In Israel we have a 1970s song based on a poem from 1953 by Amir Gilboa about Theodor Herzl [the most important early advocate for the establishment of Israel]. It has a line in it about Herzl: “Suddenly a man rises in the morning, feels he is a people, and starts walking. ” That is exactly what Hurvitz did. Suddenly he woke up in the morning, feels he is a giant world class company, and starts walking. No one, aside from Herzl, has accomplished anything as remotely as impressive in this country as Hurvitz.
It was impossible, a million to one odds at best, and he still did it. He woke up one morning and started walking. — Ori Hershkovitz, equity analyst at Tel Aviv-based Leader & Company The markets had not been kind to Teva Pharmaceutical during the first half of 2006. The stock had plunged nearly 30% from January 1 to June 30, erasing billions of dollars from the company’s market capitalization. Even good news, such as reports in July of Teva’s wildly successful introduction of generic Zocor—the largest blockbuster drug ever to go off-patent—had failed to boost the stock significantly.
Since nearly every retirement fund and mutual fund in Israel invested in Teva, this drop had been felt throughout the population, in effect amounting to every Israeli family losing NIS 3000, or $675. 1 Teva was more than the world’s leading producer of generic pharmaceuticals. It represented the gold standard of business in Israel. As the country’s largest public company and first true multinational, it had avoided the traditional conglomerate model of early Israeli enterprises, choosing instead a highly focused approach embraced by later generations of successful Israeli firms.With revenues growing from $91 million in 1985 to an estimated $8.
5 billion in 2006, the company had bred a class of professional managers and scientists not before seen in the country. It had served as a bridge from Israeli science to the market and had been an important source of talent and capital for the growing biotechnology sector. It had also helped to catalyze the country’s domestic capital markets by being one of the early companies to list on the Tel Aviv Stock Exchange in 1968. 2 In 2005, Teva’s $7. billion acquisition of Ivax catapulted the company to the top position among global generics in what one reporter dubbed “Generics’ answer to Big Pharma.
”3 Less than one year later, Teva filled 20% more prescriptions than Pfizer, the world’s largest pharmaceutical company. It had a portfolio and pipeline twice the size of its next closest competitor. 4 With a 20% share of the U. S. generics market by revenue and number of prescriptions, it was by far the largest player in the world’s largest market. Also, with the Ivax acquisition, Teva had gained the broadest geographic reach in the industry.
One of the top players in Western Europe, it also had a significant operations in ____________________________________________________________ ____________________________________________________ Professors Tarun Khanna and Krishna Palepu and Doctoral Student Claudine Madras prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2006, 2007 President and Fellows of Harvard College.To order copies or request permission to reproduce materials, call 1-800-545- 7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www. hbsp. harvard.
edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School. Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441Teva Pharmaceutical Industries, Ltd the fast-growing markets of Eastern Europe and Latin America, and had a presence in over 50 countries globally. While Teva may have been Generics’ answer to Big Pharma, Big Pharma had finally and resoundingly answered back.
Novartis, one of the world’s largest pharmaceuticals companies and the only one with a consistently strong presence in generics over the last two decades, had spent $10 billion on generics acquisitions since 2001. Novartis’s generics unit, Sandoz, was now the second- largest generics company in the world.Other innovative pharmaceutical firms were aggressively fighting patent challenges through the legal process, through alliances with generics companies, or by moving to revive their own generics arms. Low-cost firms from India, Eastern Europe, and elsewhere were also upping their game, emulating strategies that Teva itself pioneered over the last decade. Partly as a consequence, the pricing of generics in the U. S. market—the core of Teva’s business for 20 years—had declined between 15% and 30% over the past three years. However, the U.
S. and worldwide markets continued to grow as aging populations and rising expenditures created pressure for lower-cost options. In these industry conditions, could the company maintain its annual growth rate of 33% of the last five years and, if so, how? Teva could maintain its focus on the U. S.
generics market, with major blockbusters set to lose their patent protection over the medium term, taking advantage of the glut to grow its share during the inevitable consolidation.Alternatively, the company could focus on the global generics market, either the large potential markets that were slowly opening up to generics, such as Germany, France and Japan, or the newer markets, such as Latin America or Asia. Finally, Teva could continue to move up the value chain from low-cost generics into more specialized products such as drugs with complex delivery systems or “biosimilar” versions of large-molecule drugs, and, ultimately, into innovative drugs which carried both significantly higher risks and returns.In the meantime, Teva also needed to guard against the innovative firms and low-cost players to make sure that, as the incumbent, it did not allow creeping complacency to become fatal. The industry had changed significantly over the past five years; and the Israeli market leader needed to change with it. The Generic Pharmaceuticals Industry Generic pharmaceuticals refer to “bioequivalent” versions of their innovative counterparts.
Most often in tablet and capsule form but also available in syringes, inhalers, and other delivery devices, generics in effect duplicated the active compounds developed by the original drug maker.These drugs were subject to the same regulatory standards and could only be manufactured and sold if the original drugs were not protected by patents. From a medical perspective, these drugs were largely identical to the versions of innovative firms and other generics producers. Generics were typically priced significantly lower than their original versions because the drug makers did not need to recoup the massive costs of the initial research and development associated with drug discovery nor support the massive sales and marketing costs associated with introducing a new drug.SeeExhibit 1 for a comparison of the cost structures between innovative firms and generics firms. While the innovative and generics industries had both grown worldwide at around 9% to 10% annually since 2000 (see Exhibit 2), the innovative side was expected to slow to 5% to 8% as major drugs lost their patent protection without a large immediate pipeline to replace them, while generics growth was expected to speed up to as much as 16% in major markets.
Daniel Vasella, the CEO of Novartis, predicted that sales of generics would double to $100 billion worldwide by 2010 2 Copying or posting is an infringement of copyright. [email protected] arvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd 707-441 from the $52 billion in 2005. 6 In contrast, the size of the worldwide pharmaceutical industry was approximately $600 billion in 2006. Generic Markets United StatesThe United States, by far the world’s largest generics market, was the first major country to embrace unbranded generics with the enactment of the Hatch-Waxman Act in 1984.
As a result of the act, generics penetration in the U. S. increased from 13% of the total number of prescriptions in 1983 to more than 50% in 2006 with prices close to 11% of the innovative products on a per-dose basis. The act contained two important provisions. First, it introduced the Abbreviated New Drug Application (ANDA) process which allowed generic drugs to shortcut the lengthy drug approval processes required by the Food and Drug Administration. Second, through its “Paragraph IV” provision, it allowed generics companies to challenge innovative drugs long before patent expiration. Crucially, it established a 180-day exclusivity period for the first company to submit an ANDA under a Paragraph IV challenge, providing incentives for generics competition.This exclusivity period set up a highly coveted duopoly for the first six months after the introduction of a generic drug, and resulted in a vicious escalation in the legal battles between innovative companies and their generics counterparts.
During the exclusivity period, during which a generic drug faced competition only from its patented counterpart, the generic could be expected to capture up to 75% of the market by volume of prescriptions with discounts of 20% to 40% off the original drug price. Gross margins during this period were typically near 70% to 90%, close to the innovator’s margins of 90% to 95%. After the 180- day period expired and other generics competition entered the market, the pricing of the 180-day generic drug decreased significantly, although the company often maintained a higher market share than the new generic entrants. In a typical scenario, the pricing would decline to 90% off the innovative price, while the market share of the 180-day holder would decrease from 70% to 75%, to 30% to 40%, with the corresponding sharp decline in margins.
These numbers differed across products and with the number of competitors entering the market. EuropeThe market for generics in the rest of the world varied greatly across countries. The European Union, very slowly moving towards internal harmonization, was still far from achieving that aim. The United Kingdom and the Netherlands, the most competitive markets in the region, most resembled the U. S. in their market structures. Pharmacists were free to substitute generic drugs for innovative versions at their discretion unless explicitly overruled by the physician, and prices were largely market driven.As a result, generic penetration was also high—49% of total prescriptions in the two countries in 2004—as governments, the public, physicians, and pharmacists generally accepted generics substitution.
9 The United Kingdom had a $2. 9 billion generics markets that was expected to grow to $5. 6 billion by 2008. 10 Germany and France, like most other European countries, were “physician-driven” or “branded generics” markets in which pharmacists could not substitute generics at their discretion.Generics companies operating in these markets branded and marketed their drugs directly to physicians in the same manner as innovative companies and, as a result, incurred the costs of supporting much larger sales forces and marketing activities than in pharmacist-driven markets. Furthermore, prices for both innovative and generic drugs tended to be government regulated in these markets; therefore, discounts associated with generic drugs generally were much lower than in liberalized markets.
These markets had lower penetration rates than pharmacist-driven markets—12% in France and 41% in Germany by volume in 200411—but were still some of the largest markets globally both in size and 3 Copying or posting is an infringement of copyright. [email protected] harvard.
edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd potential. Germany had a $5. 5 billion generics market in 2004 that was expected to increase to $9. 7 billion by 2008. The $1.
2 billion generics market in France was projected to grow even faster during the same period, to reach $3. billion by 2008. 12 Rest of worldJapan, the world’s third-largest pharmaceuticals market, was also heavily regulated and had a generics penetration of approximately 10%.
13 Japan and other East Asian markets also had various structural barriers to generics substitution, including a perception by patients and most physicians that generics were of inferior quality. Physicians also generated a portion of their income from pharmaceuticals, given their role as both a prescriber and dispenser of drugs, and thus had little incentive to substitute the lower-priced generics.Over time, however, penetration in Japan, like all the large markets, was expected to increase as its population aged and health care costs rose. Developing markets, such as Latin America, Eastern Europe, Russia, India, and China were becoming increasingly attractive markets for generics as governments moved to provide higher- quality care and middle classes emerged—though with budget constraints that led to a strong preference for less costly generic drugs.
For example, in Poland, Lithuania, and Hungary, generics penetration by volume in 2004 was 87%, 73%, and 50%, respectively. 4 Many of these markets were physician driven, requiring all the corresponding sales and marketing activities, and were heavily government regulated. Industry Players Starting in the mid-1990s, the highly fragmented generics industry began to consolidate slowly and then a decade later, it experienced two competitive seismic shifts: the entrance of new types of competitors and the introduction of aggressive tactics by the innovative firms. Low-cost players began to emerge from newly competitive markets such as India (Ranbaxy, Dr.Reddy’s Laboratories, Orchid, among others), Eastern Europe (Pliva, Aegis, and Gedeon Richter), and Iceland (Actavis).
Indian firm Ranbaxy was one leader of this generation. The Indian market had long been heavily protected and the government had de facto allowed local firms to circumvent international patent laws to manufacture drugs domestically, a practice which ended in 2005 with India’s commitments as a full member of the World Trade Organization. With fierce domestic competition and very low consumer ability to pay, India had among the lowest pharmaceutical prices in the world.For example, the country had over 100 brands of generic ciprofloxacin priced at an average of 63 cents for 10 tablets of 500mg each, compared to $51 for generic ciprofloxacin in the U. S. 15 (However, a large component of the price differences between generics in the Indian and U. S. markets could be attributed to additional costs which would have to be borne by all participants, such as obtaining federal approval and maintaining quality standards, as well as the pharmacy markup.
Ranbaxy had used its advantages to compete abroad: by 2005, the company generated 80% of its $1. 2 billion revenues outside India. In mid-2006, Ranbaxy had the second-largest generics pipeline in the U. S. after Teva16 and set itself the goal of surpassing Teva globally by 2012. 17 However, it was still significantly smaller on an absolute scale, and revenue was increasing at a rate of 19% over the previous five years compared to Teva’s 33%. See Exhibit 3 for competitor information. Generic pharmaceutical companies also faced new competition from innovative firms.
In 2005 Novartis acquired two generics companies, Hexal (Germany) and Eon (U. S. ), and merged them into its generics arm, Sandoz, placing it temporarily into the top position in the generics industry. More significant than the relative size of the firm, this acquisition marked the first serious effort by an innovative company to compete in generics after a wave of failed attempts in the 1990s. Pfizer had also recently picked up activity with its Greenstone unit and others had recently signaled that they were reassessing the sector. Copying or posting is an infringement of copyright.
[email protected] harvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd 707-441 According to one observer, Sandoz had focused on developing a top-three presence in specific markets, namely Germany, much of the rest of Western Europe (with the notable exceptions of the United Kingdom, Ireland, and Italy), and the United States. 18 This approach—which emphasized the highly localized nature of pricing and regulations—was similar to that followed historically by Teva.In contrast, Ivax, another global generics firm since acquired by Teva, had expanded into a broad number of markets, but often with smaller market shares.
Another tactic by innovative firms affected the profitability of generics. Innovative giants such as Merck, Pfizer, and Eli Lilly increasingly released their own “authorized generic” version of their products during the 180-day exclusivity period, often by licensing production rights to a competing generics company. This practice cut into the revenues of the first-filer by an estimated 50% to 60%. 9 While varying significantly across products, a representative generic drug which may have held 75% market share and 30% discount off the original price without authorized generic competition might have its share reduced to 50% and discounts rise to 60%. In 2004 and 2005, several high-profile antitrust cases emerged from these practices involving both Teva and Mylan as plaintiffs; however, given no signs of dampened competition in the industry—in fact, the opposite had occurred—no one expected the practice to be regulated or subside.Since 2003, every major drug with revenues over $1 billion going off patent had an authorized generic introduced onto the market. 20 As a result, generics companies could depend less on 180-day exclusivities for profitability and many looked to other means of protecting their margins, such as entering profit-sharing alliances with innovative firms or with each other and focusing on niche drugs which attracted less competition. Generic Products Generics could be roughly divided into three categories of products: commodity generics, niche or “specialty” generics, and biosimilars.
Exhibit 4shows several stylized scenarios of revenues and margins of drugs in these different categories. Commodity genericsCommodity generics, typically in tablet or capsule form, were generic versions of the small-molecule pharmaceuticals that made up the bulk of innovative firms’ traditional businesses and consequently comprised the largest segment of generics. Examples ranged from generic versions of antibiotics Cipro and Zithromax to painkiller Oxycontin to cholesterol-lowering drugs Pravachol and Zocor.After the expiration of a 180-day exclusivity period, the margins on these drugs were typically lower than either niche generics or biosimilars, although this varied based on the number of competitors. For example, Eli Lilly’s Prozac, one of the most successful antidepressant drugs in history, had both a very large branded market and was a relatively simple compound to synthesize. As a result, once the patent and the 180-day exclusivity period had expired, 18 competitors entered the market, collapsing prices and erasing profits.
21Niche genericsGeneric drugs could qualify as niche drugs if either their active molecules were difficult to synthesize or their delivery mechanism was non-standard. Respiratory drugs, for example, had patented inhalers and had to be branded and prescribed by physicians even in normally pharmacist-driven markets. Niche drugs could attract as few as one or even no generic version, depending on the difficulty and size of market. As expected, generic companies realized higher gross margins on these products than on commodity generics, while the capital required was greater than for commodity generics but less than for biosimilars.BiosimilarsThe market for biosimilars was a multibillion dollar but largely undeveloped segment. Biosimilars were the generic versions of the so-called “biotech” drugs pioneered by companies such as Amgen and Genentech.
The active compounds in these drugs were highly complex proteins or other large molecules that were far harder to replicate than traditional 5 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd harmaceuticals.
While the worldwide market for biotech drugs was only $29 billion in 2002, it was expected to grow to $112 billion by 2012, a 12% annual growth rate, and take on increasing importance over the long term as the innovation in small-molecule drugs diminished and was replaced by this class of products. 22 Because of the complexity of the original drugs, the regulatory pathway for biosimilars was still undetermined in the U. S. and just appearing in Europe.
However, the expected rewards were high as the prices of these drugs were expected to be discounted by only 10% to 20% off the branded prices, and the margins were correspondingly closer to innovative drugs than commodity generics. Some estimated that the market could support only three to four companies competing in biosimilars because the capital and expertise required created significant barriers to entry. Predicted one industry analyst, “the companies that will be successful in [biosimilars] will be those that really have the resources to roll out a product launch.The biggest three that pharma needs to be worried about are Sandoz, Teva and Barr. ”23 As of mid-2006, only Sandoz had launched a major biosimilar— a human growth hormone—in Australia and Europe, and both Teva and Barr had acquired companies to enter the field (Sicor and Pliva, respectively). Teva’s Early History Teva’s roots could be traced back to 1901 as Salomon, Levine and Elstein (SLE), a wholesale drug distributor based in Jerusalem to serve the local population and waves of immigrants from Europe during the first four decades of the twentieth century.
During the 1930s, refugees from Nazi Germany came to British-Mandate Palestine and set up several small drug manufacturing plants, including one called Teva (“nature” in Hebrew). These early immigrants tended to be highly educated, and many had been scientists, physicians, and engineers in their home country. Because Germany was the birthplace of the pharmaceuticals industry and arguably had the top universities and scientific research institutions at the time, they brought many specialized skills required to set up pharmaceuticals cottage businesses in their new country.In 1945, the newly created Arab League declared a general boycott against domestic and foreign businesses operating in the Jewish portion of Palestine, which was subsequently applied to all businesses dealing with Israel when the country was established in 1948. This boycott contributed to an economic structure in which foreign direct investment comprised less than 5% of all investment in Israel through the 1970s.
4 For the nascent pharmaceuticals industry, the absence of any large foreign pharmaceuticals company spurred a domestic industry of about 20 family-owned drug distributors and manufacturers each with annual revenues of approximately $1 million. 25 Together these family firms produced both the scale and, more significantly, the full portfolio of products required to serve the population of approximately 2 million people by the late 1950s. As a result, Israel boasted a community of chemists with a broad set of synthesis skills, experienced in supplying drugs at a lower cost to serve the relatively poor home market.Also, since the patent-holding foreign firms would not conduct business directly in Israel, domestic firms could invoke the threat of “compulsory licensing” to pressure the patent holders into licensing the pharmaceuticals for use in the domestic market. 26 Compulsory licensing provisions were common in the legal codes of most countries, and could be invoked in certain situations in which good faith attempts to obtain a license under negotiated commercial terms failed for non-commercial reasons.While compulsory licensing was rarely invoked by these local pharmaceuticals companies, the threat increased their leverage to obtain voluntary licenses from the patent holders.
In the 1950s, SLE purchased Assia, a small pharmaceuticals manufacturing company. In 1962, Eli Hurvitz, a young employee of Assia, began the drive for consolidation of the fragmented industry. 6 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd 707-441 Hurvitz, born in Jerusalem in 1932, had started at Assia as a young economist in 1954.
He had served as a private in the Israeli Defense Forces during the 1948 war of independence and then obtained a degree in economics from Hebrew University. Hurvitz finished his active military service as a member of a generation of young Israelis highly dedicated to developing the new country. By 1962, both Hurvitz and Nachman Salomon, the head of the combined company, became convinced of the need to consolidate the industry. Salomon put Hurvitz in charge of negotiating the acquisitions. In 1963, after much discussion, they completed their first acquisition, of a company called Zori.Hurvitz reflected on his first major lesson in business: With these private, family-owned companies, they were not ready to dilute their ownership and lose control. We had to show them that mergers produce synergies, that they make money. We needed one example to prove that the result was not small at all but an order of magnitude.
Only then could we convince the rest of them. In 1968, he completed his second acquisition, this time of Teva, which had been publicly listed on the Tel Aviv Stock Exchange since 1951. The combined company officially changed its name to Teva Pharmaceutical Industries in 1976.That year, Hurvitz became the chief executive of the merged entity, the largest pharmaceuticals company in Israel with revenues of $28 million at the time. The Billion Dollar Theory By the early 1980s, having recently acquired Ikapharm, the second-largest remaining pharmaceuticals company in Israel after Teva, Hurvitz recognized that the company had grown as far as it could within its home market. 27 He hired Dr.
Joseph Aleksandrowicz to head the strategic planning process for the company, which he continued to do until 1995. Aleksandrowicz recalled, “In the early 1980s, no company in Israel had any organized strategic planning.It was unheard of in the country at the time. Businesses were run more informally.
Our production was best and FDA approved, we had marketing, computers, finance, and excellent, devoted people. But no one was used to creating a strategy. ” Aleksandrowicz organized a two-year intensive program for the executive team, bringing in professors from leading American business schools to educate the leaders of the $50 million company.
It was during one of these sessions in the mid-1980s that Hurvitz issued a challenge that became dubbed “The Billion Dollar Theory. Said one participant at the meeting, “Eli said to us: ‘We have all the capabilities of a full-sized company. If we were operating in a large western market, we could be a billion dollar company, instead of the $50 million organization we are today. Now,’ he asked us, ‘how do we make that happen? ’” Hurvitz himself recalled the conversation: I remember in one planning meeting, I went around to each member of the executive team, asking what their growth goals were for the next year, five years. I heard 10%, 15% at the most. Everyone was thinking incrementally.
I realized with that type of thinking, we would never grow to our potential.I had to break out of that thinking. With the Billion Dollar Theory to guide them, the executive team recognized that they would have to expand beyond their home country and become the first Israeli company to enter a large, Western market. Dr. Aleksandrowicz recalled that, in addition to new markets, the group was occupied with the question of whether to be a focused company or a conglomerate and then, after choosing the focused approach—“extremely unusual for Israel at the time”—whether to be a chemicals or pharmaceuticals company: 7 Copying or posting is an infringement of copyright. [email protected] arvard.
edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd We decided on pharma, since it had more profits, we could collaborate with the scientific institutions in Israel, such as the Weizmann Institute, Hebrew University of Jerusalem, or the Technion, and we could export around the world. This path was so much riskier, but it also had a higher payoff if we were successful. At the time, the company was partly owned by Koor Industries, the largest Israeli conglomerate controlled by the Histradrut, the powerful domestic trade union rooted in the socialist beginnings of the country.The board members from Koor in particular resisted this move as too risky for a company that employed so many people and served the basic health needs of much of the population.
Hurvitz remembered: At the time, we had a $60 million market capitalization and it would cost us $20 to $25 million to enter the U. S. market.
Now the decision seems obvious, but those numbers made it impossible to pass through the board. So I made them a pledge: I will not ever take a risk so big that it would jeopardize the company. I will risk quarterly or yearly profits, but never the company.
I have always followed that. I managed the company for 100 quarters, not afraid to bet a year but never the company. Expanding Abroad Despite the close cultural and trade ties between Europe and Teva’s home country, the executive team chose the U. S.
market first. Europe was a still patchwork of regulation and price controls, while the U. S.
could be treated as a single market on the verge of uniform liberalization and market-based pricing. Teva entered the U. S. through a joint venture with W.
R. Grace, a major American conglomerate, which gave them access to capital and contacts within the market.Chief Financial Officer Dan Suesskind said, “When we got together with W. R. Grace we said to them, ‘We are willing to contribute to the partnership what ever we have, but money we don’t ship over the ocean, of this they have enough in the U. S.
’ That’s how we got to this arrangement. ” Professor Elon Kohlberg, member of the board of the Teva’s North America business, noted: Here comes Teva, a nothing company from a tiny country…and somehow, Hurvitz manages to structure a deal where Grace puts in over 90% of the capital for 50% of the joint venture. Who else could negotiate that kind of deal? . . Grace was so much bigger than us at the time, and yet Mr. Grace himself used to come to the office just to spend time with Eli. He viewed him as an equal.
That was part of the genius of Hurvitz. In late 1985, the Teva And Grace (TAG) joint venture acquired Lemmon, a $20 million U. S. arm of Nattermann, a German company. From there, Teva entered the U. S.
market and, just as in the Zori deal in Israel, once it had established a foothold, sales and market share steadily grew. Hurvitz built an internal team focused on acquisitions that earned a reputation in the industry for its systematic approach and successful outcomes.Teva became the most active acquirer in the industry, sometimes paying less than one times sales for a target company and rigorously executing the integration.
By 1993, the company had reached $502 million in revenues, halfway to its billion dollar goal, and North America had overtaken Israel as the largest contributor to the business. Teva continued to expand throughout the 1990s and 2000s, fueled by a series of acquisitions in North America and Europe (see Exhibit 5), and passed the billion dollar revenue mark in 1997. The geographic make-up of Teva’s revenue changed dramatically as the company expanded.Israel accounted for the majority of the company’s revenue until 1991, but that share had fallen to just 6% by 2004.
During that same 8 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860.
Teva Pharmaceutical Industries, Ltd 707-441 period, the North America share of revenue rose from 33% to 64% while the contribution from Europe and the CIS increased from 9% to 26%. Developing Competitive Advantage Over time, Teva became one of the largest suppliers to the growing segment of national pharmacy chains in the United States. In the mid-1980s, when Teva entered the U.
S. arket, the industry was dominated by wholesalers and distributors which had long focused on serving mom-and-pop pharmacies. Teva filled a vacuum for these national chains, enabling them to reduce their own internal costs by sourcing much of their formulary from a single company without use of a middleman. Teva provided not only a broad scope of products, but also inventory management, volume-based discounts and pricing bundles, services less valuable to the mom-and-pops but very important to the cost-conscious chains. Teva also kept its focus on low prices, acknowledging the commodity-like nature of the industry.Hurvitz reflected, Throughout the 1980s, everyone kept saying, “The Chinese are coming! ” Everyone was terrified of this situation back then. So, we had to neutralize price as an issue for us. We spent a lot of time on our manufacturing and business model to ensure this, and always, always guaranteed the lowest price to our customers.
If our competitors lowered prices after the contract was signed, we would give our customers credit. We were willing to forego part of our income in the short term for the long term. We knew back then that he who keeps market share will be the one who makes money in this industry.This philosophy stayed with Teva in the subsequent years.
According to Hershkovitz, “No one takes market share from Teva—no one. In the past, they have slashed their prices like nobody’s business. This is a rule for the Indian companies: if you go into a Teva drug, you lose money, as simple as that. ” Teva also sought to gain advantage through rigorous execution, including filing ANDA applications earlier and with fewer revisions than its competitors, backward integrating into active pharmaceutical ingredients, and efficiently managing its supply chain.As a result, Teva was able to sustain a large pipeline of Paragraph IV challenges as well as a broad portfolio of commodity generics, an elusive balance for its competitors. Developing an Innovative Business In the early 1980s, Teva decided to enter the innovative drug market, a moved dubbed as “sheer chutzpah”28 by Eli Hurvitz. By 2006, Teva’s strong relationship with Israeli academic institutions yielded 150 to 180 proposals for new drugs per year.
They had launched three drugs: two in partnership with Weizmann, including their blockbuster drug, Copaxone, in 1996, which became the leading treatment for multiple sclerosis.Teva relied on these external institutions for drug discovery, in contrast to Pfizer or other companies producing innovative drugs who had large internal basic research divisions. As a result, Dr. Irit Pinchasi, the VP of global innovative R&D, estimated that Teva’s drug development cost for Copaxone amounted to approximately one-sixth to one-fourth the $1 billion typically required to bring an innovative drug to market. 29 Mergers & Acquisitions Since 1985 Teva had executed 14 transactions together worth over $12 billion, more than any other generics company, including Sandoz. It had built a reputation for successful mergers and fair Copying or posting is an infringement of copyright. [email protected] harvard.
edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd treatment of employees, in part arising from the small community within Israel in which the consequences of treating employees poorly could be severe, and more importantly, because it reflected deeply held values of Eli Hurvitz. Many acknowledged the need for consolidation among generics companies. In the U. S. , the top four firms controlled less than 50% of the market, the next six together controlled 20%, and none of the more than 40 firms in the remaining tail controlled more than 2%. 0 As Hurvitz stated, The market needs consolidation, globally.
The more commoditized the market, the more this is true. And in this industry, the smaller players are the price leaders. . . . Mathematically we have a problem: we are already large. Today we are 20% of the [U.
S. ] market. How far can we go? In 2002, Israel Makov succeeded Hurvitz as CEO, who, at 70 years old, remained in place as chairman. This event marked the first leadership handover within the company since 1976. The company continued its string of acquisitions, however.In 2003, Teva acquired Sicor which, at $3. 4 billion, was eight times the deal size of its previous largest acquisition. Sicor offered not only additional scale, but also expansion into new customers, products, and technologies, selling injectable liquid products directly to hospitals rather than more traditional tablets to pharmacies.
Some hailed the acquisition as an opportunity to expand and diversify away from commodity generics, particularly into biosimilars and the lucrative injectables business.Others cautioned that the businesses were too different and that the opportunity cost of choosing Sicor over other businesses had been high. Said one observer, “Focus had been the key to Teva’s success over the years, during periods when other companies fell down trying to do too much. Sicor changed too many variables at once. ” In 2005, Teva acquired Ivax for $7. 4 billion, a move viewed positively by analysts for a variety of reasons. Some saw it as a tactical acquisition to gain access to Ivax’s very strong first-to-file Paragraph IV pipeline in the U. S.
which included generic Zocor and Zoloft (two of the largest blockbusters in history), at a time when Teva’s own pipeline had softened. Others viewed the acquisition as more strategic, with Ivax’s strong positions in global markets where Teva had little presence, particularly Latin America and Eastern Europe, as well as their innovative pipeline and niche generics in therapeutic areas new to Teva. Still others viewed the innovative and niche businesses positively, but were cautious of overexpansion into many small physician-driven markets. Supply Chain By initially limiting its markets to the U.
S. and Israel and only slowly adding in new markets, Teva had maintained a rigorously low-cost culture and achieved greater scale benefits in its supply chain than any of its competitors. Said Eli Shohet, vice president responsible for the Ivax integration and the Central and Eastern Europe region: The bottom line is that we have scale advantages that cannot be matched by other companies at this time.
Compare Ivax before the merger and Teva. In Teva, we have two plants in Israel that are currently capable of eight billion tablets and one in Canada with the same scale.One batch at Teva would have required five to six runs at Ivax, all in different locations.
This is so much more expensive, and this is how most companies are set up. With our size, we can also source raw materials on a much larger scale than our competitors. You cannot just look at labor costs. First of all, they are not the only input and second of all, we are much more productive and capital intensive. And for labor intensive processes, we have operations in India. 10 Copying or posting is an infringement of copyright. [email protected] harvard.
edu or 617-783-7860.Teva Pharmaceutical Industries, Ltd 707-441 Teva reconfigured its supply chain every several years since the early 1990s and after every major acquisition. The most recent integration with Ivax had been particularly challenging, as Ivax and Teva organized their worldwide operations very differently. Reflected Shohet, The culture of the two companies is the same, but the business model is different.
Since 1995, Teva has operated as a global company. We localize the management and marketing in each region while having a global backend in R&D, manufacturing and APIs [active pharmaceutical ingredients].The Ivax business model was an international company. It operated as a series of independent companies with very little cross-border interaction. The backbone of Teva’s supply chain was managed through several centers of excellence located globally to take advantage of differences in local labor skills and costs, tax provisions, and intellectual property regulations. The supply chain started with active pharmaceutical ingredient (API) production, a step which many of Teva’s competitors at least partially outsourced, often to Teva.Teva’s API division had sold $1. 1 billion of ingredients in 2005, approximately evenly divided between internal and external use, and was one of the world’s largest third-party suppliers of APIs.
Once the APIs were produced, they were sent to pharmaceutical manufacturing facilities. The two largest of these facilities were in Israel, which primarily supplied the U. S. and Israeli market and had a capacity of 16 billion tablets, and in Hungary, which primarily served Europe. Teva estimated that it would produce 36 billion tablets in 2006.Teva reported unit-cost reductions of 30% in 2001-2005 due primarily to scale effects (seeExhibit 9). 31 Once the tablets were produced and packaged appropriately, they were shipped to their various markets and distributed locally.
See Exhibit 10 for a map of Teva’s Israeli operations. Given the security risk associated with Israel’s political situation, redundancies in the supply chain and extensive disaster planning had been conducted to mitigate disruptions associated with conflict within the country. Teva in 2006Generic Markets United StatesBy the middle of 2006, Teva controlled approximately 18% of the base U. S. generics market by number of prescriptions (see Exhibit 7). Its total pipeline as of August 9, 2006, including the 180-day drugs, was 148 drugs products with branded sales of over $84 billion.
32 This segment formed the core of Teva’s business, and some analysts expressed concern about the systemic erosion of prices in the U. S. market. The combined Ivax-Teva pipeline of 180-day exclusivities in 2006 was the largest in the industry.As of August 9, 2006, the company had 46 first-to-file Paragraph IV applications, covering drugs with $35 billion in branded revenues. From January through August 31, 2006, Teva had launched four drugs with exclusivities, including generic Zocor in June, the largest generics launch in the history of the industry covering branded sales of $4. 4 billion. From January 1, 2004 through May, 2006, Teva had filed 24 Paragraph IV challenges compared to eight for Sandoz.
33 However, this market was tightening as more companies vied for a fixed number of exclusivities.EuropePrior to the Ivax acquisition, Teva had focused on the pharmacist-driven markets in the U. K.
and the Netherlands, as well as several other larger markets which showed signs of potentially moving to a pharmacy-driven model. It had maintained either low or no presence in the markets that remained dominated by physician-driven regulation, most notably Germany and Japan. Europe comprised approximately 30% of Teva’s 2005 revenues. Ivax gave Teva presence in the growing markets of the Czech Republic, Poland, Russia, and Slovakia (see Exhibit 8).
Within Europe, 11Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860.
707-441 Teva Pharmaceutical Industries, Ltd Hungary, the U. K. , and the Netherlands comprised approximately 75% of Teva’s revenues, reflecting Teva’s strength in pharmacist-driven markets and the legacy of Biogal, the company’s acquisition in Hungary.
Germany and France, the two largest physician-driven markets, together comprised slightly more than half of the remaining European revenues. Analysts differed on how Teva should approach these and other physician-driven markets.Teva could wait for the markets to adapt to a structure closer to the pharmacy-driven model in which Teva excelled. At the same time, other companies were already aggressively expanding into continental Europe, establishing dominant positions that could become difficult to displace later.
Rest of worldIn Japan and other Asian markets, Teva—like most other generics companies from outside the region—had adopted a wait-and-see strategy and had little presence. Ivax brought to Teva the leading presence in Latin America, which had contributed approximately 25% to Ivax’s 2004 profits and was growing quickly.Other Products Niche products and biosimilarsAfter the Ivax acquisition, Teva reorganized its internal operations and set up a separate specialty division to focus on niche products (such as hospital and respiratory drugs) and biosimilars.
Teva expected $400 million in revenues from its respiratory franchise in 2006, growing to $1 billion to $2 billion by 2010. 34 It had not launched any significant biosimilars products in 2006, but expected this segment to be a high-growth area. However, some questioned whether Teva had focused too heavily on the U.S. market, which was bogged down in a regulatory impasse that was estimated to take possibly as long as five years to resolve. In contrast, Sandoz had focused more on Europe, working closely with the European regulatory authorities and at least one marketed drug. Innovative pharmaceuticalsCopaxone had been Teva’s first innovative drug, and had become the top treatment for multiple sclerosis in the world with worldwide total sales of $1.
2 billion in 2005. It continued to grow at an annualized rate of 22% in 2006, compared to a combined rate of 13. % for its competitors,35 and had become an important contributor to Teva’s overall profits. The cost structure for Copaxone differed from a typical innovative drug. In addition to lower research and development costs, sales and marketing expenses—typically two to three times the cost of R&D at large innovative firms—were lower for Copaxone, given the limited population of prescribing physicians. Furthermore, Teva had partnered with Sanofi-Aventis through 2008 to manage the sales and marketing of the drug, thus off-loading much of these costs from Teva.Most analysts estimated that Sanofi-Aventis passed on 50% to 60% of the revenues back to Teva. See Exhibit 6 for an approximate breakdown of Teva’s revenue between 2003 and 2005.
Azilect, a treatment for Parkinson’s disease, had been released to the market in mid-2006. Dan Suesskind noted the importance of bringing this second drug to market: “At least [Azilect] showed that Copaxone was not a one-off. Having two marketed drugs is almost more important than having a pipeline.
” Teva also had a pipeline in other therapeutic areas with estimated potential sales of $6 billion by 2015. 6 Outside analysts estimated that this number could, in fact, be much higher and that, given the superior economics of innovative products, the relative proportion of innovative to generic drugs in Teva’s revenue mix would steadily increase during the next decade. Others wondered whether four or five different therapeutic areas37 was too much for Teva’s limited research budget and limited experience bringing drugs to market. 12 Copying or posting is an infringement of copyright.
[email protected] harvard. du or 617-783-7860. Teva Pharmaceutical Industries, Ltd Innovative vs. Generic 707-441 In 2006, Teva reported R&D expenses at an annualized rate of $500 million or approximately 6% of sales. Allocating resources between innovative and generics areas was one of the company’s main challenges.
The lead time for innovative drug development was 10 to 15 years, while generics development was three to five years, and the act of selecting and executing projects required very different skills and information.Reflected Dr. Ben-Zion Weiner, the head of Teva’s research and development group: It is interesting how these two animals live under the same roof. On the one hand, we have low-risk products in generics, and then we have Copaxone and Azilect. The same person manages both and is responsible for dividing the resources. This is a very tricky decision making process. How do you trade off, say, investing in 10 low-risk generics drugs versus one high-potential innovative drug? This is a big part of our challenge.Within the generics R&D division, Weiner’s group had worked to create “an ANDA factory.
” Over the past decade, Teva had filed and won the greatest number of 180-day exclusivities in the industry, earning a reputation for quick ANDA filings and aggressive patent litigation. “Of course,” said Dr. Weiner, “fifteen years ago, we were the entrepreneurs in this area. Since then, we have been studied by others and the gap has shrunk. ” The innovative R&D group, on the other hand, had a different set of challenges.Said Weiner, “We are so small compared to the big guys. The consolidated research and development budget of the top 10 innovative firms is $45 billion.
What can we do with a budget of [a few hundred million] against that? And that’s just the top 10, the total budget of the industry is much bigger. ” In this context, the Teva team decided to leave the original research to external institutions, and to build research franchises in areas that did not require mass marketing to the general public and family doctors.With the addition of Ivax’s research arm and existing pipeline, Pinchasi estimated that, by 2010, Teva would have a sufficient pipeline theoretically to launch one new innovative drug per year, in comparison to five per year of leading pharmaceuticals companies such as Pfizer.
38 Said Hershkovitz, “[Teva’s innovative R&D group] is running way, way under the radar right now. They are currently running over 10 phase 2 trials, in addition to their phase 3 trials. And every month it seems as if we discover another clinical trial that they are involved in through equity in a startup. Other companies, particularly Novartis, were tackling the same issue although from different corporate roots. Sandoz had achieved operating margins of only 7. 3% in 2005 compared to 25% for Teva, and some employees commented on the issues with running a generics division within an innovative company, “In Novartis, if you sell the [branded] product one month later or not it doesn’t make a big difference, because there is no other company to sell it,” says Bedri Toker, Sandoz’s top executive in Turkey, “But as a generic company I have to be first because there are many companies that can sell the same product. .
. The way of thinking is very different. ” Roche, another large innovative firm, had also considered entering the generics business three times over the last decade, but decided against it based on their belief that pure generics companies would always be able to underprice Roche. Hurvitz held similar views, saying, “It is very easy to manage a generic company when you are poor. It becomes very complicated when you are rich.
It is impossible for a rich company to act poor. As long as we remember this equation, and we do not become bureaucrats, and as long as we fight the fat culture, we will succeed. Roche, like the other companies, also decided that is was too difficult to manage patent creation and challenging under one corporate umbrella. 39 This issue arose for both Novartis and Teva.
Sandoz could not challenge any Novartis patents, and filed far fewer Paragraph IV challenges than Teva. On Teva’s side, as they released more innovative drugs to the market, they anticipated greater challenges 13 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd by other generics firms to these drugs.Responded Dr.
Pinchasi to how they will manage these dual missions: “That will be interesting, no? We’re now trying to learn what you have to do to make things hard for generic drug makers…After all, we know better than anyone how to challenge patents, but there’s no guarantee we’ll succeed. Yes, there are quite a few companies that would like to turn the tables on us, and challenge our patents. ”40 Many were watching whether either Sandoz or Teva could manage both businesses effectively under one corporate umbrella, particularly as they came from ifferent roots but both sought growth in similar areas: generics sales in global markets, biosimilars, and niche innovative drugs. Conclusion After years of tremendous success competing against richer, Western companies, Teva was now the reigning incumbent in an increasingly competitive industry. New low-cost players were coming in behind them, having learned from Teva’s success and hungry to capture a share of the growing market.
The innovative firms had also finally woken up—vigorously protecting their hard-earned patents while also encroaching on the generics market.In front of Teva lay the complex world of global markets for generics, as well as the innovative drug market, both of which were large and growing but did not necessarily play to Teva’s historical strengths. How should Teva grow in the next ten years? Should it focus on consolidating in the U.
S. and other substitution-oriented generics markets, on further expanding into the global branded generics markets, or on gradually turning itself into a more specialized generics or even an innovative firm? Alternatively, did it need to focus on all three areas to succeed, and if so, could it manage such diverse goals under one roof? 4 Copying or posting is an infringement of copyright. [email protected]
harvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd Exhibit 1Innovative and Generics Cost Structure Comparison (2005) Big 707-441 Net sales TEVA 100% Barr 100% SandozWatsonMylan 100%100%100% PharmaaGenericsb 100%100% Gross profit R&D expenses SG&A Op income Industry sales growthc 47% 7% 15% 25% 70% 12% 29% 32% 51% 9% 26% 13% 48% 6% 10% 13% 56% 7% 14% 25% 75% 14% 33% 28% 5% 51% 7% 16% 19% 16% Source:Bank of America Securities, Company 20F and 10K filings. aBank of America Securities, 2003.
bAverage of Teva, Watson, Mylan and Sandoz From European and Chemical news (see footnote from text). 15 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. Copying or posting is an infringement of copyright. [email protected] harvard.
edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd Exhibit 5Teva Acquisitions from 1985 to 2005 Deal Value 707-441 Date Jul-05 Company Acquired Ivax Location United States USD, M) 7,367 Value/Sales 3. 65 Aug-04 Dorom Italy 85 2. 33 Oct-03 Jun-02 Feb-02 Dec-99 Sicor Honeywell Fine Chemicals Bayer Classics Novopharm United States Italy France Canada 3,401 168 86 258 6. 49 N/A N/A N/A Aug-99 Copley United States 220 1. 77 May-98 Aug-96 Jan-96 Nov-95 Mar-92 1988 1985 Pharmachemie APS/Berk Biocraft Labs Biogal Procintex and GRY-Pharm Abic Lemmon Netherlands United Kingdom United States Hungary Italy, Germany Israel United States 87 53 296 25 23 27 21 N/A 0.
81 2. 12 0. 36 N/A N/A N/A Source:Windhover’s Strategic Intelligence Systems, Company 20F, Thomson Financial, Securities DataExhibit 6Teva Estimated Revenue Breakdown, 2003–2005 Net Sales Copaxone (@55%) API Other 2005 5,250 647 524 23 2004 4,799 515 501 22 2003 3,276 396 371 20 Generics in U.
S. 2,166 2,173 1,399 Generics in Europe Generics in ROW Generics in EU and ROW Total generics sales Number of generics prescriptions in U. S.
Source:Company 20F and casewriter estimates. — 1,890 1,890 4,056 252 — 1,589 1,589 3,761 220 — 1,091 1,091 2,489 tbd 19 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441 Exhibit 7Teva Total Generics Prescriptions Total Prescriptions in U. S. (June 2006)All Pharmaceutical Companies Teva Pharmaceutical Industries, Ltd Generics Only Company Growth Company ShareGrowth Teva USA Pfizer Novartis (without Sandoz) Mylan Watson Merck GlaxoSmithKline AstraZeneca Mallinckrodt Actavis 393,014 314,200 292,317 239,045 195,060 137,545 128,982 114,789 103,874 89,022 17.
3 -9. 1 8. 4 7. 8 7. 6 9. 9 -3. 0 8. 3 23. 9 -1. 2 Teva USA Mylan Sandoz Watson Mallinckrodt Actavis Barr Par Qualitest Ranbaxy 390,845 236,033 212,020 195,053 103,874 89,020 82,034 71,767 70,888 49,335 18% 11% 10% 9% 5% 4% 4% 3% 3% 2% 17. 4 8. 3 11. 7 7. 6 23. 9 -1. 2 -2. 9 -2. 8 -7. 2 27. 2 Source:Teva, primary: IMS, June 2006. 0 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd Exhibit 8Teva and Ivax Geographic Mix, 2004 Tevaa Ivaxb 707-441 North America % total 3,059 64% United States % total 860 46% Europe and CIS 1,245 Europe 704 % total Israel % total Other countries % total Total Source:WR Hambrecht. aTeva 2004, 20F. bWR Hambrecht estimates. 26% 285 6% 210 4% 4,799 % total Latin America % total Other countries % total Total 37% 316 17% 0 0% 1,880 Exhibit 9Teva Cost and Output Trends (1998 to 2005) 300% 250% 200% 150% 100% 50% 0% 19981999200020012002200320042005TabletsEmployeesTotal production costCost per tablet Source:Teva. 21 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441 Exhibit 10Teva Israel Production Source:Teva company documents. 22 Teva Pharmaceutical Industries, Ltd Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. Teva Pharmaceutical Industries, Ltd Endnotes 1 “Plummeting Teva stocks affect every household,” Yedioth Ahronot, June 25, 2006 2 Alternately, the company could be viewed as listing in 1951, accounting for an antecedent company. “Teva/Ivax: Generics’ Answer to Big Pharma”, In Vivo, September 2005. 4 Dan Suesskind, personal communication; Ranbaxy company documents 5 Casewriter estimates based on published financial reports and IMS data. 707-441 6 “Mixing Medicines: Betting $10 Billion on Generics, Novartis Seeks to Inject Growth,” Wall Street Journal, May 4, 2006. 7 Remarks by Lester M. Crawford. Acting Commissioner of Food and Drugs to the Generics Pharmaceutical Association, 26 February 2005, and WR Hambrecht estimates. 8 Dr Joseph Aleksandrowicz, personal communication. 9 European Generics Association; ttp://www. leaddiscovery. co. uk/datamonitor_shots/BEST%20Nov%2016th% 20Generics%20Sample%20Pages%202. pdf. 10 Ranbaxy Laboratories, Corporate Presentation, May 2006. 11 European Generics Association. 12 Ranbaxy Laboratories, Corporate Presentation, May 2006. 13 Eran Ezra, personal communication. 14 European Generics Association, http://www. leaddiscovery. co. uk/datamonitor_shots/BEST%20Nov%2016th%20Generics % 20Sample%20Pages%202. pdf. 15 “Emerging Giants,” Businessweek, July 21, 2006. 16Ranbaxy website, accessed August 28, 2006. 17 “Emerging Giants,” Businessweek, July 21, 2006. 8 Dr Joseph Aleksandrowicz, personal communication 19 Teva internal communication (Dan Suesskind, August 28, 2006). 20 Fenwick and West, November, 2005. 21 Rouhi, “Generic Tide is Rising. ” Chemical and Engineering News, Volume 80, Number 38, CENEAR 80 38 pp. 37–51. 22 Medical and Healthcare Marketplace Guide, 2004. 23 http://news. monstersandcritics. com/health/article_1193475. php/Analysis_Biosimilars_to_make_big_splash. 24 meria. idc. ac. il/journal/2002/issue3/jv6n3a3. html as accessed on November 14, 2005. 25 Eli Hurvitz, personal communication, November 2005. 26 Dan Suesskind, personal communication 7 During the late 1960s, Teva had expanded briefly overseas to West Africa and Kenya, reflecting a period of close ties between the governments of these countries and the companies recognition then of the need for expansion. However these markets proved limited in size and increasingly politically problematic and eventually Teva exited the region. 23 Copying or posting is an infringement of copyright. [email protected] harvard. edu or 617-783-7860. 707-441 Teva Pharmaceutical Industries, Ltd 24 28 “Nerve, gall or supreme self-confidence,” Merriam-Webster Dictionary, accessed August 30, 2006 29 “Not just generics and Copaxone,” Globes, 10April 2006 30 Teva investor lunch, August 9, primary: IMS June data. 31 Teva company documents. 32 Q2 earnings call, August 8. 2006 and Hurvitz, personal communication. 33 Wall Street Journal, May 4, 2006. 34 Q2 earnings call, August 8, 2006. 35 Teva company documents, IMS data. 36 Teva company documents. 37 Central Nervous System, immunology, oncology, hematology and respiratory. 38 “Not just generics and Copaxone” Globes, April 10, 2006. 39 Wall Street Journal, May 4, 2006. 40 “Not just generics and Copaxone” Globes, April 10, 2006. Copying or posting