'Teva Pharmaceutical Industries\r'

'TEVA pharmaceutic Industries,Ltd Problem dictation After numerous years of successful increase in the generic wine wine pharmaceutic industriousness, competing against the biggest western Pharmaceutical companies, TEVA Pharmaceutical Industries, Ltd the study and biggest player in this competitive industry, has filtrateed a point where after acquiring m whatever other pharmaceutical companies and achieving his 1 jillion dollar conjecture goal, seem to gravel lost focus and found themselves in need of setting a t rarityer goal that get out make believe them, coming(prenominal) vision and will help them peckcel being scattered all approximately the commercialise and dispersing their extra budget ?On one hand is the global grocery store for generics, where m either parvenue clinical depression- fol busted players be appendage using Teva’s look at same successful formula to take into custody foodstuff sh atomic number 18 and existent extensive inno vational players are take overing to incur, making of this specific industry a precise(prenominal) challenging one with steady competition, collapsed forbiddenlays and precise downcast mesh. On the other hand, the ripe drug trade, an unknown grocery for Teva, where the bully investiture is accounted in one million million millions in expenses in R&D, and branch is anticipate to impenetr open down, the possibilities for gamy revenues are great than Teva muckle imagine. External abridgment Industry: The Pharmaceutical industry, a 600 cardinal industry, has been growing at an approximate rate of 12% over the last five years, with a common ROE of 20%, among the juicy gearest of any industry.It has 2 main sectors, namely Innovative Pharmaceuticals and Generic Pharmaceuticals. The Innovative Pharmaceutical, considered a sector of high risk of infection due to the high peachy investiture in R&D, the broken in probability of having an ap be developm ent then the opportunity to fuss revenues exceeding the invested R&D and salutes, has currently negative expectations regarding the afterlife mainly be name of slow growth predictions, the end of a unmixed protective cover occlusive of up to 70 drugs with no innovative harvest-festivals in the pipeline to replace them.It’s counterpart, The Generic Pharmaceuticals a 52 billion sector, although dependent on the innovative drug’s patents to be recruitd, is judge to become a growth of up to 16% in major knowledge domain markets and It has 3 categories: ? Commodity generics: Requires the lowest capital investment and also is the largest segment of generics, crusade why many enemys were attracted to it. ? quoin generics: Have to be prescribed by physicians even in pharmacist-driven markets.Although requires higher(prenominal) capital investment than trade good the gross margins were higher. ? Biosimilars: Refers to the undeveloped segment of the generi c version of the so called â€Å"Biotech”, which active’s compounds were highly complex, by far harder to iterate than traditional pharmaceuticals. Has high expectative of growth, and margins General Factors per demesne of the generic market United States: The orb largest generic pharmacist-driven market, offered benefits for generic drugs such as the ANDA process which shortened the approval of generic drugs and the â€Å" dissever IV” which allowed generic companies to scrap innovative drugs ample before patent expiration. The competition in the US is stiff due to a large do of competitors go in the market which is negatively bear on the pricing and consequently the profits. Europe: The UK and Netherlands, the virtually competitive markets in the region resembled the US (pharmacist-driven, prices were regulated by the market, with a high penetration of generics, 49%, which makes the competition high). France and Germany on the other hand, were physi cian-driven for which generics collect to market and firebrand their drugs comparable innovative companies, hence subject in the same merchandise expenses as innovative companies, small-arm prices were regulated by the government.Also, these markets were accounted as part of the biggest globally and had trim penetration rates, 12% for France and 41% for Germany, composition having high growth potential. Also they approximately(prenominal) accounted for only 12% of Teva’s revenues in Europe. ? Rest of the world: Japan is a highly regulated market with generic penetration of 10%, in particular becaexercising of the patients’ science of generics as of freeze off quality, only expected to growth in a the long term.Other markets like Latin the States, Eastern Europe, Russia, China, and India were expected to grow in the generic market although due to especial(a) disposable income the patients demanded low price generics. Five forces Analysis ( catch up with concomitant 1) ? Rivalry ( mettlesome) ? condition of supplier (Low) ? Power of buyers (high) ? Substitute products (Medium) ? Threat of new entrants (high) Opportunities: thither are 70 innovative drugs in the US about to unstrain their patents in 2010, which are potential new generics developments for Teva.There are quiet down some un stark(a) markets such as France, Germany, Latin America and Asia where Teva goat make an strategic sound. There is still the Niche generic and Biosimilar Markets where barriers of entry hind end be created to prevent new competitor entrance, and lastly, there are still non many competitors and high growth expectations specially in Biosimilar products in the US. Threats: ANDA and â€Å"Paragraph IV” are slowing due to brutal competition and entrance of new competitors, mend innovative companies started also to enter the trade good generic market.The industry is highly break which makes competition fierce and some global markets have government regulated prices and needed licensing making competition on price difficult. Finally, the US Market is getting saturated of competitors which is reducing profitability. Internal Analysis incorporate schema: Teva’s Corporate dodge is to diversify into related channeles that through a well managed chain pass judgment (Localized instruction and marketing, and centralized R&D, manufacturing and APIs) has take backn them greater graduated table benefits than any of its competitors, and a composition as the company not to vie on price with.Teva’s business strategy and Competitive vantage: Teva’s business strategy is cost address institutiond in abide bying R&D low, an efficient management of its supplement chain, backward integration into pharmaceutical ingredients (API), blotto execution including register ANDA applications faster than competitors (which gave them a large pipeline of paragraph IV challenges and a b way portfolio of commodity generics), and finally a reputable, successful science team up. See addendum 3) Value chain (see accessory 2): Teva has maintained its low cost shade during the years, and thank to his careful growth into new markets through acquisitions has achieved greater benefits of scale than any other competitor. Its R&D, which usually adds for a high percentage in the industry (14% of net sales), was only of 7% for Teva thanks to the strong collaboration with the scientific base in Israel such as Weizmann institute, Hebrew university of Jerusalem and the Technion.Additionally, Teva has entered new markets where they have successfully been able to push their products by influencing market players namely Pharmacists-driven markets. Key success factors: deep down the main success factor we can recognize former CEO Hurvitz , who fostered a culture of goal settings and low prices, acknowledging the commodity-like disposition of the industry and whose vision took the co mpany to reach and pass the â€Å"Billion Dollar theory”. His legal team, who is in charge of filing ANDA, is famous for being faster than any competitor.His acquisitions team who has a great account in the industry for the systematic flak and successful outcomes in integrating acquired companies. Strengths: Teva is the largest commodity generic producer in the world by having an amazingly well managed cost structure and by setting economies of scale to produce at a lower cost than its competitors, hence being able to compete with low prices. Its capacity to allure key market players within its markets (pharmacists). An acquisition team that has lead to successful buys and integrations.Also, Teva has a non Bureaucratic structure that is aligned with the low cost structure. Weaknesses: The limited knowledge of Physician-driven markets, is for instance, the cause for Teva’s low presence in France and Germany that together accounted for only 12. 5% of the revenues of Teva in Europe. Limited research budget and limited date in innovative pharmaceuticals market. High focus in the US market, reason for which any possible downturn, like the regulative impasse, has a high possibility of impact negatively the results of the company.Alternatives 1. Teva has successfully introduced 2 blockbuster innovative drugs into the market, Copaxone in partnership with Sanofi-Aventis, and Azilect, which proved that Copaxone was not a one-off. This can lead us to think that Teva can keep on pass down the road of innovative drugs and in other remedy areas with sales estimates of up to $6 billion dollars. We can’t forget though, that Teva has limited research budget and limited follow up in this market where teras companies like Merck, Novartis and Sanofi-Aventis compete.Additionally CEO Hurvitz qualified this move as nothing else than supreme self-confidence. 2. Move into Niche and Biosimilar markets which are relatively new or completely unknown market s for Teva, especially for the guinea pig of relationship with the Physician-driven markets but that can sink services and possibilities to create entry barriers to new competitors and that would unimpeachably set a solid base for Teva’s continuous growth. 3.Enter new geographical markets: continue with its low cost strategy and enter new geographical markets, such as Germany and France, this strategy is aligned with the move into Niche and Biosimilar market mainly direct to physician-driven markets. 4. Status Quo: Teva should focus solely in the commodity generic market in which the company is currently the strongest player, but risking to loose market share with competitors such as Sandoz, Ranbaxy and Barr. See appendix 4 for Analysis of Alternatives RecommendationIn the light of the alternative analysis (see appendix 5), the best move for Teva is to start entering the Niche and Biosimilar markets while also expanding geographically into Physician-driven markets such a s Germany and France where it is wise to unite and try to get a big market share using Ivax and Sicor’s know-how in these areas. Ivax has already given Teva the confidential information presence in Latin America where must of the countries were physician-driven markets, proving that Ivax has go out in this casing of market.Teva can give leverage to Ivax in orderliness to be able to produce at low costs, while Ivax with its sever type of action can give Teva access to global markets. For this purpose, Teva must successfully integrate Ivax into Teva’s culture while supporting its independent operation and providing marketing budget, which will definitely generate high revenues due the nature of Ivax’s quoin generic products. Also, Ivax strength in first-to-file paragraph IV pipeline in the the States can positively affect Teva’s operation within its original market and generate a solid ground so that Teva can later on support its new operations i n the new markets.On the other hand, Teva has already started underdeveloped Innovative drugs, and has had 2 blockbusters, but getting deeper in this market can be dangerous and the probabilities of failure are very high. Instead, Teva should use its previous experience in handling the innovative division, and handle Sicor experience in the Biosimilar in the same way. Teva’s experience in rolling out a product dejeuner will definitely become useful in order to support Sicor’s operation that can generate entry barriers to the Biosimilar market and higher revenues within the US in the injectables business.Also it is possible to use a low cost approach, and his economies of scale to be much prices efficient than the possible competitors. Implementation plan. Since 70 innovative drugs are loosing their patent protection by 2010 in the US, Teva should start evolution the generic version of this drugs and can use Ivax experience in the first-filer paragraph IV in order t o take advantage and make its position in the US market stronger. Teva should also start tardily moving away from the Innovative market.In order to do this, Teva should finish the development of the innovative drugs and they already have in the pipeline, and lunch them. After this, most of these resources are going to be transported into the toil of Biosimilars leaded by Sicor. With the intention of moving into Germany and France, Teva must start creating a solid marketing team in conjunction with Ivax, this capital investment should generate enough revenues to overshadow the cost knowing that Niche products have higher gross margins.With Sicor, Teva should start developing Biosimilars within the US, before Barr with Pliva and Sandoz move into the US market that is supposed to support only 3 competitors. We know that Sandoz has already lunched one Biosimilar in Australia and Europe. Although the regulation pathway for Biosimilar in the US was still unknown this will give some lead -time for Sicor to develop and then have approved Biosimilar products in the US and hopefully start generating entry barriers for biotech and other Biosimilar competitors.Biosimilar product has margins close to those of the innovative drugs and with lesser risk of competing against the giants who don’t play in this market. Finally, Ivax gave Teva the leading position in Latin America, and although it accounts for only 39. 3 billions or 7% of the industry revenue, this revenue is expected to growth at a 9. 2% CAGR with medium-low competition. It is a great opportunity for Teva to establish himself as the market leader in this growing market. accessory 1 Porters 5 forces. [pic] Appendix 2 Value Chain [pic] Appendix 3 Sustainability of competitive advantage. |Valuable | rarified | |INNOVATIVE |High revenues if successful. |Slow growth and stiff competition against giant| | |2 successful innovative drugs already launched |companies. | | |Has some innovative drugs in the pipeline |vast capital investment required. | | |projected to generate revenues of $6 billions |Inexperience of Teva in this market. | | |Goes against advantage of Teva of producing | | | |with low costs | |NICHE AND BIOSIMILAR AND geographic EXPANSION|High revenues and market growth expected |Teva does not have experience in this area of | |THROUGH ACQUISITIONS | scuttle to generate entry barriers to new |production | | |competitors |Teva has no experience and know how in | | |Has already bought Sicor (Biosimilar), Ivax |physician-driven markets however it can | | |(Niche) and has already set up a separate |integrate Ivax and Sicor know-how. | | |division to focus on Niche market and | | | |Physician-driven markets | | | |Aligned with center strategy and efficient | | |chain value for low costs | | | |date in acquisitions and integration | | |STATUS QUO |Strong coalesced position in the US | saturate market | | |Know-how and experience in pharmacist-driven | crocked competition with new competitors and | | |market |giant companies entering commodity generic | | |Experience in ANDA filing |market. | | | |Prices lowering and with them profits | ———————†Teva Pharmaceutical Industries, Ltd Final Report professor\r\n'