Teva's Biosimilar Boom Is Just Getting Started. Is It Time to Buy This Rebounding Pharma Stock?

Teva Pharmaceutical Industries (NYSE: TEVA) has clawed back from the brink like few drugmakers have. After a long stretch of poor performance, a company once buried under debt, patent cliffs, and litigation is now up by 97% in the last 12 months. The bull case credits its expanding biosimilars lineup, and that quickly growing segment could mean the stock has more room to run.

Still, a recently risen share price and a growing product line are not the same as a stock worth buying today. Will biosimilars truly move the needle for a business this size? Is the easy money already made, or is there more to come? Let's find out.

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What the biosimilar build-out will accomplish

If you aren't familiar, a biosimilar drug is a near-copy of a biologic medicine like an antibody or protein. Unlike generic medicines that are small molecules which can be synthesized fairly inexpensively at scale, biosimilars are almost always quite costly and fairly slow to make, which is why Teva sources most of its biosimilars through a biotech partner, Alvotech, that develops and manufactures them while Teva handles commercialization in the U.S.

That means that Teva captures only a slice of the proceeds in a category that's characterized by narrow margins and a high degree of competition based around providing lower prices. In other words, biosimilars launch at steep discounts to their branded equivalents by necessity and then are forced to erode further with each new entrant.

The copies of AbbVie's Humira are the cautionary tale to know here. Uptake crawled for over a year until pharmacy-benefit managers (PBMs) swapped in versions priced far below the brand name medicine. Even so, the Humira copies took only about 21% of volume by late 2024, and Teva's biosimilar Selarsdi now battles a handful of rivals for what's left of the pie.

As for what's already approved and what's coming, Teva has two Alvotech-partnered biosimilars on the U.S. market so far: Simlandi, its copy of Humira, which launched in May 2024, and Selarsdi, its Stelara copy, which followed in February 2025. Three more are working through the the U.S. Food and Drug Administration (FDA). Proposed biosimilars to the inflammatory-disease drug Simponi and the eye drug Eylea were resubmitted in June 2026 and are under a six-month review, while a proposed interchangeable biosimilar to the bowel-disease drug Entyvio was accepted for review that same month.

On that note, Teva expects its biosimilars business to roughly double to around $800 million by 2027.

The real comeback is elsewhere

So if biosimilars aren't the story of Teva's resurgence, what is?

In short, the rebound is currently running on Teva's branded drugs, led by Austedo, which is prescribed for the involuntary movements of tardive dyskinesia and Huntington's disease and reached about $2.3 billion in sales in 2025, with smaller contributions from Ajovy for migraine and Uzedy for schizophrenia.

The issue with buying this stock now, in hopes of riding its future growth, is that Teva presently trades around 25 times its trailing price-to-earnings (P/E) ratio, which is a fair price for a specialty drugmaker and not really a bargain. The formerly distressed valuation that made this stock an easy win is long gone; its 2026 revenue is set to be flat to lower.

The turnaround is ongoing, and it will probably continue. Nonetheless, investors have bet on Teva's promise of cheap, efficient scale of generic medicines before and been punished for it, and with the easy rerating spent, the pharma industry offers better opportunities for growth elsewhere. This one is worth watching but not buying.

Alex Carchidi has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends AbbVie. The Motley Fool has a disclosure policy.