Teva Pharmaceutical Industries is the biggest name in the no-name world of generic pharmaceuticals. The company makes hundreds of generic versions of brand-name antibiotics, heart drugs, heartburn medications, and more. Subsidiary Teva Pharmaceuticals USA generics product line include equivalents of such blockbusters as antidepressant Prozac and osteoporosis drug Fosamax. The company, Israel's top drugmaker, also develops and manufactures proprietary branded drugs, including multiple sclerosis treatment Copaxone, Parkinson's disease treatment Azilect, and a portfolio of women's health treatments. Its active pharmaceutical ingredient (API) division makes drug components for Teva and other manufacturers.
While Teva has research and manufacturing operations in more than 60 countries in the Americas, Europe, Asia, and the Middle East, almost half of the company's sales come from its North American operations.
Although generics still account for half of the company's sales, Teva is steadily building up its line of branded proprietary drugs, which accounted for 35% of the company's sales in 2011. Its development pipeline includes drug candidates for neurological disorders, autoimmune diseases, and oncology, targeting such ailments as Alzheimer's disease, Crohn's disease, and lupus. However, joining in on the branded market has also made Teva more vulnerable to patent expirations of its own: Its two bestsellers, Provigil and Copaxone, are facing generic competition soon.
Over-the-counter (OTC) drugs are still a small portion of its branded drug revenues, but in 2011 Teva laid the groundwork to grow that business. It struck a joint-venture with Procter & Gamble to combine both companies' OTC drug businesses outside of the US. P&G brought big consumer health brand names to the deal (including Pepto Bismol and Vicks), while Teva brought international manufacturing and regulatory expertise.
While biotech drugs are more finicky to make, they also have the potential for higher profit rewards that Teva does not want to miss out on. Generic biotech drugs are known as biosimilars or follow-on-biologics (FOBs), and Teva has built up its capacity to produce biosimilars through smaller acquisitions and a joint venture with Swiss API firm Lonza.
Marketing and Sales
Teva's finished product are sold directly to retailers and medical providers, as well as through wholesale distribution firms.
Teva's revenues have made a steady march upwards each year, rising 11% to $20 billion in 2012. Likewise, its net income bounced back from the 2008 recession until 2011, when it dropped 15% to $2.8 billion due to acquisition expenses. Net income fell another 29% in 2012 to some $2 billion.
Following a strategic review of its operations in 2007, Teva set a goal of doubling its business by 2012 to achieve annual revenues of $20 billion. The company successfully achieved the goal by increasing its market share in key regions (including North America), expanding its R&D and production capacities, and growing its generic and proprietary drug portfolios through acquisitions and organic growth programs.
Continuing growth strategies include expansion efforts in emerging markets and increasing its portfolio in over-the-counter medicines. Teva continues with its historical strategy of filing patent challenges on branded products, thus attempting to gain a "first-to-market" advantage with its generic equivalents; however, in recent years these patent challenges have grown more expensive and less exclusive, which has eroded their usefulness.
Lingering impacts from acquisition expenses, as well as the patent expiration of top-selling branded drug Copaxone, prompted Teva to launch a cost control program in 2013 to cut $2 billion in annual expenses by 2017. The program includes a 10% workforce reduction; the first such downsizing program in the company's history.
Perhaps in response to losing exclusivity of its Copaxone, Teva made an unsolicited $40 billion bid for generics rival Mylan in mid-2015. Mylan had just made its own unsolicited offer to purchase Perrigo for some $29 billion; either deal would be among the largest of the year.
After regulatory compliance expenses pinched the company's animal health business in 2011, Teva sold off those operations to Bayer HealthCare in early 2013 in a deal worth up to $145 million. The business included dermatology and food products for companion animals.
Mergers and Acquisitions
Several hefty acquisitions have helped it get closer to its goal, and, with its 2011 $6.8 billion buy of US drugmaker Cephalon, Teva believes that it has indeed reached the $20 billion revenue mark. Cephalon's marketed specialty drugs promise to bolster Teva's brand name drug portfolio and fatten its pipeline of R&D candidates. Specifically, the deal gave Teva more treatments for central nervous system disorders including narcolepsy drug Provigil, as well as oncology and pain management drugs, and 30 late-stage drugs in development.
Acquisitions around the globe have helped the company enter new markets and secure market dominance in others. In the emerging market of Japan, the company paid some $150 million in 2011 to gain full control of Teva-Kowa Pharma, a former joint venture with Kowa Company. An acquisition in Peru positioned the company to take advantage of better health care coverage in South America, which is creating a new demand for pharmaceuticals.
The company now plans to buy California-based Auspex Pharmaceuticals, which is developing drugs for central nervous system disorders including Huntington's disease and Tourette's syndrome, for some $3.2 billion.