Teva Reports First Quarter 2016 Results

JERUSALEM–(BUSINESS WIRE)– Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) today reported results
for the quarter ended March 31, 2016.

• Non-GAAP EPS adjusted to exclude December 2015 equity offerings was
  $1.36, in line with results in the first quarter of 2015.

• Exchange rate fluctuations reduced revenues by $107 million and
  non-GAAP operating profit by $30 million.
• Second quarter 2016 revenues are expected to be $4.7-$4.9 billion;
  non-GAAP EPS expected to be $1.16-$1.20; non-GAAP EPS, adjusted to
  exclude the impact of the December 2015 equity offerings, is expected
  to be $1.32-$1.36.
• Our guidance for the second quarter of 2016 does not include any
  Actavis Generics revenues or profit. We expect to close the Actavis
  Generics acquisition in June 2016.

“We start 2016 with solid performance across the business, strong
financial results and the achievement of several key milestones.
Generics remains a core contributor to our performance despite no major
launches in the U.S. this quarter as we had in the first quarter 2015
with continuous operational and financial improvement across the
business. We finalized our acquisition of Rimsa and completed the
business venture in Japan with Takeda. We continue to make important
progress in our specialty business where we see great promise,” stated
Erez Vigodman, President & CEO of Teva. “Looking forward, we have
several upcoming approvals and key clinical milestones in our pipeline
and of course the much anticipated close of Actavis Generics. We are
excited to be in the final stages of completing the acquisition of
Actavis Generics, which will enable us to further realize the enormous
potential in the growing global generics universe and deliver the
benefits of this transaction to our stockholders, customers, patients
and healthcare systems around the world.”

First Quarter 2016 Results

Revenues in the first quarter of 2016 amounted to $4.8 billion,
down 3% compared to the first quarter of 2015. Excluding the impact of
foreign exchange fluctuations, revenues were down 1%.

Exchange rate differences (net of profits from certain hedging
transactions) between the first quarter of 2016 and the first quarter of
2015 decreased revenues by $107 million, and both non-GAAP and GAAP
operating income by $30 million.

Non-GAAP gross profit was $3.0 billion in the first quarter of
2016, down 2% from the first quarter of 2015. Non-GAAP gross profit
margin was 62.7% in the first quarter of 2016, compared to 61.5% in
the first quarter of 2015. GAAP gross profit was $2.8 billion in the
first quarter of 2016, down 2% compared to the first quarter of 2015.
GAAP gross profit margin was 58.0% in the quarter, compared to 56.9% in
the first quarter of 2015.

Research and Development (R&D) expenses (excluding equity
compensation expenses and purchase of in-process R&D) in the first
quarter of 2016 amounted to $375 million, compared to $328 million in
the first quarter of 2015. R&D expenses were 7.8% of revenues in the
quarter, compared to 6.6% in the first quarter of 2015. R&D expenses
related to our generic medicines segment increased 23% to $136 million,
compared to $111 million in the first quarter of 2015. The increase is
mainly due to increased development of complex generic products such as
sterile and respiratory medicines. R&D expenses related to our specialty
medicines segment increased 7% to $229 million, compared to $215 million
in the first quarter of 2015, mainly due to increased development costs
related to assets acquired through the Labrys and Auspex transactions.

Selling and Marketing (S&M) expenses (excluding amortization
of purchased intangible assets and equity compensation expenses)
amounted to $821 million, or 17.1% of revenues, in the first quarter of
2016, compared to $908 million, or 18.2% of revenues, in the first
quarter of 2015. S&M expenses related to our generic medicines segment
decreased 25% to $279 million, compared to $374 million in the first
quarter of 2015. The decrease was mainly due to reduced royalties
related to our sales of budesonide (Pulmicort^®) in the United
States. S&M expenses related to our specialty medicines segment
decreased 6% to $457 million, compared to $486 million in the first
quarter of 2015.

General and Administrative (G&A) expenses (excluding equity
compensation expenses) amounted to $294 million in the first quarter of
2016, or 6.1% of revenues, compared to $293 million and 5.9% in the
first quarter of 2015.

Quarterly non-GAAP operating income was $1.5 billion, similar to
the first quarter of 2015. Quarterly GAAP operating income was $1.2
billion in the first quarter of 2016, an increase of 56% compared to
$0.7 billion in the first quarter of 2015.

We calculate EBITDA as non-GAAP operating income (which excludes
amortization and certain other items) plus depreciation expenses for the
period. In the first quarter of 2016, depreciation amounted to $108
million, compared to $113 million in the first quarter of 2015. EBITDA
for the first quarter of 2016 amounted to $1.6 billion, down 1% compared
to the first quarter of 2015.

Non-GAAP financial expenses amounted to $52 million in the first
quarter of 2016, compared to $49 million in the first quarter of 2015.
GAAP financial expenses for the first quarter of 2016 amounted to $298
million, compared to $192 million in the first quarter of 2015. The
higher expenses, on a GAAP basis, were mainly the result of a $246
million impairment of net monetary assets following the devaluation in
Venezuela.

The provision for non-GAAP income taxes for the
first quarter of 2016 amounted to $302 million on pre-tax non-GAAP
income of $1.5 billion, for a quarterly tax rate of 21%. The provision
for non-GAAP income taxes in the first quarter of 2015 was $312 million
on pre-tax non-GAAP income of $1.5 billion, for a quarterly tax rate of
21%. GAAP income tax expenses for the first quarter of 2016
amounted to $228 million or 26%, on pre-tax income of $867 million. In
the first quarter of 2015, the provision for income taxes amounted to
$104 million or 19%, on pre-tax income of $557 million. While the tax
rate may fluctuate quarterly, we expect our annual tax rate for 2016 to
be similar to that for 2015.

Non-GAAP net income attributable to ordinary shareholders and
non-GAAP diluted EPS were $1.2 billion and $1.20, respectively,
in the first quarter of 2016, compared to $1.2 billion and $1.36 in the
first quarter of 2015. Non-GAAP EPS adjusted to exclude the December
2015 equity offerings was $1.36. GAAP net income attributable to
ordinary shareholders and GAAP diluted EPS were $570 million and
$0.62, respectively, in the first quarter of 2016, compared to $446
million and $0.52, respectively, in the first quarter of 2015.

Non-GAAP information: Net non-GAAP adjustments in the first
quarter of 2016 amounted to $536 million. Non-GAAP net income and
non-GAAP EPS for the quarter were adjusted to exclude the following
items:

• Financial expenses of $246 million related to the impairment of our
  net monetary assets in Venezuela following a change in exchange rates;
• Amortization of purchased intangible assets totaling $189 million, of
  which $178 million is included in cost of goods sold and the remaining
  $11 million in selling and marketing expenses;
• Acquisition and related expenses of $101 million;
• Equity compensation of $24 million;
• Restructuring expenses of $19 million;
• Impairment of long-lived assets of $13 million;
• Other non-GAAP items of $43 million;
• Income from legal settlements and loss contingencies of $25 million;
  and
• Corresponding tax benefit of $74 million.

Teva believes that excluding such items facilitates investors’
understanding of its business and financial results. See the attached
tables for a reconciliation of the U.S. GAAP results to the adjusted
non-GAAP figures.

Cash flow from operations generated during the first quarter of
2016 amounted to $1.4 billion, as in the first quarter of 2015. Free
cash flow, excluding net capital expenditures, amounted to $1.2 billion,
similar to the first quarter of 2015.

Cash and investments at March 31, 2016 decreased to $7.2 billion,
compared to $8.4 billion at December 31, 2015, mainly due to the funding
of the Rimsa acquisition.

For the first quarter of 2016, the weighted average outstanding
shares for the fully diluted earnings per share calculation were 979
million on a non-GAAP basis and 920 million on a GAAP basis. The average
weighted diluted shares outstanding used for the fully diluted share
calculation for the first quarter of 2015 were 859 million shares, on
both a non-GAAP and GAAP basis. The increase in the number of shares
resulted from our December 2015 equity offerings, with the number of
shares on a non-GAAP basis including the potential dilution resulting
from our recently issued mandatory convertible preferred shares, which
had a dilutive effect on our non-GAAP earnings per share.

Excluding the impact of the December 2015 equity offerings to finance
the Actavis Generics acquisition, the weighted average outstanding
shares for the fully diluted earnings per share calculation on a
non-GAAP basis for the first quarter of 2016 was 861 million shares.

As of March 31, 2016, the fully diluted share count for calculating
Teva’s market capitalization was approximately 1,003 million shares.

Total shareholders’ equity was $30.6 billion at March 31, 2016,
compared to $29.9 billion at December 31, 2015.

Segment Results for the First Quarter 2016

Generic Medicines Segment

Generic Medicines Revenues

Generic medicines revenues in the first quarter of 2016 amounted to $2.2
billion, a decrease of 17% compared to the first quarter of 2015. In
local currency terms, revenues decreased 15%.

Generic revenues consisted of:

• U.S. revenues of $976 million, a decrease of 32% or of $463 million,
  compared to the first quarter of 2015. The decrease resulted mainly
  from a decline in sales of $427 million due to the loss of exclusivity
  on esomeprazole (Nexium^®) and budesonide (Pulmicort^®).
• European revenues of $671 million, a decrease of 1%, but up 1% in
  local currency terms, compared to the first quarter of 2015. This
  resulted mainly from our strategy of pursuing profitable and
  sustainable business in the region, along with higher API sales to
  third parties.
• ROW revenues of $523 million, an increase of 4%, or 13% in local
  currency terms, compared to the first quarter of 2015. The increase in
  local currency terms was mainly due to higher revenues in Venezuela
  and Canada, which were partially offset by lower revenues in Japan and
  Russia.
• API sales to third parties of $197 million (which is included in the
  market revenues above), an increase of 25% compared to the first
  quarter of 2015, with higher revenues in both Europe and the United
  States.

Generic medicines revenues comprised 45% of our total revenues in the
quarter, compared to 52% in the first quarter of 2015.

Generic Medicines Gross Profit

Gross profit from our generic medicines segment in the first quarter of
2016 amounted to $1.0 billion, a decrease of 22% compared to the first
quarter of 2015. The lower gross profit was mainly a result of the lower
sales of esomeprazole (Nexium^®) and budesonide (Pulmicort^®)
in the United States, which are both high gross profit products. This
decrease was partially offset by higher gross profit of our ROW markets
and API business. Gross profit margin for our generic medicines segment
in the first quarter of 2016 decreased to 46.0%, from 49.0% in the first
quarter of 2015.

Generic Medicines Profit

Our generic medicines segment generated profit of $584 million in the
first quarter of 2016, a decrease of 27% compared to the first quarter
of 2015. Generic medicines profitability as a percentage of generic
medicines revenues was 26.9% in the first quarter of 2016, down from
30.5% in the first quarter of 2015. The decrease was primarily due to
the lower gross profit of the segment, which was partially offset by
lower S&M expenses.

Specialty Medicines Segment

Specialty Medicines Revenues

Specialty medicines revenues in the first quarter of 2016 amounted to
$2.2 billion, an increase of 10% compared to the first quarter of 2015.
In local currency terms, revenues increased 11%. U.S. specialty
medicines revenues amounted to $1.7 billion, up 13% compared to the
first quarter of 2015. European specialty medicines revenues amounted to
$394 million, a decrease of 3%, but flat in local currency terms,
compared to the first quarter of 2015. ROW specialty revenues amounted
to $81 million, up 13%, or 27% in local currency terms, compared to the
first quarter of 2015.

Specialty medicines revenues comprised 45% of our total revenues in the
quarter, compared to 40% in the first quarter of 2015.

The increase in specialty medicines revenues compared to the first
quarter of 2015 was primarily due to higher sales of our CNS and
respiratory products.

The following table presents revenues by therapeutic area and key
products for our specialty medicines segment for the three months ended
March 31, 2016 and 2015:

Global revenues of Copaxone^® (20 mg/mL and 40
mg/mL), the leading multiple sclerosis therapy in the U.S. and globally,
amounted to $1.0 billion, an increase of 9% compared to the first
quarter of 2015.

Copaxone^® revenues in the United States amounted to $821
million, an increase of 12% compared to the first quarter of 2015. The
increase was mainly due to higher net pricing, including a price
increase of 7.9% in January 2016. At the end of the first quarter of
2016, according to March 2016 IMS data, our U.S. market shares for the
Copaxone^® products in terms of new and total prescriptions
were 28.1% and 29.8%, respectively. Copaxone^® 40 mg/mL
accounted for over 81% of total Copaxone^® prescriptions in
the U.S.

Copaxone^® revenues outside the United States amounted to $185
million, a decrease of 4%, but an increase of 2% in local currency
terms, compared to the first quarter of 2015.

Our global Azilect^® revenues amounted to $113 million,
an increase of 6% compared to the first quarter of 2015. In local
currency terms, revenues increased 7%. Global in-market sales decreased
13%.

Revenues of our respiratory products amounted to $366 million, up
38% compared to the first quarter of 2015. ProAir^® revenues
in the quarter increased 40% to $173 million, compared to the first
quarter of 2015, due to volume growth and positive price effects. QVAR^®
global revenues increased 37% to $134 million in the first
quarter of 2016, compared to the first quarter of 2015, mainly due to
positive price effects.

Revenues of our oncology products amounted to $268 million in the
first quarter of 2016, up 2% from the first quarter of 2015. Revenues of Treanda^®
and Bendeka™ amounted to $155 million, down 1% compared to the
first quarter of 2015.

Specialty Medicines Gross Profit

Gross profit from our specialty medicines segment amounted to $1.9
billion, an increase of $193 million compared to the first quarter of
2015. Gross profit margin for our specialty medicines segment in the
first quarter of 2016 was 86.9%, compared to 85.8% in the first quarter
of 2015.

Specialty Medicines Profit

Our specialty medicines segment profit amounted to $1.2 billion in the
first quarter of 2016, up 21% compared to the first quarter of 2015,
mainly due to higher gross profit and lower S&M expenses.

Specialty medicines profit as a percentage of segment revenues was 55.1%
in the first quarter of 2016, up from 49.9% in the first quarter of 2015.

The following tables present details of our multiple sclerosis franchise
and of our other specialty medicines for the three months ended March
31, 2016 and 2015:

Other Activities

Our OTC revenues related to PGT amounted to $288 million, an
increase of 35% compared to $213 million in the first quarter of 2015.
In local currency terms, revenues increased 47%, mainly due to inflation
and higher volumes in Venezuela. PGT’s in-market sales amounted to $411
million in the first quarter of 2016, an increase of $37 million
compared to the first quarter of 2015.

Other revenues amounted to $200 million in the first quarter of
2016, mostly from the distribution of third-party products in Israel and
Hungary, compared to revenues of $192 million in the first quarter of
2015.

Financial Outlook

Pending the closing of the Actavis Generics acquisition, we are
providing revenue and non-GAAP EPS guidance for the second quarter 2016.
This includes the results of the Rimsa acquisition and the Teva-Takeda
business venture, but not of the Actavis Generics acquisition.
Additional guidance will be provided after closing the Actavis Generics
acquisition.

We continue to work toward satisfying all conditions for the closing
and, based on our estimate of the timing to obtain clearance from the
U.S. Federal Trade Commission, we currently expect to close in June 2016.

• We expect revenues for the second quarter of 2016 to be $4.7-$4.9
  billion.
• Non-GAAP EPS for the second quarter of 2016 is expected to be
  $1.16-$1.20. Excluding the impact of the December 2015 equity
  offerings, non-GAAP EPS is expected to be $1.32-$1.36.
• Cash flow from operating activities for the second quarter of 2016 is
  expected to be $1.2-$1.3 billion.

These estimates reflect management`s current expectations for Teva’s
performance in 2016. Actual results may vary, whether as a result of
exchange rate differences, market conditions or other factors. In
addition, the non-GAAP figures exclude the amortization of purchased
intangible assets, costs related to certain regulatory actions,
inventory step-up, legal settlements and reserves, impairments and
related tax effects.

The non-GAAP data presented by Teva are the results used by Teva’s
management and board of directors to evaluate the operational
performance of the company, to compare against the company’s work plans
and budgets, and ultimately to evaluate the performance of management.
Teva provides such non-GAAP data to investors as supplemental data and
not in substitution or replacement for GAAP results, because management
believes such data provides useful information to investors.

Dividend

On May 5, 2016, the Board of Directors declared a cash dividend of $0.34
per ordinary share for the first quarter of 2016. For holders of our
ordinary shares that are traded on the Tel Aviv Stock Exchange, the
dividend will be converted into new Israeli shekels based on the
official exchange rate as of May 9, 2016.

The record date will be May 24, 2016, and the payment date will be June
7, 2016. Tax will be withheld at a rate of 15%.

On March 15, 2016, we paid a dividend of $71 million (including
withholding taxes) to the holders of record of our mandatory convertible
preferred shares as of March 1, 2016.

Conference Call

Teva will host a conference call and live webcast along with a slide
presentation on Monday, May 9, 2016, at 8 a.m. ET to discuss its first
quarter 2016 results and overall business environment. A question &
answer session will follow.

In order to participate, please dial the following numbers (at least 10
minutes before the scheduled start time): United States 1-866-254-0808;
Canada 1-866-607-2172; or International +44(0) 1452-541003; passcode:
88267484. For a list of other international toll-free numbers, click,
click here.

A live webcast of the call will also be available on Teva’s website at: www.ir.tevapharm.com.
Please log in at least 10 minutes prior to the conference call in order
to download the applicable audio software.

Following the conclusion of the call, a replay of the webcast will be
available within 24 hours on the Company’s website. The replay can also
be accessed until June 10, 2016, 10:00 a.m. ET by calling United States
1-866-247-4222; Canada 1-866-878-9237 or International +44(0)
1452-550000; passcode: 88267484.

About Teva

Teva Pharmaceutical Industries Ltd. (NYSE and TASE: TEVA) is a leading
global pharmaceutical company that delivers high-quality,
patient-centric healthcare solutions to millions of patients every day.
Headquartered in Israel, Teva is the world’s largest generic medicines
producer, leveraging its portfolio of more than 1,000 molecules to
produce a wide range of generic products in nearly every therapeutic
area. In specialty medicines, Teva has a world-leading position in
innovative treatments for disorders of the central nervous system,
including pain, as well as a strong portfolio of respiratory products.
Teva integrates its generics and specialty capabilities in its global
research and development division to create new ways of addressing unmet
patient needs by combining drug development capabilities with devices,
services and technologies. Teva’s net revenues in 2015 amounted to $19.7
billion. For more information, visit www.tevapharm.com.

Teva’s Safe Harbor Statement under the U. S. Private Securities
Litigation Reform Act of 1995:

This press release contains forward-looking statements, which are
based on management’s current beliefs and expectations and involve a
number of known and unknown risks and uncertainties that could cause our
future results, performance or achievements to differ significantly from
the results, performance or achievements expressed or implied by such
forward-looking statements. Important factors that could cause or
contribute to such differences include risks relating to: our ability to
develop and commercialize additional pharmaceutical products;
competition for our specialty products, especially Copaxone^® (including
competition from orally-administered alternatives, as well as from
generic equivalents) and our ability to continue to migrate users to our
40 mg/mL version and maintain patients on that version; our ability to
identify and successfully bid for suitable acquisition targets or
licensing opportunities, or to consummate and integrate acquisitions
(such as our pending acquisition of Actavis Generics and the integration
of Rimsa); the possibility of material fines, penalties and other
sanctions and other adverse consequences arising out of our ongoing FCPA
investigations and related matters; our ability to achieve expected
results from the R&D efforts invested in our pipeline of specialty and
other products; our ability to reduce operating expenses to the extent
and during the timeframe intended by our cost reduction program; the
extent to which any manufacturing or quality control problems damage our
reputation for quality production and require costly remediation;
increased government scrutiny in both the U.S. and Europe of our patent
settlement agreements; our exposure to currency fluctuations and
restrictions as well as credit risks; the effectiveness of our patents,
confidentiality agreements and other measures to protect the
intellectual property rights of our specialty medicines; the effects of
reforms in healthcare regulation and pharmaceutical pricing,
reimbursement and coverage; governmental investigations into sales and
marketing practices, particularly for our specialty pharmaceutical
products; adverse effects of political or economic instability, major
hostilities or acts of terrorism on our significant worldwide
operations; interruptions in our supply chain or problems with internal
or third-party information technology systems that adversely affect our
complex manufacturing processes; significant disruptions of our
information technology systems or breaches of our data security;
competition for our generic products, both from other pharmaceutical
companies and as a result of increased governmental pricing pressures;
competition for our specialty pharmaceutical businesses from companies
with greater resources and capabilities; the impact of continuing
consolidation of our distributors and customers; decreased opportunities
to obtain U.S. market exclusivity for significant new generic products;
potential liability in the U.S., Europe and other markets for sales of
generic products prior to a final resolution of outstanding patent
litigation; our potential exposure to product liability claims that are
not covered by insurance; any failure to recruit or retain key
personnel, or to attract additional executive and managerial talent; any
failures to comply with complex Medicare and Medicaid reporting and
payment obligations; significant impairment charges relating to
intangible assets, goodwill and property, plant and equipment; the
effects of increased leverage and our resulting reliance on access to
the capital markets; potentially significant increases in tax
liabilities; the effect on our overall effective tax rate of the
termination or expiration of governmental programs or tax benefits, or
of a change in our business; variations in patent laws that may
adversely affect our ability to manufacture our products in the most
efficient manner; environmental risks; and other factors that are
discussed in our Annual Report on Form 20-F for the year ended December
31, 2015 and in our filings with the U.S. Securities and Exchange
Commission (the « SEC »).

Forward-looking statements speak only as of the date on which they
are made and we assume no obligation to update or revise any
forward-looking statements or other information contained herein,
whether as a result of new information, future events or otherwise. You
are advised, however, to consult any additional disclosures we make in
our reports to the SEC on Form 6-K. Also note that we provide a
cautionary discussion of risks and uncertainties under “Risk Factors” in
our Annual Report on Form 20-F for the year ended December 31, 2015.
These are factors that we believe could cause our actual results to
differ materially from expected results. Other factors besides those
listed could also adversely affect us. This discussion is provided as
permitted by the Private Securities Litigation Reform Act of 1995.

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