Teva Surges After Push Into Branded Drugs Drives Sales Beat

Summary

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Podcast Summary: Teva Surges After Push Into Branded Drugs Drives Sales Beat

Podcast: Bloomberg Businessweek
Episode Date: November 6, 2025
Hosts: Carol Massar and Tim Stenovec
Guest: Richard Francis, President and CEO of Teva Pharmaceuticals
Interviewer: Katie

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Episode Overview

This episode dives into Teva Pharmaceuticals' strong third-quarter earnings, focusing on the company’s remarkable share surge and ongoing strategic transformation. CEO Richard Francis discusses Teva’s shift from a generics-focused company to a biopharma leader with a growing innovative portfolio. The conversation highlights the drivers behind the recent revenue beat, the outlook for both generics and branded drugs, updates on pipeline developments, and the strategic sale of Teva’s active pharmaceutical ingredients (API) business.

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Key Discussion Points & Insights

1. Teva’s Earnings Surge and Strategic Shift

• [01:29] Shares rose over 21%, reaching their highest levels since 2018 after Teva reported $4.48 billion in Q3 revenues, surpassing consensus expectations.

• Richard Francis attributes the excitement to growth in Teva’s innovative branded portfolio, now a central company focus, versus a previous generics-only approach.

• Teva’s transition is changing its gross margin dynamics and future profit potential.

  “When I came on board three years ago, [Teva] was a generics company and now we're transitioning it to a world class biopharma company. And to do that we need to have an innovative branded portfolio. And that was up 33%...”
  — Richard Francis, 02:08

Key branded drugs driving growth:

• Austedo: +38% (tardive dyskinesia)
• Uzedy: +24% (schizophrenia)
• Ajovy: +19%

“That transition... is changing our gross margin dynamics, which of course feeds down to the EBITDA and to the EPS.”
— Richard Francis, 02:54

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2. Handling the Generics Business

• [04:30] Generics remains a core but is not scrutinized quarter-to-quarter; growth is better understood as a 2-year CAGR, given variable patent expiries and product launches.
• Recent quarterly generics sales missed estimates, but long-term performance has exceeded expectations.
• Generics growth projected at 2% CAGR, funding the pipeline and providing a stable base as innovative drugs increase profits.

“It's a big business and we don't look at it on a quarterly basis or even a yearly basis. We look at on a two year CAGR... our generics business has performed... considerably.”
— Richard Francis, 04:35

Pipeline highlights:

• Long-acting schizophrenia treatment (next year)
• Asthma drug (year after)
• Rare disease/SMA drug
• New treatments for UC and CD

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3. The GLP-1 Opportunity

• [06:15] Teva launched the first US generic GLP-1 (Victoza) for weight loss—amid strong market competition.
• Teva opted for commercialization partnerships rather than manufacturing investments due to uncertainty in pricing and volume.
• GLP-1s will contribute but are not a primary growth driver; focus remains on broader generics and emerging biosimilars (10+ in pipeline).

“We do see significant opportunity... but... we also understood the uncertainty around that area around pricing, around volume... It will be something that helps drive our growth, but it won't be a significant growth driver.”
— Richard Francis, 06:41

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4. API (Active Pharmaceutical Ingredient) Business Sale

• [07:32] Teva’s previously announced sale of its raw ingredients/API business recently fell through after talks with an unnamed buyer ended.
• The business is valuable—#2 globally outside of China/India—and remains for sale, but Francis emphasized the need for a partner aligned with Teva’s long-term supply needs.
• Improved company strength means less urgency to sell quickly; intent is still to divest for strategic alignment, but only on optimal terms.

“We are still wanting to divest the business. We think it's a very good business... But it's still an attractive business, but strategically it's not one we're going to keep long term because as we transform into this biopharma company...”
— Richard Francis, 08:14 & 09:20

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Notable Quotes & Memorable Moments

• On Teva’s transformation:

  “Now we're transitioning it to a world class biopharma company.”
  (Richard Francis, 02:11)

• On generics as a funding engine:

  “Our generics business is helping fuel it because obviously we use the revenue and the cash that throws off to fuel our pipeline.”
  (Richard Francis, 05:20)

• On the failed API sale:

  “We need to make sure that the service agreements we have with that partner are the ones that benefit Teva over the short, medium and long term. And so because of that, you know, we want to make sure this deal is right.”
  (Richard Francis, 08:30)

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Important Timestamps

• 01:29: Episode interview starts—Teva’s Q3 earnings, stock surge, and revenue beat
• 02:08: Richard Francis on branded drugs portfolio growth
• 04:30: Generics business performance, two-year CAGR context
• 06:15: GLP-1 generics strategy and partnerships
• 07:32: Discussion about the API business sale, reasons for failed deal, and future plans
• 09:26: Wrap-up and final remarks

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Tone and Language

The tone is direct, analytical, and forward-looking, with Francis emphasizing strategic clarity, measured optimism, and careful execution. He blends detail with big-picture strategy, aiming to reassure investors about Teva’s transformation and sustainable growth trajectory.

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This summary covers all substantive interview topics and avoids unrelated segments such as advertisements or non-content chatter.

Transcript

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[Interviewer (Katie)]

Let's turn our attention to health care and specifically to Teva Pharmaceuticals. Shares on a tear right now after reporting earnings up about 21 and a half percent on the day, hitting their highest level since 2018. And who better to discuss these results than with Teva Pharmaceuticals President and CEO Richard Francis joining us right now. Richard, great to speak to you again. So it seems like Wall street particularly psyched about total revenue last quarter coming in at 4, $4.48 billion. That was a beat when it comes to the consensus figure. Unpack that a little bit for us. Where exactly is the growth coming from and how sustainable is it?

[Richard Francis]

Well hi Katie, and thanks for having me on. Yeah, we had a good quarter three and as you say, 4.5 billion, up 3%. But I think the detail is where I think the excitement is. Innovative portfolio, which is something that's relatively new to Teva. You know, when I came on board three years ago it was a generics company and now we're transitioning it to a world class biopharma company. And to do that we need to have an innovative branded portfolio. And that was up 33% and it grew and it's now total over 800 million for Q3. And that was led by Esteto up 38%, a treatment for tardive dyskinesia. And you said he up 24%, a treatment for schizophrenia and then a Jovi up 19%. So good growth across the portfolio and I think that's what excited people now. They really see this transition of the company. And although our generics business was up 2%, what they're seeing now is this change in portfolio is changing our gross margin dynamics which of course feeds down to the EBITDA and to the eps. And so, you know, the opportunity to grow value for shareholders at Teva I think is becoming clearer for investors. So I think that's one of the significant things. The other thing that is worth noting is we did announce that we have concluded our negotiations with IRA and CMS right regard to Estado. And that was in line with our modeling that we set out in 2023 when we gave guidance of a two and a half billion revenue for 27. And we now committed with confidence to the fact that we can hit that two and a half billion and we can hit peak sales of over three billion. So I think that removed an uncertainty from the stock as well as with all those tailwinds that I just spoke about. I think that's probably why we are where we are today.

[Interviewer (Katie)]

Right? Yeah. I'm glad you brought up Estado. And certainly when it comes to those price negotiations, I know that was a hot topic on the call. You talk about this transition that you've been navigating the company through. When you think of being primarily known as a generics companies into what you're describing, of course when it comes to biosimilars and biopharmaceuticals and branded medications there I take a look at some of the details of your report. I know that sales of generics, which is still your core business, missed estimates there. I mean is that a ship that you are focused on writing, having those sales come back for the generics business maybe in line with expectations? Are you really focused more on the growth areas such as branded medications?

[Richard Francis]

Well, you know, we're doing both. But what I'm what I think people, we try to make them think about our generics business. It's a big business and we don't look at it on a quarterly basis or even a yearly basis. We look at on a two year cagr. And the reason why we ask people to look at it over two years is because some years we have more launches than others because obviously drugs lose their pattern and we can't predict exactly equally when that's going to happen. And so we get, you know, some launches in one year and less launches in the other. And so because of that we say look at over 2 year CAGR. If you look at how our generics business has performed the last three years, it's actually outperformed expectations considerably. What we've said going forward is that our generics business will probably do a 2% CAGR going forward because it's a very big business. But that is a good return on that business being to such a size. It is. But as our innovative business continues to grow at the speed it is as a company, we are changing our profitability, we're changing our sustainability, the ability to keep these results going forward. So I think that transition, our generics business is helping fuel it because obviously we use the revenue and the cash that throws off to fuel our pipeline. Now our pipeline also created quite a bit of excitement on our Q3 earnings because we have a late stage innovative pipeline. So as much as our portfolio has grown at 33% currently that's on the market, we're going to be adding a long acting treatment for schizophrenia next year we'll be adding a treatment for asthma the year after that and then we'll be adding a treatment for a rare disease drug, sma the year after that and then the year after that we'll be adding a treatment for you seen and cd. So we have a lot coming through and I think that's the way to think of the company in its totality. And so I think when it comes to generics, it has a job to do. And I think growing at 2% over those multiple year period will be a good way of modeling the company.

[Interviewer (Katie)]

Well, Richard, I did want to ask about one of those generic drugs you launched. The first US generic GLP1 indicated for weight loss. How much weight are you guys putting behind that effort? Because it is a very competitive space here, GOP ones.

[Richard Francis]

It is indeed. And you know, we do see significant opportunity at the same time, when this sort of discussion started at three years ago with regard to the GLP1, firstly we did launch Victoza and we have launched end of this year. So we're in that first genericized market. But obviously people are talking about the big GLP1s which will be coming off patent in the next few years. And what we've decided to do is we've partnered with people on those to make sure we can commercialize those products. But we didn't invest in manufacturing capability to do that. We let other people do that. So as much as we see it as a significant opportunity, we also understood the uncertainty around that area around pricing, around volume and things like that. So it will be something that helps drive our growth, but it won't be a significant growth driver because we have a broad range of generic products coming to the market and we have over 10 biosimilars coming to the market in the short, medium term. So we have a lot of other things that are going to drive our generic growth outside of the GLP1s, although we will participate in that market.

[Interviewer (Katie)]

Yeah, I appreciate the context there. When it comes to GLP one's a hot topic of conversation. Something else I did want to get your thoughts on, Richard, and this is something you and I have spoken about before, is the sale of your raw ingredients business. You announced today that that sale process, it actually fell through. You were in talks with an unnamed buyer originally. I know that you had said that this would go through by the end of the year. So bring us up to speed there. I mean, are you trying to reengage with any other potential buyers? Is the active ingredients business still for sale at this point?

[Richard Francis]

So, yeah, there's a few questions within that question. So let me unpick them and hopefully I can do it justice. But so firstly, we are still wanting to divest the business. We think it's a very good business. It's the number two API business in the world and it's. And it's not based in China or India. So that creates a real differentiation, particularly with the geopolitical situation that I think has been discussed the last six to 12 months. So we see it as real value. That said, as we divest this business, it's not just about divesting it and obviously getting an amount of money for that. This is a partner we're going to have to work with for the next 10, 15 years because it will supply us with API. And so we need to make sure that the service agreements we have with that partner are the ones that benefit tether over the short, medium and long term. And so because of that, you know, we want to make sure this deal is right. This deal is right for us, this deal is right for our shareholders. And we were in a position to say we don't think we've got there right now. We do think the market's changed. We do think you know where we are as a company. We strengthen ourselves as a company. So our need to do a sale in a certain time period has diminished and so we can be more thoughtful about this and make sure we get the deal that's right for Teva and right for our shareholders. But it's still an attractive business, but strategically it's not one we're going to keep long term because as we transform into this biopharma company, it's not something that will be strategically aligned to that.

[Interviewer (Katie)]

All right, Richard, great to get an update with you. I know it's a busy day. That is Richard Francis. He is the CEO of Teva Pharmaceuticals, a company that is higher by more than 20% after reporting earnings and third quarter revenue that beat expectations.

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