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Case studies in Strategy: Teva
As CEO of Teva, the focus should be on maintaining generics markets in the US and Europe, introducing biosimilars and niche products in Latin America and Eastern Europe, and pursuing innovative pharmaceuticals. The strategic plan emphasizes leveraging company strengths like cost leadership and strong academic ties while responding to shifting healthcare demands. Teva aims to adapt and grow by handling logistics through maintaining a global presence and creating specialized divisions.
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Case studies in Strategy: Teva
- 1. As the CEOof Teva, which markets would you concentrate on developing going forward?
- 2. Introduction • Decisions case •Decision options: focus on US market and the other generic markets, expanding into the global branded markets, or gradually turning into specialized generics or innovative pharmaceuticals • Criteria: value creation, utilizing company’s strengths, aligned with their core values
- 3. Teva's Core Valuesand Strengths • A focused firm, not a conglomerate • Global company • Cost leadership advantage • Large market shares • Close relation to academic institutions • Taking risks but not ones that risk the entire company • Experienced at pharmacy driven markets
- 4. Market segments • Geographical:US, Western/Eastern Europe, Japan, Latin America, Asia • Physician driven vs. pharmacy driven • Product type: commodity generic, niche generic, biosimilars or innovative
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- 6. 1. Keeping upthe generics market in US and Europe (40%) • Accounts for the core of sales. • Pharmacy driven markets experience • Very good at filing ANDA in the USA. Paragraph IV and exclusivity period provides higher margins. • Debt crisis in Europe has governments looking for places to cut costs (e.g. generics) • Similarly, in US people are looking to cut costs.
- 7. 2. Introducing Biosimilarsand Niche markets to Latin America and Eastern Europe (40%) • Already has a specialty division that expects high growth rates (Ivax) • Less competitive than generics, higher entry barriers, higher gross margins, closer to innovative. • US market regulatory barriers • Price erosion within generics market in the US • Competitors in Europe expanding aggressively, important to get in the market before it’s too late • Linkage between US and Latin America
- 8. 3. Pursuing theinnovative market (20%) • Impressive success with Copaxone (blockbuster drug accounts for 12% sales) and Azilect • Collaborating with Israeli academic institutions in R&D - cost advantage. • Partnering for sales & marketing - cost advantage (Sanofi-Aventis). • Massive competition in generics including low cost players like Ranbaxy (India) • Innovative drug companies entering the generic market and defending their patents aggressively - strategic decision.
- 9. Breakdown of strategicplan • Keeping up the generics market share in US and Europe (40%) • Introducing Biosimilars and niche markets to Latin America and Eastern Europe (40%) • Continue penetrating the innovative market (20%)
- 10. How will thecompany logistically handle this structure? • Maintain global company. • Integrate acquired companies. • Create separate divisions for innovative and commodity generics, as it did with Ivax for biosimilars.
- 11. Closing Statements • Healthcareindustry is changing and Teva needs to adapt in order to grow. • Decision case based on criteria: core values, strengths and value creation • Angles to consider: geography, market driver, product type.
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