Teva may record additional impairments in the future, to the extent it changes its plans on any given asset and/or the assumptions underlying such plans, as a result of its network consolidation activities.

Contingent consideration

In 2022, Teva recorded an expense of $163 million for contingent consideration, compared to an expense of $7 million in 2021 and an income of $81

million in 2020, respectively. The expense in 2022 was mainly related to changes in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

). The income in 2020 was mainly related to a change in the estimated future royalty payments to Allergan in connection with lenalidomide (generic equivalent of Revlimid

), which was part of the Actavis Generics acquisition, partially offset by the change in the estimated future royalty payments to Eagle in connection with expected future bendamustine sales.

Restructuring

In 2022, Teva recorded $146 million of restructuring expenses, compared to $133 million in 2021 and $120

million in 2020. The expenses in 2022 were primarily related to network consolidation activities. The expenses in 2021 and 2020 were primarily related to network consolidation activities and residual expenses of the restructuring plan announced in 2017.

The following tables provide the components of restructurin

g costs:


	Year ended December 31,
	2022		2021		2020
	(U.S. $ in millions)
Restructuring
Employee termination	$	117	$	117	$	71
Other		29		16		49

Total	$	146	$	133	$	120

157

The following table provides the components of and changes in the Company’s restructuring accruals:


	Employee termination costs			Other			Total

	(U.S. $ in millions )
Balance as of January 1, 2020	$	(208	)	$	(7	)	$	(215	)

Provision		(71	)		(49	)		(120	)
Utilization and other*		164			49			213

Balance as of January 1, 2021	$	(115	)	$	(7	)	$	(122	)

Provision		(117	)		(16	)		(133	)
Utilization and other*		101			16			117

Balance as of December 31, 2021	$	(131	)	$	(7	)	$	(138	)

Provision		(117	)		(29	)		(146	)
Utilization and other*		136			29			165

Balance as of December 31, 2022	$	(112	)		(7	)		(119	)

*	Includes adjustments for foreign currency translation.

Significant regulatory and other events

In July 2018, Teva announced the voluntary recall of valsartan and certain combination valsartan medicines in various countries due to the detection of trace amounts of a previously unknown nitrosamine impurity called NDMA found in valsartan API supplied by Zhejiang Huahai Pharmaceuticals Co. Ltd. (“Huahai”). Since July 2018, Teva has been actively engaged with global regulatory authorities in reviewing its sartan and other products to determine whether NDMA and/or other related nitrosamine impurities are present in specific products. Where necessary, Teva has initiated additional voluntary recalls. In December 2019, Teva reached a settlement with Huahai resolving Teva’s claims related to certain sartan API supplied by Huahai. Under the settlement agreement, Huahai agreed to compensate Teva for some of its direct losses and provide it with prospective cost reductions for API. The settlement does not release Huahai from liability for any losses Teva may incur as a result of third party personal injury or product liability claims relating to the sartan API at issue. In addition, multiple lawsuits have been filed in connection with this matter, which may lead to additional customer penalties, impairments and litigation costs. See note 12b for further discussion.

In the second quarter of 2020, Teva’s operations in its manufacturing facilities in Goa, India were temporarily suspended due to a water supply issue. During the second half of 2020, Teva completed partial remediation of this issue and restarted limited supply from its Goa facilities. The site experienced some additional delays in the first quarter of 2021 due to labor related issues, but the situation stabilized during the second quarter of 2021. The water supply remediation was completed in December 2022, and since then, the site is operating with an upgraded water system. The impact on Teva’s financial results for the year ended December 31, 2022 was immaterial.

In June 2021, the Company temporarily paused manufacturing at its Irvine, California facility in the United States, and suspended release of product from the facility pending completion of an open manufacturing investigation. In July 2021, the FDA initiated an establishment inspection at the facility. On August 18, 2021, the Company issued field alert reports to the FDA for products manufactured at the Irvine facility and put Irvine-manufactured products in Teva’s distribution center on hold. On August 20, 2021, the FDA completed its inspection and issued a Form

FDA-483

to the Irvine facility with ten observations and, on December 17, 2021,

the FDA notified the Company that the inspection classification of this site is “Official Action Indicated” (“OAI”). Teva began working diligently to address the FDA’s concerns in a manner consistent with current good manufacturing practice (“CGMP”) requirements, and was in discussions with the FDA Drug Shortage Staff (“DSS”) and FDA Office of Manufacturing Quality (“OMQ”) to recommence the distribution, release and manufacture of certain medically necessary products from the site under defined controls and protocols.

On March 22, 2022, the Company announced its decision to permanently cease all manufacturing activities and to close the site, and to transfer certain products to other facilities. Teva will remain in contact with FDA regarding the status of Irvine, California site to ensure that the Company continues to comply with all relevant CGMP requirements, particularly those involved with product transfers to other sites within the Teva network.

Teva has considered these developments and, during the year ended December 31, 2022, recorded

$98

million costs in its financial statements related to this matter. In December 2022, Teva sold its Irvine, California site.