Innovative medicines lead the charge
Teva Pharmaceutical Industries saw strong performance in its innovative medicines during the second quarter, particularly in the products AUSTEDO, AJOVY, and UZEDY. These three drugs generated a combined 43% year-over-year revenue increase, a significant achievement that led the company to boost its 2026 revenue guidance by $75 million to a range of $16.5 billion to $16.85 billion. The growth in these innovative medicines portfolio is central to Teva's future strategy.
AUSTEDO, which treats tardive dyskinesia and Huntington’s disease chorea, earned $676 million in U.S. revenue for the quarter, marking a 33% increase compared to the previous year. The extended-release version, AUSTEDO XR, was a key driver of this growth, capturing over 60% of new patient starts, indicating strong adoption in the market.
UZEDY, a long-acting injectable treatment for schizophrenia, demonstrated remarkable growth with revenue climbing to $77 million, a 43% increase from the previous year. Total prescriptions for the drug rose by 63%, as noted by Chief Executive Officer Richard Francis. With improved market acceptance and demand, UZEDY's performance is likely to continue its upward trajectory.
AJOVY, Teva's migraine treatment, also contributed significantly to the company's revenue, generating global revenue of $244 million, a 56% increase year-over-year. In the U.S., revenue climbed 83%, largely due to better contracting, favorable gross-to-net trends, and gaining market share. These factors have positioned AJOVY as a strong contender in the migraine treatment market.
Generics pressure and biosimilar expansion
Despite the robust performance of its innovative medicines, Teva experienced a decline in global generics revenue, which fell by 15% year over year. This decrease is primarily attributed to lower sales of the generic version of Revlimid, a key drug in the company's portfolio. However, management emphasized that the rest of the generics business remains stable, with U.S. generics revenue even showing a 1% increase.
Looking ahead, Teva is focusing on biosimilars as a new growth platform. The company has 15 biosimilar products on the market and 14 in development. Two of its five U.S. biosimilars are already market leaders, while a third is on the verge of capturing the top position. These developments are expected to significantly contribute to Teva's future growth.
Francis highlighted the company's confidence in biosimilars, noting that Teva expects to exceed its target of $800 million in biosimilar revenue by 2027. This strategic shift toward biosimilars reflects Teva's broader initiative to diversify its revenue sources and mitigate the risks associated with generic product sales.
Profitability and balance sheet under scrutiny
Teva's second-quarter financial results were marked by a $576 million GAAP net loss, largely driven by a $724 million charge associated with the recent acquisition of Emalex Biosciences. This acquisition, classified as an asset acquisition, significantly impacted the company's GAAP earnings. On a non-GAAP basis, Teva reported earnings per share of $0.02, with a non-GAAP gross margin rising to 55.4% for the quarter.
Free cash flow surged by 31% year over year to $622 million, showcasing the company's ability to generate liquidity despite the acquisition-related charges. Teva ended the quarter with net debt of $12.9 billion, and the net-debt-to-EBITDA ratio was 2.8 times, reflecting the financial impact of the Emalex acquisition. Chief Financial Officer Eli Kalif pointed out that if the Emalex-related charges were excluded, non-GAAP operating margin would have been 26.6%, indicating the company's underlying operational strength.