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

All right. Good day, everybody. My name is Ash Verma. Welcome to UBS Global Healthcare Conference. I'm really excited to have Richard Francis from Teva join us. Richard, thanks a lot for making the trip. I know a lot of disruption with the flights and everything. So thanks for joining us. And it's been a pretty exciting story, then we want to go over a few different items of the latest updates that have happened. Maybe just for the audience, like if you want to ask any question, there is a QR code, and I will get that on my iPad here, and we can cover it that way.

So with that out of the way, yes, Richard, maybe if you can give us a little bit of a sense of like high level, where are we in the story? You just reported third quarter earnings. Just if you hit a couple of few highlights and then we can go over there.

Well, firstly, Ash, thank you for having us. I really appreciate it. Yes, that's an open-ended first question, so I've got to be careful to keep it quite tight. So where we are on the story, nearly 3 years ago, the pivot to growth strategy was put in place for Teva. And obviously, they had 3 phases, which we laid out, one was to return to growth, accelerate growth and maintain growth. The first few years about return to growth. And after many years of decline, that wasn't a small achievement, and we returned to growth. We had our 11th consecutive quarter of growth in Q3. And then we are now into the phase of accelerate growth. Now the return to growth, probably the nuggets about that are the intensity, which we focus on our innovative business, our patented business, both in market and in the pipeline as well as stabilizing our generics business. And we have done all of those. And I think Q3 was a really good example of how the finances showed up the math. I always call it the math, the maths don't like. And so in Q3, we grew our innovative business now to over $800 million for the quarter, up 33%. AUSTEDO up 38%, AJOVY up 19% and UZEDY up 24%. So over $800 million of innovative sales. And that throws off a completely different gross margin level of profitability. So when I started this journey with the team, our gross margin in Q1 2023, I probably should mention this, I probably shouldn't. It was 48%. And now we're tracking to be in the 54% to 55%. And why has that happened is, obviously, we've driven efficiencies and a lot of things we should do, but our portfolio shift has happened, and those maths are fundamental, and they will keep changing. And I think in Q3, you saw the nuggets of that is stable generics business, growing at 2% and innovative business growing at 33%, a pipeline that's maturing and getting really close to either being submitted or launched with olanzapine next year, DARI the year after, duvakitug in Phase III, Phase II starting next year. It's a fundamentally different company. And then maybe I'll stop because I'll keep going on. But when I started this journey with the team, people said, remember, you asked the first question in New York, right, which I won't go back to. But people said this is a crazy idea to move the largest generics company in the world to an innovative company, a leading biopharma company. And I remember saying it may sound like fiction. But over each quarter, it will become more and more nonfiction. And I think today, the reality is we are a biopharma company that has a world-class generics business, and we have a world-class class innovative portfolio both in the market and the pipeline.

Great. Excellent. Yes, I've been very, very excited for your success. And yes, it's been a tremendous turnaround. And AUSTEDO, obviously, a big part of it -- like the third quarter for AUSTEDO was particularly strong. Maybe if you can talk about like what are the different dynamics of what is driving that? Is it some part of it volume, some just going from IR to XR getting that type of an advantage? And how much of it is like volume versus price?

Yes. I think this is a really good example of how Teva has completely transformed. I think one of those first question I was asked is can Teva sell innovative products, which, by the way, I was shocked to the question because I used to work at Biogen for many years, and Teva was probably one of the hardest competitors with COPAXONE. So I always thought they could, maybe the muscle had atrophied a bit. But I think going back to your question on AUSTEDO, that what's driving it? There are so many different aspects that the team have put in place here, and Chris Fox is here, who runs the U.S., which are phenomenal, not just making sure we have the right sales force with the right coverage with the folks on the right quartile, but understanding the patient journey. So it's how do we move patients from script onto drug? How do we get them titrated in the appropriate way? How are they supported with adherence and compliance? How do we get them on the optimal efficacious dose. All of those things are multilayered and many different programs we have. And all of those keep getting executed. And when people say, how did you go to 38% in Q3? I probably say, well, that journey started 2 years ago. And that -- and all of those things keep getting honed and refined. But still, the fundamentals are 85% of the patients who should be on therapy or not. So the team are getting more of those bought into the office and treated. More of those get titrated on a titration pack a sample. And more of those end up on a more optimal dose because as we move to the XR, it's easier for physicians to move them to titrate them. So all of those things come together, which allows to have a strong quarter. There are a couple of things which I mentioned that the comparison to the prior quarter in '24 was probably a bit favorable because we launched XR in quarter 2 '24. And so we stocked in more there. So I think Q3 '24 was maybe slightly suppressed because of that. And there was a little bit of gross to net favorability in Q3 this year, but nothing of any significance that rechanges the direction of travel for this. So I think it's a multi-leg story. We do lots of different things well every day, and I think that's what's driven it.

One of the things that just your competitor, Neurocrine, they have gone into pretty aggressive contracting earlier this year. And sometimes these things happen in cycles that one competitor taking more price hit and then growing volume and then the other competitors turn. So I wanted to understand, is there any type of that dynamic going on with the AUSTEDO that there is more of a contracting coming as a competitive reaction to what Neurocrine did?

Yes. Look, I mean, I'm pretty consistent with this. I never talk about competitors, particularly in the market like AUSTEDO where you have 85% of patients, 85% of nearly 800,000 patients are not treated. To me, this is an opportunity for us in the market to help patients. And so I'd say that first and foremost. The other thing we've said consistently is actually, all the markets we operate in, this is going to be constantly challenging. Managing value and access is a constant discussion that you have to have because I think what we've shown across our portfolio is that you need both. Access with that value is erode of returns. So you need to think about that carefully. So I think what we've done is position ourselves well this year. We've positioned ourselves well next year to make sure we balance that value and access. But for me, it goes back to the fundamentals. This is all about getting more patients into the market, getting more patients -- physicians to treat those patients because that's the opportunity and that's a responsibility that we have to help those patients. So I think that's the fundamental. We -- when we plan and budget across all of our portfolio, we plan for the payer market to get harder and harder every year forever, ever. So we think like that all the time. And so when that does happen, I'd like to think we're not shocked. We prepared for it. But we showed that with UZEDY. UZEDY is a great example of the team doing a phenomenal job balancing value and access. Because once again, we think our portfolio that we're bringing to the market brings real value and has real need in the market. There are many patients who can benefit from our AUSTEDO, UZEDY, AJOVY and soon to be olanzapine. So we think that has value. We need to retain that value because long term, we want to give returns. We want to increase the value of this company. We give returns to our investors. So to do that, you have to be very disciplined on things like access and making sure you create long-term value.

Got it. All right. So I guess pretty exciting update with the third quarter that you reiterated your 2027 guidance, I mean -- and so yes, I think with now having a clear line of sight on the long-term goal for AUSTEDO brand. Yes, what I'm trying to understand is that it's a very promotion-sensitive brand like we get that. And in the past, you've talked about it how you want to expand the sales and marketing footprint on AUSTEDO. So now that you have like a clear line of sight that IRA is not a big impact or something that you can absorb, then what's your focus in terms of growing the commercial footprint on AUSTEDO?

Yes. So maybe we actually approach it slight different than you think. We never waited for IRA. We -- because I think that's for the long term, the $2.5 billion, we were comfortable with because we made an assumption in 2023 that was going to happen. Now obviously, I think we've got a lot more comfort and the market a lot more comfort when we actually negotiated the number, and we knew that the [ 2.5 and the 3 ] were really going to happen. But going back to your sales and marketing, we've always invested to make this brand a global blockbuster because our philosophy is you play to win and then you deal with failure when it happens, but you don't hedge. So I think with AUSTEDO, we've always -- and the commitment we've made to the brand and to the patients we serve is always with a real intent to help them. Now if things change along the way, we'll adapt. But we weren't waiting the IRA. We had always believed and I always believe the team and negotiations were going to work out in line with what we had forecasted. But I just want to be clear that this doesn't open the floodgates of -- because I think we've always allocated the amount of resources required to actually optimize that brand. And we'll do that across all of our brands. But that comes back to a very thoughtful but disciplined and maybe slightly aggressive capital allocation that we do at Teva. We -- in fact, here's a humor story, which is -- so I'm sure I can share this well. I'm going to share it anyway. So yesterday, my Head of R&D sent me an audio that he managed to work out to put together some data points to a podcast on capital allocation. That's my Head of R&D, that's the coolest thing the Head of R&D sends out. He may live to get that. And then today at breakfast, we're talking about capital allocation and how we have to allocate capital more aggressively to drive long-term value. And -- and so I just tell you that because it's an interesting story, but one that I think is unique at Teva. We do not think about budgets as something you get every year because you had it last year. We do not think about things just need money because they've always needed it. Sales and marketing for AUSTEDO, our pipeline duvakitug Phase II results. We think about how we're going to drive long-term value and create long-term value for our shareholders. And that means we have to be really talking about capital allocation. And I thought it was just really nice that my -- Eric Hughes, Head of R&D did that.

Yes. That's great. So I know there is a lot of focus on just the IRA MSP, where it will come down to, which I don't know if you are willing to talk about that...

Look, it maybe early in the morning, but it's no way that early in the morning...

I'll try to ask it in a few different other ways, let's see. So I know your...

I think -- amongst you and me, that I can tell you. But I know that's going to happen.

Maybe just like ask you something that has been disclosed by a lot of companies about their branches like where is the -- where is the net pricing that you're realizing at AUSTEDO right now, like before IRA. Is that something that...

See that's almost a trojan horse there, isn't it? But I saw it because it's just a big and it's wooden and it's a massive horse. So we move on to the next question.

All right. Okay. So yes, maybe we move on. So we'll find out...

By the way, just coming back always I should apologize. But your previous 2 questions were about competitive environment and access. There's no way, I will give anything that impedes our ability to do the right thing for the brand. So -- but we'll always help our investors. We're always helping the IRA team will always help them model and understand what it looks like because I don't want to leave people in the dark, but at the same time, from a competitive point of view, I don't want to put my U.S. team at any disadvantage just because I want to carelessly answer questions.

Yes, that makes sense. Maybe just we switch over to UZEDY. So for UZEDY, I know like since you launched, I mean, the uptake has been pretty strong. And one of the things that you talked about was that you want to maintain pricing discipline that not give away like discount unless you need to, so where are you in that process? It's still working out like the slightly premium compared to the other LAIs in the market? And just talk about the uptake of what's resonating with the physicians?

Yes. No, I think this is a really good example of just the quality of capability we now -- we have built and we've utilized and maybe it was always there at Teva. So UZEDY competes in a very competitive segment of risperidone and now I take paliperidone of -- there has been -- there's some big, big brands in there. It's been genericized as well. And TRx was up 119%. And I think that goes to show 2 things. One is the quality of the product and the product profile. And these are really important attributes. The fact that subcutaneous does not be kept in a fridge and it can get therapeutic dose within 24 hours, really important for physicians, and we've really found that. And the quality of our teams in talking to the physicians, the nurse practitioners, the forming committee members of the hospital. So we're very, very good at that community and the patient associations. But that value, we knew we had a valuable product. We knew it made a difference to physicians and patients. And so we are mindful not to place the easy access, like give a discount and get access and then volume will follow. We've sort of created a demand from physicians because they value the product and we use that to maintain the value and help improve the access. But I think this is a really important story and I think it's a really important little micro case study of Teva. At a time when you're trying to grow your innovative business, you're trying to move the company from a generics to an innovative pharma company, you're trying to do a turnaround and you're try to make people believe all these things and you want to have a next quarter of growth. The easy thing to do is the discount to get access because you think that would just get to the next place. That would just help you get there. And we didn't. And the team didn't. And credit to the team, I talked to them about it and I said, look, should we be going for a bit more access? I said no, this is a great product, long-term value. We need to hold the line. And that's the quality of people we have at Teva, and that's what we did. But we had all the conditions to maybe challenge that decision, and we did. That's why UZEDY, I think, is a really good opportunity. And that's why when we launched olanzapine next year, which clearly does not have a competitive market there are no generics. There aren't any big brands. It is a segment that really needs a long acting. And we're going to go to those physicians, those formulary committees, those nurse practitioners, those payers who we've been working with for 2 years with UZEDY. And I think now we're becoming a real partner in psychiatry and in schizophrenia, but one that really knows the value we have and the value we want. And I think olanzapine obviously has even more of that. So that's when I reiterate the $1.5 billion to $2 billion for our schizophrenia franchise, I truly believe that's possible. You put that with the $2.5 billion to $3 billion [indiscernible] I mean this is a different company. with different numbers and different levels of growth of both top and bottom line for the future.

But it also has an implication like when you're not necessarily giving a way free product, what that also means that like your time to get to the $1.5 billion, $2 billion, let's say, for both of these products combined might be a little bit further out. Is that possible 2030 to hit...

Yes. Maybe it's interesting. I mean it goes back to math. I love my math. It's like give you less at more value or more at lower value. I mean the end destination is probably the same, just getting in a different way. So I think for me, haven't necessarily thought about it like that. I've just thought about it as what is the value that we have, and we should retain. And I think for me, it's -- you're going to be very, very careful thinking volume is going to solve any growth trajectory in innovation. I think ultimately, it's about creating something of value, an unmet medical need and helping people understand that deeply and then you have something really valuable. I think if any time you sort of try and rush forward -- those launches are really important. Those first -- I've learned throughout my career, those first 6 to 12 months are really important. And I think discipline and understanding of the market. And the patients, once again, back to the team in the U.S., they understand the patient journey and the points of inflection of treatment and decision-making is deep and it's only going to get better.

On the olanzapine LAI, so yes, you have a filing that is planned and hopefully, everything gets resolved with this government shutdown. But just talk to us about what is sort of the base case scenario that you're running with? Is there possibility of some sort of accelerated path here?

So we're really excited about olanzapine for the things I mentioned. I mean, I think it's going to be an amazing product for patients who really need a long acting. Don't forget that olanzapine is for moderate to severe patients with schizophrenia and compliance is key there really key. But to answer your question, we're going to file it this quarter. I'm hopeful despite the amount of hours I've spent on Tarmac at various airports in the last 10 days around this country, that's not going to affect the FDA. And with regard to whether we use any sort of voucher to accelerate it, we have a big portfolio of a lot of products, both in innovative and generic and we're looking at where could be the best use of something like that. So we'll come back on that. But we're planning for a launch in the second half of next year, which is sort of -- if that can be accelerated, great. But once again, it's that long-term value creation at Teva. If there's other things that could benefit from that within our portfolio, we'd probably think about those as well.

Okay. And then on duvakitug, so good to see the Phase III being launched on CD and UC. I think one of the other things that you've also talked about is just additional indications. So just what's happening on that front?

Yes. So I listened to Eric a lot, not just on capital allocation, Head of R&D, but tells me about this is the first -- the fastest transition from Phase II to Phase III for trial in UC CD. So quite -- that's from a company that's not supposed to know how to do innovative work. So I'm so excited about that. Eric and I exchanged messages all the time about recruitment, how it's going. And then we're going to announce some Phase IIs or whether we announce them next year, or we keep the secret until people go to clinicaltrials.gov we'll see. But look, I think maybe I take this moment to say it's interesting that the first few questions we've had about the $2.5 billion to $3 billion of AUSTEDO, the successful launch of UZEDY and then the potential launch of olanzapine, duvakitug, UC and CD Phase III and 2 more indications. In less than 3 years, this definitely doesn't feel like a generics company feels like a world-class biopharma company already with assets that can create real long-term value and be a value creation for shareholders in my view. So I appreciate you're asking the right questions because this is what everyone wants to talk about because this is why it's so exciting to be at Teva right now.

Great. on DARI, so that's the other pipeline program. There's a lot of focus on that. So I think -- so just in terms of like tracking on the time line here, if you can talk about enrollment finished by the end of this year and get the data and kind of compare contrast like to the GSK as a competing product?

Yes. So DARI dual action rescue inhaler, team has done an amazing job. Once again, I emphasize at this point because I'm very proud, but we moved olanzapine faster through a Phase III schizophrenia study than anybody has ever done, and that's supposed to be really hard. We moved our Phase II trial for duvakitug to UC and CD faster than anybody have done. And I think now we're going to do DARI in Phase III and asthma and pediatric faster than anybody has ever done. And so if anybody says we can't do development, we can. And the intensity, once again I know this enrollment in pediatric adolescents and adults because we have an app that I can look at all the time, which I'm sure Eric sometimes wishes, I didn't. But we're on track to do all the recruitment by the end of this year. This is -- by the way, this is an exciting opportunity. The guidelines suggest that 10 million Americans should be on a dual-action rescue inhaler. We're coming to the market with a great device because we have a lot of experience in devices. And we see this as a big market that has real long-term value. We're obviously following AstraZeneca, who are creating the market, getting these guidelines really understood by physicians, and their script data looks very impressive and strong. So I think for us when we come to the market, which will be in '27, I'd like to think that we're following the guidelines which are very well understood and will be differentiated not just because of our device, but we'll have the pediatric indication, which is 25% of the population. So it's 25% of those 10 million.

Good. Good. So yes, now let's switch over to the generics and biosimilars space. So yes, a lot of different developments on that. I guess the one thing that I wanted to understand, so there is a lot of talk recently about just FDA simplifying these clinical trial requirements, right? And it can be looked at in a positive or a negative? Like -- so what I wanted to understand what -- how do you think about it? Like for Teva, what does this mean? Is it a -- is it a worry that now there will be all of a sudden like a cottage industry that shows up for biosimilar or is that not necessarily the case because you think that the quality of the assets that you get to the market are going to be differentiated versus the crowding that might happen?

Yes. No, it's a fair question. So in biosimilars, firstly, a couple of things which I think mean -- so I think it's a good thing, because I just don't think it was actually necessary. So I think wasting money on things you shouldn't have to do clinical trials where you know you've already proven it. So I think that's just sensible because we can put that capital to other use to ultimately help society. But -- so I think it's a good thing. Does it mean there's going to be a wave of competitors? No. The reason why especially technically, it's really hard, that people forget that. To develop biosimilars, you still have to have a good technical capability. Second, it's still not cheap. It's $70 million to $100 million per biosimilar. So for a small company or a generic company, that's a lot of money. If you want to do 5 or 6 that's going to chew up a lot of money. So I don't think -- I think maybe there'll be more -- but for us, our strategy always was we want to have a huge portfolio. I mean we have the fastest-growing portfolio in that, the second largest. I think we'll soon be probably the largest. We want to have over 30 biosimilars, and we're doing that through partnerships, which we started 3 years ago. We saw partnerships was the best way of doing that in a capital-efficient way. And so for me, maybe that creates an opportunity to have deeper partners -- deeper partnerships with -- as you saw, we don't one the Samsung. We have some with Labscience, part of Fresenius and we have Alvotech. But we can do -- go deeper on some of these and maybe expand it. You saw we have one with more [ Formycon ] in Europe. So for me, it just helps us on that journey to have a bigger portfolio. And I think I see this as a positive thing. And I think hopefully, those comments help you understand that it's not going to create a wave of people coming. One, it takes a lot of time and the capability is high. And the money is still -- or the capital required is still not insignificant.

So when you think about just kind of the pushes and pulls of pursuing this as a partnership opportunity versus like doing it in-house. I mean, just like given what has happened recently with 2 different CROs that you've gotten with the partnered asset. Like how does that play into your thinking that like -- if I'm doing that in-house, maybe sort of potentially like less risk and more of a tighter control that you can manage versus trying to get it from a partnership where there can be a potential risk from that?

Yes. So first, I'd say that the thing you have to talk about internally, which we did is opportunity cost, unlimited capital. So if we do it internally, yes, I'm sure Eric could actually do this. But what's the opportunity cost to do it? Does that mean we don't do another Phase II in duvakitug. Does that mean we don't accelerate [ emrusolmin ]? Does that mean we don't do a third indication in anti-IL-15. There's an opportunity cost. Capital has to be allocated really thoughtfully with a mindset. And the great thing about Teva now is we're in a position where we can have a discussion? Do we do biosimilar development internally or do we do all this innovative? Do we give more sales and marketing to AUSTEDO, UZEDY, olanzapine? And we have those capital allocation discussions. We operate as an enterprise team. We do not operate in a functional way. So here's the thing. When we did the pivot to growth back in first quarter '23, we did analysis and we looked at the [ R NPV ] of revenue and EBITDA, if we did a partnership or if we do it internally biosimilar. And it's the same. Actually, EBITDA is slightly better if you do a partnership on a risk-adjusted NPV. So I give those numbers, that's how we think, right? And so could we do it better? Here's the other thing I would say, it's like we always think every company always thinks they can do things better than others, right? In some instances maybe we could. But in others, we're very good at picking people with really good capability and being, I think, humble enough to saying, actually, those guys can do it. We have a lot of partners across our whole generics business. So biosimilars, injectables, some interesting technologies. And I think picking the right partner, which has the right capabilities is the right thing. And so I stand by it. Now capital allocation is really important, opportunity costs, understanding the opportunity cost and being mindful. Otherwise, you're just going to keep spending money and then you keep promising a return in the future. But as you know, the future never happens, it's always in the future.

Yes. Maybe just taking a pause for the audience in the room, if you have any questions that you want us to bring up, feel free to submit that, and I'll get this on my iPad. Just a couple of others, like while we are waiting for that to get populated. So yes, I think there is a lot of focus, obviously, on the 2026 dynamics. And I guess it's a very good thing to see that you're kind of reiterating that mid-single-digit CAGR on revenue. But like 2026 has a little bit of a unique dynamic that you have REVLIMID going away. So yes, I'm trying to understand like what is the growth -- what is essentially like the growth levers that you're pulling to offset that? And can you stay on this path of going towards mid-single digit?

Yes. So look, I think this is a question I like because I think it shows a lot about the discipline at Teva now. So we knew we were going to lose generic Revlimid in '26. And we didn't take that as an opportunity to say, okay, can you give us a break? It's a big product, we're going to lose it now. Let's just discount '26 and let's just move on to '27, we did. And we've put a few things in place. One, we make sure we're accelerating our innovative pipeline and our products in the market. So our innovative growth, we talked about being at 33%. If we keep driving our innovative growth in '26, that's going to throw off obviously a significant amount of revenue, which has a very high gross margin, which is a significant amount of profit. We put that together with our organizational effectiveness programs, which are going to save 2/3 of $700 million by the end of next year, as well as we're going to launch more biosimilars launch more complex generics next year, and our base generic business will keep improving the efficiency. That's why we've been able to say we'll grow EBITDA next year. We'll grow EBITDA in absolute numbers and we'll grow an operating margin. That's not easy, but we plan for it. We also understood that we had a transformation of our portfolio coming through. So I think for me, there's a bit about the revenue in the CAGR, which I think we feel comfortable on. But the thing I'm really proud of is what we can do on the level of profitability and keep driving the company towards our 2027 targets, which are mid-single-digit CAGR growth on revenue, but a 30% operating margin. Those things to do together when you lose a product like Revlimid, which is high margin, I think that shows a real discipline in the company and a real focus on really wanting to lean into these challenges, not accept them. So I think, great. That's why I expanded on your question a bit because I think for us, '26 is a moment where I'd like to think that people can see this company has really moved from where maybe it was historically a few years ago and to where it's heading. And I think both on planning ahead, the transformation of our portfolio, the thoughtful approach to costs and expenses and capital and that sort of comes together in '26.

Just in the last couple of minutes. So yes, I know a lot of focus on TAPI as well and it has taken life of its own, like divesting and not divesting it? Like what is the latest? And I'm just curious to understand, I think your decision to like restart the process? Like why do that versus retaining the business at this point?

It goes back to strategy and capital allocation. Strategy, the pivot to growth strategy is not a tagline. It's a detailed plan for the next 10 years. And we know exactly what we have to do over each year. And so TAPI is an amazing API business, it's second largest globally. Does it help us fulfill our goals of becoming a world-class biopharma company with a valuation that we think is appropriate? No, it doesn't, despite how good it is. So because of that, it's not aligned to the strategy. And so we should stick with that principle. What we have learned throughout this process, though, is that Teva is in a position now that it goes a bit back to access. We don't get forced into doing things that we don't think will give a return to shareholders and it will help this company be successful going forward. And so if we see that we know what we want when it comes to TAPI, particularly from a partnership agreement because we'll obviously be partners with whoever acquires this for 10 years plus. So that's really important. We also know the change in geopolitical situation has changed dramatically since we started this process. So I think we can think of this very differently. And we're in a position now in a financial position where we can be really thoughtful. But it ultimately goes back to all the decisions we have to make and we should make are, are they in the best interest of the company? Are they in the best interest in terms of driving sustainability long term. And ultimately, if we do those, they'll be in the best interest of shareholders, which is what we are paid to do. And so I think we should stay disciplined on those. And I think there's a few questions you've asked, which I hope show our thoughtful, disciplined approach to decisions. And so I feel very comfortable with what we did on TAPI. And we will start a process again. And I think the world has an opportunity now that wasn't maybe there in 2024 to come back to table and take another look at TAPI.

Are there any other noncore parts of your portfolio? I know like investors like to think about OTC, which is growing pretty well and it's kind of customary to divest that for a lot of companies. Is that opportunity?

That's a standard play. We believe if you've got an OTC business, you quickly sell it. Well, our OTC business, I think a couple of things is, one, I suppose it goes back to a core principle is how do we create value -- long-term value in this company. And we can be a bit cookie cutter about that, what's driving long-term value? What's going to drive our gross margin? What's going to drive our long-term operating margin? What's going to drive long-term EPS growth? Now our OTC business right now has a real purpose in driving our pivot to growth. it's a slightly different OTC business. It's a very pharmacy benefit based. So it's not your sort of toothpaste or stuff like that. It's really medicines. And right now, you see a lot of synergies with our generics business, and we see it helping us drive our financials. It's part of the -- people say, how do you replace 1 billion of generic Revlimid, I say, well, we have a generics business. We have 10 complex generics. We have another 10 biosimilars we're launching, and we have our OTC business that grows at double digits. So I think it's aligned to the strategy, it's aligned to profitability. It's synergistic with what we do. People come to us all the time asking about it, bankers asking whether we would -- but I'd say it's a life to our strategy. So it's really clear, it's a really easy decision. But every year, we reassess where is our capital, what's absorbing capital, where could we put capital and what's the best return for the medium to long term? Because our goal is to create a long-term prosperous Teva, long term, we're talking they will never ever see the challenges that saw the path. It will be here way after I've gone, and it will be set up for success. And that's about making these thoughtful decisions on where you put capital now and how you're going to keep allocating capital going forward. So I suppose it's a long answer to your question, we'll always look at parts of the business and say, are they aligned to our strategy? Are they worthy of receiving capital versus other things? And if they don't adhere to those, and say, well, maybe there's another owner of that. But that's how we sort of look through it.

Great. All right. With that, thank you so much for your time and looking forward to learning more about Teva.

Thanks, Ash. Appreciate -- appreciate you hosting us today. Thanks, everybody.

Thanks, everybody.