Speaker 1: Bloomberg Audio Studios, Podcasts, radio, news.
Speaker 2: Business, Bloomberg Markets. I'm Scarlett Food. It's time now for
Speaker 2: the stock of the hour, and we're focused on Teva Pharmaceuticals.
Speaker 2: Those shares are rising after the drug maker reaffirmed its
Speaker 2: full year revenue guidance, even after sales missed estimates for
Speaker 2: the second quarter. For the quarter that ended, Teva is
Speaker 2: gearing up to launch new products in the second half
Speaker 2: of the year and looking at spinning off its active
Speaker 2: ingredient business, which it hopes will work as catalysts. So
Speaker 2: joining us live, I'm pleased to say, is the Teva CEO,
Speaker 2: Richard Francis, and of course Bloomberg Open Interest co hosts
Speaker 2: Katie Greifeld here with us as well. Richard, thank you
Speaker 2: so much for speaking with us. I want to start
Speaker 2: with the backdrop that you are operating against, which is tariffs,
Speaker 2: and how that affects you the US and you kicked
Speaker 2: off this week agreeing to fifteen percent tariffs on pharmaceuticals.
Speaker 2: How does that affect your business, particularly here.
Speaker 3: In the US.
Speaker 4: Well, firstly, thank you Scott Kate for having me. I
Speaker 4: do appreciate the time. So when it comes to tariffs, yes,
Speaker 4: that is hot, hot topic and how it impacts us.
Speaker 4: A couple of things I'd say is, firstly, we're not
Speaker 4: super clear on exactly the detail of what's happened in
Speaker 4: Europe and whether generics are included or whether they're not.
Speaker 3: I would like to say the exposure to China.
Speaker 4: We don't have an exposure to China, and we are
Speaker 4: very limited exposure to India because obviously you saw the
Speaker 4: tariff's beIN announced this morning.
Speaker 3: But I think the reason why I.
Speaker 4: Thought in a good position is our supply chain and
Speaker 4: how it sets up. So we have eight manufacturing sites
Speaker 4: in the US already, and our major product, which I'm
Speaker 4: sure we'll talk about, oesteto, which grow twenty two percent
Speaker 4: of the US, is manufactured in Florida. So I think
Speaker 4: from a point of view a supply chain, we're in
Speaker 4: a good position. But what we do need to have
Speaker 4: is clarity on what these tariffs mean in Europe and
Speaker 4: what they mean in other parts of the world, and
Speaker 4: the detail of that, because there has been some rumors
Speaker 4: that generics.
Speaker 3: May be excluded or not until we'll have to wait
Speaker 3: and see.
Speaker 2: Yeah, no, you're working in a fog of uncertainty. Get that,
Speaker 2: and I'm just curious whether you've had conversations with the
Speaker 2: White House or surroguits of the White House on these
Speaker 2: specific issues.
Speaker 3: Well, we've been.
Speaker 4: Working with them on two three two and make it,
Speaker 4: helping them sort of work through what is the complexity
Speaker 4: of the pharmaceutical market, the supply change as well as
Speaker 4: on the innovative side and on the generic side.
Speaker 3: But with regard to these tariffs that.
Speaker 4: Have just recently announced, we don't have any clarity yet
Speaker 4: on the detail.
Speaker 3: What I would say is because of.
Speaker 4: What I said about our supply chain and our footprint
Speaker 4: in the US as well as we've been working the
Speaker 4: last few months on mitigating plans.
Speaker 3: As to whatever may happen. Now let's see the detail.
Speaker 4: But it's something where I think we already would have
Speaker 4: plans in place to at least mitigate some of this.
Speaker 1: I hear what you're saying, Richard, that there's a lot
Speaker 1: of details that we would all like to have, especially
Speaker 1: you where you're sitting as the CEO of a pharmaceutical business.
Speaker 1: But you said in May that you would have to
Speaker 1: raise drug prices if President Trump imposed those pharma tariffs.
Speaker 1: So now that we have at least some details. When
Speaker 1: it comes to the US and the EU, is that
Speaker 1: still the plan? Is that a lever that you planned
Speaker 1: a pull?
Speaker 4: Well, I g when you think about the two businesses
Speaker 4: we have, we have the innovative business and we have
Speaker 4: the generics. On the innovative business, we won't increased prices
Speaker 4: because the way the system set up, we can't.
Speaker 3: So that's just the fact.
Speaker 4: But as I said, our major products actually made in
Speaker 4: the United States, so tariffs are not actually relevant to that,
Speaker 4: which is good for US. I think when it comes
Speaker 4: to Generics, is a very competitive market and you can
Speaker 4: you can only raise prices when you have a new contract,
Speaker 4: and in that position, we would instill a free market.
Speaker 4: So it depends what our competitors do. So I think
Speaker 4: the ability for prices to change will depend on the
Speaker 4: competitive environment and how some of our competitors move. So
Speaker 4: I think will they go up? I think we'll have
Speaker 4: to wait and see. There is the potential that they could.
Speaker 4: But I would argue that you know, in the United States,
Speaker 4: one in fifteen scripts is a tap a script. So
Speaker 4: we are a major supplier of the healthcare system in
Speaker 4: the United States, and we've been community into the administration
Speaker 4: who are very aware of this, and I would say sympathetic.
Speaker 4: They want to make sure there is a good supply
Speaker 4: of medicines to the United States, and so I think
Speaker 4: as that all plays together, we'll understand actually how tarifs
Speaker 4: do fall on the generics and or if they do
Speaker 4: or if they don't. But I think that's how it's
Speaker 4: separated up is we have the innovative where we can't
Speaker 4: raise prices. Theoretically you can in generics, right, but it
Speaker 4: is a competitive environment.
Speaker 1: I appreciate the context there. I want to talk about
Speaker 1: another issue that we are also searching for details on,
Speaker 1: and that is Most Favored Nation drug pricing. That is
Speaker 1: a proposal that President Trump has floated. We've been talking
Speaker 1: about your generics business, but when it comes to your
Speaker 1: branded franchise, how might MFN affect that and are you
Speaker 1: putting any plans in place there?
Speaker 4: Well, actually, we're in a really unique position here, Katie.
Speaker 3: So I don't think most people are sit in my
Speaker 3: seat will.
Speaker 4: Answer it this way. Is because our innovative portfolio is
Speaker 4: so young. I mean, it's twenty seven cent growth and
Speaker 4: is closing on two point nine billion dollars of revenue.
Speaker 4: And this is a Stato a jovi and you said it,
Speaker 4: but apart from a Jovi, these are basically sold in
Speaker 4: the United States. We haven't gone global yet and so
Speaker 4: because of that, the most favored nation pricing I think one,
Speaker 4: we need to see what it says and when it's
Speaker 4: going to be.
Speaker 3: Put in place.
Speaker 4: But we're not a mature by a farmer company yet
Speaker 4: where we have that geographical footprint of our innovative business.
Speaker 4: So that gives us, I think, time to think about
Speaker 4: what we do, to think about where we launch our products,
Speaker 4: and to think about the pricing. But right now, Oestio
Speaker 4: and your studia are pretty much sold in the United States.
Speaker 4: A Jovi is sped across Europe and international markets, so
Speaker 4: that's a very limited footprint compared to many other biofarmer companies.
Speaker 4: What I would say is it's important to understand what
Speaker 4: the most favored nation look like. Because another thing I'd
Speaker 4: say is when you look at the actual net price
Speaker 4: of products in the United States, on many cases, because
Speaker 4: of what has happened with the PBMs over time, the
Speaker 4: net price versus the price in Europe, there's not as
Speaker 4: big a differentiation that's differential as you'd imagine on many.
Speaker 3: Drugs, so let's wait and see how it plays up.
Speaker 4: But I think we're in a strong position as TeV
Speaker 4: and that's important because our innovative portfolio is growing so
Speaker 4: well at twenty seven percent.
Speaker 1: And Richard, we have less than a minute left here.
Speaker 1: But Scarlett alluded to this in the intro that there's
Speaker 1: a lot of interest in the Tappy business over at Teva.
Speaker 1: Have you found a buyer yet?
Speaker 4: So we've been in active discussions and we are in
Speaker 4: active discussions, which is why I'll probably keep this quite
Speaker 4: short and we'll have an announcement on this at the
Speaker 4: end of Q three. What we are doing is taking
Speaker 4: the time to make sure whatever we do, we really
Speaker 4: bring value to our shelders, which is the prime responsibility
Speaker 4: I have is to make sure we create a long term,
Speaker 4: sustainable company that creates shelder value.
Speaker 2: Richard Francis, you've just earned yourself an invitation to come
Speaker 2: back by the end of the third quarter with that announcement.
Speaker 2: Thank you so much for joining us today, Pharmaceutical CEO,
Speaker 2: Richard Francis, And of course Katie where I fell at
Speaker 2: Bloomberg Open Interests co host