Introduction

Generic Pharmaceuticals are bioequivalent drugs which can be used in place of brand

name drugs. These generics are in most cases equivalent in medical use to those of the brand

name equivalents. Eli Hurvitz is credited with merging Assia Chemical Labs Ltd. with Zori in

1964 which gained controlling interest in Teva in 1969. By 1976 the three companies merged

into one. After becoming the market leader in Isreal the company under Hurvitz as CEO decided

it would be best to expand into the western market (Pearce & Robinson, 2013). Teva

Pharmaceuticals is the leading provider of generic drugs in the world. Teva is the leading

provider of FDA approved generic pharmaceuticals in the United States. In fact one out of seven

of the 3.4 billion generic prescriptions filled in the United States are filled with Teva’s

pharmaceutical products (Teva Pharmaceuticals USA, Inc, 2015). Generic pharmaceuticals are a

more profitable business than that of name brand pharmaceuticals. While brand name

pharmaceuticals bring in revenues of approximately $ 225 billion, the gross profits received from

those revenues are only $ 5 billion (Phein, A.J. 2010). Compare that to generic pharmaceutical

revenues of only $ 24 billion, with gross profits of $ 2.5 billion. That equals to a profit of only

one dollar for every $ 45 in revenues for brand name pharmaceuticals compared to a return of

one dollar for every $ 10 in generics. In 2011 Teva has revenues of $18.3 billion with $560

million in profits. This means Teva’s position as the largest provider of generic pharmaceuticals

puts them in a more profitable position than most brand name drug companies.

How does Teva compete in the generic pharmaceuticals industry? What is its

competitive advantage?

Teva Pharmaceutical Industries is the largest generic pharmaceutical manufacturer in the

world. Teva is ahead of companies such as Sandoz and Milan, who are second and third in the

generic pharmaceutical industry respectively. Teva competes in the generic pharmaceutical

industry by focusing on providing affordable generic drugs. The company has created a cost

conscious culture in their corporation which focuses on advanced technologies, efficient

operations, high volume all of which together allows them to gain cost advantages in the generic

pharmaceutical market (Grego, 2012).

Teva does not do any research or discovery in identifying new compounds for drugs. This

allows Teva to focus on manufacturing current drug compounds at cheaper prices, which gives

them a competitive advantage. They also have a superior track record in the industry due to their

technological advances and ability to manufacture and bring to market generic drugs faster than

their competition.

Evaluate Teva's resources. Which are its most valuable ones?

Teva Pharmaceutical Industries has many resources in Israel and abroad. They have

business relationships with local Israeli scientific institutions such as the Weitzman Institute.

Many of these scientific institutions conduct the research which leads to the discovery of new

pharmaceutical compounds. Teva will acquire these new compounds which enables the company

to produce branded drugs, as opposed to their generic pharmaceuticals. One of the compounds

they acquired from the Weitzman Institute was Copaxone, which is now a top selling drug for

the treatment of multiple sclerosis.

Analyze the opportunites for Teva in innovative pharmaceutical and biosimilars.

Teva Pharmaceutical Industries opportunities in generics and biosimilars are vast

especially with the generic market being a more profitable one. Biosimilars are generic versions

of bio tech drugs which by nature have active compounds that are difficult to reproduce. By

allowing other companies to use their money to invest in research to produce less profitable

brand name pharmaceuticals, Teva can more wisely spend their money on producing more

profitable generic prescription drugs. While the cost of branded drugs continues to rise the cost

of generic drugs continues to fluctuate while still remaining significantly lower than that of their

brand name counterparts (Blitzer, 2013).

How should Teva move forward?

Teva Pharmaceutical Industries should move forward by producing more generic drugs

for popular brand name products. They become the fastest growing pharmaceutical company in

the past 10 years through both smart acquisitions as well as conservative management practices.

They have been able to achieve 27% earnings growth rate and as much as a 20% invested capital

return in a single reporting period. Teva should continue moving forward in focusing on generic

pharmaceuticals and less on brand name products as the latter is statistically not as profitable. By

allowing other companies to invest the money in research and development, they can focus on

reproduction of those drugs compounds that are not patent protected.

Conclusion

Teva Pharmaceuticals is the leading producer of generic and biosimilar drugs which in

the pharmaceutical industry are more profitable than the brand name market.

Resources:

Blitzer, (2013) http://www.indexologyblog.com/2013/10/02/real-data-on-healthcare/

Grego, G. (2012). Why Teva Pharmeceutical is an attractive buying opportunity. Nasdaq.

Retreived from http://www.nasdaq.com/article/why-teva-pharmaceutical-is-an-attractive-

buying-opportunity-cm187949

Hurvitz, Eli (1932–) Personal history, biographical. J Rank Encyclopedia. Retrieved from

http://encyclopedia.jrank.org/articles/pages/5730/Hurvitz-Eli-1932.html

Phein, A.J. (2010). Wholesaler profits: Brand vs. Generic Drugs.

http://www.drugchannels.net/2010/06/wholesaler-profits-brand-vs-generic.html

Pearce, J. A., & Robinson, R. B. (2013). Strategic management: Planning for domestic & global

competition. NY: McGraw Hill

Teva Pharmaceuticals USA, Inc (2015).

https://www.tevagenerics.com/about-teva-generics/who-we-are

http://www.gphaonline.org/issues/biosimilars/

https://prezi.com/hh3sls-kdmci/competitive-environment/

http://www.academia.edu/9440351/Teva_Pharmaceutical_Industries

http://www.slideshare.net/dansaguy/teva-12937871

http://www.reuters.com/article/2015/04/24/us-mylan-m-a-antitrust-idUSKBN0NF28R20150424