#11: Teva Pharma
Headcount 39,660
Year Established 1944
Pharma Revenues $16,121 16%
Total Revenues $16,121 16%
Net Income $3,331 67%
R&D Budget $93 16%
Top-Selling Drugs in 2010
Drug |
Indication |
$ |
(+/- %) |
Generics |
$10,917 |
17% |
|
Copaxone |
MS |
$3,316 |
17% |
Azilect |
Parkinson’s disease |
$318 |
31% |
Respiratory (non-generic) |
$875 | -3% | |
Women’s health |
$374 |
5% |
|
Biosimilars |
$112 |
51% |
Account for 99% of total pharma sales, same as in 2009.
PROFILE
The world’s biggest generics company continues to climb in our ranks. In last year’s profile, I noted Teva’s ambitious five-year plan to more than double its revenue to $31 billion. (Teva also plans to increase non-GAAP net income to $6.8 billion by then, but I take non-GAAP results with a grain of salt. After all, there’s a reason they’re called GENERALLY ACCEPTED Accounting Principles.)
During the course of 2010, Teva launched 18 generics that targeted drugs with $12.2 billion in U.S. sales. (Of course, the generic versions will only bring in a fraction of those revenues.) The company reported that it accounts for 21.1% of total U.S. generic prescriptions. Generic introductions in the U.S. slowed to a crawl in 1Q11, but the company plans to launch generics of Zyprex (Lilly) and Nasacort AQ (Sanofi) later in the year.
But what generics giveth, they also taketh away. Teva is battling two generics makers that have filed to market of Teva’s key branded drug, MS treatment Copaxone. The companies are suing to invalidate Teva’s patents, and the years-long case will go to court in September 2011. Teva, meanwhile, is conducting trials for a new, higher dosage of Copaxone.
With Copaxone under siege, Teva makes no bones about the need to grow through acquisition (see our Acquisition News sidebar). Teva added $2.6 billion in revenues with the $5.2 billion acquisition of ratiopharm last year, and will fork over another $6.8 billion to pick up Cephalon, which had revenues of $2.8 billion in 2010. The two moves shore up different areas for Teva: ratiopharm puts it in the top position for generics in Europe, while Cephalon offers a branded and specialty portfolio and pipeline. Teva took the role of the white knight in the Cephalon deal, saving the company from a hostile bid by Valeant Pharmaceuticals, which had planned on selling off Cephalon’s pipeline and eschewing R&D. The move piggybacks Cephalon’s earlier acquisition of Mepha, the top generics company in Switzerland, with presence in emerging markets. Still, the Cephalon move is a risky one for Teva, given Cephalon’s impending patent expirations and the inherent risks in pharma R&D.
But it’s not as though generics are risk-free. In addition to litigation risks, some drugs are just harder to knock off than others. In November 2010, Teva noted that it won’t file for a generic version of GlaxoSmithKline’s Advair franchise until at least 2014 in the U.S., where the “substitutability” hurdles are higher than in the EU. That would shift any U.S. revenues from generic Advair — the branded version brought in $8.0 billion for GSK last year — outside the company’s 2015 timeframe (an EU version may reach the market by 2013 or 2014), although the company still projects that it will get $2.4 billion in annual sales from its respiratory unit by 2015, up from $875 million in 2010. GSK hopes to get its Advair followup approved by 2013, while Teva is now working on an innovator to compete with Advair. Teva executives contend that, in the long term, the respiratory business can hit $5.0 billion in annual sales.
Teva’s respiratory franchise may be gasping a little, but the company is making inroads with its biosimilars strategy. The company posted 2010 sales of $121 million with biosimilars of EPO, HGH and Tevagastim, a biosimilar to Amgen’s Neupogen. The latter was first approved in the EU in September 2008, and Teva is working with the FDA to get it on the U.S. market. Teva is currently working on two biosimilars to Amgen’s more profitable Neulasta and one for Merck Serono’s Gonal-f. Those projects are all in Phase III.
In the other direction, Teva struck a partnership with Procter & Gamble for OTC medicines in March 2011. The companies will form a joint venture to sell OTC meds outside North America. Teva will take over manufacturing for P&G, and control 49% of the JV, which would have had sales of $1 billion in 2010. The move gives P&G and Teva a means to convert prescription drugs to OTC status, capturing revenues and allowing them to sidestep some pharma price controls in Europe.
Teva has a way to go to hit that goal of $31 billion in 2015 sales, but a Copaxone victory, some first-to-file generic wins, and a few more strategic acquisitions (perhaps if Pfizer follows through on its rumored devolution plan) could move it along rather speedily. —GYR
WARNING!
In January 2011, Teva received a warning letter from the FDA for its oral solid dosage facility in Jerusalem. The letter cited cGMP deficiencies tied to laboratory reporting and systems at the site. Teva said that it’s addressed the FDA’s observations and is trying to resolve the issue. At present, no restrictions have been issued. The facility makes generics of Glucovance and Ambien, amng other drugs.
In December 2009, the company received a warning letter for its parenteral facility in Irvine, CA, after discovery of bacterial endotoxin in a drug, among other observations. The company ceased production at that site in April 2010, but began a product-by-product resumption in February 2011. The shutdown cost Teva approximately $230 million in 2010 revenues.
ACQUISITION NEWS
Target: Theramex
Price: $360 million, plus milestones to Merck KgA
Announced: October 2010
What they said: “Theramex’s diversified product portfolio, its seasoned sales force and promising pipeline will be combined with the strong R&D capabilities and product portfolio of our U.S. women’s health business. Together the global team will accelerate the expansion of our women’s health franchise into key growth markets in Europe and around the world and provide an excellent springboard for future sales.”
—Shlomo Yanai, president, chief executive officer, Teva
Target: Corporacion Infarmasa
Price: not disclosed
Announced: January 2011
What they said: “Infarmasa complements Teva’s activity in Peru and will advance our position as a market leader in this region.”
—Shlomo Yanai
Target: Cephalon
Price: $6.8 billion
Announced: May 2011
What they said: “This is transforming for Teva’s branded business, as it will help us to deliver on our strategic goal of creating a diversified, multi-faceted company.”
—Shlomo Yanai
Target: Taiyo Pharmaceutical
Price: $460 million for 57% of shares, tender extended at enterprise value of $1.3 billiion
Announced: May 2011
What they said: “Taiyo’s strong market reach, cutting-edge production facilities, and impressively large product portfolio, combined with Teva’s scale and capabilities as the world’s largest generics company, will enable us to offer a much wider range of high quality, affordable generics to a much larger segment of the Japanese market.”
—Shlomo Yanai
THE LOWE DOWN
Teva! What on earth am I doing writing about Teva on this list? I was told that it was going to be all Big Pharma companies!
Well, the reason I’m writing about Teva is that it really is a big deal, and the state of the industry is such that its a bigger deal than many of the companies that are trying to discover their own drugs. In fact, if you look at the list of best-selling medicines, you’ll find that the number of generics on it is growing every year. A clearer statement of the trajectory of modern drug discovery I do not know.
But I’m saying that like it’s a bad thing — naturally enough, since I work in research. Take the broader view, though: patients are getting lots of good medications more cheaply as things go off patent. And if that means that companies prosper by waiting for those expirations, and by trying to speed things up in the courtroom whenever remotely feasible, who am I to judge? Now, if the rest of us stop finding so many things to eventually go generic, then the Tevas of the world may have some rethinking to do. But for now, they’re in good shape. —Derek Lowe
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