According to the recent "World Preview Report" by EvaluatePharma, which one of the following will be among the top ten pharmaceutical
companies, ranked by sales, in the year 2016: A) Bristol-Myers Squibb, B) Teva, C) Amgen, or D) Genzyme?
The answer, you may be surprised to learn, is Teva Pharmaceuticals, the Israel-based generics manufacturer that began by distributing
imported medicines on camels and donkeys in 1901. In 1985, Teva had only $91 million in sales, but the company's global revenues
are projected to be $31 billion just six years from now. Currently, Teva distributes over 630 million prescriptions in the
US—that's more than Pfizer, Merck, and GlaxoSmithKline combined. The company produces 60 billion tablets annually worldwide
in 38 different locations.
Over the past ten years, Teva has become the pharmaceutical industry's most feared competitor. The company is known for relentlessly
challenging brand patents, routinely suing rivals, vigorously defending its market share, and acquiring competitors and suppliers
to remain the world's largest generics company.
Let's take a look at the four attributes that make Teva such a formidable competitor: strategic discipline, market aggressiveness,
stakeholder differentiation, and business innovation.
Teva'a demonstrates the industry's most disciplined approach for developing and executing corporate strategy. The "five pillars"
of their strategy include: increase market share in key markets; double the product portfolio; redefine customer service;
focus on biotechnology; and innovate the business. The company's objective: $31 billion in sales by 2015. To ensure corporate
alignment with this objective, Teva has initiated an internal marketing campaign utilizing the slogan "Everyone is 31," and
provides a 2 percent bonus on corporate profits to employees.
Teva is also disciplined in executing its strategy, utilizing a command-and-control approach to global operations that operates
with military precision—not surprising given that the company's CEO, Shlomo Yanai, is a former major general and head of strategic
planning for the Israel Defense Forces. In a recent New York Times article, Richard Silver, an analyst at Barclays Capital who has followed Teva for over fifteen years, stated "There is a
culture of excellence at Teva that, frankly, I don't see a lot in pharma. ...They just do it better."
Teva's market aggressiveness is legendary. The company cunningly and ruthlessly attacks branded products, typically stalking
its prey for years and waiting for patent expiration before pouncing, usually before other generic competitors.
In the US, the company files Abbreviated New Drug Applications (ANDAs) earlier and with fewer revisions than competitors.
Teva currently has over 216 ANDAs pending at FDA, representing over $113 billion in brand sales. (Teva prides itself on having
more than double the ANDAs of its nearest competitors.) Recognizing that the first generics company to launch has a better
chance to garner the largest market share, Teva has filed 89 potential first-to-file products or Paragraph IV US submissions.
In other cases, Teva ambushes brands prior to patent expiration. Over the past decade, Teva has conducted numerous generics
launches in which it actually begins selling a product while patents on an innovator drug are still being litigated. This
approach has worked over a dozen times, often by compelling innovator companies to enter into legal agreements that enable
Teva to launch prior to patent expiration and before other generics competitors. The company has used this approach to enable
earlier launches of versions of Effexor, Avandia, TriCor, and Nexium in the US before patent expiration.
Teva is even more aggressive when defending its own products. To prevent potential generics competition to its multiple sclerosis
agent Copaxone, Teva filed multiple patent infringement lawsuits against Sandoz and Mylan, and has registered two citizen
petitions with the FDA. To ensure market access for its generic version of the best-selling blood-thinner Plavix, the company
filed an official complaint with the French Competition Authority that accused Sanofi-Aventis of disparaging Teva's generic
version. Maurice Chagnaud, CEO of the local Teva division, stated that brand-name companies "need to understand that they
cannot use misleading practices to prevent competition from therapeutically equivalent and effective generic products."
Teva also exhibits aggressiveness by acquiring competitors and suppliers. Over the past two decades, it has acquired 15 companies,
including Ivax, Barr, and most recently Ratiopharm, Germany's largest generics company, for which Teva outbid Pfizer. The
Ratiopharm purchase makes Teva more formidable simply by eliminating a significant competitor. Meanwhile, the company increased
its European and global market share, diversified its portfolio, and added new customers and biogeneric capabilities. Together,
these acquisitions have enabled Teva to more than double the sales of any generics competitor.
In addition, Teva is ruthless about ensuring its product supply. The company jumped at the opportunity to form a joint venture
with industry-leading biogenerics supplier Lonza, which effectively excludes biosimilar competitors from this critical supplier.
Similarly, Teva has integrated backward to supply some of its own active pharmaceutical ingredients, and sells some of this
API to competitors, thus making them dependent upon Teva.