Teva Pharmaceutical Industries Ltd. (TEVA) Presents at 41st Annual J.P. Morgan Healthcare Conference (Transcript)

Teva Pharmaceutical Industries Ltd. (NYSE:TEVA) 41st Annual J.P. Morgan Healthcare Conference January 11, 2023 1:30 PM ET

Company Participants

Eli Kalif – Executive Vice President and Chief Financial Officer

Richard Francis – President and CEO

Conference Call Participants

Chris Schott – JPMorgan

Chris Schott

Good morning, everybody. I’m Chris Schott at JPMorgan, and it’s my pleasure to be introducing Teva this morning. From the company, we have the company’s recently appointed CEO, Richard Francis; as well as CFO, Eli Kalif. Eli is going to make an initial presentation, then we’re to move over to some Q&A with both Richard and with Eli.

So with that, welcome and look forward to the presentation.

Eli Kalif

Thank you, Chris. Welcome, everyone. And just before I start, I want to thank Chris and JPMorgan team to have us presenting here. It’s really nice to come back and now after three years, really more exciting.

So today, we’re going to review a few elements. We’re going to talk about Teva today, and we’re going to elaborate on how we are progressing with our current financial targets, with swift shift around the debt. And then also, I will elaborate more about what we communicated in the third — in the second quarter last year about our financial targets beyond ’23.

Before I begin, please refer to our forward-looking statement on Slide #2. Additional information regarding this statement is available on our SEC Forms 10-K and 10-Q under Risk Factors.

But first, please let me welcome Richard Francis, our President and CEO. The old management and our teams globally are really excited to have Richard with us. And what I can tell you, 11 days in the job, we’re already up to suite with a lot of processes, onboarding and helping Richard to get up and running. And I’m sure Richard will elaborate on all of these in the coming session with Chris.

Teva today. We’re committed to be the world’s largest leaders in generics. And the most critical element for us is how we’re managing our footprint in order to allow us to have a better access for medicine for patients. Teva is the largest supply chain manufacturing company in the entire pharmaceutical industry. Across 37,000 employees, with 53 manufacturing sites, we’re working around the clock to make sure that we’re able to support our mission. And most important is also to enable to have access to around 60 countries across six continents. Every hour, there is around kind of — we’re saying, one plane in the air, or every hour you have kind of ship in the seas or truck in the road just to make sure that we are able to deliver to all the pharmacies and hospitals around the world.

As an integrated, innovative generics R&D organization, Teva global R&D organization really uniquely positioned to support our mission. And we are always continuing to find new ways on how we’re able to innovate and to explore synergies across our existing processes. Or if you like, really redefining how pharmaceutical industry should look on innovative development programs.

When I’m saying uniquely positioned, what we did in the last several years, we were able to build the right structure in order to give us the right agility to be more flexible on how we are shifting and prioritize projects in order to support our ongoing growth pipeline.

This slide is kind of summarizing more about those strategic focus that we have at Teva: continue to be the leaders in generics; and as well, building and accelerating our capabilities and our capacity around biosimilars. We stay committed to make sure that we can be more competitive around cost, on healthcare related to biosimilars. And if you look on the third one, it’s around the innovative products. We’re keeping — fueling our pipeline with more innovative projects that kind of having a certain level of preclinical or depends on the phase. But I will elaborate more about our existing products, mostly about AUSTEDO and AJOVY and how we’re further penetrating them in the market.

Now if we just try to look a bit back on what we did in the last five years. So we set for ourselves kind of a target that started end of ’17, and it was accepted with the management and with the Board. And when we started it, opioid actually kicked in somewhere early 2019, and this come grow and become more complex. But I’m really happy that today we have agreement. And as we announced Monday this week, we’re actually seeing ourselves moving to the next stage when we’re expecting to see the same, more or less, level of participation with the cities, counties and the subdivisions. So doing that one and enable us, hopefully, midyear to put this one behind us and keep our focus on how we are able to serve our patients.

What we also did in the last five years; and as we committed, we serve the debt. We look on any assets that we are able to monetize. We look on anything that we’re able to optimize in order to contribute cash and totally allocate it in order to serve the debt. So all in all, we’re able to pay around $18 billion, this is including the coupon interest, to our bondholders. And we’re going to continue to do so. And one of those elements that enabled us to do it is actually looking on how we’re able to optimize our spend base, which is part of it is related to the revenue and the mix in terms of the cost of good sourced, but it’s part of it is how we’re able to put the right network in order to support our existing revenue.

And in ’17, when the restructuring was announced, we had around $16 billion, and it was planning to go to $13 billion. And what you will see in the further slides and here as well, that we’re able even to take it below, so we can call it around $5 billion. And Teva, it’s actually aggregation of around 20 acquisitions that this company grow in the last 20 years. And we have so much acquisitions, you’re actually bringing a lot of complexity into your footprint, but complexity also giving you capabilities. And what we are doing in the last four years and what we’ll keep doing is looking on those capabilities in how we can actually leverage on them, to understand how each one of those capabilities enable us to build our competitive advantage and to make sure that we are really cost effective. One of these examples, you can see on top, we’re able to take the entire network from 80 sites to 53 manufacturing sites.

So just to kind of recap and understand where we were, end of ’17 until ’19 when we actually come to the bottom with the COPAXONE patent expired and with the U.S. generics competition and price erosions, we’re in a position that we need to take some actions in order to enable us to expand our ways to repay the debt.

Now when we put that plan, we put around to top in 350 basis points. Remember that number, I will come back to it very soon. And as you can see us now at least based on the Q3 year-to-date earnings that we announced back in November, we’re actually yielding to that target.

Now to get a bit more focus and just try to understand what our team and our global employees did here in the last five years, I want to mention three things here that really have a nice view here. First of all, we always actually look on our top line and now we’re able to make sure that we have the right support and the right capacity and capabilities to manage our expansion on the OP. The second element that you can see here, that up to Q3 year-to-date, we already topped 250 basis points from that 350 basis points, and we are on the way to actually meet our targets by end of ’23. We’re really positive that we’re going to do that one.

Now another element that we can see here is on top, how the ratio on the net debt-to-EBITDA went from 5.3 to the 4. So you will say 1.3 turns on more or less EBITDA of [418], you understand that this is around $6.5 billion actually went in order to reduce that one. And this is what you see in the bottom line. That’s free cash flow generation year-over-year at the level of $2 billion to $2.2 billion, this is what allows us to do it.

Now we just need to remember one thing is that when we set those targets, we didn’t really rely on top line growth or kind of a mix in terms of top line. If you look on 2020, the mix in between, AUSTEDO, AJOVY and COPAXONE was at the tune of around $2.2 billion, $2.3 billion. We guide to be by end of this year on all those three by $2.1 billion. And that means that the acceleration of the erosions on COPAXONE when we were able to catch up with others, this in-between mix enable us to actually mitigate that one, but we never actually took that advantage. And you can see it, and it’s very obvious.

Another thing we need to remember that around 50% from our top line is in non-dominated U.S. dollars. So any movements on currency is really sensitive in our world, and it’s actually flow through.

Now this is the trajectory in terms of the net debt. And as I explained, our capital allocation method in the last five years were strictly in order to serve the debt. I hope that in the next two years, we’ll have some more opportunities to accelerate on some other surplus on cash and hopefully, to come to a normal debt rate so we can support the business and our growth.

Now in order to do that one, we need to actually looking on our debt stake. And we went to the market in ’18, in ’19, during the refinancing. We also did in ’21, a $5 billion SLB refinancing, where in November ’21 we addressed the maturity of ’22, ’23 and ’24. We’re coming back to the market this year in order to address the ’25, ’26, ’27. And on paper, what you can see here with around $3.5 billion to $4 billion in order to refi those debt stack, in order to allow us to keep running our operation and to get our free cash flow run rate to support our debt.

You can you can see here also, it’s the euro and the U.S. dollars. This is kind of a mix of 40:60. We’re doing what we call a natural hedge. And we make sure that our debt is really aligned to our revenue mix in terms of the currency in order to support our manufacturers and collections worldwide.

Now when you’re actually looking on what we did in the R&D area and how we’re able to position ourselves, what we did in our network on the manufacturing, it’s really also, I think, interesting to see, and this is IQVIA data that we actually spoke about in the second quarter when we introduce our new long-term financial targets about how we have this kind of a gradual shift between in the mix of small molecule and biologics. In the last five years, it was turning like a 25% or total $100 million you see here. And this one is actually growing, but the shift here is like more about the large molecules and the biological, which is coming into kind of 50%. So how you actually really position yourself and leveraging those capabilities that I spoke about and leverage your R&D organization in order to react to that element. And we really believe that according to that data, and in according to what we see in the market, we have a lot of opportunities on revenue growth.

Now shifting a bit to our two innovative products, we start with AUSTEDO. As you all know, there is around 750,000 to 800,000 people in the U.S. that’s suffering from tardive dyskinesia; and currently, if you think about the data, diagnosed around 15%. And also like less than 6%, around 50,000 treated, which mean that there is a really unmet need here that we need to address, and this is our mission here.

Now if we just look on Q3 year-to-date versus a year ago, it’s like 20% increase. Q3 by itself versus Q3 ’21 was 30%. So we are really on track on that element.

The other element is AJOVY, which is really progressing nicely. And this one is yet unlike AUSTEDO, it’s more globally. So it’s around all the three markets: International markets; Europe; and of course, North America. And what we can see here is actually all in all, that we see ourselves at least 1/3 of the market in terms of market share. And we’re not going to stop here. We are looking actually to grow that piece. But what has really excited me in the last two years when I’m with the company, with all this restructuring, with all the efforts that we did in the network, and people are really busy on optimizing and do a really remarkable job, is to see those assets. And you need to remember, we launched AUSTEDO in the second half of ’17. We launched AJOVY in ’18, which means that, that muscle of that capabilities to grow innovative products same as we did in COPAXONE back in the years, it’s still existing here. And this is really a huge DNA that we have in the company, and I’m really excited about it.

Shifting to our innovative and medicine biosimilars pipeline. Of course, I will not go through all those elements. But you can see here how we are building our capabilities on biosimilars. We have around 13 assets on biosimilars, 5 of them is with partnership with Alvotech. You can name Humira and Stelara. Last week there was an announcement about the BLA on Stelara. And as we — as far as related to Humira, we’re still actually positive about launching in early July this year. Another element is Lucentis with a partnership with Bioeq. We already launched it in the first half of the year with two countries in Europe.

Now another interesting element is about Risperidone. We actually resubmit back in November this year, and we are actually expecting to get the FDA response by end of the first half of the year. So I believe that somewhere this year will come back to the market with kind of a sort of Capital R&D Day that we’ll talk about more assets and our R&D organization, our executive management, will come and tell everyone more about our capabilities and our assets.

ESG, it’s really something that we developed with Teva in the last several years. And as a company that you consider to become like from the search until the distribution A to Z, you need to actually look how you’re able to embrace and to penetrate ESG across all those activities that we have. Of course, there is a lot of details here behind. But what I will mention it is where we have the focus. Everything is starting with how you’re able to make the right government in terms of the executive management, the steering committees that we have in terms of how we’re working with the Board on ESG. And another element is how you’re able to make sure that you have the right measurement and the right disclosure when you move on. And we are really, really progressing in that area.

Also, I spoke about debt and I spoke about refinancing, we actually match our refinancing strategy into our ESG strategy. So we issue sustainable-linked bonds, about $5 billion with actually two main KPIs, those one related to the environmental as well on the access. And the access to medicine, it’s really something that’s exciting us. It’s really mainly dominated with our international market segment. And it’s really about, what I would say, how you actually accelerate on regulatory approvals in low, mid-income countries based on the worldwide bank list, as well how we able to penetrate on more volumes. So this one is really actually moving very nicely and we’re progressing. And also, we take our 1.8 revolving credit facilities into certain KPIs as well. So as we move forward, we’ll keep refinancing. I believe that around 50% from our debt by two years from now will actually tap with ESG KPIs. So really exciting about it, a lot of work here by the team.

And just to kind of elaborate a bit on those long-term financial targets beyond ’23. We came to the market on the second quarter. And a few things I wanted to mention here. First of all, you saw very clearly that we are underway to reach the 28%. We are not stopping. We’ll keep working and optimizing as much as we can in order to make sure that we have the right competitive advantage, and we are really cost effective, across all our manufacturing footprint, across all our R&D offices and the sites.

Now another thing is about the cash conversion. So what we did in the last several years, and we keep doing it, it’s not only the ability to translate $1 of earnings into free cash flow. It’s also how you match your working capital into your revenue trajectory, the mix inside, how are you able to have more control on your shipment patterns and make sure that you actually less finance your working capital. This one is really progressing very nicely, and that will enable us to do beyond this 80% cash conversion.

Of course, on the debt, as I mentioned, we are committed to serve the debt and to keep deleverage until we get to kind of a normal debt ratio that enable us to keep and grow the business and reallocate sources from our capital allocation that we have today. And then all of this one should enable us to really support growth. And I would just have kind of meaning my time pass, I’ll take another 10 seconds from you.

That’s my last slide. I just want to leave you here with three messages. The first one, as I mentioned, we’ll continue to optimize our business and continue to expand our margin. The second element is that we continue to serve the debt, and we continue to deleverage. And the third one, we’re actually looking for growth. Thank you very much.

Question-and-Answer Session

Q – Chris Schott

Great. Thank you for those comments. So I think we’re going to pivot over to the Q&A section here now. So maybe as that folks can see here. Maybe Richard, just obviously a few days into the new seat, but would love to just hear how you’re thinking about kind of top priorities and maybe just some of your high-level views on some of the — both the opportunities and challenges at Teva as you kind of move into the new seat?

Richard Francis

Yes. Well, thank you for invitation. And so firstly, I’m very excited to join Teva. Everybody seems to ask me that question. I’m excited because I think there’s a lot of opportunity at Teva. I think the company has done tremendous work to get the company back on a footing and a solid foundation. And I think there’s an opportunity to get the company back to growth.

What are those opportunities? Well, I think Eli has highlighted a few. I think we have a world-class generics business. And I think we’ve got a great pipeline there, which allows us to think about that business and particularly how we can drive some growth there. But I think some of the major growth drivers around biosimilars and around the innovative portfolio that Eli touched upon there, where there’s still significant unmet need that can be addressed.

So I think there’s a lot of positives. You said the negatives. Obviously we have debt, and that gives us some capital constraints. And so as we think about the plan going forward, we need to take that into account. But as you saw, it’s heading in the right direction, and so we’ve got to start to plan for that.

The focus for me is to make sure with the management team, we can come back to the market midyear with a clear idea of the future of Teva, where it’s heading and the specifics of how to get there.

Chris Schott

And can you just elaborate a little bit in terms of your background and how that prepares you for kind of the next steps for Teva here?

Richard Francis

Well, I think what’s interesting in the last 19 years in my career, my #1 competitor has been Teva. So I spent 13 years — over 13 years at Biogen, where I was obviously competing against COPAXONE. And then the last, sort of five years, I was at Sandoz competing against Teva there. So I think I know the company very well.

But also, I think that experience that I’ve had in specialty, the biotech side with Biogen I think, I’ll be able to leverage that with the innovative pipeline. And then with Sandoz, obviously, I think coming into Teva, that knowledge will be really helpful in understanding how we can maximize the business, both generics and biosimilars.

And then the last two years, not to forget, I’ve been in gene therapy and a cardiology small company, where I’ve seen really how exciting some of the new modalities are as well as some of the sciences out there, which I think creates an opportunity for companies like Teva as well. So I’d like to think that’s going to help me, but time will tell.

Chris Schott

Okay, great. I think as discussed in the presentation, Teva has made a lot of progress the last few years in terms of integrating, in terms of addressing some of the debt structure. I guess with where we see the company is today, does there come a point where the company has to think differently, I guess, about as you look towards driving towards growth about maybe thinking about investment levels differently or how they run the business differently. Have you any kind of initial thoughts on that?

Richard Francis

Yes, I do. Look, and I think it’s a good question, obviously, we have limitations with regard to the debt we have. But I think, first and foremost, I think we’ve got to make some choices about what we want to invest in, and that means what we’re going to have to stop investing in. Because I do think we need to keep control on cost to make sure we can keep servicing the debt in the way we are and we have been. But I do think we’ve got to make some choices.

Now very quickly, this is going to change. The landscape is going to change. We’re going to get to this — led this ratio that Eli talked about. And so I think we’ve got a plan for that, and we’re going to plan for how we’re going to move the business forward, where we’re going to invest more aggressively, both from organically and inorganically, and we’re starting to think about that now. And that’s something which, once again, we’ll reiterate more clearly in midyear. But even in the short term, I do think there’s an allocation of resources that can be decided upon pretty quickly.

Chris Schott

Okay. And maybe on that kind of topic. I mean, if I look in a bigger picture at the pipeline, how do you think about the balance right now of what Teva’s spending on, let’s say, more innovative assets versus biosimilars, versus traditional generics? Is that the right balance, do you think, for the company going forward? Or is that an area that we could think about there being some evolution?

Richard Francis

Well, it’s a good question. I can’t really answer that because 10 days in, I haven’t got my head around that one yet. In fact, I’m working with Eric and his team next week on that. What I — I can’t answer that question. What I can say is that I’m really impressed with some of the capabilities that Teva has on the research side, which I think are underappreciated. And were definitely underappreciated by me from the outside in looking.

So good question. I think it goes back to what is the strategy of the company? What are we trying to do long term? And based on that, every function and every dollar should follow that strategy. And so once again, I think it’s another thing that we’ll create clarity on midyear. But yes, I can’t give you the specifics right now

Chris Schott

Fair enough. Just a couple of more big picture ones. On capital deployment and business development, totally acknowledging that there’s some constraints now. Just your general approach towards kind of partnerships versus acquisitions, small versus large. What’s your bias of how in terms of the best role Teva can play or the best approach to build the business out?

Richard Francis

Yes. Look, I don’t think I have — I think they all should be considered. I do think, obviously, capital constraints mean that I think in licensing and doing relatively small targeted deals is the best way to move forward. But I also go back to what I think is happening in the industry right now in the last five years is an explosion of science. And I think that’s everywhere.

It’s not contained in big pharma anymore. Research is moving fast everywhere, and I think we’ve seen that. And so I think that creates opportunities for companies to partner with Teva because of our global capability. I think you’ve seen what we’ve done with AUSTEDO and AJOVY, and I think that’s something which I want to leverage.

And I think for us, it’s about finding the right assets, the right partners that we can create long-term relationships with. And that’s something which I think, historically, we’ve shown we’re good at. But right now, we’ve been a bit constrained and that’s something which I want to maybe push a bit more over the next couple of years.

Chris Schott

We had the 2027 guidance the company recently gave, a new CEO coming on board. Should we assume those kind of top line growth targets, margin targets, leverage targets should still apply? Or is that going to be something that as you think about kind of where Teva wants to invest and how they run the business that you want to take a look at?

Richard Francis

No, they still apply.

Chris Schott

Okay, great. Maybe last big picture question. When you think about the evolution of Teva, should we think of this as maybe more an evolution of the strategy? Or could there be a bigger shift in the approach as you consider the options of what you could do?

Richard Francis

So an evolution versus a revolution.

Chris Schott

Yes, exactly.

Richard Francis

So look, what — I’m just started, I’ve obviously done due diligence from the outside in. But now it’s time to sit down with the executive team and really understand what options we have at Teva, what capabilities we have, look at externally how we think the segments we operate in are going to evolve over time. And they’re going to — we’re going to come back and we’ll communicate what that strategy is.

And so I’d say we’re going to wait until then. But I have some perspectives, but it’s about doing the work now over the next few months, we’re going to move quickly. And that will define what that looks like. Look, I think to get back to growth and to maximize the opportunities that I see in the marketplace and some of the capabilities I see with Teva, I think it’s going to be a purposeful strategy that has real intent behind it. I wouldn’t say that’s a revolution, but it’s also not something that is going to be marginal.

Chris Schott

Okay, great. Very helpful. Shifting to the core business. Maybe just first talking about the biosimilar market. I know that, as you highlighted in the charts, it’s a big component of how we think about growing the business over time. How are you thinking about the durability of some of these franchises?

So I think what we’ve seen in some of these markets, some tend to be durable, but a lot of them, it seems like we’ve got a nice ramp. And then as competition comes in, revenues can drop fairly quickly. So talk a bit about how healthy of a market overall that is for you?

Richard Francis

Do you want me to go first? Or do you want Eli?

Chris Schott

Whoever wants to grab it? Yes.

Richard Francis

Okay. So look, obviously, I’m a big believer in biosimilars. I was a big believer at Sandoz. And — but I think you’re right. I think there is an approach where you launch, you reap the rewards of that and then competition comes and it starts to decline. So that means you need to have a deep pipeline. You need to have a pipeline which allows you to come to market very early on to reap those rewards, but you’ve got to keep replenishing it.

But what Eli also showed on the chart is there’s a lot of biologics coming off patent over the next five years. And so for us, it’s about to make sure we have a pipeline, we execute on that pipeline. We get it to the market and we maximize those opportunities. Yes, there’ll be some bumpiness in it, but the opportunity is massive. It really is. And I truly believe that both in Europe and in the U.S.

Chris Schott

Great. And maybe a question for Eli. Could you give us an update on biosimilar, Humira and your kind of confidence of your ability to get to market by, I guess, mid this year now?

Eli Kalif

So we actually have partnership with Alvotech, right? And we’re constantly having with them all those reviews and the readiness around it. We are supporting as much as we can. So according to the data that we have with them, we’re actually positively that it’s going to happen in that date. Time will tell.

Chris Schott

Okay. Can you talk a bit about how you see the Humira market evolving? And that I think it’s obviously the largest market out there, but it seems like it’s also a pretty broad competitive suite of entrants coming in.

Eli Kalif

Yes. So we have Amgen here in January starting, right? Already yesterday, it’s going to become more gradually. And there are kind of at least nine, I think, in the line, most of them end of June and as early in July. And I think it really depend what the commercial strategy. It’s really dependent about the commercial strategy that each one of the companies will actually look, if you’re really looking on the consumer element, if you’re looking on more institutional. I think this one is really something that we’ll play there.

I think what I can tell you from our experience, and you can — we demonstrated very clearly with TRUXIMA in the last several years, where actually, we were able to get a very nice share and to actually demonstrate that we’re the first big biosimilars that we’re able to accelerate. So I think if you take those capabilities and our ability to negotiate with the PBMs and to structure ourselves with our contracting capabilities or things that you can find a good spot. Not sure if you look on all those competitives that the full value will come in ’23, most likely it can come in ’24, but more or less that’s a view.

Chris Schott

How important is — are these initial contracts in ’23? I think working a lot of this kind of theme that seems like with the way AbbVie’s contract this may be a smaller market this year and then the opportunity is more ’24, ’25. Is it important to be there day one and get some of those initial contracts? Or is this something you can kind of build your access over time?

Eli Kalif

I think it’s evolving, and it’s evolving and it’s really depending on how the PBMs able to pick, because they need to make sure that you have the sufficient capacity. You need to make sure they’re actually fulfill commitment. And so I think it really depends on how it’s going to evolve. And we’ll see it in the next few months and on those one that’s starting to accelerate.

Chris Schott

On the traditional generic market, I would love to just get your sense of just the health of that overall opportunity. I guess we’ve seen a number of companies that kind of narrow their focus and portfolio. And I guess, have we reached a point that we can think about there being a more stable outlook? Or is the dynamic is that this is a market that will just be under some pressure over time, and opportunities like biosimilars, will just kind of naturally replace that? So I guess maybe Richard — to either Richard, that one…

Richard Francis

Well, I mean, I think we always talk about the generic market if it’s one market with one dynamics, and it’s not. I think a lot of what you’re referring to is about the U.S. If you look at the European market and the rest of the world, it’s stable and it’s growing, and it’s a good business for Teva in all of those markets.

So I think that’s the one thing I’d say to clarify, generics outside the U.S., if you have a good pipeline and a good go-to-market model is predictable, it can drive growth. The U.S. is a different story. And so will stability come to the U.S. I think my view on that is the U.S. was reset in 2014, and it’s still the same as it was then, which is you have huge buying power and you have huge competition.

You have a lot of people supplying the products, and that allows the purchaser to have some real power. That’s just fact. That’s not going to change. I don’t see that ever changing. So the question is, what is your business model to approach that market, to make it less turbulent and more profitable? And I think that comes down to portfolio and portfolio of choice.

And so I think that’s what — I think the American market is still attractive. It can be still very profitable. But I think you have shorter durations of revenue growth with products that are easier to make versus the ones that are more complex. So I think it’s about creating portfolio selection for the U.S. to create some more stability, which I’m sure is something you’ve heard.

So I think that’s something which you would have to look at here at Teva. But once again, I encourage you to look at the businesses outside the U.S. in generics, which are performing well.

Chris Schott

And a question for Eli, maybe as we look at 2023, are there any notable opportunities we should be kind of paying attention to. I think we kind of always watch of this, in the past, you talked about $1 billion run rate as maybe a normalized level for that North America business. Is there opportunities this year that could kind of get us to that run rate?

Eli Kalif

Yes. So we’re going to the market with earnings in early February, and we’re going to elaborate on that one as well.

Chris Schott

Okay, great. Shifting over to some of the branded products on AUSTEDO. Where are we in the product’s growth trajectory? And I guess, what are the biggest opportunities to continue to expand the franchise?

Eli Kalif

Yes. So my view when you look with some data there on that slide, is that if you look both on the prescription run rate, in both of our volume and revenue run rate, those one are actually yielding to be plus 20%, and it’s kind of a run rate that you normalized, I would say in the last, I would say, six months, regardless of Q4 because we don’t have the data now front of us. And I think that the fact that this unmet need is in about 6% just, I would say, treated versus that 15% that we mentioned, is a huge opportunity. And the tardive dyskinesia, it’s kind of a side effect for the schizophrenia. And it really depends on how the physicians really able to write those scripts and are they actually going to — looking on finding solution on the schizophrenia or are they actually going to find solution on this side effect.

So it really depends on how this one is going to ship. But we’re really positive about it, and we’re sure that when we keep our focus, we will be able to grow this asset to really high levels.

Chris Schott

Great. Just in the last minute or so here, just to continue on the branded side. On the pipeline, I know we got — you’re highlighting Risperidone LAI coming to market this year. How big of an opportunity could this be for the company? I think we’re all trying to struggle to size up what this means for Teva?

Eli Kalif

Yes. So we never provide any big sales because no one remember those assumptions. But I can tell you, it’s one of those products that really demonstrate our capabilities on the complexity and how it’s actually shifting. It’s long-acting, it’s self-continuous, and it’s also have kind of a very nice PK profile.

And if you look on what is out there now in terms of how easy it actually to use with that treatment, it’s actually a game changer. And we believe that, that will accelerate. And it’s actually providing us with more penetration on a few other indications that actually in the pipeline related to that capabilities. So it’s going to be promising, but again, we’re not providing this level now.

Chris Schott

Great. Well, I think we’re just out of time here. Really appreciate the comments, I appreciate making these comments so short into the tenure. I look forward to the communication as we get along.

Eli Kalif

Thank you very much.

Richard Francis

Thank you.