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Segments
 9 Months Ended
Sep. 30, 2023
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, the United Kingdom 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. Based on such review, in May 2023 Teva launched its new Pivot to Growth strategy. Any additional 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.
During the third quarter of 2023, in conjunction with a recent shift in executive management responsibilities and in alignment with Teva’s Pivot to Growth strategy, Canada will no longer be included as part of Teva’s North America segment as of January 1, 2024. From that date, Teva’s North America segment will be comprised solely of the United States and Canada will be reported as part of the Company’s International Markets segment. Teva is currently evaluating the associated changes to align its internal financial and segment reporting and its reporting units with this shift.
a. Segment information:

 
  
Three months ended September 30,
 
 
  
2023
 
 
  
North America
 
  
Europe
 
  
International Markets
 
 
  
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
Revenues
   
$
2,002
 
  
$
1,146
 
  
$
485
 
Gross profit
      1,093        648        261  
R&D expenses
      163        62        23  
S&M expenses
      257        184        102  
G&A expenses
      98        66        27  
Other income
      (2 )      
§
        (2 ) 
    
 
 
     
 
 
     
 
 
  
Segment profit
   
$
577
 
  
$
338
 
  
$
111
 
    
 
 
     
 
 
     
 
 
  
 
§
Represents an amount less than $0.5 million.
 
 
  
Three months ended September 30,
 
 
  
2022
 
 
  
North America
 
  
Europe
 
  
International Markets
 
 
  
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
                   
Revenues
   
$
1,809
 
  
$
1,069
 
  
$
475
 
Gross profit
      942        634        252  
R&D expenses
      111        44        15  
S&M expenses
      232        169        97  
G&A expenses
      122        61        30  
Other income
      §        §        (2 ) 
    
 
 
     
 
 
     
 
 
  
Segment profit
   
$
477
 
  
$
360
 
  
$
112
 
    
 
 
     
 
 
     
 
 
  
 
 
§
Represents an amount less than $0.5 million.
 
    
Nine months ended September 30,
  
    
2023
  
    
North America
     
Europe
     
International Markets
  
                   
    
(U.S. $ in millions)
  
Revenues
   
$
5,759
 
  
$
3,493
 
  
$
1,456
 
Gross profit
      2,950        1,943        778  
R&D expenses
      478        168        64  
S&M expenses
      743        565        310  
G&A expenses
      306        196        87  
Other income
      (6 )       (2 )       (31 ) 
    
 
 
     
 
 
     
 
 
  
Segment profit
   
$
1,429
 
  
$
1,017
 
  
$
348
 
    
 
 
     
 
 
     
 
 
  
 
 
  
Nine months ended September 30,
 
 
  
2022
 
 
  
North America
 
  
Europe
 
  
International Markets
 
 
  
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
                   
Revenues
   
$
5,450
 
  
$
3,396
 
  
$
1,422
 
Gross profit
      2,841        2,031        780  
R&D expenses
      401        157        54  
S&M expenses
      733        561        293  
G&A expenses
      361        183        89  
Other income
      (12 )       (1 )       (43 ) 
    
 
 
     
 
 
     
 
 
  
Segment profit
   
$
1,359
 
  
$
1,130
 
  
$
386
 
    
 
 
     
 
 
     
 
 
  
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, 2023 and 2022:
 
 
  
Three months ended
 
  
Nine months ended
 
 
  
September 30,
 
  
September 30,
 
 
  
2023
 
  
2022
 
  
2023
 
  
2022
 
 
  
 
 
  
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
  
(U.S. $ in millions)
 
North America profit
    $ 577      $ 477      $ 1,429      $ 1,359  
Europe profit
      338        360        1,017        1,130  
International Markets profit
      111        112        348        386  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total reportable segments profit
      1,025        949        2,794        2,875  
Profit (loss) of other activities
      (5 )       29        22        135  
    
 
 
     
 
 
     
 
 
     
 
 
  
Total segments profit
      1,020        977        2,816        3,010  
Amounts not allocated to segments:
                                    
Amortization
      145        165        471        576  
Other assets impairments, restructuring and other items
      46        36        241        282  
Goodwill impairment
      —         —         700        745  
Intangible assets impairments
      47        24        289        223  
Legal settlements and loss contingencies
      314        195        1,009        2,048  
Other unallocated amounts
      112        139        394        379  
    
 
 
     
 
 
     
 
 
     
 
 
  
Consolidated operating income (loss)
      355        419        (289 )       (1,244 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
Financial expenses, net
      280        252        808        721  
    
 
 
     
 
 
     
 
 
     
 
 
  
Consolidated income (loss) before income taxes
    $ 75      $ 166      $ (1,097 )     $ (1,964 ) 
    
 
 
     
 
 
     
 
 
     
 
 
  
 
 

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, 2023 and 2022:
North America
 
    
Three months ended

September 30,
  
    
2023
     
2022
  
               
    
(U.S. $ in millions)
  
Generic products
   
$
929
 
  
$
806
 
AJOVY
      61        57  
AUSTEDO
      339        260  
BENDEKA
®
and TREANDA
®
      57        77  
COPAXONE
      103        105  
Anda
      367        371  
Other
      146        133  
    
 
 
     
 
 
  
Total
  
$
2,002
 
  
$
1,809
 
    
 
 
     
 
 
  
North America
 
    
Nine months ended
September 30,
  
    
2023
     
2022
  
               
    
(U.S. $ in millions)
  
Generic products
   
$
2,722
 
  
$
2,731
  
AJOVY
      168        142  
AUSTEDO
      817        618  
BENDEKA and TREANDA
      188        241  
COPAXONE
      242        285  
Anda
      1,183        1,021  
Other
      439        411  
    
 
 
     
 
 
  
Total
   
$
5,759
 
  
$
5,450
 
    
 
 
     
 
 
  
Europe
 
 
  
Three months ended

September 30,
 
 
  
2023
 
  
2022
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
Generic products
   
$
886
 
  
$
803
  
AJOVY
      41        30  
COPAXONE
      55        63  
Respiratory products
      61        62  
Other
      104        111  
    
 
 
     
 
 
  
Total
   
$
1,146
 
  
$
1,069
 
    
 
 
     
 
 
  
 

 
Europe
 
 
  
Nine months ended
September 30,
 
 
  
2023
 
  
2022
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
Generic products
   
$
2,727
 
  
$
2,552
 
AJOVY
      115        90  
COPAXONE
      174        207  
Respiratory products
      195        198  
Other
      282        349  
    
 
 
     
 
 
  
Total
   
$
3,493
 
  
$
3,396
  
    
 
 
     
 
 
  
International markets
 
 
  
Three months ended

September 30,
 
 
  
2023
 
  
2022
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
Generic products
   
$
381
 
  
$
393
 
AJOVY
      12        6  
COPAXONE
      10        9  
Other
      82        67  
    
 
 
     
 
 
  
Total
   
$
 485      $ 475  
    
 
 
     
 
 
  
International markets
 
 
  
Nine months ended
September 30,
 
 
  
2023
 
  
2022
 
 
  
 
 
  
 
 
 
  
(U.S. $ in millions)
 
Generic products
   
$
1,175
 
  
$
1,175
 
AJOVY
      31        22  
COPAXONE
      32        29  
Other
      219        195  
    
 
 
     
 
 
  
Total
   
$
1,456
 
  
$
1,422