Teva Pharmaceutical Industries Limited (TEVA) Earnings Call Transcript & Summary

Good morning, everybody. I'm Chris Schott at JPMorgan, and it's my pleasure to be introducing Teva today at the 40th Annual JPMorgan Conference. From the company, we have Kare Schultz, President and CEO. [Operator Instructions] And so with that, Kare, Happy New Year. Thanks for joining us, and looking forward to your remarks.

Thank you very much, Chris, and welcome to all of you listening in and watching this. I would like to address four important issues that are of high relevance to us in Teva. First, I would like to give you an update on how we plan to solve the litigation challenges we have on the opioid litigation and what the status is. Then I'll give you an idea about how we are going about optimizing our business, focus on the progress we're making on reducing our debt. And then last but not least, I'll explain how we're securing our future sales growth. But let's start with a burning topic that, I would say, everybody is very interested in, which is the opioid litigation. Now this is an area which has been going on for quite a while. As you all know, the early investigations and litigations has been started over the last 6 years. The events that are being discussed, many of them are 10, 20 years back. There's more than 3,500 complaints filed by all kind of subdivisions, local, state, governmental agencies, tribes, private plaintiffs and so on. And it involves Teva, of course, some Teva affiliates and many other manufacturers, distributors and retailers. 90% of the complaints have been consolidated into the MDL, which is in Cleveland, Ohio. And 10% remain in state courts. Now so far, we have had a few one-off settlements in Oklahoma. You might remember May 2019 that's paid for $85 million. And then in connection with the MDL case, MDL Track 1, in Cleveland, Ohio, we had 2 counties in 2019 for $20 million and $25 million of products. And then recently, we had Louisiana here in '21, $15 million over 18 years and $3 million of products. At the same time, we've had a number of court cases. I'll just mention the most relevant ones for us. As you know, J&J won on appeal in Oklahoma Supreme Court. The court found public nuisance law was not applicable in this case. And I can recommend everybody, who is interested in the topic, read the verdict. It's very well-written and explains exactly why the public nuisance law does not really apply to the situation with opioid addiction and the sad, sad effects that this has on the public. Now Teva and codefendants won in Orange County, California. The trial judge found that medicines sold lawfully could not be a basis of public nuisance, basically saying that if you meet all the rules and regulations on a product that you're lawfully selling, then how can that product possibly be deemed to be a public nuisance. And also here, a very well-written verdict, which also lays out exactly why this really does not make any sense. Then we had a loss in the jury trial in New York just recently. And basically, in that trial, you could say everybody else settled apart from us. And we were found there by the jury to be causing a public nuisance in New York through the medicines that we've been selling. There was a lot of interesting things that happened in that trial. I'll just mention that we have filed for a mistrial. And that's basically because the closing remarks, the state produced data on opioid volumes that they claim several of the companies have been selling. And these volumes were completely misstated. And they have not been willing to reveal what they were going to present. So in the closing argument, they overstated the volumes of Teva with some many hundred times. And that's one of the, of course, reasons why we are saying that it's a mistrial. Because if you give that as your closing argument and we are not allowed to say anything after that, then that's not a fair way to do it, especially when you deliberately did not hand over these materials to us before your closing arguments. So there, we are, you could say, moving for mistrial that will be heard by the judge in February. Assuming that, that works, there will be a new trial. Otherwise, there will be a verdict, we'll appeal that. And then we hope that based on that appeal, the second part of the trial in New York, which is the financial piece, so to speak, will be stayed until that appeal has been heard. As you can see, it's pretty complicated, and this is just the highlights. It has a lot of more details here. And we have, of course, as you all know, since the Cleveland settlement, which is some more than 2 years ago, where we also came out with the national framework. We have been discussing a nationwide settlement with the AGs and with the plaintiff lawyers. We did the nationwide framework together at the same time as J&J and the 3 big distributors. They are actually working on finalizing their nationwide settlements. And they are quite far down the road with that. We are still in discussions with AGs, with plaintiff lawyers, trying to reach a suitable compromise on a nationwide settlement that could really be in the best interest of all stakeholders. I think it's fair to say that the original framework, where we would offer $250 million in cash and $23 billion in Suboxone product for the treatment of people who are using and misusing opioids, that has really been a very good idea from a state point of view. But from a claiming noise point of view, it's probably less attractive simply due to the fact that the fees are calculated on the cash and not on the product contributions. We still hope that we can contribute products. We also have Narcan approved now, which is you know this spray that can solve overdose situations and rescue people. So we're hopeful that in the coming year, we will be able to reach a nationwide settlement, which would be the best, we think, for all parties. So that was on the opioid litigation side. Then I promised to cover three other topics. And they are here: business optimization, debt and financing and future growth. And I'll do it relatively quick. And if we just take the business optimization, this is a super simple way of explaining a very complex exercise we've been going through. You will know that from '17 to '19, we had a dramatic drop in our revenues due to COPAXONE going off-patent and price competition in the U.S. generic space. And that hurt our margin significantly. In the same period, we have been working to optimize our business, all aspects of the business. Just as an example, I can mention that we have now closed or divested around 100 sites, that being around 30 manufacturing sites, around 30 R&D labs and sites and about 30 offices. And we are still planning to close another 10 manufacturing sites over the coming years. That has taken us from 80 manufacturing sites, when I joined 2017, to currently 50, and within the short period, getting down to around 40 manufacturing sites. So we're improving our operations and our operating margin is improving with it. And those of you who remember the targets we set in early '18 will see that we still have the same target for the end of 2023, a 28% operating margin. And we are well on the way to hit that. So that's a simple way of explaining that we're doing everything we can to improve the business by consolidating and optimizing the business. At the same time, we had to handle our net debt situation. A net debt of $34 billion was way too much, given our earnings. And that was the situation back in 2017, some 4 years ago. And you can see how we've taken it down from $34 billion by more -- down by more than $12 billion to $21.7 billion at the end of the third quarter of last year. And this will continue. We have a firm target as you also know, which I'll get back to, to be less than 3x net debt/EBITDA at the end of 2023. And the reason why we had this high debt, as you all know, is because the acquisition of Actavis was at a price tag of around $40 billion. And most of that was financed through debt. But we will continue to reduce our debt as we go forward. Talking about debt, we had just some months ago done a very successful refinancing. We refinanced $5 billion. So basically, we issued $5 billion in sustainability-linked bonds. What that means is that you have a bond and, of course, you pay an [ all-in ] interest rate on it. But then you also commit yourself to certain targets. If you don't meet these targets, you pay a penalty. Now we have committed ourselves to three targets, one for the emission of greenhouse gases and two for access to medicine in low- and middle-income countries. And this is the first time that a generic medicines company issues these type of bonds. But it's also the first time in the pharmaceutical industry that we have both social and environmental targets. Many had in mind targets of greenhouse gases and so on, but very few have moved on to social targets. And we think being the biggest manufacturer of generic medicine in the world, we can do a lot of good for many countries by ensuring that the medicines on WHO's list of essential medicines, that these medicines get filed, approved and supplied to low- and middle-income countries. So we're very proud about that. It's building on our strong ESG foundation. And we think this is the way to go going forward that you focus on where you can make a difference. Now what it actually meant from a more financial point of view, you can see here what we call pre-deal here, that's the debt stacks we had before the refinancing. And you can see the problem with the debt stacks that Teva had already 4 years ago was that they were assuming a much higher profit contribution from Actavis than what has actually ended up happening. So what you see here is debt stacks around $3 billion to $4 billion. And the operational cash flow that we are creating is above $2 billion, but it's not $3 billion. So that's basically why what we did is we paid down debt in '22, '23 and '24 and we took our new debt in '27, '29 and '30. And those of you who have been following our strategy on debt management will see that we [indiscernible] in chunks a couple of years at a time. So we do it operationally. We don't try to be smart about the interest rate or anything like that. And as our debt situation improves, so does also the interest rate we are paying by the risk premium going down. And you can see from this that the next time we'll be handling the future debt towers will probably be end of '23, beginning of '24, where we will handle the excess high of the towers in '25, '26 and '27. And that, by the way, will be the last time we had to do it from an operational reason. Because after that, then all our future maturities will be below the operational cash flow that we are generating. Now the last piece I want to talk about is sales growth, where sales growth is going to come from in the coming years. And some of it is quite well described because that's products we have already in the market, and they are doing very well. One product is AUSTEDO. And as you all know, AUSTEDO has been growing very nicely. It continues to grow. We have continued focus on patient activation, on commercial activities such as DTC, on ensuring that we have good patient retention and good titration. And there's an enormous unmet need in the form of tardive dyskinesia patients that are not being treated. Before AUSTEDO and our competitors came to the market, there was no treatment for tardive dyskinesia. There's now two effective treatments. And we're really doing our best to reach these patients, improving their lives and at the same time, growing the sales of AUSTEDO. The other known growth driver is AJOVY. AJOVY is doing very well in the U.S. and very well in Europe. In Europe, we're now the second-leading brand. Our volume market share stands at 27%. We have an ambition now both in U.S. and in Europe to reach 1/3 of the market, so 33%. It used to be we were thinking about 25%. Now we've realized that we have the longest-acting profile of any anti-CGRP in the market. And that's very attractive. And we had a very benign safety profile, better than some of the competitors. So we're very confident that we can reach 33% over the coming years of this very nice market that's developing good, both in U.S. and also in Europe. Lately, we have also launched in Japan and in several other markets in international operations. So it's really becoming a worldwide brand for us. And we are very satisfied with the overall performance of AJOVY. Now as you know, we are also dedicated to biosimilars. We have built, over the last 4 years, a very strong pipeline of biosimilars. We have 7 in-house programs. We have 5 biosimilars with Alvotech. And we have one that we've in-licensed from bioeq. And we've also proven already with the launch of TRUXIMA that we know how to do this commercially. TRUXIMA has been doing extremely well since Rituxan went off-patent. And it's really having a strong, strong position in the market. I think I said in the beginning that we would need to show we could get double-digit market share. And now we have about 25%, so we're very happy with that. The broad portfolio, we have basically covers all the key biologics that go off-patent over the next 10 years. And we believe, due to our unique combination of being both a specialty company and generics company, we have all the business-to-business relationships, all the contracting know-how and relationships that are needed. But we also have the medical capabilities to support these products. So we think we're well positioned to have strong growth in the coming years from biosimilars. And of course, we are all waiting to see what happens with biosimilars to Humira. We think we have, together with our partner, Alvotech, one of the best biosimilars, which is the modern version, the highest rate that we are going for interchangeability in our approval. So that's very exciting. Now last but not least, we have a product waiting for FDA approval. We hope to get it approved in the first half of this year. It is a subcutaneous, antipsychotic, long-acting risperidone for patients with schizophrenia. As I'm sure you all know, there's a huge need for better long-acting treatments of schizophrenia. Any relapse for a person suffering from schizophrenia carries significant risk of reduced cognitive function. So it really matters a lot whether you can put people suffering from schizophrenia on a therapy where they avoid relapses. We have had, I would say, second-to-none data on this drug, phenomenal prevention of relapses, around 80% prevention of relapses on a once-monthly dosing. We also have every second month dosing. It's subcutaneous, where nearly all the other competing long-actings are intermuscular. So it's a shorter needle that you use. It's easier to inject. So we think this product can play a very good role in improving therapy for patients suffering from schizophrenia. And then we can get a meaningful share of the long-acting antipsychotic market in the U.S. Now what is all of this leading to? It's basically leading to the targets that I'm proud to present here once more that I first time presented in 2018. I think it was February of 2018. So very soon, it would be 4 years ago. We are aiming for those still exact same targets, 28%, as I talked about before, operating margin by end of '23; cash to earnings above 80%, so we can pay down debt; and net debt-to-EBITDA, below 3x. It also goes without saying that in order to do this, we will continue to be totally committed to utilizing cash flow to pay down debt and we do not plan to raise equity. We think that the very patient equity holders, who have been bearing with us through this turnaround and through the opioid litigation, should be the ones to get the reward. So this is our continued financial strategy long term. So with this, I have sort of finished my little presentation here, giving you an idea about what we plan to do in the coming years. And I think I'll hand it back to Chris.

Great. Maybe just kind of addressing some of these topics in the order that you went through. Maybe first two questions just on opioids, obviously a big discussion point in the story. So maybe, first, on the New York case, can you talk about the timelines and the pathway? I think you're looking for a mistrial, appealing this, some of the damage portion, which brings a sense of when we'll have more visibility on kind of what -- where this proceeds, I guess?

Yes. First of all, it's difficult for me to say exactly how the timing will be. These days with COVID, timing of legal situations have been unpredictable. But if we just take some of the normal way that things would work, then first, there's already scheduled a hearing on the mistrial. So the judge will be hearing that in February. And that will take -- it's difficult to say how long that takes. But that will take, of course, some time. Then either the judge grants a mistrial, then there's a new trial. In that case, there will be a new jury trial, which would probably to get scheduled and executed, it would take, I don't know, at least a year or more. If the judge does not grant a mistrial, then there's a verdict, which we will appeal. And we have many, many very serious grounds for appeal. I won't get into those details. But there's a lot of things there which we think are very valid. Same as it was the case for J&J in Oklahoma. And we will then appeal, and we will then argue that the appeal has to go first before we can go back and do the financial piece of the New York jury trial. Now the appeal, we can then win or lose that. I don't know how long that will take to get that appeal trial executed by, maybe 1 to 2 years. And then after that, we will either -- if we win, of course, maybe have another appeal of that from the plaintiffs. Who knows what could happen? And then eventually, at some point in time, unless we win the whole way through, there will be a financial discussion. And that piece can then again also be appealed. So it will be a while.

Yes. That's what it sounds like it, not something we should be thinking about a number any time soon. And then just I think you mentioned that you were kind of the last one standing here, there was a lot of other settlements. Is settlement still an option? Or is this something that Teva is committed to fighting at this point?

No, I think settlement is very much still an option. We have said from the beginning that we are very willing to settle this. We think that conducting 3,500 trials in theory doesn't make any sense for anybody. It won't help anybody who is suffering from opioid misuse. So we are very committed to settlement. What we did in the framework was we offered what we could realistically offer because we don't have the same ability to offer a lot of cash, like Johnson & Johnson and the three distributors. So we've been offering cash and product. And we've got the feedback from especially the plaintiff lawyers that they would like to see more cash and less product. So we've been trying to change the mix and negotiate the best we could, both in New York and also nationwide. And we're still in very active dialogues. So I still hope that things can eventually meet. I don't think anybody will benefit from a prolonged set of trials, not the AGs, not the states, not the plaintiff lawyers and not us. So I think everybody has an interest in a settlement, which will also be the best for the people suffering from opioid abuse.

In your view, does the finalization of J&J and distributor settlements help the process at all in terms of getting -- it sounds like the plaintiff attorneys might be the sticking point here, just getting all the parties really focused on the framework and what Teva is able to offer? Or are these independent processes?

I think any step forward towards a settlement, be it the nationwide, J&J and the distributors, anything getting sort of finally wrapped up and executed and done will help the process, I think. Because that means that everybody realizes that this is the way forward, it is possible and it is the way to do it. And if you think about things like the Purdue bankruptcy settlement discussions, right, it just shows that if you don't get a reasonable settlement done, you can, of course, discuss forever. And you can maybe end up in the court system forever. I just explained briefly how the New York trial might evolve over the coming years. I mean, this could take God knows how long. And I don't think it benefits Teva. But I certainly don't think it benefits the plaintiff lawyers or the states either.

Yes. That makes sense. Just the last couple ones on this one. You mentioned the free product component of the framework. So I guess, when you think about Suboxone and maybe now Narcan, do you still think that will represent kind of the biggest piece of any final deal? Or do you think about something that needs to be significantly revised in terms of the terms that the plaintiff attorneys are looking to see? So is this more just like tweaking the settlement versus is this something totally different than we maybe saw from the first go-around?

I think it will be conceptually the same that there will be product and there will be cash. But the balance will be shifted significantly, I would say. So in the first framework, as you know, it was $250 million versus $23 billion, which is a big difference. I think the difference will be less. And one of the things you can look at is, of course, what we just did in Louisiana, which is a different mix.

Okay. Perfect. And then final question, just when you wrap this all together, just your confidence of getting something done in 2022. I know it's hard to predict these things. But are you highly confident to get this done this year? Or is it still a bit murky?

So with the caveat that I'm always optimistic, I'm optimistic that it will get done. Because it doesn't really makes sense for anybody not to do it. Because I also think that the basic sort of pattern we're seeing already is that when this situation gets in front of judges and only judges, so in an appeal court or Supreme Court or a bench trial, then there's a very high likelihood that the plaintiffs will not prevail, that Teva will not be found guilty. Whereas if it's a jury trial that's probably due to the political and emotional piece of the whole discussion, there's probably a relatively high risk that we will lose in the first instance in jury trials. Now what does that create long term for the involved parties? A very murky picture, where you could say maybe you've got to fight it out forever and eventually win in the Supreme Court but will probably take 10 years. And that would mean that it would cost the plaintiff lawyers a lot of money. It would cost us a lot of money. And we would not be helping anybody on the way.

Yes. That makes sense. Well, we'll look forward to some progress on that front. Just pivoting to the core business then, on AUSTEDO, I think we saw a bit slower growth from this product over the first 3 quarters of 2021. Some of those were just broader market conditions. Just help us a little bit understand what drives the step-up you were expecting with 4Q sales. And just maybe any early thoughts on kind of the environment for this product as we head into 2022.

Yes, you're absolutely right. Compared to the predictions we had when we started last year, we saw a slightly lower patient uptake. It's not that it's not growing, it's growing very nicely as I showed. But the speed, it was just a little bit slower. Now we believe the reason for that is basically COVID-19-related. So we could see in all the IQVIA data and all the statistics we have on specialist visits that the number of doctor face-to-face visits at psychiatrists and neurologists have been down significantly in the first and second quarter of last year. Now that has an effect in the sense that less patients come in and discuss their tardive dyskinesia and therefore less patient gets on therapy. At the same time, our reps and sales have had less access and less face-to-face interaction with doctors. So that has slowed down the curve somewhat. Now what we saw in the third quarter was a pickup in activity and patient volume. And then there's this factor that many patients, because we have titration, they will start on a single titration pack. So from the moment you get a prescreen script until it kicks in as real sales, there's quite a delay, which -- so you can't really say that the TRx data is 1:1 with the sales data. Because if you're moving upwards in a quarter with many new patients, you can get a lot of TRxs to more patients, but you don't really get any sales because they all come on a titration single pack. But then of course, after 2 months, when they have titrated, then they go on normal sales packs and then that's why -- so that's why you will see some fluctuations between quarters due to this phenomenon. But we believe now that we have good traction again. Of course, I'm not the one to predict how the Omicron current high infection rate, low mortality rate, how will that affect behavior of people going to the doctor, their psychiatrists, their neurologists. We have to make -- it's so new, so we don't really know yet. I'm optimistic that there will be a limited effect because we don't think we'll see major lockdowns in the U.S. But it remains to be seen, of course.

Okay, very helpful. The other one, as I think about TRUXIMA, that was obviously a great launch for Teva. It's been the large contributor in the last several quarters. Can you talk a little bit about as we look out to '22 for this one? I think becoming a bit more competitive market over time. I'm just trying to get a sense of for a biosimilar like this, has launched well, it has a lot of share, how do you think about erosion as competition starts to build in the space?

Yes, you're absolutely right. Of course, there will be more competition here in '22 than we had in '21. Of course, there's this element, which is interesting with biosimilars, that you sell a lot to clinics, hospitals and so on. Normally, they prefer not to have five different products in their pharmacy. That's just not optimal from a practical point of view, which is why you also see the #1, 2, 3, that launches will have a good chance of getting their volume and keeping the volume. Of course, you will see some price competition, and you will see some gradual conversion close to 100% of the market. So I think in '22, when it comes to TRUXIMA, we will see more volume converting to biosimilars, so even more moving away from the original product. And then we'll see lower net pricing, a slow erosion of net pricing per unit. And hopefully, when we look at that mix, that will lead to some modest decline in our total TRUXIMA sales. That's how we see it. But of course, at a point in time, we will have full penetration of the volume, so there will be more volume up for grabs. That could happen maybe around '23. And then you'll see a slightly bigger impact of the price erosion.

Okay. So that's helpful. And as I think about kind of the next big one kind of maybe coming onboard with the biosimilar Humira market, obviously a huge target you're going after but also one with, I think, a different competitive environment than we've seen almost in any market before with so many players. So how do you think about Teva differentiating in this space? And I guess I'm just thinking about like what AbbVie is going to do, what -- whether it's 8 or 9 potential companies coming into this over the first year. Talk about just how you navigate that environment.

Yes. Of course, it's difficult to say exactly what's going to happen because it's -- in the case of our product, which is coming from Alvotech, Alvotech and AbbVie are still in a legal battle/negotiation on a potential settlement. And I don't know where that's going to lead to. So we'll have to wait and see there. If we look at the facts as we know them, then of course, we have the high concentration version, which is the version that is AbbVie is marketing right now. And we are filing for or have filed for interchangeability. So there, of course, we need to see FDA approve the Alvotech filing and interchangeability. But assuming that happens, and I think that's fair to assume since the product is already on the market in Europe, so it's -- I mean, it's a bona fide product approved by EMA, then there shouldn't really be any challenges there unless something unexpected happens, which I don't expect. So then it's back to this novel, you could say, litigation settlement, IP fight. And you have a lot of different scenarios there. Sometimes people launch at risk. Sometimes they reach a good settlement, sometimes not as good a settlement. I think in this space, it will be the same as for other biosimilar launches. You've got to have the right product so that it's easy for the hospital or clinic to switch. Because switching to another version is always a bit of a hassle. And if there are many suppliers, which there will be here, several of them probably with the latest version of the product, then I think the ones with the latest version of the product will get most market share. You've got to be competitive on your contracting and be early in your contracting, of course. And you've got to be well prepared from a logistical point of view. Then all that being said, of course, you can still do some basic math based on what we've seen so far, where you could say, "Okay, what is the originator net price revenue? What's the net revenue reported in the U.S.?" You deduct a reasonable assumption on discounts. And you see out of maybe 7 competitors, 3, 4 will really get going. And then you start figuring out how much at the end of the day will be there for a company like Teva if we are successful with all these different practical pieces of the puzzle.

Yes. Do you think of this...

And when you do that math -- and when you do that math, of course, you realize that this is as good as a really good generic launch, if not better, assuming everything goes right.

Okay. Yes, I was trying to get that question. A big question we get is just by the time you -- this all shakes out, is this a big target that turns into a not-so-interesting opportunity? But from your perspective, this is an attractive market for Teva as we think out to '23 and '24. Okay. Excellent. The other question I had on the maybe bigger picture on the North America kind of generic portfolio as a whole. I think you, in the past, used the ice maker analogy, I think we all liked as a way of thinking of the business. What does it take to get this franchise back to kind of a $4 billion run rate? Because I think we're a bit below that in 3Q. Or is this a business that is stable, but we should be thinking about some sort of maybe gradual erosion over time? You've got some other growth drivers to offset that. But just give us a little bit of sense of how that part of the portfolio shakes out over time.

Yes. So structurally, the business is around a $4 billion business on an annual basis. And that's North America, so it's U.S. and Canada. And that's including our biosimilar portfolio. So that's how we look at it. So what will really shake it up will be approvals of more of the complex generics. Last year, Teva had more approvals of generics than anybody else in the U.S., much more. We also had more complex generics approved than anybody else. But we didn't have all the ones approved that we thought should be approved. And we have this phenomenon that we have several complex generics that are approved and sold in Europe, in Canada, doing great, and we are not yet getting the FDA approvals. I would say it's really kind of sometimes very small, bizarre technicalities that leads us into a situation where we don't get the approval. So we are optimistic that we'll get more of these approvals in the coming years. We are optimistic that our biosimilar pipeline will be contributing. So we do believe that longer term, we do have a structurally $4 billion business in that space in North America.

Okay. And in your view, what does the Sandoz divestiture mean for the industry? And kind of directionally, what do you think happens with that asset as we think about the maybe more traditional generic piece of the market?

Yes. Of course, I don't know because I'm not deeply involved in that in any way whatsoever. And it's not a relevant merger part for Teva due to FTC issues. Sandoz and Teva are either #1, 2 or 3 in all the European markets, which means that if you were to combine them, you will be told to get rid of half your business or something like that. So you will lose all the synergies in competitive blocks from the EU Commission. So that would not make a lot of sense. It's interesting that if I just look at it as an outsider, the move is a bit similar to Pfizer spinning Upjohn out to Mylan into Viatris. And it just shows that big pharma is sort of preferring to focus on their specialty piece and take the generic piece elsewhere. I think it's good because it actually means that the generic businesses need to be very focused on profitability, on running a sustainable, profitable, cash-generating business. And that's what we want to do. And that's, I think, what all our competitors by now are also realizing that that's what they should do. So you could say a crazy race to the bottom on pricing, fighting for volume, market share doesn't make anybody rich or any shareholders happy. So hopefully, when you get a more focused shareholder base and you're not sort of in a way not hidden but a little bit Sandoz could get lost in the big story about Novartis, now that will maybe not happen in the future, and I think it can only help the competitive dynamics.

Yes. That makes sense. On '23, you've made some really good progress towards those targets you laid out. If I just think conceptually, if I was to look at a longer-term kind of outlook for Teva, once we look past '23, does this story remain still kind of a margin story? Does it pivot a bit more to top line growth? I guess from a leverage perspective, do you -- is 3x like a good level to keep going down? I'm just trying directionally to think about how do you think about the next leg of the story once you kind of get through this big restructuring and kind of cleanup that you've been working on in the last few years.

Yes. First of all, I'll say something which is maybe not always so popular, but boring is good. And it's good that Teva, that we're keeping the same targets and that we're meeting the targets. And that's basically how we want to run the business. So we'll set our new financial targets once we have achieved the ones we have right now. So sometime in the beginning of '24, there will be new long-term financial targets. But in terms of strategic direction, we will be changing a little bit in the sense that we will still focus on margin improvements. I think I said the first time I presented for Teva at JPM, I said that if this was a greenfield, we would have 12 to 16 factories. And we had 80 now. Maybe in '23, we won't have 80, but we'll have less than 40. But that doesn't mean that you can't keep on improving. So that will be a margin story that will continue for years into the future. We are maybe halfway, 2/3 of the way. But there's still some way to go. The next thing that we want to do is, of course, to secure growth going forward. Now we are not a type of business where we are going for phenomenal double-digit growth. But we want to go for a single-digit growth. And we want to do it organically globally. And I think we have a very good chance of doing that based on the assets that I've just described. So you will be looking at modest growth on revenue, continued improvement on margin, strong cash generation. And once we get below the 3x net debt-to-EBITDA, then of course, the capital allocation is more of a discussion. Right now, as you've seen for the last 4 years, again this couldn't be more boring, capital allocation is 100% against debt. That's not necessary once we get below 3x, then we can start thinking about allocating some capital, some cash towards the shareholders. And we can also start thinking about if there are really good business opportunities to do maybe smaller bolt-on acquisitions and so on. But the key driver in my personal view is to continue to take debt down until we get around 2x net debt/EBITDA, which I think is a sustainable level that you could maybe potentially continue to live with for many years.

Okay. That's perfect. Well, it's a great way to wrap up. I think we're about out of time, Kare, really appreciate all the comments today, and thanks for joining us.

Very nice to see you. Bye-bye.

Thanks so much.