2012 Generics Revenue: $10.4 billion
At the top of the list sits Teva ($TEVA), the Israeli generics giant. But things aren't always easy at the top, and lately, Teva has had its fair share of struggles. With 5,000 job cuts on their way, Teva is dealing with heat from outraged Israeli unions; 10% of the company's workforce is getting the ax as part of a push to cut $2 billion in costs by 2017. Despite the turmoil, however, Teva is tops in the generics world, and it's traveled quite a journey to get there.
The company started out in Jerusalem in 1901, distributing imported medications using mules and camels. With the rise of the Nazi party taking a toll on drug imports from Germany in the 1930s, a few drug factories combined to combat the problem. The merged company was one of the first industrial companies to go through an IPO on the Tel Aviv Stock Exchange, and when postwar imports resumed, it continued to seek out both merger deals and new markets. Eventually, acquisitions allowed Teva to separate the production of penicillin and non-penicillin drugs, clearing it for entry into the U.S. market. Teva continued to grow, and by the 1990s, its M&A strategy had transformed it into a major international player.
Today, Teva represents the leading generics company in both the U.S. and Europe, which generated 51% and 28% of the company's 2012 sales, respectively. In the U.S., Teva accounts for more than 16% of generic prescriptions, and it sells more than 400 generic products in an array of dosages, formulations and package sizes. In Europe, Teva practices balance. The company received 1,103 generic approvals on 231 compounds in Europe in 2012, including 6 EMA approvals that extend to all EU countries. No one market accounts for more than a quarter of European revenues, allowing the company independence at a time when multiple countries are initiating pricing controls.
Overall, the company launched 23 generic products in the U.S. in 2012, including copies of Lexapro, Pulmicort and Adderall, which all chipped in significant sales. Those launches helped it grab a 14.5% market share for generics worldwide, according to EvaluatePharma, making it one of only two companies in double digits. Royalties under an agreement with Ranbaxy over sales of generic Lipitor also generated serious revenue.
Yet CEO Jeremy Levin took over in May 2012 to the tune of floundering stock prices and dissatisfied shareholders. Levin promised a new-look Teva by 2017 that would focus on branded products, OTC offerings and new drug formulations.
The generics business, Teva's bread and butter, will continue to play a central role. "Our efforts over the past year clearly demonstrate Teva's ability and commitment to transform the company," Levin said in a February statement. "Our generic franchise remains the core of our business." To that tune, as of January 2013, Teva had 147 product registrations awaiting FDA approval. Of those, 103 are applications challenging branded drugs, and the company believes it was first to file for FDA approval for 62 of them. That means Teva would be the first generic rival to those brands--and the only rival for 6 months after approval. Together, those brands topped $45 billion in 2012 U.S. sales.
Outside the U.S., Teva hopes to sustain a big presence in growing generics markets--Japan, for one. As Japan shifts toward generic drugs, Teva intends to shift with it. Partnerships and acquisitions have positioned the company for serious sales in the country; in May, Japanese media reported that the company would pay about $490 million for Japan's third-largest generics producer, Taiyo. In 2009, Teva invested in Japanese generics maker, Taisho Pharma, through a joint venture with Japan's KOWA. And it's making sure it has the manufacturing capacity to handle the 9 billion pills a year it expects to produce by 2018: In July, Teva announced plans to put more than $200 million toward new facilities, doubling its production capacity in Japan.
Levin hopes success in Japan will help his company make waves in China. With pollution creating a need for a strong lineup of respiratory products, he thinks China makes a nice match for Teva. "Our portfolio more closely matches the needs of that nation than nearly any other company in the world," he said in May at the Reuters Health Summit. The company says it already has a "major presence" in Russia, another promising emerging market; additionally, it says, it's growing in Latin America and recently entered the South Korean market.
But while Teva tries to make a splash in up-and-coming markets, it may run into some serious trouble. To get the company where he wants it, Levin will have to navigate the revenue falloff that will accompany the impending loss of patent protection for its top seller, the multiple sclerosis drug Copaxone. Teva recently lost a critical patent fight over the treatment, which brings in 40% of the company's profits; as it stands, Teva will get a taste of its own medicine come next May, when Copaxone will open up to generic rivals.
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