Presentation Agenda

Purpose: To provide an in depth analysis of Teva’s current situation and strategies concluding with recommendations for future strategy and implementation for continued growth. Structure of Analysis: I. Internal Analysis – Present Situation, Financial Resources, Strengths and Weaknesses II. External Analysis
General and Operating Environment Competitive Forces & Strategy Opportunities and Threats

III. IV. V. VI.

Key Decisions Alternative Strategies Recommendations Implementation & Evaluation

S. and the Netherlands – Small presence in Germany. Azilect • Current generic market share: – 18% of U. France. generic market – Significant presence in U. Zoloft – Innovative: Copaxone.Present Situation • World leading producer of generic pharmaceuticals • Current products: – Generics: Zocor.K.4 billion. a 60% increase over 2005 – 2007 Outlook – Net sales to exceed $9 billion . Japan • Increasing competition in “authorized” generic market • Financial Position: – Cash flow from operations for 2006 was over $2 billion – Net sales for 2006 reached $8.

S. generics • Backward integration – active pharmaceutical ingredients .Strengths IMPORTANCE • Low cost manufacturing strategy – esp. market • Over reliance on few products – Copaxone: 11% of revenue • Small R&D Budget • Market leader in U.S. supply chain • Acquisition capability – size & global footprint • Highly efficient Paragraph IV pipeline • Strategic relationships – National pharmacy chains – Israeli academic institutions (R&D) Weaknesses • Increasing diminishing returns on acquisitions • Heavy dependence on U.

North America and Japan • Developing markets • Commodity nature of industry .General Environment • Increasing acceptance of generic drugs worldwide • Increasing health care costs • Aging population – esp.

Operating Environment Current Customers: • Generic Drug Market – Pharmacies – Doctors (physiciandriven markets) – Governments Region % of Sales North America Europe and CIS Israel Other countries 64% 26% 6% 4% Target Customers: • Developing markets – Latin America. India. China • Biosimilar/Niche generic and/or innovative drug markets .

Ranbaxy. Mylan. etc. Buyers: Pharmacies Governments Doctors MEDIUM-HIGH Substitutes: “Authorized” generics Other generics Brand name drugs HIGH .Competitive Forces Potential Entrants: Big Pharma (generics) MEDIUM Suppliers: Chemical companies LOW Competitors: Big Pharma Sandoz. Barr.

Competitive Group Analysis Big Pharma Teva U. Focus on Customers Other Generics U.S.S. Focus on Competitors Low High Big Pharma Teva Other Generic companies Low Quality Perception Teva Japan Other Generics Japan Price High .

Competitive Strategy Teva • Traditionally cost leadership • Focused on national pharmacy chains • Growth driven by systematic acquisitions • Supply chain/ manufacturing scale advantages Big Pharma • Differentiation • Focus on markets by drug purpose • Heavy investment in R&D • Higher margins Other Generic Companies • 4th generic strategy • Mimicking TEVA .

Opportunities • • • • • • • Many blockbuster patents expiring in near future Potential consolidation in global generic market Niche and biosimilar markets largely untapped Decreasing government regulation in Asian markets Developing markets need for low cost health care Europe opening up to generic drugs Innovative pharmaceutical markets IMPORTANCE .

IMPORTANCE .S.Threats • New “low-cost” entrants from India and Eastern Europe • Increasing competition for “authorized” generic drugs • Big Pharma plans to enter generic markets • Increasing complexity in drug formulations • Erosion of generic drug prices in the U.

Niche and biosimilar markets largely untapped Impact High .Analysis of Environmental Trends .Increasing competition for “authorized” generic drugs .Erosion of generic prices in the U.Increasing complexity in drugs .New entrants from India and Eastern Europe . .Many blockbuster patents expiring in near future Low Low Probability of Growth High .Big Pharma plans to enter generic markets .Innovative pharmaceutical markets .S.Global demand for generics increasing .

France) – Emerging markets (Latin America. and similar market consolidation • Expand into global branded generic markets – Large. Asia) • Increase specialization – Niche and biosimilar generic drugs – Innovative drugs • Or some combination . Germany.S. established markets (Japan.Key Decision How to expand in the future? • Continue U.

Continue consolidation in U. market Pros • Streamlines the market • Savings through synergy • Increased scale/production • Less price competition • Easily add products/markets Cons • Increased anti-trust risk • Incompatible networks • Increases G&A expenses • Declining prices for commodity generics .S.

e. Ranbaxy in India) • Highly regulated markets .Expand into Emerging Markets Pros • Large potential market • Rapidly growing prescription market in Latin America • Current core competencies match market needs • Ivax acquisition included access to Latin American markets Cons Expand into large. established markets Pros • Instant access to: • High usage of prescription drugs • Higher price point Cons • Physician based system • Prefer name brand products – – Harder to enter High sales cost – – Large Populations Wealthy Population • High competition from local companies (i.

Niche and biosimilar markets Pros • Higher margins than current commodity generics • Untapped segment of generic market • Rapid growth expected and increasing importance • Very few competitors Cons Innovative Drugs Pros • 100% market share • Portfolio growth and diversity • High profitability over longer period Cons • Heavy capital & R&D investment • High risk of failure • Different business model than generics • Higher production costs • Higher initial capital requirements • Require physician prescription • Regulations in U.S. undecided • Sandoz first to market in Europe .

Recommendations How to expand in the future? • Maintain market share in U.S. • Expand into global markets that deregulating to become more pharmacist driven • Follow CVS and the like into emerging markets • Increase specialization into niche and biosimilar generic drugs .

Implementation Challenges • Unknown Factors – New Markets • Production – Estimating production for emerging markets • Price – Creating a proper pricing models for various markets .

• TEVA should partner with large national pharmacy chains to enter emerging markets. Evaluation • TEVA should evaluate generic sales on a quarterly basis for each country they sell to. placement. Weaknesses. and quality . • TEVA should also take advantage of its current relationship with academic institutes in order to create niche and biosimilar product. • Further TEVA should enter developed markets as they deregulate to pharmacist driven markets. Opportunities and Threats. • Research should be done to gauge: – Consumer reaction to the introduction of generics in markets – Consumers’ expectations of appropriate price. which have a lower R&D cost than innovative products.Implementation • The prior recommendations take into account the Strength.

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