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Segments | 3 Months Ended
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Mar. 31, 2018
Segments | NOTE 17 – Segments: In November 2017, Teva announced a new organizational structure and leadership changes to enable strategic alignment across its portfolios, regions and functions. Teva now operates its business through three segments: North America, Europe and Growth Markets. The purpose of the new structure is to enable stronger alignment and integration between operations, commercial regions, R&D and Teva’s global marketing and portfolio function, in order to optimize its product lifecycle across the therapeutic areas. Teva’s financial results for the first quarter of 2018 are being reported under this new structure for the first time. In addition to these three segments, Teva has other activities, primarily the API manufacturing business and certain contract manufacturing services. All the above changes were reflected through retroactive revision of prior period segment information. Since 2013 and until December 31, 2017, Teva had two reportable segments: generic and specialty medicines. The generic medicines segment included Teva’s OTC and API businesses. Teva’s other activities included distribution activities, sales of medical devices and certain contract manufacturing operation (“CMO”) services. Teva now operates its business and reports its financial results in three segments: a) North America segment, which includes the United States and Canada. b) Europe segment, which includes the European Union and certain other European countries. c) Growth Markets segment, which includes all countries other than those in the North America and Europe segments. Teva’s Chief Executive Officer (“CEO”), who is the chief operating decision maker (“CODM”), reviews financial information prepared on a consolidated basis, accompanied by disaggregated information about revenues and contributed profit by the three identified reportable segments, namely North America, Europe and Growth Markets, to make decisions about resources to be allocated to the segments and assess their performance. Segment profit is comprised of gross profit for the segment less R&D expenses, S&M expenses, G&A expenses and other income related to the segment. Segment profit does not include amortization and certain other items. Teva manages its assets on a company basis, not by segments, as many of its assets are shared or commingled. Teva’s CODM does not regularly review asset information by reportable segment and, therefore, Teva does not report asset information by reportable segment. Teva’s CEO may review its strategy and organizational structure. Any changes in strategy may lead to a reevaluation of the Company’s segments and goodwill allocation to reporting units, as well as fair value attributable to its reporting units. See note 7. a. Segment information:
|  | North America |  |  | Europe |  |  | Growth Markets |
|  | Three months ended March 31, |  |  | Three months ended March 31, |  |  | Three months ended March 31, |
|  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |  |  | 2018 |  |  | 2017 |
|  | (U.S. $ in millions) |  |  | (U.S. $ in millions) |  |  | (U.S. $ in millions) |
Revenues |  | $ | 2,531 |  |  | $ | 3,240 |  |  | $ | 1,442 |  |  | $ | 1,341 |  |  | $ | 750 |  |  | $ | 718 |
Gross profit |  |  | 1,432 |  |  |  | 2,080 |  |  |  | 797 |  |  |  | 734 |  |  |  | 313 |  |  |  | 292 |
R&D expenses |  |  | 188 |  |  |  | 267 |  |  |  | 73 |  |  |  | 106 |  |  |  | 24 |  |  |  | 47 |
S&M expenses |  |  | 305 |  |  |  | 441 |  |  |  | 255 |  |  |  | 279 |  |  |  | 134 |  |  |  | 158 |
G&A expenses |  |  | 126 |  |  |  | 139 |  |  |  | 91 |  |  |  | 79 |  |  |  | 41 |  |  |  | 48 |
Other income |  |  | (102 | ) |  |  | (73 | ) |  |  | 1 |  |  |  | 2 |  |  |  | (8 | ) |  |  | (1 | )
Segment profit |  | $ | 915 |  |  | $ | 1,306 |  |  | $ | 377 |  |  | $ | 268 |  |  | $ | 122 |  |  | $ | 40 |
|  | Three months ended March 31, |
|  | 2018 |  |  | 2017 |
|  | (U.S.$ in millions) |
North America profit |  | $ | 915 |  |  | $ | 1,306 |
Europe profit |  |  | 377 |  |  |  | 268 |
Growth Markets profit |  |  | 122 |  |  |  | 40 |
Total segment profit |  |  | 1,414 |  |  |  | 1,614 |
Profit of other activities |  |  | 21 |  |  |  | 7 |
|  |  | 1,435 |  |  |  | 1,621 |
Amounts not allocated to segments: |  |  |  |  |  |  |  |
Amortization |  |  | 310 |  |  |  | 320 |
Other asset impairments, restructuring and other items |  |  | 707 |  |  |  | 240 |
Goodwill impairment |  |  | 180 |  |  |  | — |
Gain on divestitures, net of divestitures related costs |  |  | (93 | ) |  |  | — |
Inventory step-up |  |  | — |  |  |  | 64 |
Other R&D expenses |  |  | 22 |  |  |  | — |
Costs related to regulatory actions taken in facilities |  |  | 1 |  |  |  | 34 |
Legal settlements and loss contingencies |  |  | (1,278 | ) |  |  | 20 |
Other unallocated amounts |  |  | 61 |  |  |  | 48 |
Consolidated operating income |  |  | 1,525 |  |  |  | 895 |
Financial expenses, net |  |  | 271 |  |  |  | 207 |
Consolidated income before income taxes |  | $ | 1,254 |  |  | $ | 688 |
b. Segment revenues by major products and activities: The following tables present revenues by major products and activities for the three months ended March 31, 2018 and 2017:
|  | Three months ended March 31, |
|  | 2018 |  |  | 2017 |
|  | (U.S.$ in millions) |
North America segment |  |  |  |  |  |  |  |
Generic products |  | $ | 1,088 |  |  | $ | 1,415 |
COPAXONE |  |  | 476 |  |  |  | 797 |
BENDEKA / TREANDA |  |  | 181 |  |  |  | 156 |
ProAir |  |  | 130 |  |  |  | 121 |
QVAR |  |  | 107 |  |  |  | 84 |
AUSTEDO |  |  | 30 |  |  |  | — |
Distribution |  |  | 331 |  |  |  | 295 |
|  | Three months ended March 31, |
|  | 2018 |  |  | 2017 |
|  | (U.S.$ in millions) |
Europe segment |  |  |  |  |  |  |  |
Generic products |  | $ | 997 |  |  | $ | 850 |
COPAXONE |  |  | 153 |  |  |  | 152 |
Respiratory products |  |  | 113 |  |  |  | 84 |
|  | Three months ended March 31, |
|  | 2018 |  |  | 2017 |
|  | (U.S.$ in millions) |
Growth Markets segment |
Generic products |  | $ | 488 |  |  | $ | 486 |
COPAXONE |  |  | 16 |  |  |  | 21 |
Distribution |  |  | 153 |  |  |  | 125 |
A significant portion of Teva’s revenues, and a higher proportion of the profits, come from the manufacture and sale of patent-protected pharmaceuticals. Many of Teva’s specialty medicines are covered by several patents that expire at different times. Nevertheless, once patent protection has expired, or has been lost prior to the expiration date as a result of a legal challenge, Teva no longer has patent exclusivity on these products, and subject to regulatory approval, generic pharmaceutical manufacturers are able to produce and market similar (or purportedly similar) products and sell them for a lower price. The commencement of generic competition, even in the form of non-equivalent products, can result in a substantial decrease in revenues for a particular specialty medicine in a very short time. Any such expiration or loss of IP rights could therefore significantly adversely affect Teva’s results of operations and financial condition.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -URI http://asc.fasb.org/topic&trid=2134510 + Details
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