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Segments

12 Months Ended

Dec. 31, 2019

Segments

NOTE 19—Segments:

Teva 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) International Markets segment, which includes all countries other than those in the North America and Europe segments.

The Company began reporting its financial results under this structure in the first quarter of 2018. This change was reflected through retroactive recasting of prior period segment information.

In addition to these three segments, Teva has other sources of revenues, primarily the sale of APIs to third parties, certain contract manufacturing services and an out-licensing platform offering a portfolio of products to other pharmaceutical companies through its affiliate Medis.

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 International 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:

		Year ended December 31,
		2019
		North America				Europe				International Markets*
		(U.S. $ in millions)
Revenues		$	8,542			$	4,795			$	2,246
Gross profit			4,350				2,704				1,167
R&D expenses			652				262				88
S&M expenses			1,021				890				481
G&A expenses			439				239				138
Other income			(14	)			(5	)			(3	)
Segment profit		$	2,252			$	1,318			$	464
		Year ended December 31,
		2018
		North America				Europe				International Markets*
		(U.S. $ in millions)
Revenues		$	9,297			$	5,186			$	2,422
Gross profit			4,979				2,884				1,254
R&D expenses			713				283				96
S&M expenses			1,154				1,003				518
G&A expenses			484				325				153
Other income			(209	)			—				(11	)
Segment profit		$	2,837			$	1,273			$	498

		Year ended December 31,
		2017
		North America				Europe				International Markets*
		(U.S. $ in millions)
Revenues		$	12,141			$	5,466			$	2,863
Gross profit			7,322				2,887				1,433
R&D expenses			969				390				154
S&M expenses			1,288				1,130				672
G&A expenses			533				354				189
Other income			(92	)			(16	)			(8	)
Segment profit		$	4,624			$	1,029			$	426

* The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1b.

		Year ended
		December 31,
		2019				2018				2017
		(U.S. $ in millions)
North America profit		$	2,252			$	2,837			$	4,624
Europe profit			1,318				1,273				1,029
International Markets profit			464				498				426
Total reportable segments profit			4,034				4,608				6,079
Profit (loss) of other activities			108				115				(6	)
Total segments profit			4,142				4,723				6,073
Amounts not allocated to segments:
Amortization			1,113				1,166				1,444
Other asset impairments, restructuring and other items			423				987				1,836
Goodwill impairment			—				3,027				17,100
Intangible asset impairments			1,639				1,991				3,238
Gain on divestitures, net of divestitures related costs			(50	)			(66	)			(1,083	)
Inventory Step—up			—				—				67
Other R&D expenses			(15	)			83				221
Costs related to regulatory actions taken in facilities			45				14				47
Legal settlements and loss contingencies			1,178				(1,208	)			500
Other unallocated amounts			252				366				187
Consolidated operating income (loss)			(443	)			(1,637	)			(17,484	)
Financial expenses, net			822				959				895
Consolidated income (loss) before income taxes		$	(1,265	)		$	(2,596	)		$	(18,379	)

North America segment:

		Year ended December 31,
		2019				2018				2017
		(U.S. $ in millions)
Generic products		$	3,963			$	4,056			$	5,203
COPAXONE			1,017				1,759				3,116
BENDEKA/TREANDA			496				642				656
ProAir*			274				397				501
QVAR			250				182				313
AJOVY			93				3				—
AUSTEDO			412				204				24
Anda			1,492				1,347				1,153
Other			546				708				1,175
Total		$	8,542			$	9,297			$	12,141

* Does not include revenues from the ProAir authorized generic, which are included under generic products.

Europe segment:

		Year ended December 31,
		2019				2018					2017
		(U.S. $ in millions)
Generic products		$	3,470			$	3,593			$	3,471
COPAXONE			432				535				595
Respiratory products			354				402				368
Other			539				656				1,033
Total		$	4,795			$	5,186			$	5,466

International Markets segment:

		Year ended December 31,
		2019				2018				2017
		(U.S. $ in millions)
Generic products		$	1,893			$	2,022			$	2,370
COPAXONE			63				72				91
Distribution			20				19				17
Other			271				309				385
Total		$	2,246			$	2,422			$	2,863

* The data presented for prior periods have been revised to reflect a revision in the presentation of net revenues and cost of sales in the consolidated financial statements. See note 1b.

Teva revenues from external customers attributed to Israel were less than 5% of the consolidated revenues in the years ended December 31, 2019, 2018 and 2017, respectively.

c. Supplemental data—major customers:

The following table represents the percentage of consolidated third party net sales to Teva’s major customers during the years ended December 31, 2019, 2018 and 2017.

		Percentage of Third Party Net Sales
		2019				2018				2017
McKesson Corporation			13	%			12	%			16	%
AmerisourceBergen Corporation			12	%			14	%			15	%

Most of Teva’s revenues from these customers were generated in the North America segment.

d. Property, plant and equipment—by geographical location were as follows:

		December 31,
		2019				2018
		(U.S. $ in millions)
Israel		$	1,670			$	1,987
United States			864				950
Croatia			517				538
Germany			665				518
Czech republic			343				352
Hungary			330				343
Japan			177				188
Other			1,870				1,992
Total property, plant and equipment		$	6,436			$	6,868

X

- 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://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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