Teva Pharmaceutical Industries Ltd. (NYSE:TEVA), the world's largest generic drugmaker, released its second-quarter earnings this morning before the bell, exceeding consensus for both revenue and non-GAAP diluted earnings per share. Specifically, the pharma company posted non-GAAP diluted EPS of $1.43, beating consensus by $0.15.

Revenue for the quarter came in at $5.0 billion, crushing the Street's estimate by $190 million. Teva also revised its estimated annual EPS range to $5.15 to $5.40, up from a range of $5.00 to $5.30. 

Source: Wikimedia.

Given that Teva is a top dog in the pharmaceutical world, it's worth understanding how the company generated this quarterly beat, and what may be in store for the drugmaker moving forward. So let's dive into the report. 

Generic drug sales come in strong
Although Teva's generic drug revenues dipped to $2.5 billion during the quarter, down 2% compared to a year ago, the company reported that this drop was due almost exclusively to the impact of unfavorable currency exchanges. In local currency terms, the unit's revenues actually increased by 6% year over year. 

Digging deeper, we can see that a good chunk of this rise in generic drug sales came from a 24% increase in U.S. sales to $1.3 billion for the three-month period. Management noted that this dramatic pop in U.S. sales came mainly from the recent launches of generic Abilify and Nexium. This unit also saw a healthy 36% rise in profitability relative to the same period a year ago, resulting, at least partially, from a decrease in selling and marketing expenses. 

Specialty medicines also performed well during the quarter
Unlike the first quarter, where specialty medicine sales cratered, Teva's branded drug business actually posted a respectable 3% rise in sales, to $2.1 billion during the second quarter. If we exclude the impact of foreign exchange, this figure jumps even higher, to 8%. Profitability for this segment also edged upwards by 5% from a year ago, stemming from a slight decrease in selling and marketing expenses.  

Source: Teva.

Not surprisingly, though, it was the multiple sclerosis drug Copaxone that really drove this increase in specialty medicine revenues, with the drug seeing a stately 12% rise in year-over-year sales, to $1.05 billion. Management attributed this uptick in Copaxone sales to higher volume in the U.S., as well as two relatively recent price increases. That said, the company did note that generic versions of Copaxone entered the market last month, meaning that the drug's sales could begin to slip going forward. 

What's next? 
These better-than-expected quarterly numbers and revised annual guidance are certainly good news for investors. But what is really on everyone's mind is how the drugmaker's recent acquisition of Allergan's generic drug business is going to affect the company going forward. Based on what Teva has stated so far, we know that the company's free cash flows are expected to rise by almost $6.5 billion in fiscal year 2016 due to the huge influx of new products coming into the fold from this acquisition.

Management also believes that its EPS should grow by 14.4%, on average, for the next three years running. In short, this deal appears to have transformed Teva from a struggling drugmaker into a compelling growth stock.

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