Teva Pharmaceutical Industries (NYSE: TEVA) saw its shares surge approximately 11% in New York trading on Wednesday after the Israeli drugmaker reported first-quarter earnings that topped analyst expectations. The strong performance was fueled by accelerating sales of its key branded products, signaling that Chief Executive Richard Francis's turnaround strategy is gaining traction.
The company posted adjusted earnings of $0.53 per share on revenue of $3.98 billion, surpassing the consensus estimate of $0.48 per share and $3.8 billion in revenue, as reported by LSEG. The results underscore a deliberate pivot away from the low-margin generics business toward higher-growth branded pharmaceuticals.
Teva's three growth engines — Austedo, Ajovy, and Uzedy — collectively generated $838 million in the quarter, a 41% increase in local currency terms. Austedo, a treatment for tardive dyskinesia, led the pack with $578 million in global sales, up 41%. Migraine drug Ajovy contributed $196 million, a 35% gain, while Uzedy, a long-acting injectable for schizophrenia, saw sales surge 62% to $63 million. In the U.S. alone, these three products brought in $709 million, surpassing the $612 million generated by the company's U.S. generics and biosimilars business.
Conversely, global generics revenue fell 16% year-over-year, pressured by increased competition for lenalidomide capsules, the generic version of Revlimid. This decline highlights the ongoing challenges in Teva's legacy generics segment, which has been a drag on overall performance.
In a strategic move to bolster its pipeline, Teva announced the acquisition of privately held Emalex Biosciences for $700 million in cash, with an additional $200 million tied to commercial milestones and royalties. The deal brings ecopipam, a late-stage investigational treatment for pediatric Tourette syndrome, into Teva's portfolio. Ecopipam has received FDA Orphan Drug and Fast Track designations, and its late-stage trial met its primary endpoint with statistical significance. Teva plans to file a New Drug Application in the U.S. in the second half of 2026.
J.P. Morgan analyst Chris Schott noted that investors are increasingly focused on Teva's branded lineup, particularly Austedo's solid growth trajectory. He also pointed to upcoming pipeline catalysts later this year and projected growth through 2027, describing an 'attractive setup for shares.' However, the acquisition will pressure near-term profits. Teva maintained its 2026 revenue guidance of $16.4 billion to $16.8 billion but revised its adjusted EPS forecast downward to $1.91-$2.11, reflecting the Emalex deal. Without the acquisition, adjusted EPS would have been in the $2.57-$2.77 range.
Looking ahead, Teva faces potential headwinds. CEO Francis acknowledged uncertainty around Austedo's performance as U.S. price negotiations under the Inflation Reduction Act approach in 2027. CFO Eli Kalif noted that the company has so far experienced only 'nominal increases' in transport and energy costs related to the Middle East conflict. Additionally, Teva's board has directed management to explore a potential share repurchase program, pending legal and market conditions.
The company's shift toward branded drugs comes as it continues to navigate legacy legal battles and competitive pressures. Mylan (now part of Viatris) launched a generic version of Teva's former blockbuster multiple sclerosis drug Copaxone in 2017, and Teva still faces lawsuits over alleged efforts to delay generic competition. For Teva, the success of its branded portfolio is more than a quarterly highlight — it's a critical component of the company's long-term strategy to restore investor confidence and drive sustainable growth.