Teva Reports Third Quarter 2012 Results

  Teva Reports Third Quarter 2012 Results

                   Net Revenues Total $5.0 Billion, up 14%

                         Non-GAAP EPS of $1.28, up 2%

Business Wire

JERUSALEM -- November 01, 2012

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) today reported results for
the quarter ended September 30, 2012.

Highlights:

  *Net revenues of $5.0 billion, compared to $4.3 billion in the third
    quarter of 2011, an increase of 14%.
  *Net revenues organic growth of 1.3% compared to the third quarter of 2011,
    and 6% organic growth excluding the effect of generic competition on
    Provigil^®.
  *GAAP net income (loss) and GAAP diluted EPS of $(79) million and $(0.09)
    compared to $916 million and $1.03, respectively, in the third quarter of
    2011. GAAP net income was affected primarily by two significant charges:
    provision for a loss contingency of $670 million relating to pending
    patent litigation and impairment, mostly related to in-process R&D, of
    $481 million.
  *Non-GAAP operating income of $1.4 billion, an increase of 6% compared to
    $1.3 billion in the third quarter of 2011. Non-GAAP net income of $1.1
    billion, unchanged compared to the third quarter of 2011. Non-GAAP diluted
    EPS of $1.28, an increase of 2% compared to $1.25 in the third quarter of
    2011.
  *Cash flow  from operations of $1 billion, an increase of 117% compared to
    $482 million in the third quarter of 2011. Free cash flow of $577 million
    compared to $2 million in the third quarter of 2011.
  *Sales of Copaxone^®, the leading multiple sclerosis therapy in the U.S.
    and globally, increased 13% to $1.05 billion compared to $928 million in
    the third quarter of 2011.
  *U.S. generics net revenues of $1.1 billion, an increase of 24% compared to
    $863 million in the third quarter of 2011.
  *Full year 2012 net revenues expected to be between $20.1 and 20.7 billion
    and non-GAAP diluted EPS to be between $5.32 - 5.38.

"We are pleased to report solid operating results for the quarter and look
forward to closing the year within the guidance we provided in May," stated
Dr. Jeremy Levin, President and CEO of Teva. “In addition we were also
encouraged byresults from the ongoing development of both Copaxone® and
laquinimod and pleased by the approval of Synribo®. These successes underpin
our commitment to provide the best therapeutic options to multiple sclerosis
and other patients worldwide,"

Revenues by Geographies for the Third Quarter 2012^1

Net revenues in the United States in the third quarter were $2.6 billion (52%
of total revenues), an increase of 33% compared to the third quarter of 2011,
driven by the inclusion of Cephalon as well as strong revenues of both branded
and generic medicines.

Net revenues in Europe in the third quarter were $1.4 billion (28% of total
revenues), an increase of 1% compared to the third quarter of 2011, or 13% in
local currency terms. Revenues in Europe this quarter benefited from the
inclusion of Cephalon medicines as well as stronger revenues from some of our
legacy branded medicines, primarily Copaxone^®, following the take-back of
marketing and distribution rights. This growth was offset by the negative
effects of foreign currency (primarily the euro), and to a lesser extent by
lower generic sales due to ongoing macro-economic conditions and healthcare
reforms in key European markets which increased generic penetration while
lowering prices of generic medicines. We are tightly managing our strategy and
commercial model in Europe to adapt to these conditions.

Net revenues in the Rest of the World in the third quarter totaled $1.0
billion (20% of total revenues), a decrease of 3% compared to the third
quarter of 2011. In local currency terms, ROW revenues grew by 1%. In addition
to negative foreign currency effects, the slight decline in revenues resulted
from weaker performance in Canada, which had an unusually high quarter last
year, partially offset by continued solid and profitable growth in Russia and
other Eastern European countries, Latin America and Israel, as well as by the
inclusion of Cephalon.


                   Three Months Ended                   Percentage Percentage
                                                     Change     Change
                   September 30,
                   2012      2011      % of   % of    2012 from  2012 from
                                        2012    2011    2011       2011
                   U.S. $ in millions                              in local
                                                                   currencies
United States:
Generic            $1,074     $863      22%     20%     24%        24%
Branded            1,468      1,090     29%     25%     35%        35%
Others             59         2         1%      §       α          α
Total United       2,601      1,955     52%     45%     33%        33%
States
Europe*:
Generic            798        917       16%     21%     (13%)      (3%)
Branded            376        242       8%      6%      55%        73%
Others             183        185       4%      4%      (1%)       12%
Total Europe       1,357      1,344     28%     31%     1%         13%
Rest of the
World:
Generic            620        695       12%     16%     (11%)      (8%)
Branded            177        132       4%      3%      34%        42%
Others             217        218       4%      5%      §          7%
Total Rest of      1,014      1,045     20%     24%     (3%)       1%
the World
Total Revenues     $4,972     $4,344    100%    100%    14%        19%
                                                                   
*All members of the European Union as well as Switzerland and Norway.
§ Less than 0.5%
α Over 1000%


Revenues by Product Lines for the Third Quarter 2012

Generic medicines net revenues in the third quarter were $2.5 billion
(including API sales of $195 million), an increase of 1% compared to the third
quarter of 2011. Generic revenues consisted of:

  *U.S. revenues of $1.1 billion, an increase of 24% compared to the third
    quarter of 2011. The U.S. generics business continued its positive trend
    benefiting from the launch of nine new medicines this quarter, including
    generic versions of Actos^® and Actoplus met®, as well as continued
    benefits from several launches in the first half of 2012, which included
    several medicines that were either exclusive, semi-exclusive or in limited
    competition markets such as the generic versions of Lexapro^® and
    Provigil^®.
  *European revenues of $798 million, a decrease of 13%, or 3% in local
    currency terms, compared to the third quarter of 2011. This decrease was
    caused primarily by ongoing macro-economic conditions and healthcare
    reforms in key European markets. To address these conditions, we are
    adjusting our market strategy in Europe to focus more on profitable and
    sustainable growth rather than market share. This adjustment is reflected,
    for example, in a more selective approach to participation in tenders in
    Germany, which resulted in lower revenues from tender sales. The decrease
    this quarter also reflects the fact that revenues in the comparable
    quarter last year were high as a result of the launch of a generic version
    of Lipitor^® (atorvastatin) in the U.K. The decrease was partially offset
    by the inclusion of the generic activities of Cephalon in Europe.
  *ROW revenues of $620 million, a decrease of 11%, or 8% in local currency
    terms, compared to the third quarter of 2011. We had strong performance in
    Israel, Russia, and other Eastern European markets, which was offset by a
    decrease in generics sales in Canada, which were unusually high in the
    third quarter of 2011, and were also impacted by government-imposed price
    reforms and a small decline in market share this quarter.

                                                            
                   Three Months Ended                        Percentage
                   September 30,                                Change
                   2012       2011     % of 2012  % of 2011   2012 from 2011
                   U.S. $ in millions
                                                                
Generic            2,492       2,475    50    %     57    %     1       %
Medicines
API                195         183      4     %     4     %     7       %
                                                                        

Branded medicines net revenues in the third quarter were $2.0 billion, an
increase of 38% compared to $1.5 billion in the third quarter of 2011. Branded
revenues consisted of:

  *U.S. revenues of $1.5 billion, an increase of 35% compared to the third
    quarter of 2011.
  *European revenues of $376 million, an increase of 55%, or 73% in local
    currency terms, compared to the third quarter of 2011.
  *ROW revenues of $177 million, an increase of 34%, or 42% in local currency
    terms, compared to the third quarter of 2011.

Branded revenues comprised 41% of total revenues in the quarter, compared to
34% in the third quarter of 2011.

The increase in branded medicines revenues from the third quarter of 2011 was
primarily due to the inclusion of Cephalon's medicines (mainly Treanda^® with
$160 million, Nuvigil^® with $94 million and Provigil^®, with $53 million) and
strong sales of Teva legacy medicines, primarily Copaxone^®.

Global revenues recorded by Teva for Copaxone^®, the leading multiple
sclerosis therapy in the U.S. and globally, increased 13%, or 15% in local
currency terms, to $1.05 billion compared to $928 million in the third quarter
of 2011. The increase primarily resulted from the successful take-back of
marketing and distribution rights in Europe and increased sales in ROW
markets. In the U.S., sales increased 3% to $775 million, as a result of a
price increase taken earlier this year. Sales outside the U.S. were $271
million, an increase of 54% or 68% in local currency terms, compared to the
third quarter of 2011, mainly as a result of the take-back and unusually
strong sales in Russia.

Azilect^® revenues recorded by Teva increased 8% to $77 million, while global
in-market revenues increased 6% to $103 million, primarily due to increased
demand in the U.S. and Europe.

                   Three Months Ended                          Percentage
                    September 30,                               Change
                    2012       2011    % of 2012  % of 2011  2012 from
                                                                2011
                    U.S. $ in millions
                                                                
Branded Medicines   2,021       1,464    41%         34%        38%
CNS                 1,366       999      28%         23%        37%
Copaxone®           1,046       928      21%         21%        13%
Provigil®           53          -        1%          -          -
Azilect®            77          71       2%          2%         8%
Nuvigil®            94          -        2%          -          -
Respiratory         201         210      4%          5%         (4%)
ProAir™             109         113      2%          3%         (4%)
Qvar®               62          67       1%          2%         (7%)
Women's Health      96          123      2%          3%         (22%)
Oncology            221         29       4%          1%         662%
Treanda®            160         -        3%          -          -
Other Branded       137         103      3%          2%         33%
                                                                

OTC net revenues in the quarter were $252 million, an increase of 38%, or 46%
in local currency terms, compared to $183 million in the third quarter of
2011, primarily due to sales of OTC products in the U.S. to The Procter &
Gamble Company, pursuant to a manufacturing agreement, which commenced in the
fourth quarter of 2011, and growth in sales in Latin America and Europe.
During the quarter, our joint venture, PGT Healthcare, launched the Vicks®
product line in Hungary and the Czech Republic.

Other net revenues in the quarter were $207 million, mostly from the
distribution of third-party products in Israel and Hungary, compared to $222
million in the third of 2011.

               
                 Three Months Ended                          Percentage
                 September 30,                               Change
                 2012       2011    % of 2012  % of 2011  2012 from
                                                             2011
                 U.S. $ in millions
                                                             
All Others       459         405      9%          9%         13%
OTC              252         183      5%          4%         38%
Other Revenues   207         222      4%          5%         (7%)
                                                             

Key Metrics for the Third Quarter 2012

Exchange rate differences between this quarter and the third quarter of 2011
reduced our revenues by approximately $202million, while having a minor
positive impact on operating income. The impact on revenues resulted primarily
from the weakening of certain currencies (primarily the Hungarian forint,
euro, Israeli shekel and Russian ruble) relative to the U.S. dollar.

Non-GAAP Information This quarter, we had net non-GAAP charges of $1.2
billion, consisting primarily of a provision for loss contingency of $670
million and impairments of $481 million, mostly related to in-process R&D.
Accordingly, non-GAAP net income and non-GAAP EPS for the quarter are adjusted
to exclude these and certain other items, as follows:

  *Provision for loss contingency in an amount of $670 million related to the
    pantoprazole patent infringement litigation, in light of a recent court
    ruling in an unrelated case pertaining to one of Teva's patent
    infringement defenses, which made management change its views regarding
    probability. However, Teva still vigorously disputes the plaintiffs'
    damage claims as well as the initial jury verdict of infringement;

  *Impairment of $481 million, which is a result of our on-going review of
    our R&D portfolio, and mostly related to in-process R&D: obatoclax for the
    treatment of small cell lung cancer, due to a decision to return it to
    pre-clinical phase of development; CEP-37247 anti-tumor necrosis factor
    for the treatment of sciatica, because the initial results of clinical
    trials indicate a low probability of success; and armodafinil (Nuvigil®)
    for the treatment of bi-polar disorder, following an earlier than
    previously expected launch of a generic version;
  *Amortization of purchased intangible assets totaling $299 million of which
    $288 million is included in cost of goods sold and the remaining $11
    million in selling and marketing expenses;
  *Costs of $25 million related to regulatory actions, primarily to our
    injectables and animal health facilities;
  *Legal settlements of $19 million;
  *Acquisitions, restructuring and other benefits of $34 million related to
    changes in the fair value of contingent consideration, primarily on
    obatoclax, partially offset by expenses related to the Cephalon
    acquisition; and
  *Related tax benefits of $269 million.

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

GAAP net income (loss) and GAAP EPS were $(79) million and $(0.09) in the
quarter compared to $916 million and $1.03, respectively, in the third quarter
of 2011.

Quarterly non-GAAP operating income was $1.4 billion, up 6% compared to the
third quarter of 2011. Quarterly GAAP operating loss was $0.1 billion compared
to income of $1.0 billion in the third quarter of 2011.

Non-GAAP gross profit margin was 58.6% in the quarter, compared to 56.4% in
the third quarter of 2011. This reflects an increased contribution from sales
of branded medicines, primarily due to the integration of Cephalon, and higher
sales of Copaxone®, partially offset by higher sales of medicines with lower
gross margins, especially in Europe. GAAP gross profit margin was 52.3% in the
quarter, compared to 51.7% in the third quarter of 2011.

Net Research & Development (R&D) expenditures in the quarter (excluding
purchase of in-process R&D) totaled $319 million, or 6.4% of revenues,
compared to $227 million, or 5.2% of revenues in the third quarter of 2011.
The increase in R&D spending primarily reflects the inclusion of Cephalon.
Gross R&D, before reimbursement from third parties for certain R&D expenses,
totaled approximately $354 million, or 7.1% of revenues.

Selling and Marketing expenditures (excluding amortization of purchased
intangible assets) totaled $903 million, or 18.2% of revenues, in the quarter,
compared to $796 million, or 18.3% of revenues in the third quarter of 2011.
The increase was primarily due to the inclusion of Cephalon and the take-back
of Copaxone^® in Europe, partially offset by exchange rate differences, and in
the U.S., lower royalty payments made on generic medicines.

General and Administrative (G&A) expenditures totaled $292 million in the
quarter, or 5.9% of revenues, compared with $112 million, or 2.6% of revenues,
for the third quarter of 2011. The increase was primarily due to gains
recorded in the third quarter of 2011 that reduced our expenses in that
quarter, as well as higher expenses in the current quarter due to the
inclusion of Cephalon.

Finance expenses totaled $73 million in the quarter, compared with $67 million
in the third quarter of 2011. The increase is mainly due to higher interest
expenses resulting from the additional debt incurred in connection with the
acquisitions of Cephalon and Taiyo, partially offset by gains from exchange
rate fluctuations and hedging activity during the quarter, compared with
losses in the third quarter of 2011.

The provision for non-GAAP tax for the quarter amounted to $212 million on
pre-tax non-GAAP income of $1.3 billion. The provision for tax in the third
quarter of 2011 was $119 million on pre-tax income of $1.2 billion. We expect
a slightly higher annual tax rate for 2012 compared to the annual tax rate in
2011, primarily as a result of the change in geographic and product mix
following the Cephalon acquisition.

Cash flow from operations during the quarter was approximately $1.0 billion,
compared to $482 million in the third quarter of 2011, an increase of 117%.
Free cash flow, excluding net capital expenditures and dividends was $577
million, a significant increase compared to $2 million in the third quarter of
2011, when cash flow was unusually low due to several one-time events. Cash
and marketable securities on September 30, 2012 amounted to $2.0 billion.

During  the quarter, there were no share repurchases. Since the beginning of
2012, Teva has repurchased 15.4 million shares for approximately $667 million
as part of a $3.0 billion share repurchase plan authorized in December 2011.
As a result of the repurchases, the fully diluted share count at September 30,
2012, was reduced by approximately 10million shares from December 31, 2011.

For the third quarter of 2012, the weighted average share count for the fully
diluted earnings per share calculation was 869 million on a GAAP basis and 870
million on a non-GAAP basis. At September 30, 2012, the share count for
calculating Teva's market capitalization was approximately 868 million.

Total equity at September 30, 2012, was $23.1 billion, an increase of $0.2
billion compared to $22.9 billion at June 30, 2012. The increase in total
equity is primarily a result of currency translation adjustments, partially
offset by dividend declared and the GAAP net loss of $79 million.

Dividend

The Board of Directors, at its meeting on October 30, 2012, declared a cash
dividend for the third quarter of 2012 of NIS 1.00 (approximately 25.7 cents
according to the rate of exchange on October 30, 2012) per share.

The record date will be November 15, 2012, and the payment date will be
December 3, 2012. Tax will be withheld at a rate of 20.7%.

Conference Call

Teva will host a conference call to discuss its third quarter 2012 results on
Thursday, November 1, 2012, at 8:00 a.m. Eastern Daylight Time. The call will
be webcast and can be accessed through the Company's website at
www.tevapharm.com, or by dialing 1.888.771.4371 (U.S. and Canada) or
1.847.585.4405 (International). The conference ID is 33556091. Following the
conclusion of the call, a replay will be available within 24 hours at the
Company's website at www.tevapharm.com. A replay will also be available until
November 8, 2012, at 11:59 p.m. ET, by calling 1.888.843.7419 (U.S. and
Canada) or 1.630.652.3042 (International). The Conference ID is 33556091#.

About Teva

Teva Pharmaceutical Industries Ltd. (NYSE: TEVA) is a leading global
pharmaceutical company, committed to increasing access to high-quality
healthcare by developing, producing and marketing affordable generic drugs as
well as specialty pharmaceuticals and active pharmaceutical ingredients.
Headquartered in Israel, Teva is a world leading generic drug maker, with a
global product portfolio of more than 1,300 molecules and a direct presence in
about 60 countries. Teva's branded businesses focus on CNS, oncology, pain,
respiratory and women's health therapeutic areas. Teva currently employs
approximately 46,000 people around the world and reached $18.3 billion in net
revenues in 2011.

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

The following discussion and analysis contains forward-looking statements,
which express the current beliefs and expectations of management. Such
statements 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 from
the introduction of competing generic equivalents and due to increased
governmental pricing pressures, the effects of competition on sales of our
innovative medicines, especially Copaxone^® (including competition from
innovative orally-administered alternatives as well as from potential generic
equivalents), potential liability for sales of generic medicines prior to a
final resolution of outstanding patent litigation, including that relating to
our generic version of Protonix^®, the extent to which we may obtain U.S.
market exclusivity for certain of our new generic medicines, the extent to
which any manufacturing or quality control problems damage our reputation for
high quality production and require costly remediation, our ability to
identify, consummate and successfully integrate acquisitions (including the
acquisition of Cephalon), our ability to achieve expected results through our
innovative R&D efforts, dependence on the effectiveness of our patents and
other protections for innovative medicines, intense competition in our
specialty pharmaceutical businesses, uncertainties surrounding the legislative
and regulatory pathway for the registration and approval of
biotechnology-based medicines, our potential exposure to product liability
claims to the extent not covered by insurance, any failures to comply with the
complex Medicare and Medicaid reporting and payment obligations, our exposure
to currency fluctuations and restrictions as well as credit risks, the effects
of reforms in healthcare regulation and pharmaceutical pricing and
reimbursement, adverse effects of political instability and adverse economic
conditions, major hostilities or acts of terrorism on our significant
worldwide operations, increased government scrutiny in both the U.S. and
Europe of our agreements with brand companies, interruptions in our supply
chain or problems with our information technology systems that adversely
affect our complex manufacturing processes, the impact of continuing
consolidation of our distributors and customers, the difficulty of complying
with U.S. Food and Drug Administration, European Medicines Agency and other
regulatory authority requirements, potentially significant impairments of
intangible assets and goodwill, potential increases in tax liabilities
resulting from challenges to our intercompany arrangements, the termination or
expiration of governmental programs or tax benefits, any failure to retain key
personnel or to attract additional executive and managerial talent,
environmental risks, and other factors that are discussed in our Annual Report
on Form20-F for the year ended December 31, 2011 and in our other filings
with the U.S. Securities and Exchange Commission (“SEC”). Forward-looking
statements speak only as of the date on which they are made, and we undertake
no obligation to update any forward-looking statements or other information
contained in this report, whether as a result of new information, future
events or otherwise.

^1 For a full analysis of our quarterly revenues by geography and by product
line, beginning in Q4 2010, please visit our website at www.ir.tevapharm.com

                                                           
Consolidated Statements of Income
(Unaudited, U.S. dollars in millions, except share and per share data)
                                                                      
                                 Three months ended     Nine months ended
                                 September 30,          September 30,
                                 2012        2011        2012         2011
Net revenues                     4,972       4,344       15,068       12,636
Cost of sales                    2,371      2,098      7,201       6,002  
Gross profit                     2,601       2,246       7,867        6,634
Research and
development                      324         242         914          724
expenses – net
Selling and
marketing                        914         806         2,823        2,442
expenses
General and
administrative                   292         112         920          617
expenses
Loss
contingencies,
Impairments,                     1,131      51         1,335       352    
Settlements and
other
Operating income                 (60   )     1,035       1,875        2,499
(loss)
Financial                        73         67         240         85     
expenses – net
Income (loss)
before income                    (133  )     968         1,635        2,414
taxes
Provision for
income tax                       (57   )     33          (27    )     109
expense
(benefit)
Share in losses
of associated                    8          17         32          42     
companies – net
Net income                       (84   )     918         1,630        2,263
(loss)
Net (income)
loss
attributable to                  5          (2    )     13          (10    )
non-controlling
interests
Net income
(loss)                           (79   )     916        1,643       2,253  
attributable to
Teva
                                                                      
Earnings (loss)
per share            Basic       (0.09 )     1.03       1.88        2.52   
attributable to      ($)
Teva:
                     Diluted     (0.09 )     1.03       1.88        2.51   
                     ($)
Weighted average
number of shares     Basic       869        888        873         892    
(in millions):
                     Diluted     869        890        875         896    
                                                       
Non-GAAP net
income                           1,112      1,111      3,529       3,031  
attributable to
Teva:*
                                                                      
Non-GAAP
earnings per         Basic
share                ($)         1.28       1.25       4.04        3.40   
attributable to
Teva:
                     Diluted     1.28       1.25       4.03        3.38   
                     ($)
                                                                      
Weighted average
number of shares     Basic       869        888        873         892    
(in millions):
                     Diluted     870        890        875         896    
                                                       
                                                                      
* See
reconciliation
attached.
                                                                      

                                             
Condensed Balance Sheets
(U.S. dollars in millions)
                                                               
                                                September 30,     December 31,
                                                2012              2011
ASSETS                                          Unaudited         Audited
Current assets:
Cash and cash equivalents                       1,432             1,096
Accounts receivable                             5,782             6,213
Inventories                                     5,461             5,012
Deferred taxes and other current assets         2,308             2,132
Total current assets                            14,983            14,453
Long-term investments and receivables           1,208             991
Deferred taxes, deferred charges and other      148               142
assets
Property, plant and equipment, net              6,281             5,947
Identifiable intangible assets, net             8,295             10,316
Goodwill                                        18,665            18,293
Total assets                                    49,580            50,142
                                                                  
LIABILITIES AND EQUITY
Current liabilities:
Short-term debt and current maturities of       571               3,749
long term liabilities
Convertible senior debentures - short term      531               531
Sales reserves and allowances                   4,823             4,428
Accounts payable and accruals                   3,143             3,572
Other current liabilities                       1,557             1,396
Total current liabilities                       10,625            13,676
Long-term liabilities:
Deferred income taxes                           1,914             2,610
Other taxes and long term payables              1,281             1,277
Senior notes and loans                          12,688            10,236
Total long term liabilities                     15,883            14,123
Equity:
Teva shareholders’ equity                       22,934            22,195
Non-controlling interests                       138               148
Total equity                                    23,072            22,343
Total liabilities and equity                    49,580            50,142
                                                                  

                                                             
Condensed Cash Flow
(Unaudited, U.S. Dollars in millions)
                                                                      
                                Three months ended       Nine months ended
                                September 30,           September 30,
                                2012        2011         2012         2011
Operating activities:
Net income (loss)               (84   )     918          1,630        2,263
Net change in operating         475         (597   )     130          (7     )
assets and liabilities
Items not involving cash        657         161          1,235        450
flow
                                                                   
Net cash provided by            1,048       482          2,995        2,706
operating activities
                                                                      
Net cash used in investing      (249  )     (1,194 )     (725   )     (2,110 )
activities
                                                                      
Net cash provided by (used      (570  )     698          (1,944 )     (756   )
in) financing activities
                                                                      
Translation adjustment on       15          (40    )     10           (3     )
cash and cash equivalents
                                                                   
Net change in cash and cash     244         (54    )     336          (163   )
equivalents
                                                                      
Balance of cash and cash
equivalents at the              1,188       1,139        1,096        1,248
beginning of period
                                                                   
Balance of cash and cash
equivalents at the end of       1,432      1,085       1,432       1,085  
period
                                                                      

                                                               
Revenues by Product line
(Unaudited)
                                                 
                   Three Months Ended                               Percentage
                   September 30,                                    Change
                                                                    2012 from
                   2012         2011      % of 2012     % of        2011
                                                        2011
                   U.S. $ in millions
                                                                    
Generic            2,492        2,475     50    %       57   %      1     %
Medicines
API                195          183       4     %       4    %      7     %
Branded            2,021        1,464     41    %       34   %      38    %
Medicines
CNS                1,366        999       28    %       23   %      37    %
Copaxone®          1,046        928       21    %       21   %      13    %
Provigil®          53           -         1     %       -           -
Azilect®           77           71        2     %       2    %      8     %
Nuvigil®           94           -         2     %       -           -
Respiratory        201          210       4     %       5    %      (4    %)
ProAir™            109          113       2     %       3    %      (4    %)
Qvar®              62           67        1     %       2    %      (7    %)
Women's Health     96           123       2     %       3    %      (22   %)
Oncology           221          29        4     %       1    %      662   %
Treanda®           160          -         3     %       -           -
Other Branded      137          103       3     %       2    %      33    %
All Others         459          405       9     %       9    %      13    %
OTC                252          183       5     %       4    %      38    %
Other Revenues     207          222       4     %       5    %      (7    %)
Total              4,972        4,344     100   %       100  %      14    %
                                                                          

                                                           
Revenues by Product line
(Unaudited)
                              
                      Nine Months Ended                             Percentage
                      September 30,                                 Change
                                                                    2012 from
                      2012       2011       % of        % of        2011
                                            2012        2011
                      U.S. $ in million
                                                                    
Generic Medicines     7,723      7,214      51%         57%         7%
API                   594        550        4%          4%          8%
Branded Medicines     6,044      4,239      40%         34%         43%
CNS                   4,124      2,850      27%         23%         45%
Copaxone®             2,937      2,643      19%         21%         11%
Provigil®             392        -          3%          0%          -
Azilect®              244        207        2%          1%          18%
Nuvigil®              269        -          2%          0%          -
Respiratory           600        603        4%          5%          §
ProAir™               286        291        2%          2%          (2%)
Qvar®                 205        212        1%          2%          (3%)
Women's Health        316        345        2%          3%          (8%)
Oncology              627        78         4%          1%          704%
Treanda®              447        -          3%          0%          -
Other Branded         377        363        3%          3%          4%
All Others            1,301      1,183      9%          9%          10%
OTC                   667        548        5%          4%          22%
Other Revenues        634        635        4%          5%          §
Total                 15,068     12,636     100%        100%        19%
                                                                    
§ Less than 0.5%
                                                                    

                                                        
Non GAAP reconciliation items
(Unaudited, U.S. Dollars in millions)
                                                                   
                                      Three months ended     Nine months ended
                                      September 30,          September 30,
                                      2012         2011      2012       2011
Amortization of purchased
intangible assets - under cost of     288          151       957        454
sales
Inventory step-up - under cost of     -            19        63         44
sales
Costs related to regulatory
actions taken in facilities -         25           35        103        130
under cost of sales
Amortization of purchased
intangible assets - under selling     11           10        31         27
and marketing expenses
Impairment of long-lived assets       481          16        576        30
Restructuring, acquisition and        (39   )      36        52         106
other expenses
Purchase of research and              5            15        5          15
development in process
Provision for loss contingency        670          -         670        30
Expense (income) in connection
with legal settlements and            19           (1  )     37         186
reserves
Related tax effect                    (269  )      (86 )     (608 )     (244 )
                                                                             

                                                                                                    
       Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US
       GAAP to Non-GAAP Net Income attributable to Teva and Earnings per share
                                                                                                  
                          Nine months ended September 30, 2012           Nine months ended September 30, 2011
                          U.S. dollars and shares in millions (except per share amounts)
                                    Non-GAAP        Non-    % of Net               Non-GAAP        Non-      % of Net
                          GAAP      Adjustments     GAAP    Revenues     GAAP      Adjustments     GAAP      Revenues
                                                                                                             
       Gross profit       7,867     1,123           8,990   60   %       6,634     628             7,262     57   %
       (1)
       Operating          1,875     2,494           4,369   29   %       2,499     1,022           3,521     28   %
       income (1)(2)
       Net income
       attributable       1,643     1,886           3,529   23   %       2,253     778             3,031     24   %
       to Teva
       (1)(2)(3)
       Earnings per
       share
       attributable       1.88      2.15            4.03                 2.51      0.87            3.38
       to Teva -
       Diluted (4)
                                                                                                             
                                                                                                             
                                                                                                             
       Amortization
(1 )   of purchased                 957                                            454
       intangible
       assets
       Costs related
       to regulatory                103                                            130
       actions taken
       in facilities
       Inventory                    63                                            44      
       step-up
       Gross profit                 1,123                                          628
       adjustments
                                                                                                             
       Provision for
(2 )   loss                         670                                            30
       contingency
       Impairment of
       long-lived                   576                                            30
       assets
       Restructuring,
       acquisition                  57                                             121
       and other
       expenses
       Amortization
       of purchased                 31                                             27
       intangible
       assets
       Expense in
       connection
       with legal                   37                                            186     
       settlements
       and reserves
                                    1,371                                          394
                                                                                  
       Operating
       profit                       2,494                                         1,022   
       adjustments
                                                                                                             
(3 )   Tax benefit                  (608    )                                      (244    )
       Net income                   1,886                                         778     
       adjustments
                                                                                                             

      The weighted average number of shares was 875 and 896 million for the
      nine months ended September 30, 2012 and 2011, respectively. Non-GAAP
(4)  earnings per share can be reconciled with GAAP earnings per share by
      dividing each of the amounts included in footnotes 1-3 above by the
      applicable weighted average share number.
      

      Reconciliation between reported Net Income attributable to Teva and Earnings per share as reported under US GAAP to
       Non-GAAP Net Income attributable to Teva and Earnings per share
                                                                                                      
                          Three months ended September 30, 2012                 Three months ended September 30, 2011
                          U.S. dollars and shares in millions (except per share amounts)
                          GAAP        Non-GAAP        Non-GAAP     % of Net     GAAP      Non-GAAP        Non-GAAP     % of Net
                                      Adjustments                  Revenues               Adjustments                  Revenues
                                                                                                                       
       Gross profit       2,601       313             2,914        59   %       2,246     205             2,451        56   %
       (1)
       Operating
       income (loss)      (60   )     1,460           1,400        28   %       1,035     281             1,316        30   %
       (1)(2)
       Net income
       (loss)
       attributable       (79   )     1,191           1,112        22   %       916       195             1,111        26   %
       to Teva
       (1)(2)(3)
       Earnings
       (loss) per
       share              (0.09 )     1.37            1.28                      1.03      0.22            1.25
       attributable
       to Teva -
       Diluted (4)
                                                                                                                       
                                                                                                                       
                                                                                                                       
       Amortization
(1 )   of purchased                   288                                                 151
       intangible
       assets
       Costs related
       to regulatory                  25                                                  35
       actions taken
       in facilities
       Inventory                      -                                                  19      
       step-up
       Gross profit                   313                                                 205
       adjustments
       Provision for
(2 )   loss                           670                                                 -
       contingency
       Restructuring,
       acquisition                    (34     )                                           51
       and other
       expenses
       Amortization
       of purchased                   11                                                  10
       intangible
       assets
       Impairment of
       long-lived                     481                                                 16
       assets
       Expense
       (income) in
       connection                     19                                                 (1      )
       with legal
       settlements
       and reserves
                                      1,147                                               76
       Operating
       profit                         1,460                                              281     
       adjustments
(3 )   Tax benefit                    (269    )                                           (86     )
       Net income                     1,191                                              195     
       adjustments
                                                                                                                       

      The weighted average number of shares was 870 and 890 million for the
      three months ended September 30, 2012 and 2011, respectively. Non-GAAP
      earnings per share can be reconciled with GAAP earnings per share by
(4)  dividing each of the amounts included in footnotes 1-3 above by the
      applicable weighted average share number. For the third quarter of 2012
      we took the Non-GAAP weighted average number of shares which is one
      million shares higher than the GAAP weighted average number of shares.
      

                                                                   
Revenues by Geographic Area
(Unaudited)
                                                  
              Three Months Ended                          Percentage       Percentage
              September 30,                               Change           Change
              2012        2011        % of      % of      2012 from       2012 from
                                      2012      2011      2011             2011
              U.S. $ in millions                                           in local
                                                                           currencies
United
States:
  Generic     $ 1,074     $ 863       22  %     20  %     24    %          24    %
  Branded       1,468       1,090     29  %     25  %     35    %          35    %
  Others       59         2         1   %     §        α               α     
Total
United          2,601       1,955     52  %     45  %     33    %          33    %
States
Europe*:
  Generic       798         917       16  %     21  %     (13   %)         (3    %)
  Branded       376         242       8   %     6   %     55    %          73    %
  Others       183        185       4   %     4   %     (1    %)         12    %
Total           1,357       1,344     28  %     31  %     1     %          13    %
Europe
Rest of
the
World:
  Generic       620         695       12  %     16  %     (11   %)         (8    %)
  Branded       177         132       4   %     3   %     34    %          42    %
  Others       217        218       4   %     5   %     §               7     %
Total
Rest of        1,014      1,045     20  %     24  %     (3    %)         1     %
the World
Total         $ 4,972     $ 4,344     100 %     100 %     14    %          19    %
Revenues
                                                                                 
*All members of the European Union as well as
Switzerland and Norway.
§ Less
than 0.5%
α Over
1000%
                                                                                 

                                                                    
Revenues by Geographic Area
(Unaudited)
                                                    
              Nine Months Ended                             Percentage     Percentage
              September 30,                                 Change         Change
              2012         2011         % of      % of      2012 from     2012 from
                                        2012      2011      2011           2011
              U.S. $ in millions                                           in local
                                                                           currencies
United
States:
  Generic     $ 3,347      $ 2,715      22  %     22  %     23    %        23    %
  Branded       4,330        3,034      29  %     24  %     43    %        43    %
  Others       140         6          1   %     §        α             α     
Total
United          7,817        5,755      52  %     46  %     36    %        36    %
States
Europe*:
  Generic       2,457        2,828      16  %     22  %     (13   %)       (5    %)
  Branded       1,143        772        7   %     6   %     48    %        62    %
  Others       546         566        4   %     5   %     (4    %)       10    %
Total           4,146        4,166      27  %     33  %     §              9     %
Europe
Rest of
the
World:
  Generic       1,919        1,671      13  %     13  %     15    %        17    %
  Branded       571          433        4   %     3   %     32    %        41    %
  Others       615         611        4   %     5   %     1     %        7     %
Total
Rest of        3,105       2,715      21  %     21  %     14    %        19    %
the World
Total         $ 15,068     $ 12,636     100 %     100 %     19    %        23    %
Revenues
                                                                                 
*All members of the European Union as well as
Switzerland and Norway.
§ Less
than 0.5%
α Over
1000%

Contact:

Teva
IR:
Kevin C. Mannix
United States
(215) 591-8912
or
Joseph Marczely
United States
(267) 468-4281
or
Tomer Amitai
Israel
972 (3) 926-7656
or
PR:
Hadar Vismunski-Weinberg
Israel
972 (3) 926-7687
or
Denise Bradley
United States
(215) 591-8974