(photo credit: Bloomberg News)
Teva Pharmaceuticals Industries Ltd., the world’s biggest generic drugmaker,
which has come to represent the Israeli brand name globally, has topped the BDI
Coface list of the 500 largest companies in the country in 2009 in terms of
revenue volume for the sixth year in a row. Last year, Teva generated sales of
close to $13.9 billion, out of which the generic segment accounted for 69
percent and a turnover of $54.6b.
Teva has maintained its position as the global leader in the
generics market, while also keeping its position at the top of the 500
companies in Israel year after year, overcoming one crisis after
another. How do
you explain this success?
Following the completion of its $2.7b.
acquisition of Barr Pharmaceuticals at the end of 2008, Teva announced the
acquisition of Ratiopharm, Germany’s second largest generics company and the
sixth largest worldwide, for $5b. this March. In an exclusive interview with The
Jerusalem Post, Teva CEO Shlomo Yanai is looking ahead to expanding its global
footprint to the emerging generics market building up in Europe and
When I took up my position at Teva at the end
I asked myself that same question – what is the success of this company?
Although it is very hard to point to a specific formula or answer to
question, I came up with two main points characterizing the company’s
One is the culture of the company, which promotes excellence as a high
the best way possible to advance workers. The company’s corporate
Teva’s workers feel part of it and gives them a feeling of belonging, or
US colleague said to me once: we have fire in our belly.
has for years been governed by a long-term strategy. As a public
results are published on a quarterly basis, but all of the decisions are
with a long-term view, while taking into account market trends.
a top-down strategy which has been pushed by former chairman Eli Hurvitz
ended his 34-year tenure in March this year after having transformed the
Tikva-based drugmaker into the world’s leading generic pharmaceutical
maker].How has the corporate life changed since you became CEO of Teva?
The long-term strategy approach very much suits me. I think it is the
strategy and one of the reasons Hurvitz brought me into the position at
line with our long-term approach, we updated our strategy at the
the year, highlighting key opportunities for growth and announcing our
goals of doubling revenues by 2015 to $31b.How is Teva going to keep on
track to achieve its long-term targets by 2015 as the world is still
with the pains of an economic crisis? Where do you see growth drivers in
What is important is to understand the trends in the
pharmaceuticals industry. There are a number of trends which together
strong demand for generic drugs and significant growth in emerging
the coming years. The elderly population is going to grow year by year,
turn will boost the demand for drugs. At the same time, many countries
limiting their health care budgets and governments are implementing
measures amid the global economic crisis, creating the need for generic
which can provide “the same for less.” In addition we see strong growth
in emerging markets like China and India, where the lifestyle is
the standard of living is improving, accelerating the demand for generic
Side by side with our long-term strategy at Teva, we operate
according to a so-called dynamic rolling strategy to make adjustments
needed to changing environments such as the global crisis. In such an
environment we reexamine our long-term projects and question whether
still valid. What is crucial in such times is the time of response and
do. We respond faster than others in the market, and quietly implemented
efficiency measures during 2008 to improve competitiveness and cut costs
made changes in the organizational structure in 2009.How about the
emerging generic markets, particularly the emerging giants like China
What role are they playing in the pharmaceutical industry?
growth for our business coming from the BRIC countries – that is Brazil,
India and China. But we also expect significant growth coming from those
European and international markets that are currently characterized by
generic penetration rates in Eastern Europe and in classical European
such as Spain, France, Italy and Germany. This is where we see the main
potential market with an estimated volume of $120b.Is the current
European crisis having any major impact on Teva in general, and the
acquired Ratiopharm in particular? Is there concern over accelerated
pressure on drugs as governments seek to rein in runaway health care
We are not protected by the crisis. If the euro is weak, we lose, and
we hedge against currency fluctuations. However, since the crisis itself
create greater demand for generics as they provide a solution to the
and demand for drugs is relatively solid even in difficult times, we are
less than other industries.
With regard to downward pressure on prices,
the game in Europe is only starting, but we know how to cope with it.
been operating for years in competitive environments, facing price
example in the US, where every year prices are coming down by 7 percent
We believe that growth in numbers of users will compensate for price
similar to what we expect in the US following the health care reform,
have a downward impact on prices but boost the number of US citizens
generic drugs.Teva has been making great efforts in recent weeks to
convince the public and investors that the day is still far away before
emergence of any generic competition to its multiple sclerosis
treatment Copaxone, which accounts for onefifth of Teva’s revenues and
offpatent in 2014. Can other generic drug companies challenge Teva’s
the drug? How far along is the approval for Teva’s generic version of
Copaxone combines attributes of efficacy and safety. Other alternatives
more potent, but they don’t have the safety aspect of minimum
Copaxone. We believe that a generic version of Copaxone is not possible
of its complex chemical identity to an extent that standard equivalence
for generic applications will be insufficient to get approval for a
generic. It is like a soup. What this means is that approval by the US
Drug Administration will require full clinical trial studies for the
version to prove its safety, and such tests cannot be completed before
patent expires in 2014.
We are confident that we are very close to
getting the approval for our generic version of deep vein thrombosis
Lovenox after providing all the answers requested by the FDA. Lovenox is
considered a very complex drug to replicate, but it would be a mistake
an analogy to the possibility of replicating Copaxone as has recently
suggested.The past decade has seen even more M&A activity from Teva,
with the recent acquisition of Germany’s Ratiopharm for $5b. this year
takeover of American women’s health drug-maker Barr Pharmaceuticals in
$7.5b. That nearly matched the previous record set by Teva’s 2005
drug giant IVAX for $7.4b.
Track record shows though that over time most
mergers fail. What do you think made Ivax’s integration into Teva
Are there more acquisitions in the pipeline?
Our strategy is a process
integration in cooperation with the acquired company. There is no
synergy decisions are taken on the basis of merit only and preference is
to who or what is better. We are not afraid to learn from others, and if
are better or more professional, we are happy to take them
One-third of our growth target to double sales over the next five
years will be generated from new acquisitions and the rest from organic
Thus it is part of our strategy to grow through further acquisitions in
generics markets if and when opportunities present themselves.How does
the current political environment impact Teva? We often hear of
boycotts of Israeli products, especially following events like the Gaza
incursion or the flotilla incident.
Teva is a truly global company, often
operated by local country managers in countries around the world. We
such a problem.
We may have received a random concerned call during
sensitive times, but with no significance on our activity.