Turnaround-minded Teva CEO scouts deals in specialty generics, emerging markets

Teva CEO Erez Vigodman

With a bounce-back in share price, Teva's ($TEVA) in a position to do something it hasn't done much over the past few years: buy companies. And when it comes to getting back into the M&A game, CEO Erez Vigodman has a few types of targets at the top of his list.

On a quest to return to growth after a tumultuous 2013, Teva has its eye on complex generics manufacturers and emerging markets generics gurus, according to local newspaper Haaretz. Pickups in those fields should help Teva return to--and strengthen--its generic roots, a goal Vigodman has stressed during his first year in the helmsman's seat.

And there's room to do it. Take complex generics, for instance. High barriers to entry keep competition scarce--and, in some markets, it's non-existent, Haaretz notes. Teva could move into specialty areas such as quick-dissolving thin films, patches and injectables, to name a few.

Teva's global generics CEO Sigurdur Olafsson

In some developing countries, Teva will need buyouts to get it up to speed. As the company's global generics CEO, Sigurdur Olafsson, told Haaretz, it's No. 81 in Brazil--an inappropriate position for a drugmaker of Teva's size. The Petah Tikva-based pharma will be working to beef up its footprint in Mexico too, he said.

But that doesn't mean Teva's focusing exclusively on bolstering its generics business. Vigodman said he's scouting for American companies that develop original drugs, which could help ease the branded sales decline nearing with the end of lead drug Copaxone's patent life.

Teva has a share price revival to thank for putting it in a position to make some deals, Haaretz points out. Since Vigodman took up the reins early this year, the company's stock has soared to $57 per share--a 40% increase--which gives it more firepower for equity-based buyouts.

But to preserve those gains, the company needs to keep the markets believing that profits lie beyond the Copaxone patent cliff. To that end, last Thursday the company said 2015 earnings would hit $5 to $5.30 per share, depending on when copycat challengers from teams of Mylan ($MYL) and India's Natco Pharma and Novartis' ($NVS) Sandoz and Momenta Pharmaceuticals ($MNTA) hit the market.

- see the Haaretz story

Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva | Top 10 Drug Patent Losses of 2014 - Copaxone

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