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Segments

6 Months Ended

Jun. 30, 2021

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 June 30,
		2021
		North America				Europe				International Markets
		(U.S. $ in millions)
Revenues		$	1,943			$	1,184			$	485
Gross profit			1,040				661				270
R&D expenses			162				63				18
S&M expenses			255				209				105
G&A expenses			106				47				25
Other income			(5	)		§					(1	)
Segment profit		$	521			$	343			$	123

§ Represents an amount less than $1 million.

		Three months ended June 30,
		2020
		North America				Europe				International Markets
		(U.S. $ in millions)
Revenues		$	2,047			$	1,001			$	488
Gross profit			1,090				548				247
R&D expenses			154				65				19
S&M expenses			254				188				105
G&A expenses			110				52				29
Other income			(2	)			(1	)			(2	)
Segment profit		$	573			$	244			$	97

		Six months ended June 30,
		2021
		North America				Europe				International Markets
		(U.S. $ in millions)
Revenues		$	3,932			$	2,398			$	975
Gross profit			2,114				1,349				530
R&D expenses			322				129				35
S&M expenses			483				424				201
G&A expenses			218				117				51
Other income			(7	)			(1	)			(3	)
Segment profit		$	1,098			$	680			$	245

		Six months ended June 30,
		2020
		North America				Europe				International Markets
		(U.S. $ in millions)
Revenues		$	4,129			$	2,404			$	1,053
Gross profit			2,152				1,371				552
R&D expenses			300				120				34
S&M expenses			505				390				211
G&A expenses			228				118				63
Other income			(4	)			(2	)			(8	)
Segment profit		$	1,123			$	746			$	253

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 six months ended June 30, 2021 and 2020:

.		Three months ended								Six months ended
		June 30,								June 30,
		2021				2020				2021				2020
		(U.S. $ in millions)								(U.S. $ in millions)
North America profit		$	521			$	573			$	1,098			$	1,123
Europe profit			343				244				680				746
International Markets profit			123				97				245				253
Total reportable segments profit			987				914				2,023				2,121
Profit of other activities			47				66				87				102
Total segments profit			1,034				979				2,111				2,223
Amounts not allocated to segments:
Amortization			173				249				414				507
Other assets impairments, restructuring and other items			28				381				165				502
Goodwill impairment			—				—				—				—
Intangible asset impairments			195				120				274				768
Legal settlements and loss contingencies			6				13				110				(12	)
Other unallocated amounts			50				44				132				93
Consolidated operating income (loss)			582				173				1,015				364
Financial expenses, net			274				223				564				448
Consolidated income (loss) before income taxes		$	308			$	(51	)		$	451			$	(84	)

b. Segment revenues by major products and activities:

The following tables present revenues by major products and activities for the three and six months ended June 30, 2021 and 2020:

North America		Three months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	951			$	923
AJOVY			46				34
AUSTEDO			174				161
BENDEKA®/TREANDA®			106				103
COPAXONE			152				238
ProAir®*			55				66
Anda			316				374
Other			144				147
Total		$	1,943			$	2,047

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

North America		Six months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	2,004			$	1,875
AJOVY			77				63
AUSTEDO			320				283
BENDEKA/TREANDA			197				208
COPAXONE			315				435
ProAir*			109				125
Anda			605				800
Other			305				338
Total		$	3,932			$	4,129

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

Europe		Three months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	878			$	737
AJOVY			19				5
COPAXONE			100				84
Respiratory products			85				80
Other			102				95
Total		$	1,184			$	1,001

Europe		Six months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	1,742			$	1,769
AJOVY			35				9
COPAXONE			201				193
Respiratory products			179				186
Other			242				246
Total		$	2,398			$	2,404

International markets		Three months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	407			$	426
COPAXONE			7				12
Other			71				50
Total		$	485			$	488

International markets		Six months ended June 30,
		2021				2020
		(U.S. $ in millions)
Generic products		$	799			$	875
COPAXONE			19				23
Other			157				154
Total		$	975			$	1,053

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.

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