Teva Pharmaceutical

TEVA PHARMACEUTICAL

About TEVA

Began in 1901 as a small wholesale drug business in Jerusalem distributing imported medicines, TEVA is now one of the top 20 pharmaceutica[pic 3][pic 4]l companies in the world, with operations in over 50 countries, 26,000 employees worldwide and production facilities in Israel, North America, Europe and Latin America.

How is TEVA doing

TEVA was more than the world’s leading producer of generic pharmaceuticals. As we can see in the Exhibit 1a and Exhibit 1b, TEVA is a successful company in both revenue growth and its financial structure. As you can see in the Exhibit 1b TEVA have acquired credits to leverage and ensure financial stability and on the other side in Exhibit 1a shows an increase in sales more than doubled of revenues in the last five years (comparing 2001 and 2005).

As we can see from Exhibit 1a to the company maintained a growth of approximately 32% between 2001 and 2005. Although the growth was only 9% from 2004 to 2005  due to the highly competitive industry and the entry of large players on the market, the company continues to show growth both operating income and net income. This means that, despite its high rate of growth (approximately 26%) compared to their rivals in the last five years, TEVA has to do everything possible in order to restore growth and position it acquired in previous years. On the other hand, as shown in Exhibit 1b, especially in the item of total assets of the company we can see a substantial growth the last five years, indicating that TEVA [pic 5]is making good use of their assets.

Despite the socio-political site location of its principal office conditions, TEVA knew establish itself as a global company, making 64% of their revenues come from the US market.

External Factors that explain the performance of TEVA

Innovative Pharmaceuticals. They are protected under a patent granted to the pharmaceutical company that discovers drugs. After approval by the FDA in the United States, new chemical entities having 10 to 12 years of exclusivity for the commercialization of the new drug. Among the relevant factors of the industry are the following:

• Pharmaceutical research is high risk, 5,000-10,000 One test compounds became an approved drug. Seven in every 10 marketed drugs did not produce revenues exceeding their R&D costs.
• Gross margins on patented drugs typically range from 85% to 95%.
• Annual industry growth of the traditional (non-biotech) pharmaceuticals firms was predicted to slow to 5% to 8% annually.
• Slow development process, from discovery of the compound to the approval of the government it can take 10 to 15 years.
• High costs associated with research and development.
• High costs in sales and marketing force.

Generic Pharmaceuticals. Generic drugs are off patent drugs. They are bioequivalence in terms of form, dosage,quality, effect, side effects, and the route of administration of the branded drugs. These drugs are subject to the same regulatory standards and can only be manufactured and sold when the original medicines are not protected by patents, within the industry stands out:

• The price of generics is considerably less than the original versions.
• Low costs of R & D, marketing and sales.
• America is the largest market for generic drugs in the world
• 13% of medical prescriptions in 1983 to 50% in step 2006.
• The Hatch-Waxman 1984 Act allowed to generic firms challenge to innovative firms long before its patent expire and acquire an exclusivity period of 180 days for marketing their drugs.
• It is a highly competitive industry due to the entry of low-cost manufacturers and innovative firms entering the industry.
• It is an attractive Industry in terms of return on equity, as can see in the Exhibit 2, the return on equity of generic firms is sometimes greater than  innovative firms.

Internal Factors that explain the performance of TEVA

TEVA has developed into a leading[pic 6] company in Israel medicines, until consolidate the leading company in the production of generic pharmaceuticals worldwide.With corporate offices located in Israel, these are some of the factors that determine their performance in the industry :