in May 2023.
You may review these filings on the website of the MAGNA system operated by the Israeli Securities Authority at www.magna.isa.gov.il or on the website of the Tel Aviv Stock Exchange (the “TASE”) at www.tase.co.il. Our 2023 ESG Progress report, which will provide enhanced ESG disclosures, is expected to be published in May 2024.
However, our ability to do so may be limited by regulatory and other requirements. We closed or divested a significant number of manufacturing plants in the United States, Europe, Israel and Japan in connection with a restructuring plan. We are continuing our ongoing efforts to consolidate our manufacturing and supply network.
However, our ability to do so may be limited by regulatory and other requirements. In recent years, we closed or divested a significant number of manufacturing plants in the United States, Europe, Israel and Japan in connection with a restructuring plan. We are continuing our ongoing efforts to consolidate our manufacturing and supply network.
Oversight Our Human Resources and Compensation Committee, Compliance Committee and Board play key roles in overseeing culture and talent at Teva and devote time throughout the year to human capital strategy and execution in such areas as: inclusion and diversity, Company culture, employee engagement, training and development, recruiting and turnover, leadership development and succession planning.
Oversight Our Human Resources and Compensation Committee, Compliance Committee and Board of Directors play key roles in overseeing culture and talent at Teva and devote time throughout the year to human capital strategy and execution in such areas as: inclusion and diversity, Company culture, employee engagement, training and development, recruiting and turnover, leadership development and succession planning.
The IRA also imposes rebate requirements on manufacturers of single-source generics and other drugs covered under Medicare Part B and Part D where the price of the drug increases faster than inflation. Multisource generics and all products with an average manufacturer’s price less than $100 per year, per individual, are exempt from rebate requirements.
The IRA also imposes rebate requirements on manufacturers of single-source generics and other drugs covered under Medicare Part B and Part D where the price increases of the drug outpaces inflation. Multisource generics and all products with an average manufacturer’s price less than $100 per year, per individual, are exempt from rebate requirements.
We license or assign certain intellectual property rights to third parties in connection with certain business transactions. Environment, Health and Safety We are committed to business practices that promote socially and environmentally responsible economic growth. During 2022, we continued to make significant progress on our ESG strategy.
We license or assign certain intellectual property rights to third parties in connection with certain business transactions. Environment, Health and Safety We are committed to business practices that promote socially and environmentally responsible economic growth. During 2023, we continued to make significant progress on our ESG strategy.
The purpose of this extension is to increase effective patent life (i.e., the period between grant of a marketing authorization and patent expiry) to 15 years. Subject to the respective pediatric regulation, the holder of an SPC may obtain a further patent term extension of up to six months under certain conditions.
The purpose of this extension is to increase effective patent life (i.e., the period between grant of a marketing authorization and patent expiration) to 15 years. Subject to the respective pediatric regulation, the holder of an SPC may obtain a further patent term extension of up to six months under certain conditions.
Various state Medicaid programs have implemented voluntary supplemental drug rebate programs that may provide states with additional manufacturer rebates in exchange for preferred status on a state’s formulary or for patient populations that are not included in the traditional Medicaid drug benefit coverage.
All state Medicaid programs have implemented voluntary supplemental drug rebate programs that may provide states with additional manufacturer rebates in exchange for preferred status on a state’s formulary or for patient populations that are not included in the traditional Medicaid drug benefit coverage.
In July 2019, the SPC Manufacturing Waiver Regulation came into force in the European Union (subject to certain conditions) allowing products manufactured prior to SPC expiry to be exempt from SPC infringement if such products are manufactured for export to non-European Union markets or for launch in the European Union upon expiry of the SPC.
In July 2019, the SPC Manufacturing Waiver Regulation came into force in the European Union (subject to certain conditions) allowing products manufactured prior to SPC expiration to be exempt from SPC infringement if such products are manufactured for export to non-European Union markets or for launch in the European Union upon expiration of the SPC.
Additionally, the California Consumer Privacy Act (“CCPA”) established a new privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
Additionally, the California Consumer Privacy Act (“CCPA”) established a privacy framework for covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory 25 Table of Contents damages framework for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches.
In addition to these three segments, we have other activities, primarily the sale of active pharmaceutical ingredients (“API”) to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. 2 Table of Contents For information regarding our major customers, see note 19 to our consolidated financial statements.
In addition to these three segments, we have other activities, primarily the sale of active pharmaceutical ingredients (“API”) to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. For information regarding our major customers, see note 19 to our consolidated financial statements.
In 2022, we completed numerous inspections by various regulatory agencies of our finished dosage pharmaceutical and API plants and we actively engaged in discussions with authorities to mitigate drug shortages and participated in several industry-wide task forces.
In 2023, we completed numerous inspections by various regulatory agencies of our finished dosage pharmaceutical and API plants and we actively engaged in discussions with authorities to mitigate drug shortages and participated in several industry-wide task forces.
For information about our product launches and pipeline of generic medicines in North America and Europe, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Information—North America Segment” and “Item 7—Management’s Discussions and Analysis of Financial Condition and Results of Operations—Segment Information—Europe Segment.” 5 Table of Contents Biologic medicines are large and complex medicines produced by or made from living cells or organisms, often produced using cutting-edge biotechnological methods.
For information about our product launches and pipeline of generic medicines in North America and Europe, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Segment Information—North America Segment” and “Item 7—Management’s Discussions and Analysis of Financial Condition and Results of Operations—Segment Information—Europe Segment.” Biologic medicines are large and complex medicines produced by or made from living cells or organisms, often produced using cutting-edge biotechnological methods.
Our facilities in various locations worldwide include two large development centers focusing on synthetic products, three centers with specific expertise specializing in fermentation and semi-synthetic products, a center for oligonucleotides and peptides and centers for high-potency APIs.
Our facilities in various locations worldwide include two large development centers focusing on synthetic products, four centers with specific expertise specializing in fermentation and semi-synthetic products, a center for oligonucleotides and peptides and centers for high-potency APIs.
In certain circumstances, violations could lead to criminal prosecution. 20 Table of Contents The Drug Price Competition and Patent Term Restoration Act (the “Hatch-Waxman Act”) established the procedures for obtaining FDA approval for generic forms of brand-name drugs. This act also provides market exclusivity provisions that can delay the approval of certain NDAs and ANDAs.
In certain circumstances, violations could lead to criminal prosecution. The Drug Price Competition and Patent Term Restoration Act (the “Hatch-Waxman Act”) established the procedures for obtaining FDA approval for generic forms of brand-name drugs. This act also provides market exclusivity provisions that can delay the approval of certain NDAs and ANDAs.
Nothing on our website, including our 2021 ESG Progress Report or sections thereof, shall be deemed incorporated by reference into this Annual Report or any other filing with the Securities and Exchange Commission.
Nothing on our website, including our 2022 ESG Progress Report or sections thereof, shall be deemed incorporated by reference into this Annual Report or any other filing with the Securities and Exchange Commission.
In return for this additional funding, the FDA has entered into agreements with each of the affected industries (known as the “user fee agreements”) that commit the agency to interacting with manufacturers and reviewing applications such as NDAs, ANDAs and BLAs in certain ways, and taking action on those applications at certain times.
In return for this additional funding, the FDA has entered into agreements with each of the affected industries (known as the “user fee agreements”) that commit the agency to interacting with manufacturers and reviewing applications such as NDAs, ANDAs and BLAs in certain ways, and taking action on those applications 21 Table of Contents at certain times.
Facilities that manufacture, distribute, conduct chemical analysis, import or export any controlled substance must register annually with the DEA. The DEA performs an inspection of all entities requesting a DEA registration prior to issuing a controlled substance registration for review of the facility and material security, material handling procedures, record keeping, and reporting procedures.
Facilities that manufacture, distribute, conduct chemical analysis, import or export any controlled substance must register annually with the DEA. The DEA performs an inspection of all entities requesting a DEA registration prior to issuing a controlled substance registration for review of the facility and material security, material handling procedures, record keeping, and 20 Table of Contents reporting procedures.
We also have innovative medicines in oncology and selected other areas. We deploy medical and sales and marketing professionals within specific therapeutic areas who seek to address the needs of patients and healthcare professionals. We tailor our patient support, payer relations and medical affairs activities to the distinct characteristics of each therapeutic area and medicine.
We also have innovative medicines in oncology and selected other areas. 6 Table of Contents We deploy medical and sales and marketing professionals within specific therapeutic areas who seek to address the needs of patients and healthcare professionals. We tailor our patient support, payer relations and medical affairs activities to the distinct characteristics of each therapeutic area and medicine.
Further, the generic product will be barred from market entry (marketing exclusivity) for a further two years, with the possibility of extending the market exclusivity by one additional year under certain circumstances. As part of the European Commission’s review of the general pharmaceutical legislation, the provisions relating to 23 Table of Contents regulatory exclusivity are currently under review.
Further, the generic product will be barred from market entry (marketing exclusivity) for a further two years, with the possibility of extending the market exclusivity by one additional year under certain circumstances. As part of the European Commission’s review of the general pharmaceutical legislation, the provisions relating to regulatory exclusivity are currently under review.
We anticipate that the downward pressure on uptake may ease in the future as physicians and payers become increasingly aware of the benefits of biosimilars and more comfortable prescribing them. Our innovative medicines business faces intense competition from both innovative and generic pharmaceutical companies.
We anticipate that the downward pressure on uptake may ease in the future as physicians and payers become increasingly aware of the benefits of biosimilars and more comfortable prescribing them. 16 Table of Contents Our innovative medicines business faces intense competition from both innovative and generic pharmaceutical companies.
Generally, for generic drugs marketed under ANDAs, manufacturers (including Teva) are required to rebate 13% of the average manufacturer price, and for products marketed under NDAs or BLAs, manufacturers are required to rebate the 22 Table of Contents greater of 23.1% of the average manufacturer price or the difference between such price and the commercial best price during a specified period.
Generally, for generic drugs marketed under ANDAs, manufacturers (including Teva) are required to rebate 13% of the average manufacturer price, and for products marketed under NDAs or BLAs, manufacturers are required to rebate the greater of 23.1% of the average manufacturer price or the difference between such price and the commercial best price during a specified period.
AJOVY was launched in the U.S. in 2018 and was approved in Canada in April 2020. • During 2019, AJOVY was granted a marketing authorization in the European Union by the European Medicines Agency (“EMA”) in a centralized process and began receiving marketing authorizations in various countries in our International Markets segment. AJOVY was launched in Japan in August 2021.
AJOVY was launched in the U.S. in 2018 and was approved in Canada in April 2020. • During 2019, AJOVY was granted a marketing authorization in the European Union by the European Medicines Agency (“EMA”) in a centralized process and began receiving marketing authorizations in various countries in our International Markets segment.
Teva was incorporated in Israel on February 13, 1944 and is the successor to a number of Israeli corporations, the oldest of which was established in 1901. Our Business Segments We operate our business through three segments: North America, Europe and International Markets.
Teva was incorporated in Israel on February 13, 1944 and is the successor to a number of Israeli corporations, the oldest of which was established in 1901. 2 Table of Contents Our Business Segments We operate our business through three segments: North America, Europe and International Markets.
Innovative Medicines Our innovative medicines business, previously referred to as our specialty medicines business, is focused on delivering innovative solutions to patients and providers via medicines, devices and services in key regions and markets around the world, and includes our core therapeutic areas of CNS (with a strong emphasis on neurodegenerative disorders, neuropsychiatry, movement disorders, migraine and MS) and respiratory medicines (with a focus on asthma and COPD).
Innovative Medicines Our innovative medicines business is focused on delivering innovative solutions to patients and providers via medicines, devices and services in key regions and markets around the world, and includes our core therapeutic areas of CNS (with a strong emphasis on neurodegenerative disorders, neuropsychiatry, movement disorders, migraine and MS) and respiratory medicines (with a focus on asthma and COPD).
Generics are required to meet similar governmental requirements as their brand-name equivalents, such as those relating to current Good Manufacturing Practices (“cGMP”), manufacturing processes and health authorities’ inspections, and must receive regulatory approval 4 Table of Contents prior to their sale in any given country.
Generics are required to meet similar governmental requirements as their brand-name equivalents, such as those relating to current Good Manufacturing Practices (“cGMP”), manufacturing processes and health authorities’ inspections, and must receive regulatory approval prior to their sale in any given country.
We are continuing our ongoing efforts regarding network consolidation activities and optimization of our global generics portfolio. In markets such as the United States, the United Kingdom, Canada, the Netherlands and Israel, generic medicines may be substituted by the pharmacist for their brand name equivalent or prescribed by International Nonproprietary Name (“INN”).
We are continuing our ongoing efforts regarding network consolidation activities and optimization of our global generics portfolio, to support our Pivot to Growth strategy. In markets such as the United States, the United Kingdom, Canada, the Netherlands and Israel, generic medicines may be substituted by the pharmacist for their brand name equivalent or prescribed by International Nonproprietary Name (“INN”).
It is indicated for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia in adults, which is a debilitating, often irreversible movement disorder caused by certain medications used to treat mental health or gastrointestinal conditions. • AUSTEDO was launched in China in early 2021, and was also launched in Israel during 2021.
It is indicated for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia in adults, which is a debilitating, often irreversible movement disorder caused by certain medications used to treat mental health or gastrointestinal conditions. • AUSTEDO was launched in China and Israel in 2021 and in Brazil in 2022.
For example, in 2021, the most recent year for which findings are available, we conducted comprehensive equitable pay research among 100% of our employees, and found that among those in the same level, function/profession and location, we pay our women employees an average of 1% more than our male employees in terms of annual base salaries.
For example, in 2022, the most recent year for which findings are available, we conducted comprehensive equitable pay research among 100% of our employees, and found that among those in the same level, function/profession and location, we pay our women employees an average of 0.4% more than our male employees in terms of annual base salaries.
The FDA granted deutetrabenazine New Chemical Entity exclusivity until April 2022 and Orphan Drug exclusivity for the treatment of chorea associated with Huntington’s disease until April 2024. 7 Table of Contents • AUSTEDO was launched in the U.S. in 2017.
The FDA granted deutetrabenazine New Chemical Entity exclusivity until April 2022 and Orphan Drug exclusivity for the treatment of chorea associated with Huntington’s disease until October 2024. • AUSTEDO was launched in the U.S. in 2017.
Our leading product, COPAXONE, continues to be among the leading products for the treatment of MS, though new treatments are being introduced to various markets in Europe. AJOVY was granted EU marketing authorization in 2019 and, as of December 31, 2022, we have launched AJOVY in most European countries and we are planning to launch AJOVY in other European countries.
Our leading product in Europe, COPAXONE, continues to be among the primary products for the treatment of MS, though new treatments are being introduced to various markets in Europe. AJOVY was granted EU marketing authorization in 2019 and, as of December 31, 2023, we have launched AJOVY in most European countries.
Proposed changes are expected to be published in 2023, although the implementation date and transitional provisions are unclear. The term of certain pharmaceutical patents may be extended in the European Union by up to five years upon grant of Supplementary Patent Certificates (“SPC”).
Proposed changes have been published in 2023, although the implementation date and transitional provisions remain unclear. The term of certain pharmaceutical patents may be extended in the European Union by up to five years upon grant of Supplementary Patent Certificates (“SPC”).
In 2022, we produced approximately 75 billion tablets and capsules and approximately 600 million sterile units. The manufacturing sites located in North America, Europe, Latin America, India and Israel make up the majority of our production capacity. We use several external contract manufacturers to achieve operational and cost benefits.
In 2023, we produced approximately 77 billion tablets and capsules and approximately 573 million sterile units. The manufacturing sites located in North America, Europe, Latin America, India and Israel make up the majority of our production capacity. We use several external contract manufacturers to achieve operational and cost benefits.
On Environment, Health and Safety (“EHS”), among other things, in 2022: • we continued the implementation of our global EHS management system in all countries where we operate, which promotes proactive compliance with applicable EHS requirements, establishes EHS standards throughout our global operations and helps drive continuous improvement in our EHS performance; • proactively evaluated EHS compliance through self-evaluation and an internal audit program in addition to some external audits, addressing non-conformities through appropriate corrective and preventative action; and • continued to promote climate change mitigation and adaptation strategy according to international standards.
On Environment, Health and Safety (“EHS”), among other things, in 2023: • we continued the implementation of our global EHS management system in all countries where we operate, which promotes proactive compliance with applicable EHS requirements, establishes EHS standards throughout our global operations and helps drive continuous improvement in our EHS performance; • proactively evaluated EHS compliance through self-evaluation and an internal audit program in addition to some external audits, addressing non-conformities through appropriate corrective and preventative action; • developed EHS leading indicators to drive consistent work patterns of high performing organizations; and • continued to promote climate change mitigation and adaptation strategy according to international standards.
Information in our ESG Progress Report shall not be deemed incorporated by reference into this Annual Report or any other filing with the SEC.
Information in our ESG Progress Report shall not be deemed incorporated by reference into this Annual Report or any other filing with the SEC. 26 Table of Contents
Europe General In Europe, marketing authorizations for pharmaceutical products may be obtained either through a centralized procedure for a license valid in all member countries of the European Union, which is granted by the EMA, or licenses granted by the national competent authorities via a mutual recognition procedure which requires submission of applications in other chosen member states following approval by a so-called reference member state, a decentralized procedure that entails simultaneous submission of applications to chosen member states or occasionally through a local national procedure.
Europe General In Europe, marketing authorizations for pharmaceutical products may be obtained either through a centralized procedure for a license valid in all member countries of the European Union, which is granted by the EMA, or licenses granted by the national competent authorities via a mutual recognition procedure which requires submission of applications in other chosen member states following approval by a so-called reference member state, a decentralized procedure that entails simultaneous submission of applications to chosen member states or occasionally through a local national procedure. 22 Table of Contents During 2022, we continued to register products in the European Union, primarily using the decentralized procedure (simultaneous submission of applications to chosen member states).
While our focus is on internal growth that leverages our R&D capabilities, we have entered into, and expect to pursue, in-licensing, acquisition and partnership opportunities to supplement and expand our existing innovative medicines and biosimilar pipeline (e.g., the transactions with Alvotech and Modag).
While our focus is on internal growth that leverages our R&D capabilities, we have entered into, and expect to pursue, in-licensing, acquisition, collaboration, funding and other partnership opportunities to supplement and expand our existing innovative medicines and biosimilar pipeline (e.g., the transactions with Alvotech, Modag, Sanofi, Royalty Pharma and Biolojic).
COPAXONE • COPAXONE (glatiramer acetate injection) continues to play an important role in the treatment of MS in the United States (according to IQVIA data as of late 2022).
COPAXONE • COPAXONE (glatiramer acetate injection) continues to play an important role in the treatment of MS in the United States (according to IQVIA data as of late 2023) and in Europe.
Securities and Exchange Commission. Quality We are committed not only to complying with quality requirements but to developing and leveraging quality as a competitive advantage.
Securities and Exchange Commission. 15 Table of Contents Quality We are committed not only to complying with quality requirements but to developing and leveraging quality as a competitive advantage.
Employee Career Growth, Training and Development We invest in employee career growth and development at Teva. Our talent development programs benefit employees individually by providing them with the resources they need to enhance their professional and management abilities, develop leadership skills and achieve their career aspirations, which in turn helps us to remain competitive in our industry.
Our talent development programs benefit employees individually by providing them with the resources they need to enhance their professional and management abilities, develop leadership skills and achieve their career aspirations, which in turn helps us to remain competitive in our industry.
Anda, our distribution business in the United States, distributes generic, innovative and OTC pharmaceutical products from various third-party manufacturers to independent retail pharmacies, pharmacy retail chains, hospitals and physician offices in the United States.
Anda, our distribution business in the United States, distributes generic and innovative medicines and OTC pharmaceutical products from Teva and various third-party manufacturers to independent retail pharmacies, 3 Table of Contents pharmacy retail chains, hospitals and physician offices in the United States.
We believe that our primary competitive advantages include our commercial marketing teams, global R&D capabilities, the body of scientific evidence substantiating the safety and efficacy of our various medicines, our patient-centric solutions, physician and patient experience with our medicines and our medical capabilities, which are tailored to our product offerings, regional and local markets and the needs of our stakeholders. 16 Table of Contents Human Capital Management Our People Our employees are the heart of our Company.
We believe that our primary competitive advantages include our commercial marketing teams, global R&D capabilities, the body of scientific evidence substantiating the safety and efficacy of our various medicines, our patient-centric solutions, physician and patient experience with our medicines and our medical capabilities, which are tailored to our product offerings, regional and local markets and the needs of our stakeholders.
In November 2013, the federal Drug Supply Chain Security Act (the “DSCSA”) became effective in the United States, mandating an industry-wide, national serialization system for pharmaceutical packaging with a ten-year phase-in process. By November 2018, all manufacturers and re-packagers were required to mark each prescription drug package with a unique serialized code.
In November 2013, the federal Drug Supply Chain Security Act (the “DSCSA”) became effective in the United States, mandating an industry-wide, electronic, interoperable system to trace prescription drugs through the pharmaceutical distribution supply chain with a ten-year phase-in process. By November 2018, all manufacturers and re-packagers were required to mark each prescription drug package with a unique serialized code.
Anda is able to compete in the secondary distribution market by maintaining high inventory levels for a broad offering of products, competitive pricing and offering next day delivery throughout the United States. Europe Our Europe segment includes the European Union, the United Kingdom and certain other European countries. We are one of the leading generic pharmaceutical companies in Europe.
Anda is able to compete in the distribution market by maintaining a broad portfolio of products, competitive pricing and delivery throughout the United States. Europe Our Europe segment includes the European Union, the United Kingdom and certain other European countries. We are one of the leading generic pharmaceutical companies in Europe.
In particular, HHS is directed to negotiate a subset of medicines with the highest annual expenditures to Medicare Parts B and D that have been on the market for 9 years (or 13 years for biologics) without an available generic (or biosimilar) on the market.
Department of Health and Human Services (“HHS”) is directed to negotiate a subset of medicines with the highest annual expenditures to Medicare Parts B and D that have been on the market for 9 years (or 13 years for biologics) without an available generic (or biosimilar) on the market.
Our Product Portfolio and Business Offering Our product and service portfolio includes generic medicines, biopharmaceuticals, innovative medicines, OTC products, a distribution business, API and contract manufacturing. Each region manages the entire range of products and services offered in its region and our global marketing and portfolio function optimizes our pipeline and product lifecycle across therapeutic areas.
Our Product Portfolio and Business Offering Our product and service portfolio includes generic medicines, biopharmaceuticals, innovative medicines, OTC products, a distribution business, API and contract manufacturing. Each region manages the entire range of products and services offered in its region and our generics, biosimilars and innovative franchise units optimize our pipeline and product lifecycle across therapeutic areas.
District Court for the District of Massachusetts alleging that Eli Lilly & Co.’s (“Lilly”) marketing and sale of its galcanezumab product for the treatment of migraine infringes nine Teva patents, including three method of treatment patents and six composition of matter patents.
District Court for the District of Massachusetts alleging that Eli Lilly & Co.’s (“Lilly”) marketing and sale of its galcanezumab product for the treatment of migraine infringes nine Teva patents, including three method of treatment patents and six composition of matter patents. Lilly then submitted IPR petitions to the PTAB, challenging the validity of the nine Teva patents.
Our portfolio also includes ProAir RespiClick ® , QVAR, BRALTUS ® , CINQAIR/CINQAERO ® , DuoResp ® Spiromax ® and AirDuo ® RespiClick ® / ArmonAir ® RespiClick. We are committed to maintaining a leading presence in the respiratory market by delivering a range of medicines for the treatment of asthma and COPD.
The list of products includes ProAir RespiClick ® , QVAR ® , BRALTUS ® , CINQAIR/CINQAERO ® , DuoResp ® Spiromax ® and AirDuo ® RespiClick ® . We are committed to maintaining a meaningful presence in the respiratory market by delivering a range of medicines for the treatment of asthma and COPD.
By the end of 2022, we launched AJOVY in most European countries and in certain International Markets countries, such as Australia, Israel, South Korea, Brazil and others.
By the end of 2023, we launched AJOVY in most European countries and in certain countries within our International Markets segment, such as Japan, Australia, Israel, South Korea, Brazil and others.
Biosimilar Products Pipeline We have additional biosimilar products in development internally and with our partners that are in various stages of clinical trials and regulatory review worldwide, including phase 3 clinical trials for biosimilars to Prolia ® (denosumab), Xolair ® (omalizumab) and Eylea ® (afilbercept), a biosimilar to Lucentis ® (ranibizumab) that was submitted in Canada, and biosimilars to Stelara ® (ustekinumab) and to Humira ® (adalimumab), each of which are currently under U.S. regulatory review.
Biosimilar Products Pipeline We have additional biosimilar products in development internally and with our partners that are in various stages of clinical trials and regulatory review worldwide, including Phase 3 clinical trials for biosimilars to 13 Table of Contents Prolia ® / Xgeva ® (denosumab), Xolair ® (omalizumab), Eylea ® (afilbercept) and Simponi ® (golimumab), biosimilars to Stelara ® (ustekinumab) and to Humira ® (adalimumab), each of which are currently under U.S. regulatory review.
In addition, a number of states, including New York, have enacted legislation that requires entities to pay assessments or taxes on the sale or distribution of opioid medications in order to address the misuse of prescription opioid medications.
In addition, a number of states, including New York, have enacted legislation that requires entities to pay assessments or taxes on the sale or distribution of opioid medications in order to address the misuse of prescription opioid medications. Finally, a number of states have implemented IRA-like price controls on pharmaceutical manufacturers.
A trial against the remaining 505(b)(2) NDA filer, DRL, is set to begin in May 2023. • In addition to the settlement with Eagle regarding its bendamustine 505(b)(2) NDA, between 2015 and 2020, we reached final settlements with 22 ANDA filers for generic versions of the lyophilized form of TREANDA and one 505(b)(2) NDA filer for a generic version of the liquid form of TREANDA, providing for the launch of generic versions of TREANDA prior to patent expiration.
District Court for the District of Delaware. • In addition to the settlement with Eagle regarding its bendamustine 505(b)(2) NDA, between 2015 and 2020, we reached final settlements with 22 ANDA filers for generic versions of the lyophilized form of TREANDA and one 505(b)(2) NDA filer for a generic version of the liquid form of TREANDA, providing for the launch of generic versions of TREANDA prior to patent expiration.
We have been optimizing our global generics portfolio, particularly in the United States, through product discontinuation and price adjustments, with a focus on increasing profitability. This resulted in the restructuring and optimization of our generics business, including our manufacturing and supply network, and the closure or divestment of a significant number of manufacturing plants around the world.
We have been optimizing our global generics portfolio through product discontinuation and price adjustments, with a focus on high-value generics, including complex generics. This resulted in the restructuring 5 Table of Contents and optimization of our generics business, including our manufacturing and supply network, and the closure or divestment of a significant number of manufacturing plants around the world.
By the end of 2022, we launched AJOVY in certain countries within our International Markets segment, such as Australia, Israel, South Korea, Brazil and others. AUSTEDO was launched in China in 2021 and in Brazil in 2022.
By the end of 2023, we launched AJOVY in certain countries within our International Markets segment, such as Japan, Australia, Israel, South Korea, Brazil and others.
We have also received approval from the EMA for AJOVY’s auto-injector submission in the European Union in October 2019, and we commenced launch in March 2020. • AJOVY is the only anti-CGRP subcutaneous product indicated for quarterly treatment. • AJOVY is protected by patents expiring in 2026 in Europe and in 2027 in the United States.
We have also received approval from the EMA for AJOVY’s auto-injector submission in the European Union in October 2019, and we commenced launch in March 2020. • AJOVY is the only anti-CGRP subcutaneous product indicated for quarterly treatment. • AJOVY is protected worldwide by patents expiring in 2026 at the earliest; extensions have been granted in several countries, including the United States and in Europe, until 2031.
The majority of the countries in which we market our products have enacted privacy regulation. In 2022, the existing privacy legislation in Russia and Japan were amended. We and our partners are implementing measures as needed to comply with such privacy requirements.
The vast majority of the countries in which we market our products have enacted and/or amended privacy regulation. We and our partners are implementing measures as needed to comply with such privacy requirements.
For example, our organizations in many countries introduced or expanded employee assistance programs to cover psychological support and counseling for employees and their families and we included wellbeing as part of our managerial training programs.
We offer programs and initiatives that promote healthy diet, physical activity and mental wellbeing. For example, our organizations in many countries introduced or expanded employee assistance programs to cover psychological support and counseling for employees and their families and we included wellbeing as part of our managerial training programs.
The following table presents our workforce headcount by employment type: December 31, 2022 2021 2020 Full-time 34,004 34,713 37,100 Part-time 1,121 1,266 1,272 Contractor 1,701 1,558 1,844 Total 36,826 37,537 40,216 Total full time equivalent 36,520 37,037 39,717 The following table presents our workforce headcount by geographic area (excluding contractors): December 31, 2022 2021 2020 North America 6,099 6,302 6,918 Europe 17,834 18,122 18,569 International Markets (excluding Israel) 7,952 7,955 9,210 Israel 3,240 3,600 3,675 Total (excluding contractors) 35,125 35,979 38,372 We monitor our employee turnover on an ongoing basis, as it is an important indicator in connection with our human capital management that informs our understanding of our retention, recruitment and talent engagement.
The following table presents our workforce headcount by employment type: December 31, 2023 2022 2021 Full-time 35,001 34,004 34,713 Part-time 1,471 1,121 1,266 Contractor 1,379 1,701 1,558 Total 37,851 36,826 37,537 Total full time equivalent 37,226 36,520 37,037 The following table presents our workforce headcount by geographic area (excluding contractors): December 31, 2023 2022 2021 North America 6,330 6,099 6,302 Europe 18,602 17,834 18,122 International Markets (excluding Israel) 8,155 7,952 7,955 Israel 3,385 3,240 3,600 Total (excluding contractors) 36,472 35,125 35,979 17 Table of Contents We monitor our employee turnover on an ongoing basis, as it is an important indicator in connection with our human capital management that informs our understanding of our retention, recruitment and talent engagement.
Our innovative medicines business may continue to be affected by price reforms and changes in the political landscape, following recent public debate in the United States.
Our innovative medicines business may continue to be affected by price reforms and changes in the political landscape.
In Japan, one of our key markets within our International Markets segment, we operate a majority of our business through a business venture with Takeda Pharmaceutical Companies Limited (“Takeda”), in which we own a 51% stake and Takeda owns the remaining 49%.
In Japan, one of our key markets within our International Markets segment, we operate a majority of our business through a business venture with Takeda Pharmaceutical Companies Limited (“Takeda”), in which we own a 51% stake and Takeda owns the remaining 49%. Our innovative medicines portfolio in our International Markets segment focuses on three main areas: CNS, respiratory and oncology.
Our current R&D capabilities include solid oral dosage forms (such as tablets and capsules), inhalation, semi-solid and liquid formulations (such as ointments and creams), sterile formulations and other dosage forms, and delivery systems, such as matrix systems, special coating systems for sustained release products, orally disintegrating systems, sterile systems, such as vials, syringes, blow-fill-seal systems, long-acting release injectable, transdermal patches, oral thin film, drug device combinations and nasal delivery systems.
Our current R&D capabilities include solid oral dosage forms (such as tablets and capsules), inhalation, semi-solid and liquid formulations (such as ointments and creams), sterile formulations and other dosage forms, and delivery systems, such as matrix systems, special coating systems for sustained release products, orally disintegrating systems, sterile systems, such as vials, syringes, blow-fill-seal systems, long-acting release injectable, transdermal patches, oral thin film, drug device combinations and nasal delivery systems. 12 Table of Contents We pursue biosimilar pipeline projects in other therapeutic and disease areas that leverage our global R&D and commercial areas of expertise.
Our focus is on developing complex formulations with complex technologies, which have higher barriers to entry. Generic R&D activities, which are carried out in development centers located around the world, include product formulation, analytical method development, stability testing, management of bioequivalence, bio-analytical studies, other clinical studies and registration of generic drugs in all of the markets where we operate.
Generic R&D activities, which are carried out in development centers located around the world, include product formulation, analytical method development, stability testing, management of bioequivalence, bio-analytical studies, other clinical studies and registration of generic drugs in all of the markets where we operate.
We mitigate, where possible, our raw material supply risks through inventory management and alternative sourcing strategies. See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Macroeconomic Environment.” We source a large portion of our APIs from our own manufacturing facilities. Additional APIs are purchased from suppliers located in Europe, Asia and the Americas.
We mitigate, where possible, our raw material supply risks through inventory management and alternative sourcing strategies. See also “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations—Macroeconomic and Geopolitical Environment.” 14 Table of Contents We source a portion of our APIs from our own manufacturing facilities.
A decision is expected in the first half of 2023. • QVAR RediHaler (beclomethasone dipropionate HFA) inhalation aerosol, a BAI, is indicated for the maintenance treatment of asthma as a prophylactic therapy in patients four years of age and older.
This matter is currently on appeal, and a decision on the appeal is not expected until late 2024. • QVAR RediHaler (beclomethasone dipropionate HFA) inhalation aerosol, a BAI, is indicated for the maintenance treatment of asthma as a prophylactic therapy in patients four years of age and older.
In addition, we support recruitment, development and retention of individuals with diverse backgrounds. Our I&D task force monitors and assesses our I&D programs and efforts, using regular surveys and feedback to strengthen and adapt our programs, as needed. We seek to support our inclusive and diverse culture through employee resource groups (“ERGs”), mentoring programs, sponsorship, and training, among other things.
Our I&D global team monitors and assesses our I&D programs and efforts, using regular surveys and feedback to strengthen and adapt our programs, as needed. We seek to support our inclusive and diverse culture through employee resource groups (“ERGs”), mentoring programs and training, among other things.
In addition to having our first global wellbeing month dedicated to raising awareness of the importance of wellbeing, we leveraged practical tools and local programs to address the physical, financial, social and mental health needs of our employees and their families. We offer programs and initiatives that promote healthy diet, physical activity and mental wellbeing.
In 2023, we continued to focus on employee wellbeing. In addition to having our second global wellbeing month dedicated to raising awareness of the importance of wellbeing, we leveraged practical tools and local programs to address the physical, financial, social and mental health needs of our employees and their families.
A settlement was reached with one of those two filers on December 5, 2022, and a trial was held against the other during November 2022.
A settlement was reached with one of those two filers on December 5, 2022, and a trial was held against the other during November 2022. Teva prevailed at trial, with the court finding the asserted patents to be valid.
In 2019, we launched Truxima ® , our first oncology biosimilar product in the United States. BENDEKA ® is a liquid, low-volume (50 mL) and short-time 10-minute infusion formulation of bendamustine hydrochloride that we licensed from Eagle Pharmaceuticals, Inc. (“Eagle”).
We maintain a meaningful presence in oncology, including both innovative and generic medicines (including biosimilars). In 2019, we launched Truxima ® (rituximab-abbs) injection for intravenous use, our first oncology biosimilar product in the United States. BENDEKA ® (bendamustine HCl) is a liquid, low-volume (50 mL) and short-time 10-minute infusion formulation of bendamustine hydrochloride that we licensed from Eagle Pharmaceuticals, Inc.
This biologic treatment was launched in the U.S. and in certain European countries in 2016 and in Canada in 2017. • AirDuo RespiClick (fluticasone propionate and salmeterol inhalation powder) (and its authorized generic) is a combination of an inhaled corticosteroid and a long acting beta-agonist bronchodilator, approved in the United States for the treatment of asthma in patients aged 12 years and older who are uncontrolled on an ICS or whose disease severity clearly warrants the use of an ICS/long-acting beta2-adrenergic agonist combination.
ProAir Digihaler is a digital version allowing users to capture and share inhaler use data. • AirDuo RespiClick (fluticasone propionate and salmeterol inhalation powder) (and its authorized generic) is a combination of an inhaled corticosteroid and a long-acting beta-agonist bronchodilator, approved in the United States for the treatment of asthma in patients aged 12 years and older who are uncontrolled on an ICS or whose disease severity clearly warrants the use of an ICS/long-acting beta2-adrenergic agonist combination.
Our Environment, Health, Safety and Sustainability Policy and global Environment Health and Safety Management System guide our employee health and safety practices. We have implemented this system, which often exceeds regulatory requirements, to provide a global standard of care. As our employees and communities continued to face the impact of the COVID-19 pandemic, protecting our employees remained our priority.
Our Environment, Health, Safety and Sustainability Policy and global Environment Health and Safety Management System guide our employee health and safety practices. We have implemented this system, which often exceeds regulatory requirements, to provide a global standard of care.
In July 2020, the European Court of Justice in a case known as “Schrems II”, invalidated the adequacy of the EU-US Privacy Shield Certification Programme under the EU General Data Protection Regulation (“GDPR”).
In July 2020, the European Court of Justice in a case known as “Schrems II”, invalidated the adequacy of the EU-US Privacy Shield Certification Programme under the EU General Data Protection Regulation (“GDPR”) and called into question the framework in which personal data can be transferred from the EU to outside the EU.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeDue to increasing numbers of securities claims over the last several years and related payouts under insurance policies, in addition to increased settlement values in “event-driven” litigation and a growing number of plaintiff shareholder law firms eager to bring claims, premiums and deductibles for insurance, including D&O insurance, have been increasing and some insurers are reducing the number of companies they insure, causing the supply of insurance to lag behind demand.
Biggest changeAn adverse resolution of these proceedings may result in large monetary fines, damages, additional litigation, such as securities and derivative actions, and other non-monetary sanctions and remedies, such as mandated compliance agreements, all of which can be expensive and disruptive to our operations and business, and can impact decisions related to our product offerings and portfolio. 40 Table of Contents Due to increasing numbers of securities claims over the last several years and related payouts under insurance policies, in addition to increased settlement values in “event-driven” litigation and a growing number of plaintiff shareholder law firms eager to bring claims, premiums and deductibles for insurance, including D&O insurance, have been increasing and some insurers are reducing the number of companies they insure, causing the supply of insurance to lag behind demand.
We continue to monitor these legislative developments, evaluate whether any changes to our business practices and operations are necessary in order to comply with such legislative reforms and advocate for policies that support both innovation and access to high quality medicines for patients.
We continue to monitor these legislative developments and evaluate whether any changes to our business practices and operations are necessary in order to comply with such legislative reforms and advocate for policies that support both innovation and access to high quality medicines for patients.
The development and commercialization process, particularly with respect to innovative medicines and biosimilar medicines, as well as the complex generic medicines that we increasingly focus on, is both time-consuming and costly, and involves a high degree of business risk. Our products currently under development, if and when fully developed and tested, may not perform as we expect.
The development and commercialization process, particularly with respect to innovative medicines and biosimilar medicines, as well as complex generic medicines that we increasingly focus on, is both time-consuming and costly, and involves a high degree of business risk. Our products currently under development, if and when fully developed and tested, may not perform as we expect.
We maintain an insurance program, which may include commercial insurance, self-insurance (including direct risk retention), or a combination of both approaches, in amounts and on terms that it believes are reasonable and prudent in light of its business and related risks. We sell, and will continue to sell, pharmaceutical products that are not covered by its product liability insurance.
We maintain an insurance program, which may include commercial insurance, self-insurance (including direct risk retention), or a combination of both approaches, in amounts and on terms that it believes are reasonable and prudent in light of its business and related risks. We sell, and will continue to sell, pharmaceutical products that are not covered by product liability insurance.
Any such violation could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our ability to attract and retain employees, our business, our financial condition and our results of operations. Our corporate headquarters and a sizable portion of our manufacturing activities are located in Israel.
Any such violation could include prohibitions on our ability to offer our products in one or more countries and could materially damage our reputation, our brand, our ability to attract and retain employees, our business, our financial condition and our results of operations. Our corporate headquarters and a portion of our manufacturing activities are located in Israel.
For example, the time from discovery to commercial launch of an innovative medicine can be 15 years or more and involves multiple stages, including intensive preclinical and clinical testing and highly complex, lengthy and expensive approval processes, which vary from country to country.
For example, the time from discovery to commercial launch of an innovative medicine can be 15 years or more and involves multiple stages, including intensive preclinical and clinical testing and highly complex, lengthy and expensive regulatory approval processes, which vary from country to country.
There is no assurance that we will be able to promptly increase our pricing to offset our increased costs, or that our operations will not be materially impacted by rising inflation and its broader effects on the markets in which we operate in the future.
There is no assurance that we will be able to increase our pricing to offset our increased costs, or that our operations will not be materially impacted by rising inflation and its broader effects on the markets in which we operate in the future.
As a company that manufactures most of its products outside the United States, a “border adjustment tax” or other restriction on trade, if enacted, may have a material adverse effect on our business, financial condition and results of operations.
As a company that manufactures most of its products outside the United States, a “border adjustment tax” or other restriction on trade, if enacted by the United States, may have a material adverse effect on our business, financial condition and results of operations.
In addition, no assurance can be given that we will remain in compliance with applicable FDA and other regulatory requirements once approval or marketing authorization has been obtained for a product.
No assurance can be given that we will remain in compliance with applicable FDA and other regulatory requirements once approval or marketing authorization has been obtained for a product.
Our facilities are subject to ongoing regulation, including periodic inspection by the FDA and other regulatory authorities, and we must incur expense and expend effort to ensure compliance with these complex regulations.
Additionally, our facilities are subject to ongoing regulation, including periodic inspection by the FDA and other regulatory authorities, and we must incur expense and expend effort to ensure compliance with these complex regulations.
For example, the following may have a significant effect on our financial results and cash flow: • Our future success depends on our ability to maximize the growth and commercial success of AUSTEDO.
For example, the following may have a significant effect on our financial results and cash flow: • our future success depends on our ability to maximize the growth and commercial success of AUSTEDO and AUSTEDO XR.
Our net sales may also be affected by fluctuations in the buying patterns of our significant customers, whether resulting from seasonality, pricing, wholesaler buying decisions or other factors.
Our sales may also be affected by fluctuations in the buying patterns of our significant customers, whether resulting from seasonality, pricing, wholesaler buying decisions or other factors.
These laws and regulations include data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, export requirements, the Foreign Corrupt Practices Act (“FCPA”), the UK Bribery Act 2010 and other similar local laws that prohibit corrupt payments to governmental officials or certain payments or remunerations and provisions of things of value to customers and, in some cases, other private sector counterparties.
These laws and regulations include intellectual property laws, data privacy requirements, labor relations laws, tax laws, competition regulations, import and trade restrictions, economic sanctions, export requirements, the Foreign Corrupt Practices Act (“FCPA”), the UK Bribery Act 2010 and other similar local laws that prohibit corrupt payments to governmental officials or certain payments or remunerations and provisions of things of value to customers and, in some cases, other private sector counterparties.
Our ability to realize significant revenues from direct marketing and sales activities depends on our ability to attract and retain qualified sales personnel. Competition for qualified sales personnel is intense.
Our ability to realize revenues from direct marketing and sales activities depends on our ability to attract and retain qualified sales personnel. Competition for qualified sales personnel is intense.
Fluctuations in exchange rates between the currencies in which we operate in, and the U.S. dollar, may have a material adverse effect on our results of operations, the value of balance sheet items denominated in foreign currencies and our financial condition. In 2022, approximately 47% of our revenues were denominated in currencies other than the U.S. dollar.
Fluctuations in exchange rates between the currencies in which we operate in, and the U.S. dollar, may have a material adverse effect on our results of operations, the value of balance sheet items denominated in foreign currencies and our financial condition. In 2023, approximately 47% of our revenues were denominated in currencies other than the U.S. dollar.
In addition, although the majority of our operating costs are recorded in, or linked to, the U.S. dollar, in 2022, we incurred a substantial amount of operating costs in currencies other than the U.S. dollar, which only partially offset the currency risk derived from our sales in non-U.S. dollars.
In addition, although the majority of our operating costs are recorded in, or linked to, the U.S. dollar, in 2023, we incurred a substantial amount of operating costs in currencies other than the U.S. dollar, which only partially offset the currency risk derived from our sales in non-U.S. dollars.
In addition, prescription drug abuse and the diversion of opioids and other controlled substances are the frequent subject of public attention, including, for example, recent media reports over the appropriateness of prescription of medications used to treat attention deficit hyperactivity disorder (ADHD).
In addition, prescription drug abuse and the diversion of opioids and other controlled substances are the frequent subject of public attention, including, for example, past media reports over the appropriateness of prescription of medications used to treat attention deficit hyperactivity disorder (ADHD).
Equity ownership risks Shareholder rights and responsibilities as a shareholder are governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies. The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law.
Risks related to equity ownership Shareholder rights and responsibilities as a shareholder are governed by Israeli law, which differs in some material respects from the rights and responsibilities of shareholders of U.S. companies. The rights and responsibilities of the holders of our ordinary shares are governed by our articles of association and by Israeli law.
Increased inflation rates have increased our and our suppliers’ operating costs, including labor costs, raw materials costs, manufacturing costs, freight costs and R&D costs.
Increased inflation rates have increased our and our suppliers’ operating costs, including labor costs, raw materials costs, manufacturing costs and R&D costs.
The FDA has stated that it has established new steps to enhance competition, promote access and lower drug prices and is approving record-breaking numbers of generic applications. While these FDA improvements are expected to benefit our generic product pipeline, they will also benefit competitors that seek to launch products in established generic markets where we currently offer products.
The FDA has stated that it has established new steps to enhance competition, promote access and lower drug prices and is approving increasing numbers of generic applications. While these FDA improvements are expected to benefit our generic product pipeline, they will also benefit competitors that seek to launch products in established generic markets where we currently offer products.
Our inability to timely manufacture any of our key products may result in claims and penalties from customers and could have a material adverse effect on our business, financial condition and results of operations as well as result in reputational harm. In recent years, medicine shortages have become an increasingly widespread problem around the world.
Our inability to timely manufacture any of our key products may result in claims and penalties from customers and could have a material adverse effect on our business, financial condition and results of operations as well as result in reputational harm. 35 Table of Contents In recent years, medicine shortages have become an increasingly widespread problem around the world.
As a result, access to additional financing may be challenging and is largely dependent upon evolving market conditions and other factors, which could materially impact our business, results of operations, financial condition and prospects. We may need to raise additional funds in the future, which may not be available on acceptable terms or at all.
As a result, access to additional financing may be challenging and is largely dependent upon market conditions, which could materially impact our business, results of operations, financial condition and prospects. We may need to raise additional funds in the future, which may not be available on acceptable terms or at all.
In 2016, we paid a monetary fine for FCPA violations and entered into a three year deferred prosecution 40 Table of Contents agreement with the DOJ, which included retaining an independent compliance monitor. The FCPA also requires us to keep and maintain accurate books and records and systems of internal controls to prevent bribery and corruption.
In 2016, we paid a monetary fine for FCPA violations and entered into a three-year deferred prosecution agreement with the DOJ, which included retaining an independent compliance monitor. The FCPA also requires us to keep and maintain accurate books and records and systems of internal controls to prevent bribery and corruption.
We may, therefore, be denied access to our customers or suppliers or denied the ability to ship products from any of our sites as a result of a closing of the borders of the countries in which we sell our products, or in which our operations are located, due to economic, legislative, political and military conditions, including hostilities and acts of terror, in such countries.
We may, therefore, be denied access to our customers or suppliers or denied the ability to ship products from any of our sites as a result of a closing of the borders of the countries in which we sell our products, or in which our operations are located, due to economic, legislative, political and military conditions, including hostilities and acts of terror, in such 37 Table of Contents countries.
Any failure to effectively and timely pass along our increased costs to our customers may adversely impact our results of operations and financial condition. Significant disruptions of our information technology systems could adversely affect our business. We rely extensively on information technology systems in order to conduct business, including some systems that are managed by third-party service providers.
Any failure to effectively and timely pass along our increased costs to our customers may adversely impact our results of operations and financial condition. Significant disruptions of our information technology systems could adversely affect our business. We rely extensively on information technology systems in order to conduct business, including systems managed by third-party service providers.
Collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and other risks, any of which could have a material impact, including on our business, financial condition, reputation and stock price.
Collecting, measuring, and reporting ESG information and metrics can be costly, difficult and time consuming, is subject to evolving reporting standards, and can present numerous operational, reputational, financial, legal and 46 Table of Contents other risks, any of which could have a material impact, including on our business, financial condition, reputation and stock price.
Israeli corporate law regulates acquisitions of shares through tender offers and mergers, requires special approvals for transactions involving directors, officers or significant shareholders, and regulates other matters that may be relevant to these types of transactions. Furthermore, Israeli tax considerations may make potential acquisition transactions unappealing to us or to some of our shareholders.
Israeli corporate law regulates acquisitions of shares through tender offers and mergers, requires special approvals for transactions involving directors, officers or significant shareholders, and regulates other matters 49 Table of Contents that may be relevant to these types of transactions. Furthermore, Israeli tax considerations may make potential acquisition transactions unappealing to us or to some of our shareholders.
In addition, since a significant portion of our U.S. revenues is derived from relatively few key customers, any financial difficulties experienced by a single key customer, or any delay in receiving payments from such a customer, could have a material adverse effect on our business, financial condition and results of operations.
In addition, since a significant portion of our U.S. revenues is derived from relatively few key customers, any financial difficulties experienced by a single key customer, any delay in receiving payments from such a customer, or any significant reduction in or loss of business with such a customer could have a material adverse effect on our business, financial condition and results of operations.
Some of the applicable laws may impose liability even in the absence of specific intent to defraud. The subjective decisions and complex methodologies used in making calculations under these programs are subject to review and challenge, and it is possible that such reviews could result in material changes.
Some of the applicable laws may impose liability even in the absence of specific intent to defraud. The subjective decisions and complex methodologies used in making calculations 44 Table of Contents under these programs are subject to review and challenge, and it is possible that such reviews could result in material changes.
These matters can contribute to the long- 48 Table of Contents term sustainability of companies’ performance and an inability to successfully perform on ESG matters can result in negative impacts to our reputation, recruitment, retention, operations, financial results, the price of our shares, and our ability to attract or retain certain types of customers and investors.
These matters can contribute to the long-term sustainability of companies’ performance and an inability to successfully perform on ESG matters can result in negative impacts to our reputation, recruitment, retention, operations, financial results, the price of our shares, and our ability to attract or retain certain types of customers and investors.
Any theft, loss and/or fraudulent use of customer, employee or proprietary data as a result of a cyber-attack targeting us or one of our third-party service providers could subject us to significant litigation, liability and costs, as well as adversely impact our reputation with customers and regulators, among others.
Any manipulation, theft, loss and/or fraudulent use of customer, employee or proprietary data as a result of a cyber-attack targeting us or one of our third-party service providers could subject us to significant litigation, liability and costs, as well as adversely impact our reputation with customers and regulators.
Furthermore, our systems and networks have been, and are expected to continue to be, the target of increasing advanced cyber-attacks which may pose a risk to the security of our systems and the confidentiality, availability and integrity of our data, as well as disrupt our operations or damage our facilities or those of third parties.
Furthermore, our systems and networks have been, and are expected to continue to be, the target of increasingly advanced and evolving cyber-attacks which may pose a risk to the security of our systems and the confidentiality, availability and integrity of our data, as well as disrupt our operations or damage our facilities or those of third parties.
As a company with global operations, we may be subject to national laws as well as international treaties and conventions controlling imports, exports, re-export, transfer and diversion of goods (including finished goods, materials, APIs, packaging materials, other products and machines), services and technology.
As a company with global operations, we are subject to national laws as well as international treaties and conventions controlling imports, exports, re-export, transfer and diversion of goods (including finished goods, materials, APIs, packaging materials, other products and machines), services and technology.
We have been issued numerous patents covering our innovative medicines, and have filed, and expect to continue to file, patent applications seeking to protect newly developed technologies and products in various countries, including the United States. Currently pending patent applications may not result in issued patents or be approved on a timely basis or at all.
We have been issued numerous patents 31 Table of Contents covering our innovative medicines, and have filed, and expect to continue to file, patent applications seeking to protect newly developed technologies and products in various countries, including the United States. Currently pending patent applications may not result in issued patents or be approved on a timely basis or at all.
Our failure, or the failure of our third-party vendors, to comply with applicable laws and regulations and our involvement or the involvement of any of our third-party vendors in any cybersecurity incidents could result in legal claims and liability, obligations to report incidents to governmental agencies, regulatory investigations and penalties, and reputational damage, which could have a material adverse effect on our business, financial condition and results of operations.
Our failure, or the failure of our third-party vendors, to comply with applicable laws and regulations relating to data security and our involvement or the involvement of any of our third-party vendors in any data security incidents could result in legal claims and liability, obligations to report incidents to governmental agencies, regulatory investigations and penalties, and reputational damage, which could have a material adverse effect on our business, financial condition and results of operations.
Any divestiture that we are unable to complete may cause additional costs associated with retaining the facility or closing and disposing of the impacted businesses.
Any divestiture that we are unable to complete may cause additional costs associated with retaining, closing or disposing of the impacted businesses.
Relying on acquisitions, licensing agreements and other transactions as sources of new innovative medicines, biosimilar and other products, or as a means of growth, involves risks that could adversely affect our future revenues and operating results. We may not be successful in seeking or consummating appropriate opportunities to enable us to execute our business strategy.
Relying on such transactions as sources of new innovative medicines, biosimilar and other products, or as a means of growth, involves risks that could adversely affect our future revenues and operating results. We may not be successful in seeking or consummating appropriate opportunities to enable us to execute our business strategy.
These damages may be significant and could materially 46 Table of Contents adversely affect our business. In the United States, in the event of a finding of willful infringement, the damages assessed may be up to three times the profits lost by the patent owner.
These damages may be significant and could materially adversely affect our business. In the United States, in the event of a finding of willful infringement, the damages assessed may be up to three times the profits lost by the patent owner.
Our ADSs and ordinary shares are traded on different stock exchanges and this may result in price variations. Our ADSs have been traded in the United States since 1982, and on the New York Stock Exchange (the “NYSE”) since 2012, and our ordinary shares have been listed on the TASE since 1951.
Our American Depositary Shares (“ADSs”) and ordinary shares are traded on different stock exchanges and this may result in price variations. Our ADSs have been traded in the United States since 1982, and on the New York Stock Exchange (the “NYSE”) since 2012, and our ordinary shares have been listed on the TASE since 1951.
On December 12, 2022, the EU Council announced that EU member states had reached an agreement to implement at EU level the minimum taxation component of 15% (“Pillar Two”) of the OECD’s reform of international taxation.
On December 12, 2022, the EU Council announced that EU member states had reached an agreement to implement at EU level the minimum taxation component of 15% (“Pillar Two”) of the OECD’s reform of international taxation, commencing in 2024.
In addition, we must demonstrate the benefits of our products relative to competing products that are often more familiar or otherwise better 30 Table of Contents established to physicians, patients and third-party payers.
In addition, we must demonstrate the benefits of our products relative to competing products that are often more familiar or otherwise better established to physicians, patients and third-party payers.
Under specified circumstances, including non-compliance with any of the covenants and the unavailability of any waiver, amendment or other modification thereto, we will not be able 33 Table of Contents to borrow under the RCF.
Under specified circumstances, including non-compliance with any of the covenants and the unavailability of any waiver, amendment or other modification thereto, we will not be able to borrow under the RCF.
Delays in the receipt of, or failure to obtain approvals for, future products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues and substantial additional costs.
Delays in the receipt of, or 39 Table of Contents failure to obtain approvals for, future products, or new indications and uses, could result in delayed realization of product revenues, reduction in revenues and substantial additional costs.
For a summary of the risk factors included in this Item 1A and for further details on our forward-looking statements, see “Forward-Looking Statements and Summary of Risk Factors” on page 1.
For a summary of the risk factors included in this Item 1A and for further details on our forward-looking statements, see “Forward-Looking Statements and Risk Factor Summary” on page 1.
They also could impact the ability of brand manufacturers to protect their investments in the intellectual property associated with their branded specialty and innovative biologic products.
They also could impact the ability of brand manufacturers to protect their investments in the 28 Table of Contents intellectual property associated with their branded specialty and innovative biologic products.
If we fail to meet the conditions upon which certain favorable tax treatment is based, we would not be able to claim future tax benefits and could be required to refund tax benefits already received.
If we fail to meet the conditions upon which certain favorable tax treatment is based, we would not be able to claim future 48 Table of Contents tax benefits and could be required to refund tax benefits already received.
These efforts have included pursuing new patents for existing products to extend patent protection; selling the brand product as their own generic equivalent (an authorized generic); using the Citizen Petition process to request amendments to FDA standards or otherwise delay generic (or biosimilar) drug approvals; seeking changes to U.S.
These efforts have included pursuing new patents for existing products to extend patent protection; obtaining new regulatory exclusivities; selling the brand product as their own authorized generics; using the Citizen Petition process to request amendments to FDA standards or otherwise delay generic (or biosimilar) drug approvals; seeking changes to U.S.
Changes in our management as a result of the appointment or departure of members of management and other key employees, such as the recent appointment of our new President and Chief Executive Officer, may also cause disruptions to our business and result in the loss of key personnel with institutional knowledge of our business, negative impacts on our relationships with existing employees and customers and increased operating costs related to integrating new personnel.
Changes in our management as a result of the appointment or departure of members of management and other key employees may also cause disruptions to our business and result in the loss of key personnel with institutional knowledge of our business, negative impacts on our relationships with existing employees and customers and increased operating costs related to integrating new personnel.
If we seek secured financing in excess of the limitation in our debt instruments, we may have to secure our current outstanding debt as well. Capital and credit markets, which have been disrupted by such macroeconomic pressures, have experienced increased volatility.
If we seek secured financing in excess of the limitations in our existing debt instruments, we may have to secure our outstanding debt as well. Capital and credit markets, which have been disrupted by such macroeconomic pressures, have experienced volatility.
We have procedures in place to detect and respond to cyber-attacks, data breaches, security incidents, and compromises of personal information.
We have procedures, tools, processes and services in place to detect and respond to cyber-attacks, data breaches, security incidents, and compromises of personal information.
Risks related to our substantial indebtedness We have substantial debt of $21,212 million as of December 31, 2022, which requires significant interest and principal payments, requires compliance with certain covenants and restricts our ability to incur additional indebtedness or engage in other transactions.
Risks related to our substantial indebtedness We have substantial debt outstanding, which requires significant interest and principal payments, requires compliance with certain covenants and restricts our ability to incur additional indebtedness or engage in other transactions. As of December 31, 2023, we have consolidated debt of $19,833 million outstanding, compared to $21,212 million outstanding as of December 31, 2022.
Necessary regulatory approvals may not be 32 Table of Contents obtained in a timely manner, if at all, and we may not be able to produce and market such products successfully and profitably.
Necessary regulatory approvals may not be obtained in a timely manner, if at all, and we may not be able to produce and market such products successfully and profitably.
We may consider issuing additional debt or equity securities in the future to refinance existing debt or for general corporate purposes, including to fund potential acquisitions or investments.
We may consider issuing additional debt or equity securities in the future to refinance existing debt or for general corporate purposes, including to fund our growth strategies, and to fund potential acquisitions or investments.
The base erosion and profit shifting (“BEPS”) project undertaken by the OECD may have adverse consequences to our tax liabilities. The BEPS project contemplates changes to numerous international tax principles, as well as national tax incentives, and these changes, when adopted by individual countries, could adversely affect our provision for income taxes.
The base erosion and profit shifting (“BEPS”) project undertaken by the Organization for Economic Co-operation and Development (“OECD”) may have adverse consequences to our tax liabilities. The BEPS project contemplates changes to numerous international tax principles, as well as national tax incentives, and these changes, when adopted by individual countries, could adversely affect our provision for income taxes.
However, the duration, severity and global implications (including potential inflation and devaluation consequences) of the current conflict between Russia and Ukraine, rising tensions in Asia and the Middle East and other geopolitical conflicts that may arise in the future, cannot be predicted at this time and could have an effect on our business, including on our exchange rate exposure, supply chain, operational costs and commercial presence in these markets.
However, the duration, severity and global implications (including potential inflation and devaluation consequences) of these and other geopolitical conflicts that may arise in the future, cannot be predicted at this time and could have an effect on our business, exchange rate exposure, supply chain, operational costs and commercial presence in these markets.
Additionally, once finalized, settlement payments that we will be required to make, may have an adverse impact on our operations and cash flows and there is no assurance that we will have the liquidity or other resources necessary to make such payments and provide supplies of our generic 44 Table of Contents version of Narcan ® (naloxone hydrochloride nasal spray) in the amounts and at the times required under the terms of our nationwide settlement.
The payments required to be made under this settlement agreement and others may have an adverse impact on our operations and cash flows and there is no assurance that we will have the liquidity or other resources necessary to make such payments and provide supplies of our generic version of Narcan ® (naloxone hydrochloride nasal spray) in the amounts and at the times required under the terms of our nationwide settlements.
Our credit ratings impact the cost and availability of future borrowings and, accordingly, our cost of capital. Our ratings at any time will reflect each rating agency’s then opinion of our financial strength, operating performance and ability to meet our debt obligations. In the past, we have been subject to downgrades in our credit ratings by various ratings agencies.
Our ratings at any time will reflect each rating agency’s opinion of our financial strength, operating performance and ability to meet our debt obligations. In the past, we have been subject to downgrades in our credit ratings by various ratings agencies.
These and other challenges have required us to recognize significant goodwill impairments in past years. If we experience further difficulty in this market, this may continue to adversely affect our revenues and profits from our North America business segment or cause us to recognize one or more goodwill impairments relating to this reporting unit.
If we experience further difficulty in this market, this may continue to adversely affect our revenues and profits from our North America business segment or cause us to recognize one or more goodwill impairments relating to this reporting unit.
While we maintain insurance coverage that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data security breach or disruption, unauthorized access or failure of systems.
While we maintain insurance coverage that is designed to address certain aspects of cyber risks, such insurance coverage may be insufficient to cover all losses or all types of claims that may arise in the event we experience a cybersecurity incident, data security breach or disruption, unauthorized access or failure of systems. 36 Table of Contents A data security breach could adversely affect our business and reputation.
In response to rising inflation, central banks in the markets in which we operate, including the United States Federal Reserve, have tightened their monetary policies and raised interest rates, and such measures may continue if there is a period of sustained heightened inflation. Higher interest rates and volatility in financial markets could lead to additional economic uncertainty or recession.
In response to rising inflation in recent years, central banks in the markets in which we operate, including the United States Federal Reserve, have tightened their monetary policies and raised interest rates, and such measures may continue. Higher interest rates and volatility in financial markets could lead to additional economic uncertainty or recession.
Widespread outbreaks of disease or other public health crises, such as the COVID-19 pandemic and responses thereto have in the past and may in the future negatively impact the global economy, disrupt global 35 Table of Contents supply chains and create significant volatility and disruption of financial markets.
Widespread outbreaks of disease or other public health crises and responses thereto have in the past and may in the future negatively impact the global economy, disrupt global supply chains and create significant volatility and disruption of financial markets.
For example, violations of the Controlled Substances Act of 1970 and related laws and regulations by third-party intermediaries (such as distributors and wholesalers) may expose us to liability and penalties and could have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or share price.
For example, violations of the Controlled Substances Act of 1970 and related laws and regulations by direct customers (such as distributors and wholesalers), down-stream customers (such as pharmacies) and health-care providers may expose us to liability and penalties and could have a material adverse effect on our business, financial condition, results of operations, cash flows, and/or share price.
Failing to win tenders or our withdrawal from participating in tenders, or the implementation of similar systems in other markets leading to further price declines, could have a material adverse effect on our business, financial position and results of operations. A significant portion of our revenues is derived from sales to a limited number of customers.
Failing to win tenders or our withdrawal from participating in tenders, or the implementation of similar systems in other markets leading to further price declines, could have a material adverse effect on our business, financial position and results of operations.
Risks related to our ability to successfully compete in the marketplace Sales of our generic medicines comprise a significant portion of our business, and we are subject to the significant risks associated with the generic pharmaceutical business.
Risks related to our ability to successfully compete in the marketplace Sales of our generic medicines comprise a significant portion of our business, and we are subject to the significant risks associated with the generic pharmaceutical business. Sales of our generics medicines have historically represented and are expected to continue to represent a significant portion of our business.
The development, manufacture and commercialization of biopharmaceutical products require specialized expertise and are very costly and subject to complex regulation, which is still evolving.
The development, manufacture and commercialization of biosimilar products require specialized expertise and are very costly and subject to complex evolving regulation.
Goodwill and acquired indefinite life intangible assets are subject to impairment review on an annual basis and whenever potential impairment indicators are present. Other long-lived assets are reviewed when there is an indication that impairment may have occurred.
We regularly review our long-lived assets, including identifiable intangible assets, goodwill and property, plant and equipment, for impairment. Goodwill and acquired indefinite life intangible assets are subject to impairment review on an annual basis and whenever potential impairment indicators are present. Other long-lived assets are reviewed when there is an indication that impairment may have occurred.
U.S. federal, state and local governmental and regulatory agencies are conducting investigations of us, other pharmaceutical manufacturers and other supply chain participants with regard to the manufacture, sale, marketing and distribution of opioid medications.
U.S. federal, state and local governmental and regulatory agencies have conducted and may in the future conduct investigations of us, other pharmaceutical manufacturers and other supply chain participants with regard to the manufacture, sale, marketing and distribution of opioid medications.
We are currently subject to several governmental and civil proceedings and litigations relating to our pricing and marketing practices, intellectual property, product liability, competition matters, opioids, securities disclosure and corporate governance and environmental matters. These investigations and litigations are costly and involve a significant diversion of management attention. Such proceedings are unpredictable and may develop over lengthy periods of time.
We are currently subject to several governmental and civil proceedings and litigations relating to our pricing and marketing practices, intellectual property, product liability, competition matters, opioids, securities disclosure, financial reporting and accounting practices, corporate governance and environmental matters. These investigations and litigations are costly and involve a significant diversion of management attention.
Additionally, we are defending claims and putative class action lawsuits in Canada in relation to the manufacture, sale, marketing and distribution of opioid medications. The loss or settlement of any such claims related to opioids could have a material adverse impact on our liquidity.
For further information, see “Opioids Litigation” in note 12b to our consolidated financial statements. Additionally, we are defending claims and putative class action lawsuits in Canada in relation to the manufacture, sale, marketing and distribution of opioid medications. The loss or settlement of any such claims related to opioids could have a material adverse impact on our liquidity.
A data security breach could adversely affect our business and reputation. In the ordinary course of our business, we collect and store sensitive data, including intellectual property, proprietary business information and personally identifiable information (including of our employees, customers, suppliers and business partners).
In the ordinary course of our business, we collect and store sensitive data, including intellectual property, proprietary business information and personally identifiable information (including of our employees, customers, suppliers and business partners).
We are committed to compliance and have robust compliance systems in place; however, risks associated with these laws and regulations cannot be entirely eliminated by policies and procedures.
While we have compliance systems in place, risks associated with these laws and regulations cannot be entirely eliminated by policies and procedures.
Our substantial net debt could also have other important consequences to our business, including, but not limited to: • making it more difficult for us to satisfy our obligations; • limiting our ability to borrow additional funds and increasing the cost of any such borrowing; • increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; • limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; • placing us at a competitive disadvantage as compared to our competitors, to the extent that they are not as highly leveraged; and • restricting us from pursuing certain business opportunities.
If we experience lower than anticipated earnings or cash flows, to maintain compliance with our financial ratio covenants, we may curtail spending or divest assets, which could constrain our ability to grow our business. 32 Table of Contents Our substantial net debt could also have other important consequences to our business, including, but not limited to making it more difficult for us to satisfy our obligations; limiting our ability to borrow additional funds and increasing the cost of any such borrowing; increasing our vulnerability to, and reducing our flexibility to respond to, general adverse economic and industry conditions; limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; placing us at a competitive disadvantage as compared to our competitors, to the extent that they are not as highly leveraged; and restricting us from pursuing certain business opportunities.
Our manufacturing facilities, as well as those of our vendors and manufacturing partners, have also been the subject of increased regulatory oversight, leading to increased expenditures required to ensure compliance with new or more stringent production and quality control regulations. For information regarding significant regulatory events, see note 15 to our consolidated financial statements.
Our manufacturing facilities, as well as those of our vendors and manufacturing partners, have also been the subject of increased regulatory oversight, leading to increased expenditures required to ensure compliance with new or more stringent production and quality control regulations.
Additionally, if macroeconomic pressures continue to impact our business and financial results for an extended period of time, our credit losses, liquidity and cash resources could be negatively impacted. We may be required to draw down funds from our RCF or pursue additional sources of financing to fund our operations, such as secured financing.
Additionally, our credit losses, liquidity and cash resources could be negatively impacted by macroeconomic pressures. We may be required to draw down funds from our RCF or pursue additional sources of financing to fund our operations, such as secured financing.
However, because the techniques, tools and tactics used in cyber-attacks frequently change and may be difficult to detect for periods of time, we may face difficulties in anticipating and implementing adequate preventative measures or fully mitigating harms after such an attack.
Because the techniques, tools and tactics used in cyber-attacks frequently change and may be difficult to detect for periods of time, despite our attention to such threats and especially with the increasing use of artificial intelligence technology, we may face difficulties in anticipating and implementing adequate preventative measures or mitigating harms after such an attack.
Our financial results depend upon our ability to develop and commercialize additional generic, innovative and biosimilar products in a timely manner, particularly in light of the generic competition to our existing innovative medicines. Commercialization requires that we successfully develop, test and manufacture pharmaceutical products.
Our success depends on our ability to develop and commercialize additional pharmaceutical products. Our financial results depend upon our ability to develop and commercialize additional innovative, biosimilar and generic products in a timely manner. Commercialization requires that we successfully develop, test and manufacture pharmaceutical products.
Public concern over the abuse of opioid medications, increased legal and regulatory action and any delay in our ability to obtain sufficient participation of plaintiffs for the nationwide settlement to take effect, could negatively affect our business. Certain governmental and regulatory agencies are focused on the abuse of opioid medications in the United States.
Public concern over the abuse of opioid medications, increased legal and regulatory action and the nationwide settlement could negatively affect our business. Certain governmental and regulatory agencies are focused on the abuse of opioid medications in the United States.
Although our expectation is to engage in asset sales only if they advance or otherwise support our overall strategy, any such sale could reduce the size or scope of our business, the capabilities or durability of our manufacturing network, our market share in particular markets or our opportunities with respect to certain markets. 43 Table of Contents Compliance, regulatory and litigation risks Our operations are subject to complex legal and regulatory environments.
Although our expectation is to engage in asset sales only if they advance or otherwise support our overall strategy, any such sale could result in disruptions to our business operations, result in unanticipated expenses and reduce the size or scope of our business, the capabilities or durability of our manufacturing network, our market share in particular markets or our opportunities with respect to certain markets.
In 2022, total revenues from sales of our generic medicines in all our business segments were $8,601 million, or 58% of our total revenues. Generic pharmaceuticals are, as a general matter, less profitable than innovative medicines, and have faced price erosion in each of our business segments, placing even greater importance on our ability to continually introduce new products.
However, generic pharmaceuticals are, as a general matter, less profitable than innovative medicines, and have faced price erosion in each of our business segments, placing even greater importance on our ability to continually introduce new products.
We are continuing to monitor the effects of rising inflation, foreign exchange rate fluctuations, geopolitical tensions and other macroeconomic headwinds on our business performance and financial condition. However, the duration and extent of such macroeconomic developments are uncertain and we cannot accurately predict whether we will be able to effectively and timely mitigate their impact on our business.
The duration and extent of rising inflation, higher interest rates, foreign exchange rate fluctuations, geopolitical tensions and other macroeconomic headwinds are uncertain and we cannot accurately predict whether we will be able to effectively mitigate their impact on our business.

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Item 2. Properties

Properties — owned and leased real estate

4 edited+1 added−0 removed1 unchanged
Biggest changeWe are continuing the ongoing review and optimization of our manufacturing and supply network, which may include closures and/or divestment of manufacturing plants around the world.
Biggest changeOur principal executive offices in North America and in Europe are leased by us. 52 Table of Contents We are continuing the ongoing review and optimization of our manufacturing and supply network, which may include closures and/or divestment of manufacturing plants around the world.
We have an operating lease for our office space in Tel Aviv-Jaffa for an initial term of twelve and a half years, with an option for three extensions. 52 Table of Contents In North America, our principal executive offices are our U.S. headquarters in Parsippany, New Jersey. In Europe, our principal executive offices are in Amsterdam, the Netherlands.
We have an operating lease for our office space in Tel Aviv-Jaffa for an initial term of twelve and a half years, with an option for three extensions. In North America, our principal executive offices are our U.S. headquarters in Parsippany, New Jersey. In Europe, our principal executive offices are in Amsterdam, the Netherlands.
ITEM 2. PROPERTIES We own or lease 78 manufacturing and R&D facilities, occupying approximately 19 million square feet.
ITEM 2. PROPERTIES We own or lease 59 manufacturing and R&D facilities, occupying approximately 17 million square feet.
As of December 31, 2022, our manufacturing and R&D facilities are used by our business segments as follows: Business Segment Number of Facilities Square Feet (in thousands) North America 20 3,200 Europe 35 10,000 International Markets 23 5,800 Worldwide Total Manufacturing and R&D Facilities 78 19,000 In addition to the manufacturing and R&D facilities discussed above, we maintain numerous office, distribution and warehouse facilities around the world.
As of December 31, 2023, our manufacturing and R&D facilities are used by our business segments as follows: Business Segment Number of Facilities Square Feet (in thousands) North America 18 3,350 Europe 25 9,000 International Markets 16 4,850 Worldwide Total Manufacturing and R&D Facilities 59 17,200 In addition to the manufacturing and R&D facilities discussed above, we maintain numerous office, distribution and warehouse facilities around the world.
Added
Additionally, we are continuing to review our commercial offices footprint to enhance and adjust it to the latest workplace trends.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed4 unchanged
Biggest changeUnregistered Sales of Equity Securities and Use of Proceeds None. 53 Table of Contents Performance Graph Set forth below is a performance graph comparing the cumulative total return (assuming reinvestment of dividends), in U.S. dollars, for the calendar years ended December 31, 2018, 2019, 2020, 2021 and 2022, of $100 invested on December 31, 2017 in the Company’s ADSs, the Standard & Poor’s 500 Index and the Dow Jones U.S.
Biggest changeUnregistered Sales of Equity Securities and Use of Proceeds None. 54 Table of Contents Performance Graph Set forth below is a performance graph comparing the cumulative total return (assuming reinvestment of dividends), in U.S. dollars, for the calendar years ended December 31, 2019, 2020, 2021, 2022 and 2023, of $100 invested on December 31, 2018 in the Company’s ADSs, the Standard & Poor’s 500 Index and the Dow Jones U.S.
Pharmaceuticals Index. * $100 invested on December 31, 2017 in stock or index – including reinvestment of dividends. Indexes calculated on month-end basis. ITEM 6. [RESERVED] 54 Table of Contents
Pharmaceuticals Index. * $100 invested on December 31, 2018 in stock or index – including reinvestment of dividends. Indexes calculated on month-end basis. ITEM 6. [RESERVED] 55 Table of Contents
Various other stock exchanges quote derivatives and options on our ADSs under the symbol “TEVA.” Ordinary Shares Our ordinary shares have been listed on the Tel Aviv Stock Exchange (“TASE”) since 1951. Holders The number of record holders of ADSs at December 31, 2022 was 2,161. The number of record holders of ordinary shares at December 31, 2022 was 169.
Various other stock exchanges quote derivatives and options on our ADSs under the symbol “TEVA.” Ordinary Shares Our ordinary shares have been listed on the Tel Aviv Stock Exchange (“TASE”) since 1951. Holders The number of record holders of ADSs at December 31, 2023 was 1,934. The number of record holders of ordinary shares at December 31, 2023 was 151.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

138 edited+49 added−57 removed54 unchanged
Biggest changeThe items excluded from our non-GAAP net income and non-GAAP EPS include: • amortization of purchased intangible assets; • legal settlements and material litigation fees and/or loss contingencies, due to the difficulty in predicting their timing and scope; • impairments of long-lived assets, including intangibles, property, plant and equipment and goodwill; • restructuring expenses, including severance, retention costs, contract cancellation costs and certain accelerated depreciation expenses primarily related to the rationalization of our plants or to certain other strategic activities, such as the realignment of R&D focus or other similar activities; • acquisition- or divestment- related items, including changes in contingent consideration, integration costs, banker and other professional fees and inventory step-up; • expenses related to our equity compensation; • significant one-time financing costs, amortization of issuance costs and terminated derivative instruments, and marketable securities investment valuation gains/losses; • unusual tax items; • other awards or settlement amounts, either paid or received; • other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, such as impacts due to changes in accounting, significant costs for remediation of plants, or other unusual events; and • corresponding tax effects of the foregoing items.
Biggest changeThe items excluded from our non-GAAP net income and non-GAAP EPS include: • amortization of purchased intangible assets; • legal settlements and material litigation fees and/or loss contingencies, due to the difficulty in predicting their timing and scope; • impairments of long-lived assets, including intangibles, property, plant and equipment and goodwill; • restructuring expenses, including severance, retention costs, contract cancellation costs and certain accelerated depreciation expenses primarily related to the rationalization of our plants or to certain other strategic activities, such as the realignment of R&D focus or other similar activities; • acquisition- or divestment- related items, including changes in contingent consideration, integration costs, banker and other professional fees and inventory step-up; • expenses related to our equity compensation; • significant one-time financing costs, amortization of issuance costs and terminated derivative instruments, and marketable securities investment valuation gains/losses; • unusual tax items; • other awards or settlement amounts, either paid or received; • other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, such as impacts due to changes in accounting, significant costs for remediation of plants, or other unusual events; and • corresponding tax effects of the foregoing items. 77 Table of Contents The following table presents our non-GAAP net income and non-GAAP EPS for the years ended December 31, 2023 and 2022, as well as reconciliations of each measure to their nearest GAAP equivalents: Year ended December 31, ($ in millions except per share amounts) 2023 2022 Net income (loss) attributable to Teva (5) ($) (559 ) (2,446 ) Increase (decrease) for excluded items: Amortization of purchased intangible assets 616 732 Legal settlements and loss contingencies 1,043 2,082 Goodwill impairment 700 2,045 Impairment of long-lived assets 378 402 Restructuring costs 111 146 Costs related to regulatory actions taken in facilities 4 7 Equity compensation 121 124 Contingent consideration (5) 548 261 Gain on sale of business (3 ) (47 ) Accelerated depreciation 80 117 Financial expenses 66 61 Share in profits (losses) of associated companies – net — (22 ) Items attributable to non-controlling interests (92 ) (96 ) Other non-GAAP items (1) 330 465 Corresponding tax effects and unusual tax items (5) (446 ) (1,021 ) (4) Non-GAAP net income attributable to Teva ($) 2,898 2,812 Non-GAAP tax rate (2) 13.0 % 11.7 % GAAP diluted earnings (loss) per share attributable to Teva ($) (0.50 ) (2.20 ) EPS difference (3) 3.06 4.73 Non-GAAP diluted EPS attributable to Teva (3) ($) 2.56 2.52 Non-GAAP average number of shares (in millions) (3) 1,131 1,115 (1) Other non-GAAP items include other exceptional items that we believe are sufficiently large that their exclusion is important to facilitate an understanding of trends in our financial results, primarily related to the rationalization of our plants, certain inventory write-offs, material litigation fees and other unusual events.
Goodwill Impairment We recorded goodwill impairment charges of $2,045 million in the year ended December 31, 2022, of which $979 million is related to our International Markets reporting unit and $1,066 million is related to Teva’s API reporting unit. See note 7 to our consolidated financial statements.
We recorded goodwill impairment charges of $2,045 million in the year ended December 31, 2022, of which $979 million is related to our International Markets reporting unit and $1,066 million is related to Teva’s API reporting unit. See note 7 to our consolidated financial statements.
In computing diluted loss per share for the year ended December 31, 2022, no account was taken of the potential dilution that could occur upon the exercise of options and non-vested restricted share units (“RSUs” and performance share units (“PSUs”) granted under employee stock compensation plans, and convertible senior debentures, since they had an anti-dilutive effect on loss per share.
In computing diluted loss per share for the year ended December 31, 2023 and 2022, no account was taken of the potential dilution that could occur upon the exercise of options and non-vested restricted share units (“RSUs”) and performance share units (“PSUs”) granted under employee stock compensation plans, and convertible senior debentures, since they had an anti-dilutive effect on loss per share.
We have committed to pay royalties to owners of know-how, partners in alliances and other certain arrangements and to parties that financed research and development, at a wide range of rates as a percentage of sales or of the gross margin of certain products, as defined in the underlying agreements.
We have committed to pay royalties to owners of know-how, partners in alliances and pursuant to certain other arrangements and to parties that financed research and development, at a wide range of rates as a percentage of sales or of the gross margin of certain products, as defined in the underlying agreements.
Except for income tax contingencies or contingent consideration acquired in a business combination, Teva records a provision in its financial statements to the extent that it concludes that a contingent liability is probable and the amount thereof is reasonably estimable.
Except for income tax contingencies or contingent consideration acquired in a business combination, Teva records a provision in its consolidated financial statements to the extent that it concludes that a contingent liability is probable and the amount thereof is reasonably estimable.
During the year ended December 31, 2022, the impact of this conflict on our International Markets segment’s results of operations and financial condition was immaterial. Consistent with our foreign exchange risk management hedging programs, we entered into hedges to hedge our exposure to currency exchange rate fluctuations with respect to our balance sheet assets, revenues and expenses.
During the year ended December 31, 2023, the impact of this conflict on our International Markets segment’s results of operations and financial condition was immaterial. Consistent with our foreign exchange risk management hedging programs, we entered into hedges to hedge our exposure to currency exchange rate fluctuations with respect to our balance sheet assets, revenues and expenses.
The more significant estimates and assumptions inherent in the estimate of the fair value of identifiable intangible assets include (i) assumptions associated with forecasting product profitability, including sales and cost to sell projections, (ii) tax rates which seek to incorporate the geographic diversity of the projected cash flows, (iii) expected impact of competitive, legal and/or regulatory forces on the projections and the impact of technological risk, R&D expenditure for ongoing support of product rights or continued development of IPR&D, and (iv) estimated useful lives and IPR&D expected launch dates.
The more significant estimates and assumptions inherent in the estimate of the fair value of identifiable intangible assets include (i) assumptions associated with forecasting product profitability, including sales and cost to sell projections, (ii) tax rates which seek to incorporate the geographic diversity of the projected cash flows, (iii) expected impact of competitive, legal and/or regulatory forces on the projections and the impact of 82 Table of Contents technological risk, R&D expenditure for ongoing support of product rights or continued development of IPR&D, and (iv) estimated useful lives and IPR&D expected launch dates.
As such, immediately after acquisition or impairment, even small declines in the outlook for these assets can negatively impact our ability to recover the carrying value and can result in an impairment charge. Recently Issued Accounting Pronouncements See note 1 to our consolidated financial statements. 82 Table of Contents
As such, immediately after acquisition or impairment, even small declines in the outlook for these assets can negatively impact our ability to recover the carrying value and can result in an impairment charge. Recently Issued Accounting Pronouncements See note 1 to our consolidated financial statements. 83 Table of Contents
However, as of the end of 2022, we were unable to renew certain of our expiring hedging positions due to the liquidity situation in the market for Russian rubles. Prior to and since the escalation of the conflict, we have been taking measures to reduce our operational cash balances in Russia and Ukraine.
However, as of the end of 2023, we were unable to renew certain of our expiring hedging positions due to the liquidity situation in the market for Russian rubles. Prior to and since the escalation of the conflict, we have been taking measures to reduce our operational cash balances in Russia and Ukraine.
Commitments In addition to financing obligations under short-term debt and long-term senior notes and loans, debentures and convertible debentures, our major contractual obligations and commercial commitments include royalty payments, contingent payments pursuant to acquisition agreements and participation in joint ventures associated with R&D activities.
Commitments In addition to financing obligations under short-term debt and long-term senior notes and loans, debentures and convertible debentures, our major contractual obligations and commercial commitments include leases, royalty payments, contingent payments pursuant to acquisition agreements, collaboration agreements and participation in joint ventures associated with R&D activities.
The critical accounting estimates relate to the following: • Revenue Recognition and SR&A in the United States • Income Taxes • Contingencies • Goodwill • Identifiable Intangible Assets Revenue Recognition and SR&A in the United States Our gross product revenues are subject to a variety of deductions which are generally estimated and recorded in the same period that the revenues are recognized, and primarily represent chargebacks, rebates and sales allowances to wholesalers, retailers and government agencies with respect to our pharmaceutical products.
The critical accounting estimates relate to the following: • Revenue Recognition and SR&A in the United States • Income Taxes • Contingencies • Goodwill • Identifiable Intangible Assets Revenue Recognition and SR&A in the United States Our gross product revenues are subject to a variety of deductions which are generally estimated and recorded in the same period that the revenues are recognized, and primarily represent chargebacks, rebates and 79 Table of Contents sales allowances to wholesalers, retailers and government agencies with respect to our pharmaceutical products.
Non-GAAP Net Income and Non-GAAP EPS Data We present non-GAAP net income and non-GAAP earnings per share (“EPS”) as management believes that such data provide useful information to investors because they are used by management and our Board of Directors, in conjunction with other performance metrics, to evaluate our operational performance, to prepare and evaluate our work plans and annual budgets and ultimately to evaluate the performance of management, 75 Table of Contents including annual compensation.
Non-GAAP Net Income and Non-GAAP EPS Data We present non-GAAP net income and non-GAAP earnings per share (“EPS”) as management believes that such data provide useful information to investors because they are used by management and our Board of Directors, in conjunction with other performance metrics, to evaluate our operational performance, to prepare and evaluate our work plans and annual budgets and ultimately to evaluate the performance of management, including annual compensation.
Additionally, for IPR&D assets the risk of failure has been factored into the fair value measure. 81 Table of Contents While all intangible assets other than goodwill can face events and circumstances that can lead to impairment, in general, intangible assets other than goodwill that are most at risk of impairment include IPR&D assets and newly acquired or recently impaired indefinite-lived brand assets.
Additionally, for IPR&D assets the risk of failure has been factored into the fair value measure. While all intangible assets other than goodwill can face events and circumstances that can lead to impairment, in general, intangible assets other than goodwill that are most at risk of impairment include IPR&D assets and newly acquired or recently impaired indefinite-lived brand assets.
Investors are cautioned that, unlike financial measures prepared in accordance with U.S. GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies. These non-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses our performance.
Investors are cautioned that, unlike financial measures prepared in accordance with U.S. 76 Table of Contents GAAP, non-GAAP measures may not be comparable with the calculation of similar measures for other companies. These non-GAAP financial measures are presented solely to permit investors to more fully understand how management assesses our performance.
The potential advantages of being the first filer with respect to some of these products may be subject to forfeiture, shared exclusivity or competition from so-called “authorized generics,” which may ultimately affect the value derived. In 2022, we received tentative approvals for generic equivalents of the products listed in the table below, excluding overlapping applications.
The potential advantages of being the first filer with respect to some of these products may be subject to forfeiture, shared exclusivity or competition from so-called “authorized generics,” which may ultimately affect the value derived. 61 Table of Contents In 2023, we received tentative approvals for generic equivalents of the products listed in the table below, excluding overlapping applications.
Collectively, these first to file opportunities represent over $81 billion in U.S. brand sales for the twelve months ended September 30, 2022, according to IQVIA. IQVIA reported brand sales are one of the many indicators of future potential value of a launch, but equally important are the mix and timing of competition, as well as cost effectiveness.
Collectively, these first to file opportunities represent over $72 billion in U.S. brand sales for the twelve months ended September 30, 2023, according to IQVIA. IQVIA reported brand sales are one of the many indicators of future potential value of a launch, but equally important are the mix and timing of competition, as well as cost effectiveness.
For a comparison of our results of operations and financial condition for fiscal years 2021 and 2020, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2021 Annual Report on Form 10-K, filed with the SEC on February 9, 2022.
For a comparison of our results of operations and financial condition for fiscal years 2022 and 2021, see “Item 7—Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our 2022 Annual Report on Form 10-K, filed with the SEC on February 10, 2023.
As of December 31, 2022 and 2021, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,143 million and 1,128 million, respectively. Impact of Currency Fluctuations on Results of Operations In 2022, approximately 47% of our revenues were denominated in currencies other than the U.S. dollar.
As of December 31, 2023 and 2022, the fully diluted share count for purposes of calculating our market capitalization was approximately 1,157 million and 1,143 million, respectively. Impact of Currency Fluctuations on Results of Operations In 2023, approximately 47% of our revenues were denominated in currencies other than the U.S. dollar.
As of December 31, 2022, if all development milestones and targets, for compounds in phase 2 and more advanced stages of development, are achieved, the total contingent payments could reach an aggregate amount of up to $26 million. Additional contingent payments are owed upon achievement of product approval or launch milestones.
As of December 31, 2023, if all development milestones and targets, for compounds in phase 2 and more advanced stages of development, are achieved, the total contingent payments could reach an aggregate amount of up to $20 million. Additional contingent payments are owed upon achievement of product approval or launch milestones.
Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily its $1.8 billion unsecured syndicated sustainability-linked revolving credit facility, entered into in April 2022, which was amended in February 2023 (“RCF”).
Teva’s principal sources of short-term liquidity are its cash on hand, existing cash investments, liquid securities and available credit facilities, primarily our $1.8 billion unsecured syndicated sustainability-linked revolving credit facility, entered into in April 2022, as amended in February 2023 (“RCF”).
When accruing these costs, Teva will recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any 79 Table of Contents other amount, Teva accrues for the minimum amount within the range.
When accruing these costs, Teva will recognize an accrual in the amount within a range of loss that is the best estimate within the range. When no amount within the range is a better estimate than any other amount, Teva accrues for the minimum amount within the range.
The total gross amount of unrecognized tax benefits for uncertain tax positions was $638 million at December 31, 2022. Payment of these obligations would result from settlements with tax authorities. Due to the difficulty in determining the timing and magnitude of settlements, these obligations are not included in the table above.
The total gross amount of unrecognized tax benefits for uncertain tax positions was $651 million at December 31, 2023. Payment of these obligations would result from settlements with tax authorities. Due to the difficulty in determining the timing and magnitude of settlements, these obligations are not included in the table above.
During 2022, we generated free cash flow of $2,243 million, which we define as comprising $1,590 million in cash flow generated from operating activities, $1,140 million in beneficial interest collected in exchange for securitized accounts receivables and $68 million proceeds from divestitures of businesses and other assets, partially offset by $548 million in cash used for capital investments and $7 million in cash used for acquisition of businesses, net of cash acquired.
During 2022, we generated free cash flow of $2,243 million, which we define as comprising $1,590 million in cash flow generated from operating activities, $1,140 million in beneficial interest collected in exchange for securitized accounts receivables and $68 million proceeds from sale of businesses and long-lived assets, partially offset by $548 million in cash used for capital investments and $7 million in cash used for acquisition of businesses, net of cash acquired.
In addition, in large part as a result of the nature of its business, Teva is frequently subject to litigation, governmental investigations and other legal proceedings.
In addition, in large part as a result of the nature of its business, Teva 80 Table of Contents is frequently subject to litigation, governmental investigations and other legal proceedings.
As of December 31, 2022, our generic products pipeline in the United States includes 171 product applications awaiting FDA approval, including 73 tentative approvals. This total reflects all pending ANDAs, supplements for product line extensions and tentatively approved applications and includes some instances where more than one application was submitted for the same reference product.
As of December 31, 2023, our generic products pipeline in the United States includes 137 product applications awaiting FDA approval, including 63 tentative approvals. This total reflects all pending ANDAs, supplements for product line extensions and tentatively approved applications and includes some instances where more than one application was submitted for the same reference product.
In February 2022, Russia launched an invasion of Ukraine. As of the date of this Annual Report on Form 10-K, sustained conflict and disruption in the region is ongoing. Russia and Ukraine markets are included in our International Markets segment results. We have no manufacturing or R&D facilities in these markets.
As of the date of this Annual Report on Form 10-K, sustained conflict and disruption in the region is ongoing. Russia and Ukraine markets are included in our International Markets segment results. We have no manufacturing or R&D facilities in these markets.
Excluding overlaps, the branded products underlying these pending applications had U.S. sales for the twelve months ended September 30, 2022 of approximately $113 billion, according to IQVIA.
Excluding overlaps, the branded products underlying these pending applications had U.S. sales for the twelve months ended September 30, 2023 of approximately $107 billion, according to IQVIA.
International Markets Profit Profit of our International Markets segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items. Profit from our International Markets segment in 2022 was $479 million a decrease of 9% compared to $529 million in 2021.
International Markets Profit Profit of our International Markets segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items. Profit from our International Markets segment in 2023 was $464 million a decrease of 3% compared to $479 million in 2022.
Europe Profit Profit of our Europe segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items. Profit from our Europe segment in 2022 was $1,496 million, flat compared to $1,494 million in 2021.
Europe Profit Profit of our Europe segment consists of gross profit less R&D expenses, S&M expenses, G&A expenses and any other income related to this segment. Segment profit does not include amortization and certain other items. Profit from our Europe segment in 2023 was $1,478 million, a decrease of 1% compared to $1,496 million in 2022.
Among the most significant generic products we sold in North America in 2022 were Truxima ® (the biosimilar to Rituxan ® ), lenalidomide capsules (the generic version of Revlimid ® ), epinephrine injectable solution (the generic equivalent of EpiPen ® and EpiPen Jr. ® ), albuterol sulfate inhalation aerosol (our ProAir authorized generic), and lidocaine transdermal patch (the generic equivalent of Lidoderm Patch ® ).
Among the most significant generic products we sold in North America in 2023 were lenalidomide capsules (the generic version of Revlimid ® ), epinephrine injectable solution (the generic equivalent of EpiPen ® and EpiPen Jr ® ), Truxima ® (the biosimilar to Rituxan ® ) and albuterol sulfate inhalation aerosol (our ProAir ® authorized generic).
Our working capital balance, which includes accounts receivables net of SR&A, inventories, prepaid expenses and other current assets, accounts payables, employee-related obligations, accrued expenses and other current liabilities, was negative $119 million as of December 31, 2022, compared to positive $787 million as of December 31, 2021.
Our working capital balance, which includes accounts receivables net of SR&A, inventories, prepaid expenses and other current assets, accounts payables, employee-related obligations, accrued expenses and other current liabilities, was negative $1,374 million as of December 31, 2023, compared to negative $119 million as of December 31, 2022.
Our financial leverage, which is the ratio between our debt and the sum of our debt and equity, was 71% as of December 31, 2022, compared to 67% as of December 31, 2021. Our average debt maturity was approximately 5.8 years as of December 31, 2022, compared to 6.4 years as of December 31, 2021.
Our financial leverage, which is the ratio between our debt and the sum of our debt and equity, was 71% as of December 31, 2023 and December 31, 2022. Our average debt maturity was approximately 6.0 years as of December 31, 2023, compared to 5.8 years as of December 31, 2022.
Approximately 71% of pending applications include a paragraph IV patent challenge and we believe we are first to file with respect to 68 of these products, or 97 products including final approvals where launch is pending a settlement agreement or court decision.
Approximately 78% of pending applications include a paragraph IV patent challenge and we believe we are first to file with respect to 62 of these products, or 88 products including final approvals where launch is pending a settlement agreement or court decision.
Commencing the third quarter of 2018, the cumulative inflation in Argentina exceeded 100% or more over a 3-year period. Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations. Commencing the second quarter of 2022, the cumulative inflation in Turkey exceeded 100% or more over a three-year period.
Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations. 72 Table of Contents Commencing the second quarter of 2022, the cumulative inflation in Turkey exceeded 100% or more over a three-year period.
Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations. Liquidity and Capital Resources Total balance sheet assets were $44,006 million as of December 31, 2022, compared to $47,666 million as of December 31, 2021.
Although this triggered highly inflationary accounting treatment, it did not have a material impact on our results of operations. Liquidity and Capital Resources Total balance sheet assets were $43,479 million as of December 31, 2023, compared to $44,011 million as of December 31, 2022.
For more information on BENDEKA and TREANDA, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—Oncology.” COPAXONE revenues in our North America segment in 2022 decreased by 33% to $387 million, compared to 2021, mainly due to generic competition in the United States and a decrease in glatiramer acetate market share due to availability of alternative biologic therapies.
For more information on BENDEKA and TREANDA, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—Oncology.” COPAXONE revenues in our North America segment in 2023 decreased by 17% to $320 million, compared to 2022, mainly due to generic competition in the United States and a decrease in glatiramer acetate market share due to availability of alternative biologic therapies, partially offset by a reduction in sales allowance.
In 2022, a positive hedging impact of $11 million was recognized under revenues, and a negative impact of $7 million was recognized under cost of sales. In 2021, a positive impact of $31 million was recognized under revenues and a minimal negative impact was recognized under cost of sales.
In 2022, a positive impact of $11 million was recognized under revenues and a negative impact of $7 million was recognized under cost of sales.
Definite life intangible assets consist mainly of acquired product rights and other rights relating to products for which marketing approval was received from the FDA or the equivalent agencies in other countries.
Identifiable Intangible Assets Identifiable intangible assets are comprised of definite life intangible assets and indefinite life intangible assets. 81 Table of Contents Definite life intangible assets consist mainly of acquired product rights and other rights relating to products for which marketing approval was received from the FDA or the equivalent agencies in other countries.
Such decisions may have an impact on our annual operating cash flow measurement, as well as on our quarterly results. Cash flow generated from operating activities in 2022 was $1,590 million, compared to $798 million in 2021.
Such decisions may have a material impact on our annual operating cash flow measurement, as well as on our quarterly results. Cash flow generated from operating activities in 2023 was $1,368 million, compared to $1,590 million in 2022.
These assets are amortized using mainly the straight-line method over their estimated period of useful life, or based on 80 Table of Contents economic benefit models, if more appropriate, which is determined by identifying the period and manner in which substantially all of the cash flows are expected to be generated.
These assets are amortized using mainly the straight-line method over their estimated period of useful life, or based on economic benefit models, if more appropriate, which is determined by identifying the period and manner in which substantially all of the cash flows are expected to be generated. Amortization of acquired developed products is recorded under cost of sales.
Our other activities are not included in our North America, Europe or International Markets segments described above. Our revenues from other activities in 2022 were $1,045 million, a decrease of 9% in U.S. dollars, or 6% in local currency terms, compared to 2021.
Our other activities are not included in our North America, Europe or International Markets segments described above. Our revenues from other activities in 2023 were $926 million, a decrease of 11% in U.S. dollars, or 12% in local currency terms, compared to 2022.
International Markets R&D Expenses R&D expenses relating to our International Markets segment in 2022 were $72 million, an increase of 6% compared to $68 million in 2021. For a description of our R&D expenses in 2022, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
International Markets R&D Expenses R&D expenses relating to our International Markets segment in 2023 were $83 million, an increase of 16% compared to $72 million in 2022. 67 Table of Contents For a description of our R&D expenses in 2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
The fair value of acquired identifiable intangible assets is determined using an income approach. This method starts with a forecast of all expected future net cash flows associated with the asset and then adjusts the forecast to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.
This method starts with a forecast of all expected future net cash flows associated with the asset and then adjusts the forecast to present value by applying an appropriate discount rate that reflects the risk factors associated with the cash flow streams.
Europe Segment The following table presents revenues, expenses and profit for our Europe segment for the past two years: Year ended December 31, 2022 2021 (U.S. $ in millions /% of Segment Revenues) Revenues $ 4,525 100% $ 4,886 100% Gross profit 2,700 59.7% 2,823 57.8% R&D expenses 213 4.7% 244 5.0% S&M expenses 748 16.5% 846 17.3% G&A expenses 246 5.4% 244 5.0% Other (income) expense (3 ) § (5 ) § Segment profit* $ 1,496 33.1% $ 1,494 30.6% * Segment profit does not include amortization and certain other items. § Represents an amount less than 0.5%.
Europe Segment The following table presents revenues, expenses and profit for our Europe segment for the past two years: Year ended December 31, 2023 2022 (U.S. $ in millions / % of Segment Revenues) Revenues $ 4,837 100% $ 4,525 100% Gross profit 2,726 56.4% 2,700 59.7% R&D expenses 220 4.6% 213 4.7% S&M expenses 767 15.9% 748 16.5% G&A expenses 263 5.4% 246 5.4% Other (income) expense (2 ) § (3 ) § Segment profit* $ 1,478 30.6% $ 1,496 33.1% * Segment profit does not include amortization and certain other items. § Represents an amount less than 0.5%.
This decrease was mainly due to lower gross profit, as discussed above. Other Activities We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis.
This decrease was mainly due to higher S&M and R&D expenses and lower other income. Other Activities We have other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis.
Research and Development (R&D) Expenses Our R&D activities for generic products in each of our segments include both (i) direct expenses relating to product formulation, analytical method development, stability testing, management of bioequivalence and other clinical studies and regulatory filings; and (ii) indirect expenses, such as costs of internal administration, infrastructure and personnel. 67 Table of Contents Our R&D activities for innovative medicines and biosimilar products in each of our segments include costs of discovery research, preclinical development, drug formulation, early- and late-clinical development and product registration costs.
Our R&D activities for generic products in each of our segments include both (i) direct expenses relating to product formulation, analytical method development, stability testing, management of bioequivalence and other clinical studies and regulatory filings; and (ii) indirect expenses, such as costs of internal administration, infrastructure and personnel.
North America R&D Expenses R&D expenses relating to our North America segment in 2022 were $532 million, a decrease of 14% compared to $618 million in 2021. For a description of our R&D expenses in 2022, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
North America R&D Expenses R&D expenses relating to our North America segment in 2023 were $625 million, an increase of 18% compared to $532 million in 2022. For a description of our R&D expenses in 2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
We have implemented certain measures in response to such macroeconomic pressures and are continually considering various initiatives, including price adjustments, enhanced inventory management and alternative sourcing strategies for our raw material supply, to allow us to partially mitigate and offset the impact of these macroeconomic factors.
We have implemented certain measures in response to such macroeconomic pressures and geopolitical events and are continually considering various initiatives, including price adjustments where we are not restricted contractually or regulatorily, enhanced inventory management, alternative sourcing strategies for our raw material supply and backup production plans for key products, to allow us to partially mitigate and offset the impact of these macroeconomic and geopolitical factors.
Europe R&D Expenses R&D expenses relating to our Europe segment in 2022 were $213 million, a decrease of 13% compared to $244 million in 2021. For a description of our R&D expenses in 2022, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
Europe R&D Expenses R&D expenses relating to our Europe segment in 2023 were $220 million, an increase of 3% compared to $213 million in 2022. For a description of our R&D expenses in 2023, see “—Teva Consolidated Results—Research and Development (R&D) Expenses” below.
In local currency terms, revenues increased by 5%, due to higher revenues in most markets, as well as price increases largely as a result of rising costs due to inflationary pressure, partially offset by lower revenues in Japan resulting from regulatory price reductions, the divestment mentioned above, and generic competition to off-patented products.
In local currency terms, revenues increased by 16%, mainly due to higher revenues in most markets, as well as price increases largely as a result of higher costs due to inflationary pressure, partially offset by regulatory price reductions and generic competition to off-patented products in Japan.
Our S&M expenses were primarily the result of the factors discussed above under “—North America Segment— S&M Expenses” and “—Europe Segment— S&M Expenses.” S&M expenses as a percentage of revenues were 15.2% in 2022, compared to 15.3% in 2021. General and Administrative (G&A) Expenses G&A expenses in 2022 were $1,180 million, an increase of 7% compared to 2021.
General and Administrative (G&A) Expenses G&A expenses in 2023 were $1,162 million, a decrease of 2% compared to 2022. Our G&A expenses were primarily the result of the factors discussed above under “—North America Segment—G&A Expenses” and “—Europe Segment— G&A Expenses.” G&A expenses as a percentage of revenues were 7.3% in 2023, compared to 7.9% in 2022.
Amortization of acquired developed products is recorded under cost of sales. Amortization of marketing and distribution rights is recorded under selling and marketing expenses when separable. Indefinite life intangible assets are mainly comprised of IPR&D assets. Teva monitors these assets for items such as research and development milestones and progress to identify any triggering events.
Amortization of marketing and distribution rights is recorded under selling and marketing expenses when separable. Indefinite life intangible assets are mainly comprised of IPR&D assets. Teva monitors these assets for items such as research and development milestones and progress to identify any triggering events. The fair value of acquired identifiable intangible assets is determined using an income approach.
For more information on AJOVY, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—AJOVY.” COPAXONE revenues in our Europe segment in 2022 decreased by 31% to $268 million, compared to 2021. In local currency terms, revenues decreased by 23%, mainly due to price reductions and a decline in volume resulting from competing glatiramer acetate products and availability of alternative therapies.
In local currency terms, revenues decreased by 16%, mainly due to price reductions and lower volumes resulting from competing glatiramer acetate products and availability of alternative therapies. For more information on COPAXONE, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—COPAXONE.” Respiratory products revenues in our Europe segment in 2023 decreased by 3% to $265 million, compared to 2022.
In local currency terms, revenues increased by 15%. For more information on COPAXONE, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—COPAXONE.” AUSTEDO was launched in early 2021 in China for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia, and was also launched in Israel during 2021.
For more information on COPAXONE, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—COPAXONE.” AUSTEDO was launched in China and Israel in 2021 and in Brazil in 2022 for the treatment of chorea associated with Huntington’s disease and for the treatment of tardive dyskinesia.
International Markets Segment The following table presents revenues, expenses and profit for our International Markets segment for the past two years: Year ended December 31, 2022 2021 (U.S. $ in millions /% of Segment Revenues) Revenues $ 1,903 100% $ 2,032 100% Gross profit 1,033 54.3% 1,118 55.0% R&D expenses 72 3.8% 68 3.3% S&M expenses 405 21.3% 417 20.5% G&A expenses 119 6.3% 109 5.4% Other (income) expense (43 ) (2.2% ) (5 ) § Segment profit* $ 479 25.2% $ 529 26.0% * Segment profit does not include amortization and certain other items. § Represents an amount less than 0.5%. 64 Table of Contents International Markets Revenues Our International Markets segment includes all countries in which we operate other than those in our North America and Europe segments.
International Markets Segment The following table presents revenues, expenses and profit for our International Markets segment for the past two years: Year ended December 31, 2023 2022 (U.S. $ in millions / % of Segment Revenues) Revenues $ 1,958 100% $ 1,903 100% Gross profit 1,050 53.6% 1,033 54.3% R&D expenses 83 4.3% 72 3.8% S&M expenses 420 21.4% 405 21.3% G&A expenses 118 6.0% 119 6.3% Other (income) expense (35 ) (1.8% ) (43 ) (2.2% ) Segment profit* $ 464 23.7% $ 479 25.2% * Segment profit does not include amortization and certain other items. 65 Table of Contents International Markets Revenues Our International Markets segment includes all countries in which we operate other than those in our North America and Europe segments.
See note 7 to our consolidated financial statements. • We recorded expenses of $414 million for other asset impairments, restructuring and other items in 2022, compared to expenses of $341 million in 2021.
Other Asset Impairments, Restructuring and Other Items We recorded expenses of $718 million for other asset impairments, restructuring and other items in 2023, compared to expenses of $512 million in 2022. See note 15 to our consolidated financial statements.
Segment Information North America Segment The following table presents revenues, expenses and profit for our North America segment for the past two years: Year ended December 31, 2022 2021 (U.S. $ in millions /% of Segment Revenues) Revenues $ 7,452 100% $ 7,809 100% Gross profit 3,926 52.7% 4,226 54.1% R&D expenses 532 7.1% 618 7.9% S&M expenses 941 12.6% 988 12.7% G&A expenses 474 6.4% 427 5.5% Other income (15 ) § (31 ) § Segment profit* $ 1,993 26.7% $ 2,224 28.5% * Segment profit does not include amortization and certain other items. § Represents an amount less than 0.5%.
Segment Information North America Segment The following table presents revenues, expenses and profit for our North America segment for the past two years: Year ended December 31, 2023 2022 (U.S. in millions / % of Segment Revenues) Revenues $ 8,124 100% $ 7,452 100% Gross profit 4,421 54.4% 3,926 52.7% R&D expenses 625 7.7% 532 7.1% S&M expenses 1,005 12.4% 941 12.6% G&A expenses 403 5.0% 474 6.4% Other income (8 ) § (15 ) § Segment profit* $ 2,396 29.5% $ 1,993 26.7% * Segment profit does not include amortization and certain other items. § Represents an amount less than 0.5%. 58 Table of Contents North America Revenues Our North America segment includes the United States and Canada.
For more information on AJOVY, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—AJOVY.” AUSTEDO revenues in our North America segment in 2022 increased by 20% to $963 million, compared to 2021, mainly due to growth in volume.
For more information on AJOVY, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—AJOVY.” AUSTEDO revenues in our North America segment in 2023 increased by 27% to $1,225 million, compared to 2022, mainly due to growth in volume including the launch of AUSTEDO XR in May 2023.
See “—North America Revenues,” “—Europe Revenues,” “—International Markets Revenues” and “—Other Activities” above. Exchange rate movements during 2022, including hedging effects, negatively impacted revenues by $780 million, compared to 2021. See note 10d to our consolidated financial statements. Gross Profit Gross profit in 2022 was $6,973 million, a decrease of 8% compared to 2021.
See “—North America Revenues,” “—Europe Revenues,” “—International Markets Revenues” and “—Other Activities” above. Exchange rate movements during 2023, including hedging effects, negatively impacted revenues by $172 million, compared to 2022. See note 10d to our consolidated financial statements. Gross Profit Gross profit in 2023 was $7,645 million, an increase of 10% compared to 2022.
In addition to these three segments, we have other activities, primarily the sale of API to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis. Macroeconomic Environment In recent months, the global economy has been impacted by fluctuating foreign exchange rates.
In addition to these three segments, we have other activities, primarily the sale of API to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through our affiliate Medis.
Europe Revenues Our Europe segment includes the European Union, the United Kingdom and certain other European countries. Revenues from our Europe segment in 2022 were $4,525 million, a decrease of $361 million, or 7%, compared to 2021.
Europe Revenues Our Europe segment includes the European Union, the United Kingdom and certain other European countries. Revenues from our Europe segment in 2023 were $4,837 million, an increase of $312 million, or 7%, compared to 2022.
AJOVY revenues in our North America segment in 2022 increased by 24% to $218 million, compared to 2021, mainly due to growth in volume and favorable net pricing. In 2022, AJOVY’s exit market share in the United States in terms of total number of prescriptions was 26%, compared to 21.4% in 2021.
AJOVY revenues in our North America segment in 2023 increased by 6% to $230 million, compared to 2022, mainly due to growth in volume, partially offset by unfavorable net pricing. In 2023, AJOVY’s exit market share in the United States in terms of total number of prescriptions was 24.5%, compared to 26.0% in 2022.
Revenues decreased by 5%, compared to 2021. Profit decreased by 10% compared to 2021. • Our Europe segment generated revenues of $4,525 million and profit of $1,496 million in 2022. Revenues decreased by 7% in U.S. dollars. In local currency terms, revenues increased by 4% compared to 2021.
Revenues increased by 9% compared to 2022. Profit increased by 20% compared to 2022. • Our Europe segment generated revenues of $4,837 million and profit of $1,478 million in 2023. Revenues increased by 7% in U.S. dollars or 5% in local currency terms, compared to 2022.
Profit was flat compared to 2021. • Our International Markets segment generated revenues of $1,903 million and profit of $479 million in 2022. Revenues decreased by 6% in U.S. dollars. In local currency terms, revenues increased by 3% compared to 2021.
Profit decreased by 1% compared to 2022. • Our International Markets segment generated revenues of $1,958 million and profit of $464 million in 2023. Revenues increased by 3% in U.S. dollars or 16% in local currency terms, compared to 2022.
For a description of our innovative medicines pipeline, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines” above. North America Gross Profit Gross profit from our North America segment in 2022 was $3,926 million, a decrease of 7% compared to $4,226 million in 2021, mainly due to lower revenues as discussed above.
For a description of our innovative medicines pipeline, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines” above. North America Gross Profit Gross profit from our North America segment in 2023 was $4,421 million, an increase of 13% compared to $3,926 million in 2022.
See note 9 to our consolidated financial statements. 71 Table of Contents 2022 Debt Balance and Movements As of December 31, 2022, our debt was $21,212 million, compared to $23,043 million as of December 31, 2021. This decrease was mainly due to $1,369 million of senior notes repaid at maturity and $484 million of exchange rate fluctuations.
See note 9 to our consolidated financial statements. 2023 Debt Balance and Movements As of December 31, 2023, our debt was $19,833 million, compared to $21,212 million as of December 31, 2022. This decrease was mainly due to $1,646 million senior notes repaid at maturity, partially offset by $302 million of exchange rate fluctuations.
See note 7 and note 19 to our consolidated financial statements for further details on the goodwill impairments recognized in 2022 and 2020, and Teva’s operating and reporting segments. Identifiable Intangible Assets Identifiable intangible assets are comprised of definite life intangible assets and indefinite life intangible assets.
See note 7 and note 19 to our consolidated financial statements for further details on the goodwill impairments recognized in 2023 and 2022, and Teva’s operating and reporting segments.
In 2022, revenues were negatively impacted by exchange rate fluctuations of $550 million, including hedging effects, compared to 2021. Revenues in 2022 included $17 million from a positive hedging impact, which are included in “Other” in the table below.
In 2023, revenues were positively impacted by exchange rate fluctuations of $88 million, net of hedging effects, compared to 2022. Revenues in 2023 were affected by a $12 million negative hedging impact, compared to a $17 million positive hedging impact in 2022, which are included in “Other” in the table below.
For more information on COPAXONE, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—COPAXONE.” Respiratory products revenues in our Europe segment in 2022 decreased by 23% to $273 million, compared to 2021. In local currency terms, revenues decreased by 14% mainly due to net price reductions and lower volumes.
In local currency terms, revenues increased by 27% due to higher volumes. For more information on AJOVY, see “Item 1—Business—Our Product Portfolio and Business Offering—Innovative Medicines—AJOVY.” COPAXONE revenues in our Europe segment in 2023 decreased by 14% to $231 million, compared to 2022.
In some cases, the royalty period is not defined; in other cases, royalties will be paid over various periods not exceeding 20 years. 74 Table of Contents In connection with certain development, supply and marketing, and research and collaboration or services agreements, we are required to indemnify, in unspecified amounts, the parties to such agreements against third-party claims relating to (i) infringement or violation of intellectual property or other rights of such third party; or (ii) damages to users of the related products.
In connection with certain development, supply and marketing, and research and collaboration or services agreements, we are required to indemnify, in unspecified amounts, the parties to such agreements against third-party claims relating to (i) infringement or violation of intellectual property or other rights of such third party; or (ii) damages to users of the related products.
See note 13 to our consolidated financial statements. • As of December 31, 2022, our debt was $21,212 million, compared to $23,043 million as of December 31, 2021. See note 9 to our consolidated financial statements. • Cash flow generated from operating activities in 2022 was $1,590 million, compared to $798 million in 2021.
For additional information see note 1b to our consolidated financial statements. • Our debt was $19,833 million as of December 31, 2023, compared to $21,212 million as of December 31, 2022. • Cash flow generated from operating activities in 2023 was $1,368 million, compared to $1,590 million in 2022.
From time to time, as part of our cash and commercial relationship management activities, we may make decisions in our commercial and supply chain activities which may drive an acceleration of receivable payments from customers or deceleration of payments to vendors, having the effect of increasing or decreasing cash from operations in an individual period.
Cash Flow We continually seek to improve the efficiency of our working capital management. Periodically, as part of our cash and commercial relationship management activities, we make decisions in our commercial and supply chain activities which may drive an acceleration of receivable payments from customers, or deceleration of payments to vendors.
API sales to third parties in 2022 were $675 million, a decrease of 9% in both U.S. dollars and local currency terms.
API sales to third parties in 2023 were $568 million, a decrease of 16% in both U.S. dollars and local currency terms, mainly due to changes in market conditions.
See note 15 to our consolidated financial statements. • In 2022, we recorded expenses of $2,082 million in legal settlements and loss contingencies, compared to expenses of $717 million in 2021.
Legal Settlements and Loss Contingencies In 2023, we recorded expenses of $1,043 million in legal settlements and loss contingencies, compared to expenses of $2,082 million in 2022. See note 11 to our consolidated financial statements. Other Income Other income in 2023 was $49 million, compared to $107 million in 2022. See note 16 to our consolidated financial statements.
During 2021, we generated free cash flow of $2,196 million, which we define as comprising $798 million in cash flow generated from operating activities, $1,648 million in beneficial interest collected in exchange for securitized accounts receivables and $311 million in proceeds from divestitures of businesses and other assets, partially offset by $562 million in cash used for capital investments.
During 2023, we generated free cash flow of $2,387 million, which we define as comprising $1,368 million in cash flow generated from operating activities, $1,477 million in beneficial interest collected in exchange for securitized accounts receivables (under our EU securitization program) and $68 million proceeds from sale of businesses and long-lived assets, partially offset by $526 million in cash used for capital investments.
GAAP requires management to make estimates and assumptions in certain circumstances that affect the amounts reported in the accompanying consolidated financial statements and related footnotes. Actual results may differ from these estimates. We base our judgments on our experience and on various assumptions that we believe to be reasonable under the circumstances.
Actual results may differ from these estimates. We base our judgments on our experience and on various assumptions that we believe to be reasonable under the circumstances.
Historically, our changes of estimates reflecting actual results or updated expectations, have not been material to our overall business. Product-specific rebates, however, may have a significant impact on year-over- 78 Table of Contents year individual product growth trends.
Historically, our changes of estimates reflecting actual results or updated expectations, have not been material to our overall business. Product-specific rebates, however, may have a significant impact on year-over-year individual product growth trends. If any of our ratios, factors, assessments, experiences or judgments are not indicative or accurate predictors of our future experience, our results could be materially affected.
R&D expenses as a percentage of revenues were 5.6% in 2022, compared to 6.1% in 2021. Selling and Marketing (S&M) Expenses S&M expenses in 2022 were $2,265 million, a decrease of 7% compared to 2021.
R&D expenses as a percentage of revenues were 6.0% in 2023, compared to 5.6% in 2022. 69 Table of Contents Selling and Marketing (S&M) Expenses S&M expenses in 2023 were $2,336 million, an increase of 3% compared to 2022.
In April 2022, Teva repaid $296 million of its 3.25% senior notes at maturity. In July 2022, Teva repaid $365 million of its 0.50% senior notes at maturity. In December 2022, Teva repaid $713 million of its 2.95% senior notes at maturity.
For further information, see note 9 to our consolidated financial statements. 2022 Debt Balance and Movements In April 2022, Teva repaid $296 million of its 3.25% senior notes at maturity. In July 2022, Teva repaid $365 million of its 0.50% senior notes at maturity. In December 2022, Teva repaid $713 million of its 2.95% senior notes at maturity.
Gross profit margin for our International Markets segment in 2022 decreased to 54.3%, compared to 55.0% in 2021. This decrease was mainly due to regulatory price reductions and generic competition to off-patented products in Japan, partially offset by price increases largely as a result of rising costs due to inflationary pressure and a favorable mix of products sold.
This decrease was mainly due to regulatory price reductions and generic competition to off-patented products in Japan, partially offset by price increases largely as a result of higher costs due to inflationary pressure, a favorable mix of products sold and a positive hedging impact.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

9 edited+3 added−0 removed10 unchanged
Biggest changeCurrency (sold) Cross Currency (bought) Net Notional Value Fair Value 2022 Weighted Average Cross Currency Prices or Strike Prices 2022 2021 2022 2021 (U.S. $ in millions) Forward: EUR CHF 354 * (3 ) — 0.98 EUR USD 252 98 (8 ) 4 0.96 JPY USD 246 313 (17 ) 4 139.06 EUR GBP 179 * (4 ) — 0.87 USD INR 151 95 (1 ) 1 82.51 PLN USD 122 * (8 ) — 4.70 CAD USD 79 76 2 1 1.31 CHF USD 58 509 (18 ) (4 ) 0.94 USD GBP 58 133 1 (1 ) 1.20 CLP USD 52 * (5 ) — 943.05 EUR CAD 50 * (2 ) — 1 MXN USD * 96 — (4 ) 19 Options: EUR USD 132 73 (3 ) 1 0.99 GBP USD 86 * (2 ) — 1.13 USD ILS 68 * (2 ) — 3.25 CAD USD * 53 — — — CHF USD * 51 (1 ) — — * Represents net notional value of less than $50 million. 84 Table of Contents Foreign Subsidiaries Net Assets Under certain market conditions, we may hedge against possible fluctuations in foreign subsidiaries’ net assets (“net investment hedge”).
Biggest changeCurrency (sold) Cross Currency (bought) Net Notional Value Fair Value 2023 Weighted Average Cross Currency Prices or Strike Prices 2023 2022 2023 2022 (U.S. $ in millions) Forward: EUR CHF 409 354 10 (3 ) 0.95 EUR USD 367 252 (5 ) (8 ) 0.92 EUR GBP 293 246 1 (17 ) 0.87 JPY USD 239 179 (6 ) (4 ) 145.00 EUR PLN 187 151 2 (1 ) 4.40 USD INR 162 122 1 (8 ) 83.80 USD ILS 144 79 5 2 3.73 GBP USD 105 58 4 (18 ) 1.23 USD PLN 97 58 (1 ) 1 4.03 CAD USD 61 52 (1 ) (5 ) 1.38 CHF USD 56 50 (2 ) (2 ) 1 MXN USD 56 * (2 ) — 18 Options: EUR USD * 132 — (3 ) — GBP USD * 86 — (2 ) 1.23 USD ILS * 68 1 (2 ) 3.66 CAD USD * * — — 1.38 CHF USD * * — (1 ) 1 * Represents net notional value of less than $50 million. 85 Table of Contents Foreign Subsidiaries Net Assets Under certain market conditions, we may hedge against possible fluctuations in foreign subsidiaries’ net assets (“net investment hedge”).
As of December 31, 2022, we hedged part of our expected operating results for 2023 in currencies other than the U.S. dollar, primarily the euro, British pound, Canadian dollar, Swiss franc, Swedish krona, Polish zloty, Japanese yen, Chilean peso, Indian rupee and Israeli shekel.
As of December 31, 2023, we hedged part of our expected operating results for 2024 in currencies other than the U.S. dollar, primarily the euro, British pound, Canadian dollar, Swiss franc, Swedish krona, Polish zloty, Japanese yen, Chilean peso, Indian rupee and Israeli shekel.
The table below presents the net notional and fair values of the financial derivatives entered into as of December 31, 2022 in order to reduce currency exposure arising from our cash flow and balance sheet exposures. The table below presents only currency paired with hedged net notional values exceeding $50 million.
The table below presents the net notional and fair values of the financial derivatives entered into as of December 31, 2023 in order to reduce currency exposure arising from our cash flow and balance sheet exposures. The table below presents only currency paired with hedged net notional values exceeding $50 million.
For further information on currencies in which we operate, see “Item 7— Management’s Discussion and Analysis of Financial Condition and Results of Operations—Impact of Currency Fluctuations on Results of Operations.” We generally prefer to borrow in U.S. dollars; however, from time to time we borrow funds in other currencies, such as the euro, Swiss franc and new Israeli shekel, in order to benefit from same currency revenues in relation to same currency costs and same currency assets in relation to same currency liabilities.
For further information on currencies in which we operate, see “Item 7— Management’s Discussion and Analysis of Financial Condition and Results of Operations —Impact of Currency Fluctuations on Results of Operations.” We generally prefer to borrow in U.S. dollars or euros; however, from time to time we borrow funds in other currencies, such as the Swiss franc, in order to benefit from same currency revenues in relation to same currency costs and same currency assets in relation to same currency liabilities.
We raise capital through various debt instruments including senior notes and sustainability-linked senior notes that bear a fixed or variable interest rate, unsecured syndicated sustainability-linked revolving credit facility that bears a fixed or variable interest rate and convertible debentures that bear a fixed and variable interest rate.
We raise capital through various debt instruments including senior notes, sustainability-linked senior notes, and convertible debentures that bear fixed or variable interest rates, as well as a syndicated sustainability-linked revolving credit facility and securitization programs that bear a variable interest rate.
Cash Flow Exposure Our total revenues were $14,925 million in 2022. Of these revenues, approximately 47% were denominated in currencies other than the U.S. dollar, of which 21% in euros, 4% in British pound and the rest in other currencies, none of which accounted for more than 4% of total revenues in 2022. In most currencies, we record corresponding expenses.
Cash Flow Exposure Our total revenues were $15,846 million in 2023. Of these revenues, approximately 47% were denominated in currencies other than the U.S. dollar, of which 21% in euros and the rest in other currencies, none of which accounted for more than 3% of total revenues in 2023. In most currencies, we record corresponding expenses.
As of December 31, 2021, we had outstanding derivatives, primarily forwards and currency option contracts with corresponding notional amounts of approximately $2.1 billion and $0.4 billion, respectively.
As of December 31, 2022, we had outstanding derivatives, primarily forwards and currency option contracts, with a corresponding notional amount of approximately $1.9 billion and $0.3 billion, respectively.
To the extent possible, the hedging activity is carried out on a consolidated level. 83 Table of Contents The table below presents exposures exceeding $50 million in absolute values: Net exposure as of December 31, 2022 Liability/Asset (U.S. $ in millions) CHF/EUR 360 USD/JPY 225 GBP/EUR 177 EUR/BGN 150 GBP/USD 130 INR /USD 110 ILS/USD 100 EUR/RUB 85 CAD/EUR 53 Outstanding Foreign Exchange Hedging Transactions As of December 31, 2022, we had outstanding derivatives, primarily forwards and currency option contracts, with a corresponding notional amount of approximately $1.9 billion and $0.3 billion, respectively.
To the extent possible, the hedging activity is carried out on a consolidated level. 84 Table of Contents The table below presents exposures exceeding $50 million in absolute values: Net exposure as of December 31, 2023 Liability/Asset (U.S. $ in millions) CHF/EUR 406 GBP/EUR 324 USD/EUR 279 BGN/EUR 247 USD/JPY 220 PLN/EUR 199 GBP/USD 167 EUR/RUB 140 INR/USD 101 USD/PLN 65 USD/MXN 58 Outstanding Foreign Exchange Hedging Transactions As of December 31, 2023, we had outstanding derivatives, primarily forwards and currency option contracts, with a corresponding notional amount of approximately $2.5 billion and $0.2 billion, respectively.
The table below presents the aggregate outstanding debt by currencies and maturities as of December 31, 2022: Currency Total Amount Interest Rate Ranges 2023 2024 2025 2026 2027 2028 & thereafter (U.S. dollars in millions) Fixed Rate: USD 13,220 2.80 % 7.13 % 1,250 1,000 3,497 1,000 1,250 3,770 Euro 7,667 1.13 % 6.00 % 670 2,034 — 1,925 799 1,606 CHF 379 1.00 % 1.00 % — 379 — — — — USD convertible debentures* 23 0.25 % 0.25 % — — — — — — Variable Rate: Others 1 — — Total: 21,290 $ 1,920 $ 3,413 $ 3,497 $ 2,925 $ 2,049 $ 5,376 Less debt issuance costs (78 ) Total: $ 21,212 * Classified under short-term debt. 85 Table of Contents 2023-12-312024-12-312033-12-312032-12-312025-12-31http://fasb.org/us-gaap/2022#IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestmentsP30Dhttp://fasb.org/us-gaap/2022#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#RevenueFromContractWithCustomerExcludingAssessedTax2026-04-30http://fasb.org/us-gaap/2022#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2022#LiabilitiesCurrenthttp://fasb.org/us-gaap/2022#LiabilitiesCurrenthttp://www.tevapharm.com/20221231#ImpairmentsRestructuringAndOthershttp://fasb.org/us-gaap/2022#OtherAssetsCurrenthttp://fasb.org/us-gaap/2022#OtherLiabilitiesCurrent
The table below presents the aggregate outstanding debt by currencies and maturities as of December 31, 2023: Currency Total Amount Interest Rate Ranges 2024 2025 2026 2027 2028 2029 & thereafter (U.S. dollars in millions) Fixed Rate: USD 11,880 3.15 % 8.13 % 957 427 3,375 1,000 1,250 4,891 Euro 7,592 1.13 % 7.88 % 691 1,001 — 1,986 824 3,090 CHF 416 1.00 % 1.00 % — 416 — — — — USD convertible debentures* 23 0.25 % 0.25 % — — — — — — Variable Rate: Others 1 1.00 % 2.00 % — — — — — — Total: 19,912 $ 1,648 $ 1,843 $ 3,375 $ 2,986 $ 2,074 $ 7,961 Less debt issuance costs (80 ) Total: $ 19,833 * Classified under short-term debt. 86 Table of Contents 2034-12-312033-12-312026-12-312025-12-312024-12-31http://fasb.org/us-gaap/2023#IncomeLossFromContinuingOperationsBeforeIncomeTaxesMinorityInterestAndIncomeLossFromEquityMethodInvestmentshttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#PropertyPlantAndEquipmentNethttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesNoncurrentTeva determines if an arrangement is a lease at inception.
Added
As of December 31, 2023, all outstanding senior notes, sustainability-linked senior notes and convertible debentures bear a fixed interest rate.
Added
Lease classification is governed by five criteria in ASC 842-10-25-2. If any of these five criteria is met, Teva classifies the lease as a finance lease. Otherwise, Teva classifies the lease as an operating lease.
Added
When determining lease classification, Teva’s approach in assessing two of the mentioned criteria is: (i) generally, 75% or more of the remaining economic life of the underlying asset is a major part of the remaining economic life of that underlying asset; and (ii) generally, 90% or more of the fair value of the underlying asset comprises substantially all of the fair value of the underlying asset.http://fasb.org/us-gaap/2023#RevenueFromContractWithCustomerExcludingAssessedTax2026-04-30http://fasb.org/us-gaap/2023#LiabilitiesCurrenthttp://fasb.org/us-gaap/2023#LiabilitiesCurrenthttp://fasb.org/us-gaap/2023#Liabilitieshttp://www.tevapharm.com/20231231#ImpairmentsRestructuringAndOthershttp://fasb.org/us-gaap/2023#OtherAssetsCurrenthttp://fasb.org/us-gaap/2023#OtherLiabilitiesCurrent

Other TEVA 10-K year-over-year comparisons