Teva’s transformation under new CEO Richard Francis is taking another turn.
Wednesday, the company confirmed plans to sell its active pharmaceutical ingredients business as part of Francis’ “pivot to growth” strategy.
The confirmation comes after speculation that Teva was weighing a potential sale of its small molecule API business. Six months ago, Bloomberg reported that the Israeli company was weighing its options with the business unit which serves more than 1,000 customers and employs 4,300.
“It will allow us to increase the focus on our core business, continue to invest in our growth drivers, accelerate our innovative and biosimilar pipeline, and position our generics portfolio and pipeline to drive growth,” Francis said in a release Wednesday.
Teva expects to complete the divestiture by the first half of 2025 but added that there was no guarantee of the sale, its structure or its timing. The unit, dubbed TAPI, includes a portfolio of 350 generic and innovative products.
“Our goal, operating outside of Teva, is to enable TAPI to maximize its potential for growth, capture more opportunities with third-party customers, leverage its technology, expand its capabilities and continue to support generics players and innovators, including Teva, worldwide,” TAPI CEO R. Ananth said in the release.
Teva is in a period of transformation after seeing its sales decline each year from 2017, when it peaked at $22.4 billion, followed by a slide to $14.9 billion in 2022. But the company has reversed its fortunes in 2023, with an increase in revenue to $15.8 billion, as it reported on Wednesday. For 2024, the company is guiding to a range between $15.7 billion and $16.3 billion.
Last year's turnaround performance was led by Huntington's disease drug Austedo, which raked in sales of $1.2 billion on the back of a 28% increase from 2022. Revenues for migraine therapy Ajovy were up 16% to $435 million for the year.
Francis, who started his tenure at Teva on the first day of 2023 replacing five-year CEO Kare Schultz, has been leading the company’s overhaul with his pivot to growth initiative. The strategy focuses on pipeline and business development while deemphasizing the company’s longtime dependence on generics.
Selling off its API business would be a major step in moving away from generics, as well as following an industry trend in which companies are separating from their less profitable business sectors to concentrate on those with the greatest return.