As the CEO of Teva, which markets would you concentrate on developing going forward?

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

Teva's Core Values and 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

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

The Way Forward…

1. Keeping up the 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.

2. Introducing Biosimilars and 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

• Reasonable risk within the company’s core values

3. Pursuing the innovative 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.

Breakdown of strategic plan

• 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%)

How will the company 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.

Closing Statements

• Healthcare industry 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.

Thank you