In strategic pivot under new CEO Richard Francis, Teva plots cuts to its generics portfolio

Even as drug shortages squeeze the pharmaceutical industry and weigh on patients, one of the world’s top generic manufacturers is planning to cut parts of its portfolio.

At Teva’s recent investor day, CEO Richard Francis outlined his “pivot to growth” strategy. As part of the plan, the new Teva helmsman wants to create a “sustainable powerhouse” in generics.

That involves trimming “diluted or even loss-making” areas of Teva's portfolio and replacing those offerings with “products we can sell more of," Francis explained at the event. The CEO, who joined the firm five months ago, wants to focus Teva's efforts on “areas where we can add value and drive margin.”

The CEO didn’t note specifically which drugs would be slashed from Teva’s portfolio. On a Thursday call with reporters, he said Teva will stop producing some older generics and reduce the number of new ones it brings to the market, Bloomberg reports.

Like other generics makers, Teva has faced intense competitive pressures in this business in recent years. So the company will back away from products where it faces competition from 10 to 15 other companies, he told Bloomberg. For those products, Teva figures its rivals should be able to supply the market.

Going forward, Teva will seek to introduce generics to 60% of the industry's branded products that are tumbling off the patent cliff. That compares with a prior goal of 80%.

“The majority of value is with that 60%,” Francis said during the investor day. “The incremental value for that extra 20% is marginal.”

With drug shortages being reported left and right, House Republicans in March pressed the FDA for answers. As of today, The FDA’s drug shortage database lists more than 134 products that are currently in short supply, whereas the American Society of Health System Pharmacists notes more than 300, the highest number since 2014.

Teva, for its part, has mostly stayed out of the headlines lately when it comes to drug shortages. But the company has played a role in the high-profile shortage of ADHD drug Adderall and its generics.