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What Teva Pharmaceutical Predicts for Expenses in 2018

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Dec. 4 2018, Updated 7:32 a.m. ET

Restructuring plan

On December 14, 2017, Teva Pharmaceutical (TEVA) issued a press release announcing a restructuring plan to reduce its cost base by $3.0 billion from $16.3 billion in fiscal 2017 to $13.3 billion in fiscal 2019. According to Teva Pharmaceutical’s third-quarter earnings conference call, the restructuring program resulted in a $2.0 billion reduction in the company’s spending base in the first nine months of 2018. However, the strengthening dollar had a negative impact on these savings, resulting in a net reduction of $1.8 billion in the spending base. The performance has exceeded the spending reduction target for fiscal 2018, which was $1.5 billion.

According to Teva Pharmaceutical’s third-quarter earnings conference call, since the beginning of the restructuring program, the company has already reduced its manpower by 9,100. The company expects to further reduce its headcount in accordance with the target set in the restructuring plan.

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Expense projections

Wall Street analysts expect Teva Pharmaceutical to report selling, general, and administrative (or SG&A) expenses of $2.82 billion in fiscal 2018, which would be a YoY drop of 17.39%. The company is also expected to report SG&A expenses of $2.58 billion in fiscal 2019, which is a YoY drop of 8.27%. Wall Street analysts have also forecasted Teva Pharmaceutical’s fiscal 2020 SG&A expenses to be $2.54 billion, which would be a YoY decline of 1.48%.

Wall Street analysts expect Teva Pharmaceutical to report research and development (or R&D) expenses of $1.08 billion in fiscal 2018, which would be a YoY decline of 31.73%. The company is also expected to report R&D expenses of $990.88 million in fiscal 2019, a YoY decline of 8.54%. Wall Street analysts have forecasted Teva Pharmaceutical’s fiscal 2020 R&D expenses to be $964.84 million, a YoY decline of 2.63%.

In the next article, we’ll discuss growth trends for Teva Pharmaceuticals’ Ajovy.

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