Case
Teaching Notes
Supplementary Resources
Abstract
In December 2017, with profits down and debt greater than the value of the company, the Israeli pharmaceutical company Teva announced it would lay off one-quarter of its 56,000 employees worldwide, including about 2,000 in Israel. Recently, in the pharmaceutical industry, the U.S. authorities have been approving more generic drugs (drugs whose patents have expired and fallen into the public domain), which increases the competition for Teva products, and at the same time, drug wholesale buyers are consolidating to become stronger companies. This situation hinders Teva, which creates a need to settle the crucial question of corporate strategy: should Teva continue to rely heavily on generic drugs or have a more diversified product portfolio? In either case, the dilemma facing Teva is how to grow and create value in generics, its core competency in a market where some big buyers impose ever-decreasing prices.
Students are led to perform a comprehensive analysis of Teva’s strategy of external growth through acquisition over the last 5 years to extract the factors that led to the current dilemma.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
Resources
Appendix 1. Teva Revenues and Profits 2015–2018
| Year | Revenues (USD billion) | Percent change in revenues | Operating income (USD billion) | Percent change in operating income | Net income (USD billion) | Percent change in net income |
| 2018 | 18.85 | 15.7% decline | 0.35 | 102.5% growth | −2.40 | 85.5% decline |
| 2017 | 22.38 | 2.2% growth | −14.24 | 761.4% decline | −16.53 | 24401.5% decline |
| 2016 | 21.90 | 11.45% growth | 2.15 | 35.7% decline | 0.07 | 95.7% decline |
| 2015 | 19.65 | 3.06% decline | 3.35 | 27.15% decline | 1.57 | 2.71% growth |
Source: https://www.macrotrends.net/stocks/charts/TEVA/teva-pharmaceutical-industries/revenue
Appendix 2. Historic Timeline of Teva Mergers and Acquisitions
1901: The company, which employs about 45,000 people, was founded in Jerusalem as a wholesale drug distributor.
1999: Teva purchased Copley Pharmaceutical Inc., a Massachusetts-based generic and brand-name drug company, for USD 220 million.
2000: Acquisition of Novopharm Ltd., the 2nd largest generic producer in Canada, and its Hungarian subsidiary, Human. Teva becomes the largest generic pharmaceutical company in North America.
2001: Copaxone receives approval from authorities in Europe.
2002: Acquisition of Bayer Classics (now Teva Classics) in France, including the Teva Santé manufacturing plant.
2004: Acquisition of Sicor Inc. and its subsidiaries, which combines Teva’s successful oral generic drug franchise with Sicor’s core capabilities in the areas of generic injectable solutions, APIs, and biogenerics.
2005: The acquisition of IVAX Corporation in the United States strengthens Teva’s global presence through subsidiaries in Europe, Latin America, and the East Asia. The acquisition provides Teva with a rich portfolio of proprietary products in complementary areas of respiratory systems, central nervous systems, and oncology.
2008: Teva creates a joint venture with the Japanese company Kowa Company, Ltd. Teva-KOWA Pharma is positioning Teva for the supply of generic pharmaceuticals to the Japanese market.
2008: The acquisition of Barr Pharmaceuticals in the United States, including the PLIVA subsidiary in Europe, strengthens Teva’s leading position in the United States and key global markets, as well as Teva’s product portfolio.
2009: Teva Pharmaceutical Industries Ltd. and Lonza Group Ltd. agree to establish a joint venture (JV) to develop and manufacture a portfolio of biosimilars. Teva and Lonza bring complementary capabilities that will significantly strengthen partners’ efforts to secure a strong position in biosimilars.
2010: The acquisition of Ratiopharm in Germany significantly increases Teva’s market share in Europe.
2011: The Acquisition of Cephalon and its Global Subsidiaries Strengthens Teva’s diversification in central nervous system, oncology, respiratory tract, and pain, and delivers leading position in branded pharmaceuticals and specialty products.
2012: Jeremy Levin is appointed President and CEO of Teva.
2013: Investment of more than USD 100 million will allow Pliva to increase its tablet production capacity by USD 2 billion a year. A subsidiary of Teva since the acquisition of the American Barr by the Israeli giant and global generics in 2008, Pliva plans to start the commercial production of its new unit, after obtaining the approval of the FDA (the U.S. health authority). Future productions in Zagreb will primarily target the European and U.S. markets. The additional capacities mainly concern solid oral forms (tablets and capsules).
2013: The collaboration between PGT Healthcare and Swisse Wellness integrates the main strengths of both companies, which has allowed the extension of the Swisse brand of premium VMS products to new countries and the creation of a global supra brand.
2014: Erez Vigodman is appointed President and CEO of Teva.
2014: Acquisition of NuPathe Inc. in the United States.
2014: The acquisition of Labrys Biologics Inc. in the United States opens Teva the door to a strong and innovative franchise in the field of migraine prevention and treatment within its SNC portfolio.
2015: In February 2015, Teva signed an exclusive license agreement with Eagle for Bendeka to strengthen its Treanda franchise in the treatment of patients with chronic lymphocytic leukemia and patients with indolent B-cell non-Hodgkin’s lymphoma.
2015: In May 2015, Teva acquired Auspex as part of an agreement to strengthen Teva’s central nervous system base with SD-809 (deutetrabenazine), developed to treat several movement disorders.
2015: Teva acquired interests in Gecko Health Innovations, Inc., Immuneering Corporation and Microchips Biotech, Inc.
2016: In April, Teva established a joint venture with Takeda, the largest pharmaceutical company in Japan. The company aims to leverage the Takeda brand’s reputation and strong presence in Japan in distribution, as well as Teva’s expertise in the supply chain, operational network, infrastructure, and of R&D serving millions of patients in Japan’s growing generic drug market.
2016: In August, Teva acquired Actavis Generics, Allergan plc’s global generic pharmaceuticals division, significantly expanding the generic portfolio, R&D capabilities, product portfolio, and worldwide operations network of Allergan plc. The acquisition strongly reinforces Teva’s strategy, accelerates the creation of its new business model, and opens up new opportunities for the company in generic medicines.
2016: In October, Teva acquired Anda, one of the leading generic drug distributors in the United States. This strategic change allows Teva to enhance its capabilities and flexibility to provide access to more patients across the United States.
2016: In September, Teva and Regeneron signed a collaboration agreement for the development and commercialization of Regeneron’s pain medication, Fasinumab.
2017: Kåre Schultz is appointed President and CEO of Teva.
This case was prepared for inclusion in SAGE Business Cases primarily as a basis for classroom discussion or self-study, and is not meant to illustrate either effective or ineffective management styles. Nothing herein shall be deemed to be an endorsement of any kind. This case is for scholarly, educational, or personal use only within your university, and cannot be forwarded outside the university or used for other commercial purposes.
2023 Sage Publications, Inc. All Rights Reserved
