Teva's branded drug pivot is delivering. Duvakitug, co-developed with Sanofi, could add billions in peak sales. Phase 3 data will decide the next leg.
Teva Pharmaceutical Industries (NYSE: TEVA) shares have climbed about 85% over the past 12 months as the company shifts its center of gravity from generics to branded drugs. The stock has pulled back recently, but the drivers that powered the rally are still in place.
Generic drugs now make up barely a majority of Teva's overall sales, according to first-quarter 2026 results. Branded products – Austedo, Ajovy, and Uzedy – are posting mid-double-digit annual sales growth.
Management expects earnings per share to drop from $2.65 in 2025 to between $1.91 and $2.11 this year. Much of that decline reflects the initial dilutive effect of Teva's recent acquisition of Emalex Biosciences. Starting next year, the company expects a 30% increase in operating profit and adjusted EBITDA, driven by biosimilar launches and continued growth of the branded portfolio.
Duvakitug as the wildcard
The bigger swing factor sits in the pipeline. Duvakitug, a treatment for ulcerative colitis and Crohn's disease co-developed with Sanofi, is in phase 3 trials. Phase 2b results were strong, and management has guided for peak annual sales of $2 billion to $5 billion if the drug reaches the market.
Phase 3 data will determine whether that range is realistic. Positive results would put duvakitug on a fast track toward commercialization and add a revenue stream that is not priced into the current valuation. The stock trades at less than 10 times estimated 2027 earnings.
What could go wrong
A phase 3 miss would remove the pipeline catalyst and leave Teva reliant on biosimilar and branded growth alone. The Emalex acquisition also adds execution risk – integrating a new business while managing the generic-to-branded transition is not straightforward.
Teva carries an Alpha Score of 63 on AlphaScala, a Moderate rating. The company's stock page is at /stocks/teva.
The bottom line
Teva's branded pivot is delivering measurable results. Duvakitug is the variable that could drive the next major move. Phase 3 data will tell the story.
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