#12 Teva Pharma
5 Basel St.
P.O. Box 3190
Petach Tikva, 49131
Israel
www.tevapharm.com
Headcount 45,754
Year Established 1944
Pharma Revenues $16,689 13%
Total Revenues $18,312 14%
Net Income $2,759 -17%
R&D Budget $1,095 17%
PROFILE
Top-Selling Drugs
| Drug | Indication | $ | (+/- %) |
| Generics | $10,196 | 3% | |
| Copaxone | MS | $3,570 | 21% |
| Women’s health | $438 | 17% | |
| ProAir | bronchial spasms | $436 | 10% |
| Provigil | insomnia | $350 | n/a |
| Qvar | chronic asthma | $305 | 22% |
| Azilect | Parkinson’s disease | $290 | 19% |
| Oncology | incl. biosimilars | $268 | 262% |
Account for 95% of total pharma sales, down from 97% in 2010.
PROFILE
Teva continued its transformation in the past year, adding more branded drugs and expanding its innovative pipeline to build a high-value portfolio to level out the ups and downs of its lower margin generic offerings. The company also made a big change at the top, with chief executive officer Shlomo Yanai stepping down, to be replaced by Bristol-Myers Squibb veteran Dr. Jeremy Levin.
Dr. Levin previously served as vice president for strategy at BMS, and is regarded as a key figure in the “string of pearls” model of small acquisitions and co-development alliances that has helped set BMS up to survive the loss of Plavix this year.
How difficult will it be to implement a second “string of pearls” model, given that Teva faces the loss of its own blockbuster, multiple sclerosis treatment Copaxone, in the next few years?
Teva’s larger (innovator) competitors are looking at similar strategies and have deeper pockets, so Dr. Levin will need to be creative in finding avenues for growth and diversification. One of his first moves was appointing Dr. Michael Hayden as president of Global R&D and chief scientific officer. In his first earnings call, Dr. Levin noted, “We have a number of dispersed assets in R&D across the company. So I needed to bring together an organization that is currently geographically dispersed, multiple sites, multiple different programs so that we can really get a clear handle on what it is that we most want to spend our money on.”
Teva’s larger (innovator) competitors are looking at similar strategies and have deeper pockets, so Dr. Levin will need to be creative in finding avenues for growth and diversification. One of his first moves was appointing Dr. Michael Hayden as president of Global R&D and chief scientific officer. In his first earnings call, Dr. Levin noted, “We have a number of dispersed assets in R&D across the company. So I needed to bring together an organization that is currently geographically dispersed, multiple sites, multiple different programs so that we can really get a clear handle on what it is that we most want to spend our money on.”
Teva was working on that diversification model before Dr. Levin joined the company. In November 2011, the company continued the process by launching PGT Healthcare, an OTC joint venture with Procter & Gamble. The companies first agreed on the JV in March 2011 (details were covered in last year’s profile), leveraging P&G’s marketing expertise with Teva’s operations background and its pharmacy distribution chain, while both companies enjoy access to countries where the other has established businesses. PGT will start with a global sales base of approximately $1.3 billion, and Teva projects sales of $4.0 billion by 2020.
Teva saw its generic drug revenues creep up only slightly in 2011, dragged down by subpar performance in the U.S. market, while the rest of its categories had marked double-digit increases (fueled in part by acquisitions). In 1Q12, U.S. generic revenues jumped 29% to $1.2 billion, courtesy of a series of launches with market exclusivity, helping bring worldwide generic revenues up 12% to $2.3 billion for the quarter. Given the vagaries of the generics business, it’s necessary for Teva to find steady growth in areas like branded pharma, OTC and biosimilars, where it hopes to make a big splash in the U.S.
The company’s revenues were also boosted by its acquisition of Cephalon, which closed in October 2011. That move added half a billion dollars in 1Q12 revenues from three drugs: Provigil, Treanda and Nuvigil. The downside of the Cephalon acquisition is that it was followed by an inevitable round of layoffs. The company plans to fire around 1,500 employees overall, most from Cephalon, according to media reports, leading to around $500 million in annual savings.
Provigil went generic in April 2012, but through a quirk in legal filings, Teva USA actually owned the rights to the 180-day exclusivity period for the $1.2 billion drug. The company wound up settling with Mylan to permit another generic in August 2012, giving up seven weeks of exclusivity. In April 2012, Teva also agreed to permit Mylan to sell generic Nuvigil beginning in June 2016, or earlier, depending on a court battle over Nuvigil’s patent with other generic makers.
Teva actually stepped back from a huge opportunity in the generics space last year. On the eve of Lipitor’s patent expiration in November 2011, generic marketer Ranbaxy announced an . . . agreement with Teva that would give the company half of Ranbaxy’s atorvastatin profits during its six-month exclusivity period. Neither side explained the parameters of the agreement, and Teva declined to discuss it, citing a confidentiality agreement with Ranbaxy, in its 4Q11 earnings call.
It’s possible that the companies had previously negotiated for Teva to manufacture atorvastatin, as Ranbaxy’s facilities stood a chance of not being cleared by the FDA to import to the U.S. However, that clearance did come, and Teva has not reported making or distributing any atorvastatin for Ranbaxy. It has, however, taken in hundreds of millions in royalties. That’s quite an insurance premium.
Amazingly, the world’s biggest generic company then went on to sidestep the world’s biggest generic free-for-all. In May 2012, the Economic Times of India reported that Teva would not enter the U.S. atorvastatin market after Ranbaxy’s exclusivity period ended, citing the presence of too many competitors and the need to devote too much of its API and manufacturing resources to penetrate the U.S. market. Earlier in that month, Teva launched atorvastatin in the UK.
Shortly before press time, Teva got great news on the Copaxone front, when a U.S. district court ruled that several generics companies -- Momenta, Sandoz, Myland and Natco -- infringe Teva’s patents for its MS blockbuster. According to Teva, this could keep generic Copaxone off the market until September 2015. That will give the company some breathing room, as it works to advance its pipeline, build its branded portfolio, and extend its market presence globally.
ACQUISITION NEWS
Outsourcing News
ACQUISITION NEWS
Target: Teva-Kowa Pharma Co., Ltd
Price: $150 million for 50% interest in joint venture
Announced: September 2011
What they said: “Full ownership of all our activities including Taiyo will allow us to better grow our business in Japan. With this stronger platform, Teva will be in a better position to further drive penetration of high quality generic pharmaceuticals in Japan and make better healthcare accessible to the Japanese people.”
—Shlomo Yanai, president and chief executive officer of Teva (ret.)
The Lowe Down
Last year I had to get adjusted to writing about Teva. A generic company has different problems and a different outlook than a discovery-based one, after all. But perhaps things aren’t as different as I’d thought.
Teva depends quite a bit on its own multiple sclerosis therapy, copaxone, and has just recently fought off a patent challenge from Novartis and Momenta. That gives them breathing room until 2015, which I’m sure is welcome, but you know, in terms of drug development, 2015 isn’t all that far away, either. And given the way the MS market is changing these days, copaxone might not be as big a deal to the rest of the world, even while its patent is still in force. This isn’t a one-drug company, not with its generic business, but it’s a least a 0.5-drug company, if you know what I mean.
So welcome, to the rest of the drug industry, guys, and welcome to a chance to experience patent worries from the other side. When you’re nervously looking at an expiration and wondering just what you’re going to replace those revenues with — well, you’re a full-fledged member of the club. How do you like it so far? Better facilities than the Generic Club? Worth the membership dues, do you think? Be sure to fill out the response card so we can improve your Pharma Experience!
—Derek Lowe
Outsourcing News
Teva made outsourcing headlines in April 2012 when it was revealed that the company was one of those affected by the scandal at Cetero Research, in which employees at the CRO may have falsified data and manipulated samples for outsourced early-phase studies, bioequivalence and PK testing.
In July 2011, the FDA asked all companies for which Cetero performed testing between April 2005 and June 2010 to reevaluate trial data. Teva, it turns out, had a number of trials that qualified, but the company reported to Pharmalot that most of its reworked studies will be done by August 2012. The FDA assured that these problems with data likely won’t affect any drugs that are already on the market.
In March 2012, Teva sold its facility in Mirabel, Quebec, to Halo Pharma, a CMO based in Parsippany, NJ. The site came over as part of Teva’s 2010 acquisition of ratiopharm and has capacity in non-sterile creams and ointments and large-volume liquids. Halo will transfer in 150 Teva employees and will have a multi-year supply agreement for Teva Canada. In addition to the Canadian market, the facility will enable Halo to sell into Europe. For more about the acquisition, you can read our June 2012 Newsmakers interview with Halo’s chief executive officer, Clive Bennet, at bit.ly/MS8vmI.
