Teva Misses Revenue Forecast in Q2 and Keeps Full-Year Guidance Unchanged

Teva Pharmaceuticals slightly missed analysts’ expectations for second-quarter revenue, reporting $4.17 billion compared to the forecast of $4.3 billion. While CEO Richard Francis continues to project optimism about the company’s long-term transformation strategy, short-term results highlight persistent challenges—particularly in the generics sector and with its flagship drug Austedo.

Teva’s key central nervous system drug, Austedo, underperformed with sales of $498 million, falling short of the $510 million projected by analysts. This miss was a major contributor to the company’s lack of revenue growth in the quarter.

On a more positive note:

• Ajovy, Teva’s migraine treatment, posted stronger-than-expected revenue of $155 million, prompting the company to raise its 2025 forecast for the drug to $630–640 million, up from $600 million.

• UZEDY, Teva’s schizophrenia treatment, saw revenue double to $54 million, leading to an updated annual forecast of $190–200 million.

Generic Drug Sales Decline Continues

Teva’s generics division, once its core business, continues to shrink. Revenue fell 2% year-over-year to $2.4 billion, a trend Teva warns will likely continue in the coming quarters due to delays in new product launches.

In contrast, the company’s biosimilars segment is showing promise. Although Teva did not disclose specific revenue figures, Francis said the segment is "gaining momentum" and reaffirmed the company’s goal to double biosimilar revenue by 2027.

TAPI Sale Delayed Again Amid Revenue Drop

Teva’s efforts to sell its TAPI (Teva Active Pharmaceutical Ingredients) unit hit another delay, even as the business posted an 11% revenue decline this quarter. CEO Francis acknowledged investor frustration:

“I’m disappointed that we still don’t have news on the TAPI sale,” he said during the earnings call. “We will reach a final decision in Q3.”

Efficiency Measures Drive Operating Profit Growth

While revenue was flat, Teva made notable strides on the operational front, driven by its cost-cutting and restructuring program:

• Gross profit margin rose slightly to 50.3%.

• Operating profit climbed to $455 million, up from a loss a year earlier caused by one-time expenses.

• Net profit reached $769 million, or 66 cents per share, before one-time items—slightly above expectations.

Francis highlighted $140 million in annualized savings already achieved, part of a broader plan to reach $700 million in savings by 2027. As part of the initiative, Teva is laying off 8% of its global workforce, with two-thirds of the layoffs already completed, resulting in $150 million in restructuring costs.

Full-Year Forecast Maintained

Despite mixed quarterly results, Teva reaffirmed its 2025 full-year guidance:

• Revenue: $16.8–17.2 billion

• Operating profit: $4.3–4.6 billion (excluding one-time items)

• Cash flow: $1.6–1.9 billion

However, the company cautioned that it does not expect to reach the upper end of these ranges, citing ongoing weakness in generics and uncertainty around tariff policy in Europe.

Outlook: Long-Term Promise, Short-Term Pressures

While investors were hoping for an upgraded outlook, Teva’s management appears focused on stabilizing the business, executing on its transformation strategy, and navigating headwinds in key markets. The company’s growing focus on biosimilars and innovative treatments may help drive future growth, but near-term results suggest that Teva’s turnaround is still a work in progress.