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Teva Pharmaceutical Industries Annual Report, Year Ended Dec 31, 2002

Filing Date
Filed March 4, 2003
Period End
December 31, 2002
Security
TEVA
In the record · 2016–202610-K1110-Q278-K283

TEVA filed 11 annual reports (10-K), 27 quarterly reports (10-Q) and 283 current reports (8-K) between 2016 and 2026.

  1. FY2016 annual report10-K · Feb ’17Feb ’17
  2. Material agreement8-K · Nov ’19Nov ’19
  3. Leadership change8-K · Feb ’22Feb ’22
  4. Material agreement8-K · Dec ’25Dec ’25

01—Abstract

Summary

Summary of the 20-F filed March 4, 2003. Cited figures are marked; the original filing is the authoritative source.

Teva Pharmaceutical Industries Limited's annual report for the year ended December 31, 2002 shows strong growth.

Sales reached $2,518.6 milliona, up from $2,077.4 million in 2001, and net income rose to $410.3 million from $278.2 million. Diluted earnings per ADR were $1.52, compared with $1.02 in 2001. Gross profit was $1,095.4 million, and operating income was $524.0 million.

The company attributes the growth mainly to higher U.S. generic sales, including the generic version of Augmentin launched in the fourth quarter of 2002, and to continued growth of Copaxone, whose in-market global sales reached $539 millionb in 2002. Management also cited a reduction in the effective tax rate to 17% in 2002, while noting that it expects a 20%-23% rate for 2003. The filing also highlights risks.

The PROMISE trial for primary progressive multiple sclerosis did not reach statistical significance and was terminated, and the etilevodopa Phase III trial did not show significant superiority over levodopa. Net R&D expense rose to $165.0 millionc from $107.2 million. Balance sheet items include $562.4 million of convertible senior debentures classified as short-term because of an October 2003 put option, along with $810.0 million of long-term convertible debentures.

Total assets were $4,626.8 milliond and shareholders' equity was $1,829.4 million. The filing also discloses several pending litigation matters, including patent challenges, antitrust suits, and a trade-secret suit by GlaxoSmithKline related to amoxiclav products. For investors, the key points are the strong earnings growth, a heavier reliance on Copaxone and the new generic launches, and a higher debt load from the November 2002 $450 million convertible debenture offering, which carries a 0.375% coupon.

02—Key points

Key Highlights

  1. Net sales rose to $2,518.6 million in 2002 from $2,077.4 million in 2001, passing the $2.5 billion mark for the first time.
  2. Net income increased to $410.3 million from $278.2 million, and diluted earnings per ADR rose to $1.52 from $1.02.
  3. Gross margin reached 43.5% in 2002, up from 40.8% in 2001, driven by new product launches and Copaxone.
  4. Copaxone in-market global sales were $539 million in 2002, up 48% over 2001, with the pre-filled syringe accounting for about 95% of U.S. prescriptions.
  5. The PROMISE Phase III trial for primary progressive MS did not reach statistical significance and was terminated; the etilevodopa trial did not show significant superiority over levodopa.
  6. Convertible senior debentures of $562.4 million are classified as short-term due to an October 2003 put option, which reduced working capital to $1.4 billion.
  7. Operating income was $524.0 million, and the effective tax rate fell to 17% in 2002, with 20%-23% estimated for 2003.

03—Questions

Frequently Asked Questions

  1. How did Teva's profitability change in 2002?

    Net income rose to $410.3 million from $278.2 million, and diluted earnings per ADR increased to $1.52 from $1.02. Operating income grew to $524.0 million from $366.3 million, driven by higher sales and gross margin.

  2. What drove the growth in sales?

    The filing attributes the increase mainly to substantially higher U.S. generic sales, including the generic Augmentin launched in the fourth quarter of 2002 and 14 other new generic launches, together with strong Copaxone sales growth in North America and Europe.

  3. What are the main risks to Copaxone and the pipeline?

    The PROMISE trial for primary progressive multiple sclerosis was terminated after an interim analysis showed it was unlikely to reach statistical significance. The etilevodopa trial for Parkinson's did not show significant superiority over levodopa. Copaxone also faces competition from beta-interferon products, including Serono's Rebif, which is co-marketed by Pfizer in the U.S.

  4. Why is the debt classified as short-term, and what does it mean for liquidity?

    $550 million of convertible debentures is classified as short-term because holders may require repurchase in October 2003, payable in cash or Teva shares at 103% of stated value. Management believes existing cash and internally generated funds are sufficient to meet operating needs and anticipated capital expenditures over the near term.

  5. What significant legal matters are disclosed?

    The filing discloses patent litigation over Augmentin's amoxiclav, where GlaxoSmithKline has appealed a judgment in Teva USA's favor, and a trade-secret suit by GlaxoSmithKline with trial scheduled for February 2004. It also discloses a Relafen antitrust suit against GlaxoSmithKline and Beecham, and product liability suits including fen-phen claims. Management does not expect a material adverse effect from the fen-phen claims, and no provisions were recorded for most of these matters.

04—Continue

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