Teva Pharmaceutical Seeks Clarity on Trump Drug Tariff Plans

What happened

Teva's CEO addressed potential headwinds from a proposed US tariff on generic-drug imports, expected in two years, while reporting second-quarter results that showed continued momentum in branded medicines. Revenue of $4.14 billion topped Wall Street estimates, though adjusted earnings of $0.02 per share missed forecasts due to $726 million in acquisition-related expenses tied to Emalex Biosciences. The company raised its full-year 2026 revenue guidance to $16.5–16.85 billion and now expects its three key branded drugs-Austedo (up 40% to $696 million), Ajovy (up 56% to $244 million), and Uzedy (up 43% to $77 million)-to generate around $3.7 billion in combined annual sales by year-end. Teva's generics division declined 15% year-over-year, mainly from increased competition for lenalidomide capsules in the US.

Why it matters

The tariff uncertainty introduces a potential new cost variable for Teva's generics business, which still accounts for roughly half of total revenue. However, the company's strategic pivot to branded medicines is accelerating: the trio of Austedo, Ajovy, and Uzedy delivered 43% combined local-currency growth and now represent a growing share of sales. While the Emalex deal depresses 2026 adjusted EPS by about 66 cents and won't be accretive until at least 2028, investors are betting on Teva's ability to build a steadier, higher-margin revenue stream through branded drugs and biosimilars. Management also guided for a 30% increase in operating profit and adjusted EBITDA starting in 2027, supported by biosimilar launches and further branded-drug uptake.

Bigger picture

Teva's transformation reflects broader industry trends: branded medicines and biologics command higher margins and more durable revenues than generics, which face relentless pricing pressure and competition. The proposed US tariff on generic imports could further squeeze margins across the generics sector, making Teva's pivot even more strategically critical. Meanwhile, the company's pipeline candidate duvakitug, co-developed with Sanofi for ulcerative colitis and Crohn's disease, could reach $2–5 billion in peak annual sales if phase 3 trials succeed. Shares have rallied roughly 85% over the past year and trade below 10 times estimated 2027 earnings, suggesting the market is starting to reward the strategic shift but still pricing in execution risk.

What to watch

Investors should monitor any official guidance or policy announcements on US generic-drug tariffs, as clarity could meaningfully affect Teva's generics margin outlook. Near-term catalysts include continued sales growth for Austedo, Ajovy, and Uzedy; the anticipated 2027 launch of the ecopipam Tourette syndrome therapy from Emalex; and phase 3 results for duvakitug. Teva also plans to switch its New York listing from ADS to ordinary shares on September 14th, a technical change that could affect trading liquidity. Finally, watch for the company's ability to stabilize or grow its generics business despite competitive headwinds, as that segment still underpins roughly half of total revenue.