Teva's 2024 Success Overshadowed by Cautious 2025 Outlook

Teva Pharmaceutical Industries Ltd. reported strong financial results for 2024, but its conservative guidance for 2025 has left investors concerned about the company's near-term prospects. The generic drug giant's stock price tumbled 13% following the announcement, reflecting market unease about the projected slowdown in growth.

2024 Performance Highlights

Teva's full-year 2024 revenues increased by 6% in constant currencies to $16.54 billion, driven by robust performance in both its generic and innovative drug portfolios. The company's branded drugs, including Austedo, Uzedy, and Ajovy, continued to show strength, with Austedo sales climbing 36% to nearly $1.7 billion. Ajovy, Teva's migraine medication, saw an 18% increase to $507 million, while the newly launched schizophrenia drug Uzedy generated $117 million in its first year.

The generic drug business also contributed significantly to Teva's growth, with global sales increasing by 11%. CEO Richard Francis attributed this success to improvements in launch efficiency and supply chain management. Additionally, Teva's API business returned to growth, posting a 3% revenue increase in 2024.

2025 Outlook and Investor Concerns

Despite the positive 2024 results, Teva's 2025 guidance has fallen short of analyst expectations. The company projects sales between $16.8 billion and $17.4 billion for the coming year, with adjusted earnings per share expected to be between $2.35 and $2.65. This outlook is considerably lower than the $2.78 per share analysts had anticipated.

Several factors contribute to the subdued forecast:

1. Impact of Medicare Part D redesign: CEO Richard Francis highlighted that both Uzedy and Austedo will be affected by changes to the Medicare Part D prescription drug program, which took effect on January 1, 2025.

2. Declining sales of older innovative medicines: The company expects some of its established branded drugs to face decreased demand.

3. Foreign exchange pressures: Currency fluctuations are expected to impact Teva's international revenues.

4. Increased investments: Teva plans to allocate more resources to support its growth initiatives, which may temporarily affect profit margins.

Strategic Outlook and Future Plans

Teva's leadership remains optimistic about the company's long-term prospects, emphasizing that 2025 marks the beginning of the second phase in its "Pivot to Growth" strategy. This phase, scheduled to run from 2025 through 2027, aims to accelerate growth through:

• Launching new innovative drugs
• Expanding the biosimilars portfolio
• Optimizing the generics business
• Pursuing strategic business development activities

The company plans to launch seven biosimilars in the U.S. and four in Europe during this period. Teva anticipates entering the final phase of its growth plan, focused on sustaining momentum, in 2028.

As Teva navigates the challenges of 2025, investors and industry observers will be closely watching to see if the company can maintain its growth trajectory while adapting to changing market dynamics and healthcare policies.