Teva Pharmaceutical's Strategy: Management Changes and Performance

This report provides an overview of Teva Pharmaceutical's business strategy, a leading global pharmaceutical company that has undergone significant strategic changes with three different CEOs in three years. It presents a self-reflective analysis of these changes, highlighting the impact of management decisions on the company's performance. The report discusses Teva's growth under CEO Eli Hurvitz, driven by acquisitions and a focus on generic medicines, and the subsequent shifts in strategy under Shlomo Yanai and Jeremy Levin. It further examines the changes implemented by CEO Erez Vigodman, including a focus on organic growth, cost savings, and the acquisition of Allergan's generic pharmaceutical business. The report concludes that Teva has returned to a business model focused on expanding generic pharmaceuticals through acquisitions, as initially implemented by Eli Hurvitz.

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Business Strategy
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Executive Summary:
The report aims at providing an overview of the business strategy of Teva Pharmaceuticals Pvt
Ltd. Teva is one of the largest pharmaceutical companies across the world that has gone through
major strategic changes in a matter of three years in the hands of three different CEOs. The
report puts forward a self reflective analysis of the changes taking place at Teva.

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Table of Contents
Introduction:....................................................................................................................................3
Self Reflective Summary of the Changes Taking At Teva..............................................................3
Conclusion:......................................................................................................................................6
References:......................................................................................................................................6

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Introduction:
The report aims at focusing on business strategy with respect to Teva, the fifteenth largest
pharmaceutical company in the world (tevapharm.com 2018). The company was initially a small
drug wholesaler found in Jerusalem in the year 1901. The company however shifted to
manufacturing pharmaceuticals in the year 1930s and experienced a boost after the Second
World War. Presently, the company has seventy three manufacturing units with a product
portfolio of more than 1000 molecules. It is active in more than 120 countries and has sales of
over $19.7 bn. The company however went through major management changes that followed
with a disappointing performance. Here, in the report I will discuss some of the changes that
Teva went through.
Self Reflective Summary of the Changes Taking At Teva
I could find that the tumultuous phase of Teva had been due to the frequent change in the
management decisions by different CEOs. Jeremy Levin stepped down as the company’s CEO in
the year 2012 (tevapharm.com 2018). He was brought to the company in the year 2012 for
bringing about a change in the company’s strategy put forward by President Shlomo Yanai, who
was an army officer of higher rank. The decision of changing the strategy was taken when it was
found that the company was unable to achieve global sales of US$33bn by the year 2015
followed by a subsequent collapse in the share prices. In a matter of two years, Teva, had the
experience of appointing its third CEO, Erez Vigodman in the year 2014. He was a company
insider under whom Teva experience to have its third global strategy in matter of three years.
This strategy focused primarily on the organic growth, cost savings and product rationalization.

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Teva however showed expansions under its first CEO and President and Shlomo Yanai.
The company that became Teva Pharmaceutical Industries Ltd after a number of consolidations
earned a revenue growth from $30 million to $16 billion in the year 2010 under the control of Eli
Hurvitz (tevapharm.com 2010). This resulted due to the Hurvitz foresight in identifying the
greater opportunities ofgeneric medicines in Europe and USA. Besides, in the year 1984 USA
passed a law for encouraging sale of the generic drugs after the expiry of the patents provided the
manufacturer proved their equivalence towards the original molecule. Therefore, according to
my observation the rapid growth was primarily due to the acquisitions focused on the generic
pharmaceutical company that gradually moved Teva from the local Israeli market towards
becoming the largest pharmaceutical company of the world. Moreover, under Hurvitz, the
company focused on a strategy of cost savings along with rapid integration of the acquired
companies that resulted in its successful expansion. Appointment of Israel Markov as the CEO
although resulted some acquisitions but it moved the company into a quieter phase
(tevapharm.com 2018). Followed by his resignation, Teva recruited, Shlomo Yanai, a higher
ranking member of Israeli defense. Shlomo Yanai along with Hurvitz had the aim of achieving
sales revenue that was closer to $33bn by the year 2015. In fact, both of them together witnessed
the doubling of the sales revenue of Teva from $8 bn in the year 2007 to $16 bn in the year 2010.
This achievement was the result of a dual approach in aggressive acquisition of the generic
companies and the subsequent diversification of Teva into over the counter (OTC) medicines and
looking forward to the branded pharmaceuticals for replacing its non-generic drug, Copaxone
(tevapharm.com 2018).
According to me, Teva’s growth was also defined by Philip Frost, the new non-Israeli
chairman, under whom the company successfully earned a hostile bid from the Valeant

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Pharmaceuticals for acquiring Cephalon for a deal close to $ 6.8 billion (tevapharm.com 2018).
Valeant Pharmaceuticals was a research oriented Pharmaceutical Company with close to 4000
employees. This takeover was considered a welcome move by the Cephalon board since they
considered Teva to be an organization that would totally support the ambitious research and
development plans of the company.
I believe, the company experienced a fall of the share prices by seven percent after the
departure of Jeremy Levin (Ho 2013). During Levin’s tenure there were much differences of
opinion amongst the other members regarding the implementation of a strategy which forced him
to part ways. Besides, it was also believed that Jeremy Levin failed to understand the need of
communicational and cultural connection of the Israeli society crucial for Teva. The company
had open relationship with employees, investors and the society as a whole which failed to
continue under Levin thereby making everything alienated and cold.
Teva went through a transformation after the appointed off Erez Vigodman as the new
CEO in the year February 2014. Under his guidance, the company made the announcement of
newer commercial structure that divided the business units effectively into two units, the Global
Generic Medicines Group and Global Specialty Medicines Group. This would ensure increased
focus on the sustainable and the profitable business driven through the organic growth of the
business units. It also ensured defending the non generic drug from the generic competitors
through the launch of a higher formulation of dosage. There was increased focused on the key
markets and the key products. In addition, the company will not only continue with the cost
saving drive but at the same time look for opportunities of business development.

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One of the largest deals in history was witnessed when Teva decided to acquire the
international generic pharmaceutical business of Allergen in the year 2015 for whopping $40.5
billion (tevapharm.com 2018). The acquisition meant that close to 70 percent of the futuristic
turnover would result from sale of the generic s and hence was considered a welcome move by
the stock market analyst and the share holders. The acquisition resulted in sustained and
significant value creation of the stakeholders, reinforced the strategy and accelerated the
fulfillment of newer business model. Thus, it would provide Teva with an efficient and stronger
platform for achieving the goals both from the financial and strategic perspective.
Conclusion:
On a concluding note, I can say that with the acquisition, Teva is believed to have
returned to business model that focused on the expansion of the generic pharmaceuticals through
an aggressive acquisition of the competitors, originally put forward by the Eli Hurvitz. A further
inorganic growth was in anticipation with closer cooperation with an Israeli CEO and chairman.

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References:
Ho, S. 2013. In surprise move, Teva CEO Jeremy Levin steps down. [online] Available at:
https://www.timesofisrael.com/tevas-ceo-jeremy-levin-steps-down/ [Accessed 9 Sep. 2018].
tevapharm.com 2010. Teva Reports Full Year and Fourth Quarter 2010 Results. [online]
Available at: http://media.corporate-ir.net/media_files/IROL/73/73925/fr/2010/2010-q4-pr.pdf
[Accessed 9 Sep. 2018].
tevapharm.com 2018. [online] Available at: http://www.tevapharm.com/about/profile/ [Accessed
9 Sep. 2018].
tevapharm.com 2018. [online] Available at: http://www.tevapharm.com/about/history/ [Accessed
9 Sep. 2018].
tevapharm.com 2018. [online] Available at:
http://www.tevapharm.com/news/israel_makov_appointed_teva_s_next_president_and_ceo_02_
02.aspx [Accessed 9 Sep. 2018].
tevapharm.com 2018. [online] Available at: http://www.tevapharm.com/our_products/otc/
[Accessed 9 Sep. 2018].
tevapharm.com 2018. [online] Available at:
http://www.tevapharm.com/news/teva_completes_acquisition_of_cephalon_10_11.aspx
[Accessed 9 Sep. 2018].
tevapharm.com 2018. [online] Available at:
http://www.tevapharm.com/news/teva_to_acquire_allergan_generics_for_40_5_billion_creating

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_a_transformative_generics_and_specialty_company_well_positioned_to_win_in_global_health
care_07_15.aspx [Accessed 9 Sep. 2018].

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