Ladies and gentlemen, thank you for standing by, and welcome to the Teva Pharmaceutical Q3 2020 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one on your telephone. We will kindly ask you to limit yourself to one question and one follow-up each. I must advise you that this conference is being recorded today. I would now like to hand the conference over to your first speaker, Kevin Mannix, Senior Vice President, Investor Relations. Please go ahead, sir.
Thank you, Valerie, and thank you everyone for joining us today to discuss Teva's Q3 2020 financial results. On the call with me are Kåre Schultz, Teva's Chief Executive Officer, Eli Kalif, Chief Financial Officer, and Brendan O'Grady, Teva's Head of North America Commercial. We hope you've had an opportunity to review our earnings press release, which was issued earlier this morning. A copy of the release, as well as a copy of the slides being presented on this call can be found on our website at www.tevapharm.com, as well as through our Teva Investor Relations app. Please note that the discussion on today's call includes certain non-GAAP measures as defined by the SEC. Management uses both GAAP financial measures and the disclosed non-GAAP financial measures internally to evaluate and manage the company's operations and to better understand its business.
Further, management believes the inclusion of non-GAAP financial measures provides meaningful supplementary information and facilitates analysis by investors in evaluating the company's financial performance, results of operations, and trends. A reconciliation of GAAP to non-GAAP measures is available in our earnings release and in today's presentation. To begin today's call, Kåre and Eli will provide an overview of the Q3 performance, recent events, financial outlook, and priorities going forward. This will be followed by a question and answer session. Today's call, which will run for one hour, is being webcast live and recorded. You'll be able to replay the call as well as view the transcript later today on the Teva Investor Relations website. With that, I'll now turn the call over to Teva's CEO, Kåre Schultz. Kåre, if you would, please.
Thanks, Kevin. Welcome to all of you. Thanks for joining this call. Thanks for your interest in Teva. We had a solid Q3. We saw revenues of $4 billion. That's slightly below our expectation. The reason was that we saw overall lower total script volume in both U.S. and Europe as a consequence of COVID-19. Slightly less patients actually going to doctors and to hospitals for therapy. When we look at the EBITDA, the non-GAAP EBITDA came in at $1.2 billion, which is completely in line with our expectations. We compensated for the slightly lower revenues by cost savings. We had a GAAP loss per share of $3.97. That includes a $4.6 billion goodwill impairment. We had a non-GAAP EPS of $0.58, which was completely in line with our expectations.
The free cash flow was also in line with expectations at $0.5 billion. We are very happy to see a continued reduction in our debt, and the net debt as of the end of the Q3 now stands at $23.8 billion. In terms of business news, we had several interesting things happening in the Q3. The first one I mentioned here actually happened at the very end of the quarter, the last day of the quarter. That was the very successful launch of the generic versions of the HIV medications, Truvada and Atripla in the U.S. The sales are all booked in the Q4, but we actually did have the sort of physical launch on the very last day of the Q3.
We're also very happy that we continue to see the strong penetration of TRUXIMA, and we're also very happy about the development of AJOVY and the fact that we are now looking forward to getting it approved in Japan, since it has been sent in to the authorities by our partner, Otsuka, in July. In a very interesting move, we now complement our portfolio of inhalers, digital inhalers in the U.S. asthma space, and we now have launched also the AirDuo Digihaler and the ArmonAir Digihaler, which basically means that we offer a full therapeutic opportunity for people to treat their asthma with our digital inhalers, which is a new and very advanced way of treating asthma, where you get direct feedback from the device and where your device communicates with your smartphone direct to your caregiver. We are having high expectations for this going forward.
Last but not least, I'd like to just touch very briefly on the fact that despite COVID-19, which is affecting the whole world and, of course, affects all the countries in which we have our operations, we were able, through resilience of our organization, to maintain full operational capacity everywhere and serve the roughly 200 million patients we serve on a daily basis with our essential medicines. Next slide, please. Today, I actually celebrate that I've been three years with the company as CEO, and one of the key things which I'm proud of is this debt reduction you're seeing here. In the three years that have passed since I joined, we've reduced the debt from $34 billion down to $23.8, so more than $10 billion reduction. As you know, it's our ambition to keep on doing this in the coming years.
I'm sure that in the next three years, we will also see a significant reduction in the overall debt. That's, of course, important because the debt following the Actavis acquisition had reached a level which was not healthy for the financials of the company long term. It's a really good and nice improvement here that we're now down below five times net debt to EBITDA. Let's move to the next slide, please. In terms of revenue development, you could say the last three years we've seen a significant reduction in revenue as a consequence of the patent expiry of Copaxone in the U.S. and Europe. We've actually reached a level where we have sort of flattened, we have plateaued, stabilized the revenue, and we are now looking forward to marginal increases in revenues going forward.
There's a couple of quarters here where we had once-offs, and we always had that once in a while. That's the nature of our business. One was one we knew about, that was the Q4 in 2019, where we made a launch of [Sinequan] that boosted, as you can see, the North American sales, that generic launch. The Q1 of 2020, where in Europe we saw a patient-level hoarding of all kind of products, generics, all kinds of products, which happened just at the arrival of COVID-19 before the lockdowns, and that's why you see the European sales jump in the Q1 of this year. There was a reverse of that jump in the Q2, so you see the European sales go down from $1.4 billion in the Q1 to $1 billion in the Q2.
Now you're seeing more of a normalization. I would say the European and U.S. sales here in the Q3, they are probably around 5% below the normal run rate that our market share would carry. We've not lost any market share, so it's really that the volume in the market is still somewhat negatively affected by COVID-19. We do hope, of course, that in the coming quarters, we will see a normalization so that we get back to normal total market size. Then, of course, in the Q4, we will see the benefit of the so far very successful launch of AJOVY and TRUXIMA in North America. A little bump up there in North America in Q4. Can we move to the next slide, please?
As you know, we have three main drivers that will drive our revenue up, and then we have one very stable element. The three drivers that will drive our revenue up, they are two key products. The first one is the one you're looking at now, AUSTEDO. AUSTEDO has had a really good track record since its launch at the end of 2017, which is actually exactly three years ago. You can see it still keeps growing strongly. Also here, there are some ups and downs per quarter. That's just random moves in the pipeline, so to speak, or in the value chain. The main thing here is it keeps increasing. It's 64% up versus the same quarter a year ago, and we're now above 10,000 patients.
I know I mentioned this before, but it really is important to realize that the 10,000 patients is a combination of Huntington's disease and tardive dyskinesia. The potential for tardive dyskinesia in the U.S. is huge. There are roughly 500,000 patients suffering from tardive dyskinesia in U.S., and of course, not everybody will all get therapy, but I'm sure that in the following years, we'll see more patients in therapy than we have right now. I'm very optimistic that we'll see a continued strong growth of AUSTEDO in the coming quarters. If we move to the next slide, please. Now, the second element that needs to drive our growth worldwide is AJOVY. Here we have actually quite an interesting development. First of all, let's start with the negative piece.
The negative piece is that the sales were 35 million, and we would like to see them higher. That's partly because our TRx share is a little bit low now due to the fact that we lost in NBRx, we lost traction in the market in the beginning of this year, basically due to the fact that we did not have an auto-injector, and the two competing products both had an auto-injector. Now, we have launched the auto-injector back in May, and what you see here is something that I've only seen, I think, once before in my 30 years in pharmaceuticals. It's a really successful relaunch, in this case, driven by a device. What you see is that the capture rate sort of has more than doubled in a few months from being close to 11% to now being nearly 25%.
You can see now that it starts to carry through to the TRx count. I'm very optimistic that we will continue to see AJOVY grow nicely. I can tell you, it's not on this slide, but in Europe, we see the same very nice development in a big market such as Germany, where we also launched the auto-injector. We also see a constantly growing market share also to the same level of sort of 20-some%. I expect that this market share will continue to grow throughout next year, both in U.S. and in Europe. Not the high revenue number we would have liked to seen, but some really, really good indicators here that AJOVY will show strong growth next year, both in U.S. and Europe. Next slide, please.
Another element in our strategy, here I refer to our R&D strategy that we disclosed some time ago, is biosimilars. Those of you who have followed the company know that I've been saying before we launched TRUXIMA a year ago, that we wanted to prove that the U.S. market is really open for biosimilars. If you have the right commercial setup, you can actually penetrate nicely. There's a new situation in U.S. where it's possible to make a good business and get nice market shares with biosimilars. I think I promised from the beginning that the success criteria would be that we needed to get a double-digit market share within a year. What we see here is that we have a double-digit market share, which is good. It's just around 20% right now.
I believe it will keep on increasing in the coming quarters. We're very, very satisfied with the launch of TRUXIMA. This is, of course, important because it's a good launch, but it's also important because, as you know, we have more than 10 biosimilar products in our pipeline now for North America, for the U.S. market. This is just validating the commercial model that this is a business which is a really good supplement to traditional old generics, and we are looking forward to launching many more biosimilars going forward. One of the reasons why we think that TRUXIMA will keep on growing is really that it's the only rituximab biosimilar that has RA indication as part of its label. Next slide, please. We are looking into, hopefully, a marginally growing revenue in the coming periods as a consequence of these growth drivers I just described.
Of course, combined with the fact that Copaxone keeps declining, but keeps declining less than these three elements are growing. That's not the only thing which goes into our sort of optimization of the business. We are also working very hard on improving the operating margin, both through the gross margin and through total improvement in our business model. Here you see how we bottomed out at 24.5% in 2019, how the guidance that Eli will go through a little later, where we narrow the band on the upper end of the earnings guidance. Here you can see how the band for the operating margin is now somewhere between 25.5%-26%. You also see our long-term financial targets of 28% in 2023.
This is a target that we set more than two years ago, just after I joined Teva. This is a target we are firmly committed to. All our optimization of the business is driving towards achieving this target, which is very doable. Now, this takes me to the next slide. Here I have the same slide as you've seen many times. This is basically a slide that's been unchanged for a couple of years. I think it will stay unchanged hopefully for the next three years until we get to the point where we actually realize the numbers, which will be at the end of 2023, which is three years from now.
First of all, we are committed to the 28% operating income margin, we are committed to cash earnings above 80, and we are committed to getting the net debt to EBITDA below three times. We do not plan to raise any equity. On this slide, I would like to actually reflect a little bit on the last 3 years with Teva, because it has been a phenomenal journey operationally together with my management team and all the employees. I think everybody's done a fantastic job in optimizing the company, restructuring the company, securing a healthy margin despite a revenue loss of around $5 billion on a yearly basis, getting good control on the cash flow and keeping on paying down the net debt.
I would like to share with all our shareholders who are listening that it is, of course, frustrating that when your operational plan actually is executed completely according to plan and you see your whole organization doing a great job, that you then have legal situations, litigation situations in the U.S. which are related to events way before you joined the company, litigation situations that gets worse than what you saw before you joined the company three years ago. That is something I think I share with everybody that both the opioids and the price fixing has developed to be, especially the opioids, more complex than was foreseen maybe three, four years ago.
It is a fact that if we look at the share price and the market value of the company, then it is actually, you could say, decreased or held down by the overhang from the litigations. Of course, we would love to solve these litigations. We are still in a constructive positive dialogue with the state AGs on the opioids. As you know, we are going to trial with DOJ on the price fixing. We believe that in both these cases, we will eventually see a good settlement of the situations. It is, of course, a frustration that right now we do see the market cap being held down by these legal situations. On that note, I will hand over to Eli Kalif.
Thank you, Kåre. Good morning and afternoon to everyone. As always, we start with a review of the GAAP performance on slide 13. Revenue in the Q3 of 2020 were approximately $4 billion, a decrease of 3% in both U.S. dollar and local currency terms compared to the Q3 of 2019, mainly due to lower revenue from generics, OTC, and Copaxone in all regions, and lower revenue from QVAR and BENDEKA/TREANDA in our North America segment, as well as reduced demand for certain products resulting from the impact of COVID-19 pandemic, partially offset by higher revenue from [Otezla] and AJOVY. Teva posted a quarterly GAAP loss of $4.35 billion, a loss per share on a GAAP basis of $3.97 for the Q3 of 2020.
The significant year-over-year decline was mainly due to a $4.6 billion goodwill impairment, which I will discuss on the next slide. On slide 14, we can see the impairment, restructuring, and other non-GAAP adjustments, which totaled approximately $5 billion for the quarter. The majority of this amount was a result of a $4.6 billion goodwill impairment that was booked to the North America reporting unit in connection with current market capitalization influenced by uncertainty regarding the timeframe for resolution of certain litigation. The company is committed to its projected cash flow target, and management view on the litigation exposure has not changed. However, recent developments indicate the timeframe for resolution will take significantly longer than previously expected. As such, for accounting purposes, management has incorporated these factors into its valuation of the North America reporting unit, resulting in an impairment charge of $4.6 billion.
Amortization was $251 million for the Q3, aligned with the range of $250 million-$260 million per quarter that we guided at to the beginning of the year. Now turning to our non-GAAP performance on slide sixteen. Again, we see modest year-over-year decline in quarterly revenue, which I addressed in my opening remarks. Moving down the P&L, gross margin was 62.4% in Q3 2020 compared to 61.4% for the same period in 2019. The higher gross margin was mainly due to improvements in our operating network, coupled with increased sales of AUSTEDO with high gross margin, partially offset by decline in the generic business as well as our legacy specialty brands in the U.S.
Year-to-date, our gross margin is 62.5% versus 61.5% in the full year 2019. As Kåre mentioned, we remain on track to reach our long-term financial targets. The year-to-date improvement in the gross margin is a reflection of our ongoing development plan to operate with the most optimal manufacturing and efficient overhead cost structure. Looking ahead at Q4 2020 and for the full year, we expect our gross margin to reach the level of 62.5%. Operating income in the quarter declined by 3% compared to the same period of 2019. While our operating margin of 25.8% for the quarter was in line with Q3 2019. Still, our year-to-date operating margin was 26.6% versus 24.5% in the full year 2019.
In the first nine months of 2020, operating expenses were $201 million less than the same period last year. As part of our long-term financial targets, the company continues to manage expenses and fundamentally reposition the overall operating expense structure with a view that disciplined cost structure can provide incremental earnings leverage as revenues stabilize and begin to grow again. Looking at Q4 and the full year, we expect our operating margin to be stable at the level of 25.5%-26%, as Kåre notified earlier. Non-GAAP earnings per share in the Q3 were $0.58, in line with the same period last year and bringing our year-to-date non-GAAP earnings per share to $1.89 versus $1.78 last year. Turning to slide sixteen. I would like to touch briefly on our spend base.
Despite the quarterly fluctuation in the top line this year, due to the COVID-19 pandemic, we have done a good job managing our overall spend base. Our spend base in the first nine months of the year was just under $9 billion, a decrease of $381 million versus the same period in 2019. The reduction in the spend base is a reflection of both the active management of our operating expenses and the ongoing efforts to improve our gross margin through the transformation of our network, which we outlined at the start of the year. Overall, if we add together the expansion of the both gross and operating margin in 2020 compared to 2019, we can see the progress in the main five key levers we introduced earlier this year.
Procurement cost excellence, network optimization and restructuring, operational and quality excellence, end-to-end supply chain integration, and agile operating model and organization. Turning to slide 17. We see our free cash flow for the quarter came in at $506 million, compared to $551 million in Q3 2019. The sequential decline from Q2 2020 was mainly the result of an increase in inventory. This brings our total free cash flow generation for the first nine months of 2020 to more than $1.6 billion, benefiting from stronger than unusual start of the year. Based on the first three quarters and our outlook for the remainder of the year, we are maintaining our guidance for 2020, which is $1.8 billion-$2.2 billion. Turning to our debt development on slide 18.
As you all know, our current and long-term focus continues to be on debt reduction. In July, the company repaid $1.2 billion in maturities, bringing the total debt repaid this year to $1.9 billion. Unfortunately, due to translation differences, we only saw a more sequential decline in our net debt total and a slight uptick in our net debt to EBITDA ratio, which was 4.92 terms. We continue to expect this ratio to remain under five terms going forward and decline each year, reaching under three terms by year-end 2023. As we have noted throughout the year, we have the liquidity and cash flow to cover bond repayments for the year 2021 and 2022 before looking to refinance the 2023 maturities. Turning to the financial outlook for 2020 on slide 19.
This year has proven to be a most unique year indeed, with the global pandemic presenting our operation in all three regions of the world with the challenges that have made it difficult to accurately forecast the top line. We need to remember that we are still operating in a very dynamic and highly volatile environment. We are working every day to ensure the health and wellbeing of our employees worldwide while managing through a frequently changing local condition at our locations worldwide. Our financial outlook is therefore based on our current visibility and information that is available today and does not reflect any unexpected impact of COVID-19 on our businesses. Throughout the year, we have seen the significant effect it has on the purchasing pattern of our large global customers and overall utilization by patients. In Q1, we experienced stronger than expected revenue of pandemic-related products and customer stocking.
This effect was offset in Q2, and we saw a continuing decline in Q3. As a result of this, and based on the performance of the first nine months, today, we're adjusting our guidance range for full-year revenue from the original range of $16.6 billion-$17 billion to the new range of $16.5 billion-$16.8 billion. This lowers the midpoint of our range by $150 million. The new range includes adjustments to our full-year expectation for global sales of Copaxone and AJOVY. For Copaxone, we are raising our guidance by $100 million to approximately $1.3 billion. For AJOVY, we are lowering our guidance by $50 million to $200 million for the reasons Kåre mentioned described.
For our other financial targets for 2020, operating income, EBITDA, and earnings per share, we're tightening the range by bringing up lower end for each one, reflecting the reduction in spend base that I just outlined a few minutes ago. Free cash flow guidance, as I already mentioned, remain unchanged. Where we end up within each of these range will be determined mainly by the rate of recovery in purchasing pattern and overall utilization by patients, which has been impacted by the ongoing pandemic, as well as our product mix in our generic business for the rest of the year. This concludes my review of the Q3 results and 2020 financial guidance. We will now open the call for questions and answers. Operator, would you please open the call for questions?
Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the hash key. We will remind you to limit yourself to one question and one follow-up each. Once again, it is star one to ask a question. Your first question comes from the line of Greg Gilbert of Truist Securities. Please go ahead.
Thank you. Good morning, Kåre. As you pointed out in your prepared remarks, the company's executing well against the targets that you and the team have laid out, Your equity continues to be held back by liabilities that you inherited. I was hoping you could comment or update us on those liabilities. On opioids, it looks like J&J and the distributors have very recently updated their financials to reflect what could be a near-term settlement. On that, perhaps you could weigh in on whether Teva is linked into that or not, or on your own. On price fixing, you previously expressed, in our view, open-mindedness in settling with the DOJ, even with a reasonable DPA and a penalty. Has that ship sailed given your comments about going to trial? Any other color you could offer would be great. Thank you.
Kåre, just check your mute button, please.
Thanks for that. Very good question. On the opioids, we are still in a very positive dialogue with the AGs, and that's the same group of AGs, of course, that we did the framework settlement with. It is, hopefully so that we'll see a firm settlement within the foreseeable future. The problem is, I've said that before, and I've also alluded to the fact that one of the triggering points for getting the actual settlement done where everybody signs, because there's a lot of parties involved in this, a lot of the states, a lot of the plaintiff lawyers and so on. One of the triggering points for getting settlements like this done is when there is the pressure from an actual trial that all the parties are going to.
I was very optimistic, I guess about a year ago, that the New York trial that was scheduled originally for January, then March, then January, then got even postponed, hasn't happened yet. There was a West Virginia trial that got postponed. All the trials that could trigger that people sign on the dotted line have been postponed. It's quite obvious that there's been ongoing negotiations between us and the AGs and between the four other companies that participated in the framework. I would say that they are maybe more progressed in terms of the fact that they have reached another financial number than they started out with, all of them, it seems like. It's important to mention that from the beginning, we were five individual companies that were negotiating at the same time with the AGs.
We didn't negotiate a, you would say, combined deal. It's five deals, so to speak, each company having a deal with the AGs and the plaintiffs' lawyers. I'm still very optimistic that we will have a chance of seeing that whole thing come to a solution where we see a settlement, where we will be supplying SUBOXONE to all of the U.S., and that is really the best solution, because in doing so, we will be able to help people to wean off the misuse of opioids. That really what's the situation on opioids. On price fixing, I'm always open to a settlement if it's a settlement that is reasonable. A reasonable DPA with a reasonable fine, that is something, of course, that I can live with.
I can't live with having to admit to criminal acts that the company did, in my best assessment, not do. That's really why it's moving towards a trial. Sometimes, in these cases, we saw it last with the accusations on speaker programs, which we settled not so long ago. Sometimes once you get really close to the trial date, you have new people involved, and there's new negotiation, and it does get settled. Sometimes it actually goes to trial. It's not that I'm against settling. I'm just saying that we believe that the whole, you could say, body of evidence is so weak that it makes a lot of sense for us to go to trial. I hope that clarifies your question.
Thank you, Kåre.
Thank you. Your next question.
Next question.
Apologies. Your next question comes from the line of Umer Raffat of Evercore. Please go ahead.
Hi. Thanks so much for taking my question. Kåre, I know there's definitely a huge focus on the litigations and settlements, but as we think beyond and we think about the base business, I feel like the one thing investors aren't quite hearing is a clear plan on new products, new innovation, and the real direction from a base business evolution perspective where a real path is laid for sustained top-line growth, which people are willing to get excited about and put a real multiple on. I would just like to perhaps offer an opportunity for you to lay out your vision. Assuming you do get these settlements over the next 12 to 18 months, where do you see it going? What are the plans to make the next AJOVY and the next AUSTEDO and the like? A quick CFO question, if I may, as well.
There's an unusually large gain from American Well Corporation, and I wonder if there's other investments of this scale we should be aware of within Teva. Thank you very much.
Yeah. Thanks for those two questions. I'll start with the first one about future growth. It's a little bit, of course, a long answer I have to give you because our business is comprised of several buckets or several therapeutic categories, and the underlying business is really the generics and OTC business. There we see a quite stable situation in North America and in Europe. Of course, with these bleeps in North America, when we launch the first to file and we make some extra $100 million in a quarter, and then the next quarter we make some, and then not so much.
If you look at it underlying in terms of volume and in terms of sales, I would say a very stable business in North America and a business that keeps growing in the coming years, low single digits in Europe, stable pricing environment in Europe, and a renewed focus from some customers on the supply chain and on, you could say, the reliability of the supply chain. As you know, we have probably the most U.S., European-centric supply chain of any generics buyer. That's really the basis. Not a lot of growth, but stability in North America and some growth in the rest of the world on generics. On the biosimilars, I'm optimistic, as I just went through, that in the coming years we will see growth in our total biosimilar business.
I think it's relatively sustainable due to the fact that there will be less competition in the form of, there will be several competitors for each product, but there won't be 10 competitors. There's a higher hurdle investment to get in there, which means that prices will most likely be more stable than they are on traditional generics. I also think that biosimilars will contribute to growth. Of course, there are the two growth drivers that you just saw. You saw here that in the Q3, if we combine AUSTEDO and AJOVY, we probably did something like $200 million in total, and this is growing fast. Next year, if you do the math, combined, they will be $1 billion, and they will keep on growing.
They will drag a lot of growth, and that will go on in, I think, the foreseeable future. Then, of course, you have the, what should we call it? The possible positive surprise in the shape of fasinumab, because fasinumab has actually finished its phase III efficacy trials. There's one readout on long-term safety that we're getting in the Q1. We are two companies, or we're actually four companies, but two products in development for this action modality in pain medication. The ones ahead of us, Pfizer and Lilly, with their tanezumab, they have just gotten a AdCom with FDA. I think it's scheduled for March.
That basically means that by March, we will get a good indication of whether their product has a chance of getting approved. The mechanism of action is similar to our product, and you can't compare really from trial to trial, I know that. If you look at it doesn't look that there's any significant difference in efficacy or safety if you just look at it from an overall point of view. If they get a positive opinion and eventually a regulatory approval by FDA, there's a highlight that fasinumab can get the same. We just talked about all the negative elements of the opioid situation in the U.S. It does, of course, have the positive side to it, that there's a huge unmet medical need for non-addictive pain medications, and fasinumab could be one of those.
If [inaudible] makes it, then we will, for the next many years, have not two, but three main specialty products driving our top line. Add to that, as I said also before, the broad range, more than 10 biosimilars we have in the pipeline for the U.S. The other exciting things we don't talk about so much, but actually, we just had the end of our phase III program for a long-acting antipsychotic based on a new modality, new formulation for creating the prolonged action profile. As you know, in schizophrenia, the preferred solution is really long-acting products. Here we've made sort of a version of risperidone which is longer action and subcutaneous, which basically means that from a patient point of view, it should be by far the preferred product. We don't have the readout of that phase III trial yet.
We will have that sometime in the Q1. There are two to follow, olanzapine, lurasidone are to follow. We do have a lot of different things that can drive growth in the coming years. That was quite a long answer, but it really basically means that I'm optimistic that we will see not dramatic revenue growth, but single-digit revenue growth over the coming years, everything else being equal. Of course, in these COVID times, I can't promise you anything. We need to wait until we give the guidance for next year in February. If you ask me about the longer-term outlook, that's how I see the growth drivers, the key ones. You have a question about American Well. It's correct that we have a minor shareholding in American Well, and we are flagging that in our quarterly accounts.
Right now, we don't have any other holdings that are sort of in a situation where they would sort of, based on my sort of predictions for the coming year, pop up as having a major cash value. Thanks for the questions.
Your next question comes from the line of Ronny Gal of Bernstein. Please go ahead.
Good morning, and thank you for taking my question. Kåre, I'd like to talk a little bit about biosimilars because I think this is a really interesting growth drivers. I guess of the 10 products, let's just start with the 10 products you have in the pipeline. Could you share with us any name products before 2025? Out of those 10, how many are yours only versus how many are you sourcing from Celltrion or other partners? That is kind of like, what's your share of the margins here? Then specifically around the Humira biosimilars, if you mind me finishing this one. Specifically around the Humira biosimilars, I haven't seen a settlement for you with AbbVie, so I have no good idea about when you're going to come in. It seems you are doing its interchangeability trial.
If you can comment on that, tell us when you expect those results, and how do you think it positions you in the marketplace?
Yeah. First of all, out of the, let's say, roughly 10 plus biosimilars we have in development or where we are waiting for approval and launch in the U.S., it's 50/50 between internal development and things that we have in-sourced. You saw the Alvotech deal, which we announced just recently. We basically have half coming from that deal and half coming from our own internal development. I have to disappoint you that for competitive reasons, we have so far decided not to comment on any specifics. It's not difficult to guess some of them, I'm sure, because we are basically going for roughly the 10 biggest, because that makes the most sense. I'm sure you can guess most of them, we've actually decided not to comment on the actual timing and the actual products, that's really for competitive reasons.
I'm sorry about that.
Appreciate it.
Thanks for the question.
Thank you. Your next question comes from the line of Elliot Wilbur of Raymond James. Please go ahead.
Hi. Good morning. This is Lucas Leon for Elliot, thanks for taking my questions. The top-line outlook is lower by $100 million, with Copaxone outlook increased by $100 million and AJOVY down by $50 million, implying $150 million reduction in other areas. What are the primary factors accounting for that? If I could sneak in a product-specific question. AJOVY sales have been lighter than expected, given absolute and relative growth as measured by Rx trends. Could you help us understand the dynamics there? Is this a function of heightened rebate pressure, or were there other one-time factors leading to the flattish sequential top line? Thank you.
Thank you. Your math on the top line is absolutely correct. The $150 million that we talk about here is basically related to the lower total script volume in the U.S. on a lot of different products, including generics, and the same thing in Europe. What we saw was, we saw first a increase in volumes in the Q1. We saw a significant decrease in volumes in the Q2 to the tune of maybe 15%. In the Q3, we've seen on average, because there's, of course, ups and downs from different lines of business and so on, but on average, on both our sort of older specialty products and our generics, we are seeing something like a 5% reduction in total script volume across Europe and across United States, the total TRx in the marketplace.
That's why I'm saying that this reduction of, let's say, $150 million, is basically related to that volume reduction and not to any change in our, you could say, market shares in Europe or in the U.S. Of course, we hope it's probably right now, it's difficult to predict, as you know. We hope that in Europe, people are getting more used to that the doctors are open, the pharmacies are open. I know we have a lot of lockdowns in Europe right now, but none of those lockdowns include doctors. None of those lockdowns include pharmacies. We see that there's a, you would say, asymptotic approach to the normal volume, and we hope we'll continue to see that in the Q4.
In the U.S., as you also know, in most states, there's a quite open situation with also pharmacies and doctors and so on trying to get back to normal. That's really the reason for that. If we look at AJOVY, I already commented on the fact that the TRx are lower than we had expected. Of course, we're catching up now with NRx getting back up to around 25%. The TRx will, of course, be climbing nicely here also in the Q4. The only other factor which has affected it is really the fact that some of these new-to-brand scripts that we're seeing now, they do get a buydown support, in the initial phase.
That means that if you have a high volume increase in NRx versus a stable TRx volume, then you get slightly less net sales out of that due to your buydown coupons. We have not seen any changes in the contracting environment, so we've not seen any increases in the rebates given on the various contracts. I hope that answers your question.
It does. Thank you.
Thank you. Your next question comes from the line of Akash Tewari of Wolfe Research. Please go ahead.
Hey, thanks so much. You guys took a pretty significant goodwill impairment charge regarding uncertainty on resolution of certain litigations for your North American business. Can you talk about what's leading to that? Does it have anything to do with generic Revlimid, is there any comment on when that product is getting onto the market? Is it fair to say if there wasn't an ongoing civil liability on the generic price fixing side, you would've more strongly considered a settlement with the DOJ? What is the legal ramification of long-term of admitting guilt, in regards to the civil liabilities, is there a timeframe for the DOJ resolution and the civil liabilities resolution on price fixing? Thank you.
Okay. Thank you. I'll give the first question to Brendan. I'll just take the price fixing now. On the price fixing, it's correct. There's, of course, a criminal side to DOJ and a civil side to DOJ. We also have a legal situation with the state AGs on price fixing. You're absolutely correct. If we, as a company, were to admit to a criminal act on price fixing, which we did not commit, you would sort of take away your own defense on the civil side, whether it's with DOJ or whether it's with the AGs. Typically, you will often be able to reach a solution with the DOJ that, from a financial point of view, is something that you can accept given the circumstances and the hassle of going to trial.
It's more uncertain how it looks with the civil AG trial, because that's a more broad-based accusation they are raising. If you were to go along with that, which is in our view, unfounded, then that, of course, would have a potentially higher financial cost. That's exactly right. That's one of the reasons why we did not want to settle with DOJ, with a DPA that would force us to admit criminal conduct, which we have not conducted. On the first one, I don't know whether Brendan or Eli can answer that.
Kåre, I'm hearing you loud and clear, but the question was a little muffled. I'd be happy to address it. Could you just repeat it for me or have him repeat it?
Yeah. No problem.
Yeah.
If you can hear me, the goodwill impairment charge, $4.3 billion on North America regarding uncertainty on certain legal timing, what is kind of leading to that big step down on goodwill impairment, and does it have anything to do with generic Revlimid, and when could that product get onto the market given the Dr. Reddy's settlement? Thank you.
Yeah. Maybe you could talk about the Revlimid, Brendan, but I'll just give a brief answer to the first part of it. The reason for the adjustment, the main reason for the adjustment is, you could say, accounting technical, the fact that there is a discrepancy between the net assets that we're showing in our accounts before this write-down and then the market capitalization. If you have that for more than a year, then it's good practice to take a good look at it and look at whether you should adjust your accounting, in this case, the goodwill, to bring your market cap closer to the actual, or rather bring your net assets closer to the market cap. It has nothing to do with the Revlimid.
It is just an overall assessment that there are factors in the market that probably will continue, such as the opioid litigation, the price fixing litigation. We do believe that due to COVID-19, these could be very prolonged. The price fixing litigation could go on for years. As a consequence of that, we can't say that the overhang on the share price will be removed soon. As a consequence of that, we decided to make a write-down on the good book. But maybe, Brendan, you can comment on the Revlimid piece.
Kåre, I'll just make a comment on the Revlimid piece. We typically don't comment on settlements for obvious reasons and confidentiality, and we typically don't comment on the dates of particular launches. I'll just leave Revlimid at that and leave it with Kåre's answer.
Thank you. Next question.
Thank you. Your next question comes from the line of David Amsellem of Piper Sandler. Please go ahead.
Thanks. Just a couple. I wanted to get your thoughts on the longer-term trajectory of AUSTEDO. As we all know, Neurocrine's running a study of valbenazine in Huntington's chorea, which should read out next year. Do you think that's something that, to the extent that they get a label expansion, could prove to stunt the growth of AUSTEDO over the long term? That's number one. Number two, you have some high-value generics, FORTEO and NuvaRing. To the extent that those don't bear fruit in a timely manner next year, is that something that you think could have an impact on the trajectory of the generics business, particularly considering you have a more competitive landscape for biosimilars? How should we think about that to the extent that you have a sort of a paucity of launches next year if that comes to pass? Thanks.
Thanks a lot. In terms of AUSTEDO, like I said when I comment on the development, AUSTEDO and the competitive product is actually in a very good position where they are the first products approved for tardive dyskinesia. There are only two products approved for this disease. I think we have around 10,000 patients. They have around 15,000 patients on drug. The patient pool just for tardive dyskinesia is around 500,000, and maybe only half of that will ever get on active therapy. It just means there's a big potential. The competitiveness is, you could say, quite similar and reflected in the patient counts due to the fact that INGREZZA launched a little bit ahead of us. They're a little bit ahead, but I think the growth in patients is pretty similar between the two companies.
I don't see that their potential approval in Huntington's would make a major change in the market dynamics. I'm very optimistic that due to the huge unmet medical need, we will continue to see AUSTEDO growing for the next many years. With regard to the high-value launches, and you can say, of course it always gives a little positive bleep. I just showed you cinacalcet in 2019, and we're going to have Truvada and Atripla here in the Q4 of 2020. Most likely every year we get one of these key, more complex high-value drugs approved. We still have the EpiPen and so on. I don't think it's going to play a major difference to what we see in terms of earnings and revenue next year.
Maybe, I don't know, Brendan, if you want to give a specific comment to some of these high-value launches.
Sure, Kåre, I'd be happy to. We have numerous potential high-value launches that are always possible next year. There's five or six of them. We'll see as we move through the regulatory process which ones get approved and which ones don't. You're right, the market can change by the time you get approval and launch. The way that we certainly account for those and risk adjust those in our P&L takes all that into consideration. I'm optimistic next year we'll have several high-value launches. We'll see how that goes. That's generally the way it plays out. The only other thing that I would add on AUSTEDO is that there is a significant number of patients out there, as Kåre said. About 5% of the available market is treated between us and our competitor.
We do see significant upside potential with tardive dyskinesia, and tardive dyskinesia represents the majority of the growth and the value. Huntington's disease is important, but tardive dyskinesia is certainly the bigger market. I'll leave it there.
Thank you. Your next question comes from the line of Randall Stanicky of RBC Capital. Please go ahead.
Great. Thanks. Kåre, it looks like you're reaffirming your implied EBITDA target in 2023 of close to $6 billion on the assumption that you can take down net debt by $2 billion a year and get under three times on net leverage. That seems to imply revenue growth of 2%-3% on your 28% margin, EBITDA growth to high single digits. First question is that the right way to think about the outlook on those metrics? Then secondly, can you talk about the digital therapeutics opportunity on the back of AirDuo and ArmonAir? Are there additional opportunities as you think about the broader base of business, either brand, generic or biosimilar? Do you see a 505(b)(2) opportunity in digital therapeutics? Thanks.
Thanks. The first question, you are of course overall spot on there. We will probably have a cash flow $2 billion, $2 billion plus per year, and we'll allocate the cash flow to debt reduction. That means in the next years, we'll take some $6 billion plus out of our debt. That of course means that the math is quite straightforward, that EBITDA should be around $6 billion. The way to get to that EBITDA is also pretty straightforward because we've already sort of explained to you what we think the operating margin will be, because that's going to be 28% in the end of the period. Of course you can calculate, as you rightly did, that we need a low single-digit growth in revenues in order to get to there. That's what we believe we can do.
The reason why we believe we can do it is what I explained to Umer based on his question with the various elements going in and contributing to a combination of stability and growth. When you add all that up, you get to single digit growth rates on the revenue. That's really our plan. With regard to your second question, I'll first comment on the actual Digihalers, and then I'll comment on the further possibilities within the digitalization of pharmaceuticals. On the Digihaler, it's I think extremely exciting because here we have a product that fits perfectly with the unmet patient needs. Because if you are on asthma therapy, then there's at least two things that are crucial.
One is you take your medication correctly. Two is that you monitor or somebody else helps you monitor your disease so you avoid hospitalization and severe asthma attacks. Now, the Digihaler platform, sorry for giving a slightly long answer, it really consists of a normal inhaler, but inside the inhaler there's inbuilt flow meter that registers whether your flow and your inhalation is a good or bad inhalation. That's super important for compliance. There's automated communication to your smartphone, from your smartphone to the cloud, run by Amazon Web Services, on from the cloud to any caregiver that you give access. Could be your doctor, could be a nurse, could be your parents, could be your loved ones, anybody who you want to share your data with, you can do it that way.
By following the patterns, we believe that both short term, by people being more aware of what's going on in their therapy, and longer term through artificial intelligence, we will be able to improve the predictability of major asthma attacks and avoid them. That's a major value driver for the hospital systems and of course quality of life for the patients. We're very happy about this. We think we have a great system. We are the first in the world to launch such a system. You have all these other systems where you add something onto your inhaler and whatever, but this is super nice, sleek, efficient, built right into the inhaler.
We have just launched and we are seeing nice, steady uptake, and we are seeing a lot of usage already, and we look very much forward to sharing because of course we collect data on this and that will also give us more medical insights. That's on the respiratory franchise we have, and as I said, we will keep on building that respiratory franchise now based on the Digihaler, both in U.S. and in Europe. On the more sort of long-term question of does this give inspiration to do other things?
Of course it does, and I won't sort of share with you today all our ideas, but just say we do have ideas for how we might be able to put this kind of digitalized patient compliance tracking into products that will then also help communication between patients and caregivers and improve the adherence to therapy and through that improve the clinical outcomes. It's a very exciting area. Thanks for the question.
Thank you. Your last question comes from the line of Balaji Prasad of Barclays. Please go ahead.
Yeah. Hi, this is Steven on for Balaji. Thanks for the questions. Maybe if you could talk more about the outlook for AJOVY. I guess could you just provide a little bit more color on what exactly has changed from the outlook provided in August? How do you view the additional competition coming into the migraine prevention market over the next one to two years? Thank you.
Yeah, thank you very much. What really changed has been that the total market growth has not been exactly as we hoped for. Therefore, we are getting a higher TRx number as you saw. We are getting a higher NBRx share, so we are getting a higher share of the market, which is good. The total market has continued to be held back in its growth compared to what we hoped for and planned for, most likely due to COVID and the fact that new therapies simply grow slower when people go less to the doctor. That's the key driver.
The other element that has been a factor is that we've probably seen more, you could say, new scripts come in where we ended up using co-pay cards and pay downs, and that has led to a slower, you could say, ramp up of the revenue per script compared to what we were planning for. Next year we expect to see a continuous growth in the NBRx rate and as a follow on from that, the TRx rate. As people get on more regular therapy, of course they don't get the same initial buydown, and that means that the net revenue per script will be going up. We are quite optimistic that we'll see a nice development of the AJOVY sales next year, also helped by the increasing number of European launches and the very strong initial performance we're seeing there.
Thank you very much for that question.
Thank you.
Thank you everybody. That concludes our call for today. We look forward to speaking to you today, tomorrow, and the weeks to come. Thank you again for participating.
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