Teva Pharmaceutical
Teva Sidebar: Diversification Strategy
CEO Dr. Jeremy Levin discusses why generic drugs are a growth driver.
Courtesy Teva
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Dr. Jeremy Levin is well known for his creativity and prowess in establishing strategic alliances, first at Novartis AG (NYSE: NVS) and then at Bristol-Myers Squibb Co. (NYSE: BMY), where he created a strategy to diversify and fill gaps in drug portfolios through acquisitions and partnerships. In May, Dr. Levin became president and CEO of Israel-based Teva Pharmaceutical Industries Ltd. (NYSE: TEVA). Levin lays out for NYSE magazine his long-term plans for the 111-year-old company, below.
An artificial divide. When a drug becomes generic, there is a perception that it is not as good as the branded version. For that reason, most pharmaceutical companies eschew any association between the branded and generic sides of their businesses. At Teva, we care about great medicines, not whether they are branded or generic, which is the reason we have only one R&D division for the entire company. The industry has spent huge fortunes over the past 40 years developing medicines that are highly successful. But often these really good medicines are put aside for new drugs that are only marginally better and much more expensive. We have 1,300 generic medicines in our portfolio, which may be the largest drug portfolio in the world, and many of them are tremendously therapeutic. Generics are at our core and a tremendous growth driver for this company; we have 157 generics in our pipeline.
RETURN TO ARTICLEA DIFFERENT DRUG PIPELINE
A global mindset. We have the manufacturing capacity to produce 100 billion tablets a year, along with respiratory and IV medicines, so we’re able to provide drugs for a huge number of patients worldwide. Different geographies, however, have different pharmaceutical needs, so we also need the flexibility to provide the right drugs where and when they are needed. In the U.S., 80 percent of prescribed drugs are generic; in Europe, 50 percent of drugs are generic, even though the medicines on both continents are relatively similar. But as economic pressures increase in Europe, use of generics will be greater. In emerging economies, only a tiny portion of the population can afford to buy high-cost, patent-protected medicines, and the rest depends on generics. Teva is committed to delivering the same quality medications to patients whether they are in an emerging country or a developed one. Delivering drugs on a global scale means we must possess a deep understanding of multiple changes occurring in each country, from drug regulations to macroeconomic and regional economic landscapes to governmental policies to disease profiles to demographics.
On collaboration. Partnerships will be intrinsic to Teva. You’ll see us collaborating with academia, with large pharmaceutical companies and with organizations around the world. All transactions are possible for Teva, including what I call the “oyster strategy,” which involves taking a high-value asset sitting on your shelf that you can’t develop in your own pipeline and offering it to another company, say in China, to develop with an agreement to share the sales with your company.
A tight focus. The industry is replete with research duplications because every large pharmaceutical company has broad-based R&D and is trying to develop the same novel drugs. Teva will focus its R&D only in areas where we think we have a great ability to make a difference to patients and where we see an unmet medical need. I believe the industry as a whole needs to shift its attention from trying to develop incredibly high-risk/high-reward blockbuster drugs to creating a good blend of modest-risk/modest-return drugs that will fill a tremendous pipeline.