Teva Pharmaceutical Industries reported results for the third quarter ended September 30, 2016.
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Revenues in the third quarter of 2016 were $5.6 billion, up 15% compared to the third quarter of 2015, primarily due to the inclusion of revenues of $887 million of the Actavis generics business, following the closing of the acquisition on August 2.
Excluding the impact of foreign exchange fluctuations, revenues increased 19%.
Exchange rate differences between the third quarter of 2016 and the third quarter of 2015 reduced revenues by $188 million, GAAP operating income by $83 million and non-GAAP operating income by $65 million.
GAAP gross profit was $2.8 billion in the third quarter of 2016, up 1% compared to the third quarter of 2015.
GAAP gross profit margin was 50.4% in the quarter, compared to 57.5% in the third quarter of 2015. Non-GAAP gross profit was $3.4 billion in the third quarter of 2016, up 14% from the third quarter of 2015. Non-GAAP gross profit margin was 61.0% in the third quarter of 2016, compared to 61.8% in the third quarter of 2015.
Research and Development (R&D) expenses for the third quarter of 2016 amounted to $663 million, an increase of 84% compared to the third quarter of 2015 mainly due to $250 million paid to Regeneron pursuant to company's collaborative agreement to develop and commercialize its pain medication product fasinumab.
R&D expenses excluding equity compensation expenses and purchase of in-process R&D in the third quarter of 2016 were $406 million, compared to $356 million in the third quarter of 2015. R&D expenses were 7.3% of revenues in the quarter, compared to 7.4% in the third quarter of 2015.
R&D expenses related to company's generic medicines segment were $184 million, compared to $132 million in the third quarter of 2015, an increase of 39%, mainly due to the inclusion of two months of expenses of the Actavis generics business.
R&D expenses related to company's specialty medicines segment were $228 million, an increase of 4% compared to $220 million in the third quarter of 2015.
Selling and Marketing (S&M) expenses in the third quarter of 2016 amounted to $940 million, an increase of 21% compared to the third quarter of 2015.
S&M expenses excluding amortization of purchased intangible assets and equity compensation expenses were $889 million, or 16.0% of revenues, in the third quarter of 2016, compared to $766 million, or 15.9% of revenues, in the third quarter of 2015.
S&M expenses related to company's generic medicines segment were $415 million, an increase of 41% compared to $295 million in the third quarter of 2015, or 51% in local currency terms.
The increase was mainly due to additional costs related to the inclusion of two months of expenses of the Actavis generics business and the launch of company's business venture in Japan in the second quarter of 2016.
S&M expenses related to company's specialty medicines segment were $458 million, an increase of 10% compared to $417 million in the third quarter of 2015.
The increase was mainly due to higher investments in new launches in the third quarter of 2016 and lower S&M activities in the third quarter of 2015.
General and Administrative (G&A) expenses in the third quarter of 2016 amounted to $310 million, compared to $316 million in the third quarter of 2015.
G&A expenses excluding equity compensation expenses were $304 million in the third quarter of 2016, or 5.5% of revenues, compared to $307 million and 6.4% in the third quarter of 2015. ■