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Segments
 9 Months Ended
Sep. 30, 2020
Segments
NOTE 15 – 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.
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 from time to time. 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 3 and note 6.
 
a.
Segment information:
 
 
  
Three months ended September 30,
 
 
  
2020
 
 
  
North America
 
  
Europe
 
  
International Markets
 
 
  
(U.S. $ in millions)
 
Revenues
  
$
2,017
 
  
$
1,116
 
  
$
529
 
Gross profit
  
 
1,056
 
  
 
637
 
  
 
275
 
R&D expenses
  
 
155
 
  
 
60
 
  
 
17
 
S&M expenses
  
 
250
 
  
 
200
 
  
 
101
 
G&A expenses
  
 
97
 
  
 
66
 
  
 
33
 
Other income
  
 
(5
) 
  
 
(1
) 
  
 
(1
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Segment profit
  
$
560
 
  
$
312
 
  
$
125
 
 
  
 
 
 
  
 
 
 
  
 
 
 
 
 
  
Three months ended September 30,
 
 
  
2019
 
 
  
North America
 
  
Europe
 
  
International Markets*
 
 
  
(U.S. $ in millions)
 
Revenues
  
$
2,051
 
  
$
1,163
 
  
$
565
 
Gross profit
  
 
1,048
 
  
 
662
 
  
 
295
 
R&D expenses
  
 
156
 
  
 
63
 
  
 
21
 
S&M expenses
  
 
219
 
  
 
206
 
  
 
114
 
G&A expenses
  
 
112
 
  
 
56
 
  
 
32
 
Other (income) expense
  
 
(5
) 
  
 
(4
) 
  
 
(1
) 
 
  
 
 
 
  
 
 
 
  
 
 
 
Segment profit
  
$
565
 
  
$
341
 
  
$
130
 
 
  
 
 
 
  
 
 
 
  
 
 
 
    
Nine months ended September 30,
  
    
2020
  
    
North America
     
Europe
     
International Markets
  
    
(U.S. $ in millions)
  
Revenues
    $ 6,146      $ 3,520      $ 1,582  
Gross profit
      3,208        2,009        828  
R&D expenses
      455        180        51  
S&M expenses
      755        590        312  
G&A expenses
      325        184        96  
Other income
      (9 )       (3 )       (10 ) 
  
 
 
     
 
 
     
 
 
  
Segment profit
    $ 1,682      $ 1,058      $ 378  
  
 
 
     
 
 
     
 
 
  
 
    
Nine months ended September 30,
  
    
2019
  
    
North America
     
Europe
     
International Markets*
  
    
(U.S. $ in millions)
  
Revenues
    $ 6,169      $ 3,611      $ 1,668  
Gross profit
      3,155        2,066        877  
R&D expenses
      497        199        66  
S&M expenses
      756        637        348  
G&A expenses
      342        175        102  
Other income
      (6 )       (5 )       (2 ) 
  
 
 
     
 
 
     
 
 
  
Segment profit
    $ 1,566      $ 1,060      $ 363  
  
 
 
     
 
 
     
 
 
  
 
*
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 1c.
The following table presents a reconciliation of Teva’s segment profits to its consolidated operating income (loss) and to consolidated income (loss) before income taxes for the three and nine months ended September 30, 2020 and 2019:
 
    
Three months ended
     
Nine months ended
  
    
September 30,
     
September 30,
  
    
2020
     
2019
     
2020
     
2019
  
    
(U.S.
 
$ in millions)
     
(U.S. $ in millions)
  
North America profit
    $ 560      $ 565      $ 1,682      $ 1,566  
Europe profit
      312        341        1,058        1,060  
International Markets profit
      125        130        378        363  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total reportable segments profit
      997        1,036        3,118        2,989  
Profit of other activities
      28        16        130        92  
  
 
 
     
 
 
     
 
 
     
 
 
  
Total segments profit
      1,025        1,051        3,248        3,081  
Amounts not allocated to segments:
            
Amortization
      251        255        758        823  
Other assets impairments, restructuring and other items
      (98 )       160        404        263  
Intangible asset impairments
      509        177        1,278        1,206  
Goodwill impairment
 
 
4,628
 
 
 
—
 
 
 
4,628
 
 
 
— 
 
Legal settlements and loss contingencies
      21        468        10        1,171  
Other unallocated amounts
      55        73        148        209  
  
 
 
     
 
 
     
 
 
     
 
 
  
Consolidated operating income (loss)
      (4,342 )       (81 )       (3,978 )       (591 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
Financial expenses, net
      117        211        565        635  
  
 
 
     
 
 
     
 
 
     
 
 
  
Consolidated income (loss) before income taxe
s
    $ (4,459 )     $ (292 )     $ (4,543 )     $ (1,226 ) 
  
 
 
     
 
 
     
 
 
     
 
 
  
b. Segment revenues by major products and activities:
The following tables present revenues by major products and activities for the three and nine months ended September 30, 2020 and 2019:
 
 
North America
 
Three months ended

September 30,
 
  
2020
 
  
2019
 
  
(U.S. $ in millions)
Generic products
  
$
928
 
  
$
914
AJOVY
  
 
35
 
  
 
25
AUSTEDO
  
 
168
 
  
 
105
BENDEKA
®
/TREANDA
®
  
 
105
 
  
 
124
COPAXONE
  
 
236
 
  
 
271
ProAir
®
*
  
 
50
 
  
 
71
QVAR
®
  
 
42
 
  
 
60
Anda
  
 
341
 
  
 
351
Other
  
 
113
 
  
 
131
Total
  
$
2,017
 
  
$
2,051
 
*
Does not include revenues from the ProAir authorized generic, which are included under generic products.
     
                    
      
                    
  
 
North America
 
Nine months ended
September 30,
 
  
2020
 
  
2019
 
  
(U.S. $ in millions)
Generic products
  
$
2,804
 
  
$
2,826
AJOVY
  
 
98
 
  
 
68
AUSTEDO
  
 
451
 
  
 
276
BENDEKA/TREANDA
  
 
313
 
  
 
371
COPAXONE
  
 
671
 
  
 
753
ProAir*
  
 
175
 
  
 
194
QVAR
  
 
139
 
  
 
183
Anda
  
 
1,141
 
  
 
1,080
Other
  
 
354
 
  
 
417
Total
  
$
6,146
 
  
$
6,169
 
*
Does not include revenues from the ProAir authorized generic, which are included under generic products.
     
                    
      
                    
  
 
Europe
 
Three months ended

September 30,
 
  
2020
 
  
2019
 
  
(U.S. $ in millions)
Generic products
  
$
824
 
  
$
836
COPAXONE
  
 
101
 
  
 
106
Respiratory products
  
 
77
 
  
 
87
AJOVY
  
 
8
 
  
 
1
Other
  
 
106
 
  
 
134
Total
  
$
1,116
 
  
$
1,163
 
Europe
   
Nine
 months ended 
September 30,
  
    
2020
     
2019
  
    
(U.S. $ in millions)
  
Generic products
    $ 2,593      $ 2,599  
COPAXONE
      294        327  
Respiratory products
      263        267  
AJOVY
      17        1  
Other
      352        416  
  
 
 
     
 
 
  
Total
    $ 3,520   $ 3,611  
  
 
 
     
 
 
  
 
International Markets
 
Three months ended

September 30,
 
 
  
2020
 
  
2019
 
 
  
(U.S. $ in millions)
 
Generic products
  
$
429
 
  
$
474
 
COPAXONE
  
 
14
 
  
 
20
 
Other
  
 
86
 
  
 
71
 
Total
  
$
529
 
  
$
565
 
 
*
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 1c.
     
                    
      
                    
  
 
International Markets
 
Nine months ended
September 30,
 
 
  
2020
 
  
2019
 
 
  
(U.S. $ in millions)
 
Generic products
  
$
1,304
 
  
$
1,404
 
COPAXONE
  
 
38
 
  
 
46
 
Other
  
 
241
 
  
 
218
 
Total
  
$
1,582
 
  
$
1,668
 
 
*
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 1c.