As the CEO of Teva, which markets would you concentrate on developing going forward?
Introduction
• Decisions case
• Decision options: focus on US market and the other generic markets, expanding into the global branded markets, or gradually turning into specialized generics or innovative pharmaceuticals
• Criteria: value creation, utilizing company’s strengths, aligned with their core values
Teva's Core Values and Strengths
• A focused firm, not a conglomerate
• Global company
• Cost leadership advantage
• Large market shares
• Close relation to academic institutions
• Taking risks but not ones that risk the entire company
• Experienced at pharmacy driven markets
Market segments
• Geographical: US, Western/Eastern Europe, Japan, Latin America, Asia
• Physician driven vs. pharmacy driven
• Product type: commodity generic, niche generic, biosimilars or innovative
The Way Forward…
1. Keeping up the generics market in US and Europe (40%)
• Accounts for the core of sales.
• Pharmacy driven markets experience
• Very good at filing ANDA in the USA. Paragraph IV and exclusivity period provides higher margins.
• Debt crisis in Europe has governments looking for places to cut costs (e.g. generics)
• Similarly, in US people are looking to cut costs.
2. Introducing Biosimilars and Niche markets to Latin America and Eastern Europe (40%)
• Already has a specialty division that expects high growth rates (Ivax)
• Less competitive than generics, higher entry barriers, higher gross margins, closer to innovative.
• US market regulatory barriers
• Price erosion within generics market in the US
• Competitors in Europe expanding aggressively, important to get in the market before it’s too late
• Linkage between US and Latin America
• Reasonable risk within the company’s core values
3. Pursuing the innovative market (20%)
• Impressive success with Copaxone (blockbuster drug accounts for 12% sales) and Azilect
• Collaborating with Israeli academic institutions in R&D - cost advantage.
• Partnering for sales & marketing - cost advantage (Sanofi-Aventis).
• Massive competition in generics including low cost players like Ranbaxy (India)
• Innovative drug companies entering the generic market and defending their patents aggressively - strategic decision.
Breakdown of strategic plan
• Keeping up the generics market share in US and Europe (40%)
• Introducing Biosimilars and niche markets to Latin America and Eastern Europe (40%)
• Continue penetrating the innovative market (20%)
How will the company logistically handle this structure?
• Maintain global company.
• Integrate acquired companies.
• Create separate divisions for innovative and commodity generics, as it did with Ivax for biosimilars.
Closing Statements
• Healthcare industry is changing and Teva needs to adapt in order to grow.
• Decision case based on criteria: core values, strengths and value creation
• Angles to consider: geography, market driver, product type.
Thank you