Edited by Vani Rao
Erez Vigodman to focus on expanding business and delivering long-term growth
Teva Pharmaceutical Industries Ltd. (NYSE: TEVA), the largest generics maker in the world by revenue, has appointed Erez Vigodman as its new President and CEO effective on February 11th, 2014.With a strong leadership background, Vigodman will brings in strategic expertise from his exposure to multiple industries and deep insight into global market dynamics. Vigodman was formerly the CEO of Makhteshim Agan Industries, the world’s leading generic-agrochemical company. He is known for his strategic planning and has been successful in turning around the performance of companies which he led before joining Teva Pharmaceutical Industries.
“I understand the challenges facing Teva, and I am confident that, together with the management team, we can address these challenges and deliver on our commitment to creating value for our shareholders by expanding Teva’s businesses and delivering long-term growth,” Vigodman said in a statement.
In late October 2013, former CEO Jeremy Levin resigned from the company over disagreements about the Teva’s strategy.
Challenging times ahead
Based in Israel, Teva develops, produces, and markets generic drugs, innovative and specialty pharmaceuticals, and active pharmaceutical ingredients. It has a global product portfolio of more than 1,000 molecules and a direct presence in about 60 countries. Teva reported $20.3 billion in net revenues in 2012. It manufactured more than 73 billion tablets and capsules in the same year in 73 facilities around the world. Moreover, the biotech company had 1,103 general approvals in Europe at the end of 2012.
Teva is currently facing challenging times after it announced plans to cut $2 billion in costs by 2017, according to the company data. To add to the company’s woes, a US court ruling invalidated several key patents for its blockbuster injectable multiple sclerosis drug, Copaxone back in July 2012. Hence, in 2014, Copaxone could face severe generic competition. Teva is also under pressure from lower-cost manufacturers of its generic drugs in developing nations such as India. To top off all the chain of negatives, Teva’s oral MS treatment Laquinimod, which competes against similar treatments from Novartis AG (NYSE: NVS), Biogen (NASDAQ: BIIB), and Sanofi S.A. (NYSE:SNY), was dumped by European regulators in January 2013. The graph below shows Teva’s stock movements over the past few months.
However, the silver lining appears to be the approval that Teva gained for its new dosage of Copaxone (40mg/mL) by the US Food and Drug Administration (FDA). This dosage of Copaxone allows three times a week subcutaneous administration as compared to the daily administration schedule for the current formulation (20mg/mL), proving to be more convenient for patients. Copaxone generated roughly $3.2 million in sales in the first nine months of 2013, accounting for more than 20% of the company’s total revenues in the year 2013. On the other hand, Copaxone could start facing generics competition this year.
Fourth quarter earnings
For the fourth quarter, Teva reported revenue of $5.43 billion, up 3.4% from the year-ago period, as adjusted EPS rose nearly 8% to $1.42. Copaxone reported $1.14 billion in sales, up 8% from the $1.06 billion reported in the year-ago period. Sales of the drug actually decreased 2% in the US to $805 million due to competition from the oral version. Total revenue from generics comprised 50% of Teva’s Q4 revenue, down marginally from the 51% in the year-ago period.
Expansion into biosimilars
Although Teva is a leading provider of generic pharmaceuticals, one of the company’s strategic goals is to position itself at the forefront of the development of biosimilar generic versions of the currently marketed biotechnology products. In this regard, the company focuses its investments on novel drug candidates and biosimilars.
The company currently offers five biosimilars, namely: Tevagrastim, Ratiograstim, Tbo-filgrastim, XM17 (follitropin alfa), and Lonquex (XM22 lipegfilgrastim). Teva’s effective integration of generics and specialty R&D has enabled it to generate robust pipeline of high-value medicines, with an emphasis on complex and branded generics. The company’s pipeline consists of biosimilar form of Rituximab for the treatment of rheumatoid arthritis. Teva is also developing Rituximab for the treatment of Non-Hodgkin Lymphoma. Moreover, its strategy of collaborations and acquisitions is focused on small to mid-size transactions that adds targeted value to Teva’s pipeline and capabilities.
Teva’s Tevagrastim and Ratiograstim became the first biosimilar Granulocyte Colony Stimulating Factor to be approved by the European Medicines Agency way back in September 2008.
On a final note, Vigodman, Teva’s new executive captain, has his work cut out for him at the company. This includes tackling pricing pressure for its generics from the European Union, warding off competition for branded products, and going ahead with generic product launches to mitigate for the drop in revenue once Copaxone’s generics enter the market this year.