Teva Reports Fourth Quarter and Full Year 2012 Results

Teva Reports Fourth Quarter and Full Year 2012 Results

• Fourth Quarter 2012 Net Revenues of $5.2 Billion and Full Year Net Revenues of $20.3 Billion

• Fourth Quarter 2012 Non-GAAP Diluted EPS of $1.32, GAAP Diluted EPS of $0.37; Full Year Non-GAAP Diluted EPS of $5.35, GAAP Diluted EPS of $2.25

• 15% Increase in Quarterly Dividend

• Share Repurchases of $0.5 Billion and $1.2 Billion in Fourth Quarter and Full Year 2012, Respectively

• Cash Flow from Operations of $1.6 Billion and $4.6 Billion in Fourth Quarter and Full Year 2012, Respectively

JERUSALEM--(BUSINESS WIRE)-- TevaPharmaceutical Industries Ltd. (NYS: TEVA) today reported results for the quarter and year ended December 31, 2012.

"Our efforts over the past year clearly demonstrate Teva's ability and commitment to transform the Company. Based on this, we will enter 2013 with a strong and disciplined business focus," stated Dr. Jeremy Levin, Teva's President and Chief Executive Officer. "Our generic franchise remains the core of our business. We launched 23 generic products in the U.S. in 2012, and anticipate a similar number of launches in 2013. Our specialty medicines business continues to drive value with strong fundamentals in multiple sclerosis, central nervous system, respiratory, oncology and women's health. Copaxone^® continues to lead the multiple sclerosis market in sales and market share. In March 2013, we plan to submit to the FDA a sNDA for marketing approval of a '3 times a week' dose of Copaxone®. Our new R&D organization is showing great progress. Our New Therapeutic Entities pipeline is advancing as expected. At the same time, we are beginning to add external opportunities through our 'Constellation' business development program. We have launched our 'Reshape' program and are committed to managing our costs while we invest in Teva's future."

Dr. Levin added, "I am particularly pleased with the Board's decision to increase Teva's dividend. Together with Teva's new strategy backed by our ongoing share repurchase plan, this decision reflects the Board's and management's optimism and confidence. We believe the course we have set for Teva is the right one and will yield real value for patients, customers and shareholders while ensuring the long-term growth of our company."

Revenues by Geography for the Fourth Quarter 2012¹

Net revenues in the United States in the fourth quarter were $2.6 billion (50% of total revenues), a decrease of 14% compared to the fourth quarter of 2011. Provigil^® sales declined substantially due to generic competition that began in the second quarter of 2012, while the other factor affecting the comparison is the unusually high generic revenues during the fourth quarter of 2011 due to extraordinary contributions from our launch of generic Zyprexa^® and from our agreement with Ranbaxy relating to its launch of generic Lipitor^®. The absence of these contributions in the fourth quarter of 2012 was partially offset by strong revenues from generic launches throughout 2012, as well as an increase in Copaxone^® sales

Net revenues in Europe in the fourth quarter were $1.5 billion (29% of total revenues), an increase of 2% compared to the fourth quarter of 2011, or 5% in local currency terms. Revenues in Europe this quarter benefited from stronger revenues from some of our specialty medicines, primarily Copaxone^®, following the take-back of marketing and distribution rights, as well as increased sales from our OTC business. We are continuing to manage our commercial model in Europe in line with our strategy of sustainable and profitable growth.

Net revenues in the Rest of the World in the fourth quarter totaled $1.1 billion (21% of total revenues), a decrease of 3% compared to the fourth quarter of 2011. In local currency terms, ROW revenues declined by 2%. The slight decline in revenues resulted from the sale of certain businesses of Mepha AG, which closed in the first quarter of 2012, as well as weaker performance in Canada, due primarily to government-imposed price reforms. This decrease was partially offset by growth in Latin America.

¹For quarterly revenues by geography and by product line, beginning with the fourth quarter of 2010, please visit our website atwww.ir.tevapharm.com .

Revenues by Product Line for the Fourth Quarter 2012

Generic medicines net revenues in the fourth quarter were $2.7 billion (including API sales of $202 million), a decrease of 11% compared to $3.0 billion in the fourth quarter of 2011. Generic revenues comprised 51% of total revenues in the quarter, compared to 52% in the fourth quarter of 2011. Generic revenues consisted of:

• U.S. revenues of $1.0 billion, a decrease of 17% compared to the fourth quarter of 2011. The decline primarily reflects the significant launches in the comparable quarter (including the generic version of Zyprexa^® and our agreement with Ranbaxy relating to its launch of generic Lipitor^®, which did not contribute to revenues in the fourth quarter of 2012). The decrease was partially offset by continued revenues from launches earlier in 2012 and in the fourth quarter (including the generic version of TriCor^®).

• European revenues of $930 million, a decrease of 5%, or 3% in local currency terms, compared to the fourth quarter of 2011. We saw declines in revenues in Italy and Spain that were partially offset by increases in Germany, the U.K., France, and Poland. During the quarter we continued to manage the generic business in the region for sustainable profitability, and had several launches, including generic versions of Seroquel XL^® and Detrol LA^® in the U.K.

• ROW revenues of $698 million, a decrease of 8%, or 7% in local currency terms, compared to the fourth quarter of 2011. The decrease was primarily due to the sale of certain businesses of Mepha AG and lower sales in Canada, due primarily to government-imposed price reforms, partially offset by growth in Latin America and Russia.

Specialty medicines net revenues in the fourth quarter were $2.1 billion, a decrease of 7% compared to $2.3 billion in the fourth quarter of 2011. Specialty revenues consisted of:

• U.S. revenues of $1.5 billion, a decrease of 14% compared to the fourth quarter of 2011.

• European revenues of $420 million, an increase of 28%, or 32% in local currency terms, compared to the fourth quarter of 2011.

• ROW revenues of $159 million, an increase of 3%, or 4% in local currency terms, compared to the fourth quarter of 2011.

Specialty revenues comprised 40% of total revenues in the quarter, unchanged compared to the fourth quarter of 2011.

The decrease in specialty medicines revenues from the fourth quarter of 2011 was primarily due to the decline in Provigil^® as a result of the introduction of generic competition during the year, which was partially offset by strong sales of Copaxone^® and certain other specialty medicines.

Global revenues recorded by Teva for Copaxone^®, the leading multiple sclerosis therapy in the U.S. and globally, increased 14%, or 15% in local currency terms, to $1.1 billion compared to $927 million in the fourth quarter of 2011. The increase primarily resulted from the take-back of marketing and distribution rights in Europe and continued market share leadership. In the U.S., sales increased 12% to $0.8 billion, as a result of price increases throughout the year. Sales outside the U.S. were $237 million, an increase of 23%, or 27% in local currency terms, compared to the fourth quarter of 2011, primarily because of the take-back of marketing and distribution rights in Europe, partially offset by lower revenues in Russia due to the timing of tenders.

Azilect^® revenues recorded by Teva increased 4% to $86 million, while global in-market revenues increased 4% to $113 million, primarily due to increased demand in the U.S. and Europe and a price increase.

OTC Total sales of PGT Healthcare, our joint venture with The Procter & Gamble Company, in the fourth quarter of 2012 were $377 million, an increase of 11%, or 12% in local currency terms, compared to the fourth quarter of 2011. Teva net revenues in the quarter were $269 million, an increase of 24%, or 25% in local currency terms, compared to $217 million in the fourth quarter of 2011, primarily due to strong revenues and share growth in key markets including Europe, specifically related to the ratiopharm brand, Russia and Israel, as well as to sales of OTC products in the U.S. to Procter & Gamble, pursuant to a manufacturing agreement, which commenced in November 2011.

Other net revenues in the quarter were $212 million, mostly from the distribution of third-party products in Israel and Hungary, compared to $223 million in the fourth quarter of 2011.

Revenues by Geography for the Full Year 2012

Net revenues in the United States were $10.4 billion (51% of total revenues), an increase of 19% compared to 2011, reflecting the inclusion of Cephalon commencing in the fourth quarter of 2011 as well as strong revenues from both specialty and generic medicines.

Net revenues in Europe were $5.7 billion (28% of total revenues), in line with 2011, or an increase of 8% in local currency terms. Revenues in Europe this year benefited from the inclusion of Cephalon medicines as well as stronger revenues from some of our specialty medicines, primarily Copaxone^®, following the take-back of marketing and distribution rights, as well as continued growth in our OTC business. This growth was offset by the negative foreign currency effects (primarily the euro, Hungarian forint and the Polish zloty), as well as lower generic sales due to ongoing macro-economic conditions and healthcare reforms in key European markets, which increased generic penetration while lowering prices of generic medicines. In addition, our revenues were negatively impacted by the effect of our renegotiations with some of the wholesalers in the region, which resulted in reduced stock levels. Despite these conditions, the majority of the markets maintained or increased profitability in local currency terms, as a result of our strategy to focus on a profitable commercial model in Europe.

Net revenues in the Rest of the World totaled $4.2 billion (21% of total revenues), an increase of 9% compared to 2011. In local currency terms, ROW revenues grew by 13%. The increase during the year was primarily due to the consolidation of a full year of our acquisitions in Japan, higher revenues in Russia and other Eastern European markets, as well as strong growth in Latin America. In addition we saw growth of our OTC business in many of these countries. This growth was partially offset by weaker performance in Canada, due primarily to government-imposed price reforms. Revenues in our mature generic markets (Canada and Israel) totaled $1.3 billion in 2012, a decrease of 9% compared to 2011. Revenues in our emerging generic markets (Japan, Russia, LATAM and other ROW countries) totaled $2.9 billion, an increase of 19% from the comparable year.