Generating US$7 billion in annual revenues, Israel's Teva Pharmaceutical Industries Ltd. (TEVA) is the world's largest generic pharmaceutical company.
TEVA makes generic versions of brand-name antibiotics, heart drugs, heartburn medications, and more - in all close to 200 global generic products, 700 compounds, and more than 2800 dosage forms and formulations. TEVA's pharmaceuticals are used in some 20% of U.S. generic drug prescriptions. Examples of TEVA's generics include lower-cost equivalents of such blockbusters as anti-depressant Prozac and cholesterol drug Mevacor.
Generic drugs are usually sold at a lower price than the original brand name version. Companies like TEVA can sell generic medicines at reduced prices around the world and still maintain profitability by avoiding 3 major costs incurred by brand name drug manufacturers:
- Research and development costs of a new brand name drug
- Regulatory approval costs (e.g. proving the drug's safety, dosage levels, and efficacy)
- Marketing costs for the new drug brand.
In its third quarter ending September 30, 2006, North America accounted for 62% of TEVA's net sales, while Europe contributed 23%, and the International segment (primarily Latin America, Central and Eastern Europe and Israel) garnered 15%.
Currently, TEVA sells its pharmaceutical products in Argentina, Austria, Belgium, Belorussia, Bulgaria, Canada, Chile, China, Costa Rica, Curacao, Czech Republic, Dominican Republic, El Salvador, Estonia, Finland, France, Germany, Guatemala, Hungary, Ireland, Israel, Italy, Kazakhstan, Kenya, Latvia, Lithuania, Luxembourg, Mexico, Moldova, Netherlands, Nicaragua, Norway, Panama, Peru, Poland, Portugal, Romania, Russia, Singapore, Slovakia, South Africa, Spain, Sweden, Switzerland, Taiwan, Ukraine, United Kingdom, United States, Uruguay and Venezuela.
And The Winner Is...
In the business of generics drugs, bigger is better. Drug manufacturers producing the highest volumes enjoy lower unit costs and can therefore sell at lower prices while maintaining profit margins. TEVA's portfolio of more than 300 product-lines generates 40% more in revenues than Sandoz, the world's second-largest generic drug firm.
As of November 6, 2006, TEVA had 144 product applications awaiting final FDA approval that target U.S. sales of approximately $87 billion. The company expects to launch between 70 to 80 generic drugs in 2007 & 2008. TEVA's global market reach is unmatched among generic pharmaceutical companies, and boasts a pipeline of new generic drugs that is the broadest in the industry.
Sources: Hoovers, http://www.tevapharm.com/, Reuters, WR Hambrecht & Co's Research Report of September 16, 2005, DurgResearcher.com
