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Teva Pharmaceutical Industries SWOT & PESTLE Analysis

ID : 52362953 | Apr 2018 | 13 pages

COMPANY PROFILE - Teva Pharmaceutical Industries

Business Sector : Pharmaceuticals

Operating Geography : Israel, Global

About Teva Pharmaceutical Industries : TEVA Pharmaceutical Industries is 117 years old Israel based, world's leading generic pharmaceutical company. It is focused on catering to healthcare needs of patients around the globe in all forms of medications. It has vertically integrated its innovations, manufacturing, marketing, and sales. Its major revenue share comes from US (45%), followed by Europe (25%) and growth markets (30%) as of 2017. TEVA operates in a broad brand line of 5 basic categories such as central nervous system (CNS), respiratory, women’s health, oncology and others. Due to relaxation of pharmaceutical regulations in US and trumps focus on reducing generic drug prices, TEVA is under high financial distress due to price erosion and high operating costs.

Teva Pharmaceutical Industries Revenue : $ 22,385 million (FY Dec 2017)

Competitive Analysis of Teva Pharmaceutical Industries

The SWOT analysis of TEVA Pharmaceutical Industries is presented below:
Strengths
Weaknesses
1. Leading to generic drugs and 13th in pharmaceuticals globally
2. Strong and established distribution and sales networks
3. Diverse portfolio of over 1300 molecules in generics across categories
4. Patent of bestseller drug Copaxone
5. Membership of pharma’s trade association
1. Implications of changing US generic market
2. High debts and lack of free cash
Opportunities
Threats
1. Leverage upon the strengths of acquisitions
2. Tap growing demand for existing and new products
1. Price erosion in the US and its global impacts
2. Consolidated consumer base in US generic markets
3. Competitive market conditions

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Detailed SWOT Analysis of Teva Pharmaceutical Industries

 

Strength

1. Leading to generic drugs and 13th in pharmaceuticals globally: TEVA cherishes market leadership with 8% share in the generic market with CAGR of 5-10% in various markets. It has first-mover advantage in many drugs and leverages its leeway from learning curve as its 117years old in the business. Its diverse portfolio increases its consumer base for the ease of usage. In addition to APIs and generic drugs in all forms, it also provides various healthcare services. It essentially taps the potential of growing markets while ensuring a strong hold on its highest revenue generating geographies. Its 45% revenue comes from US market followed by European and growth markets with 25% and 30% respectively.

2. Strong and established distribution and sales networks: TEVA has global presence and penetration in 80 countries. It employs over 57,000 who are well trained to become experts in their domain by TEVA itself. It has acquired various international firms over the years that have accelerated their reach to various markets. Such acquisitions begin in 1977, with TEVA acquiring Orphahell, an API plant in the Netherlands to venture into European market. 1980-90s was the phase for aggressive international expansion for TEVA by acquiring Migada, Abic,Travenol and Plantex Ltd. In order to strengthen their international presence, they later acquired pharmaceuticals firms like TAG Pharmaceuticals,Copley Pharmaceuticals Inc and Biocraft of USA,GRYPharm of Germany,Prosintex and ICI of Italy and Biogal of Hungary. These acquisitions helped TEVA vertically integrate their R&D, manufacturing, marketing and distribution which gave them competitive advantage.Teva-KOWA Pharma and PGT joint venture helped TEVA strengthen its supply chain in Japan and global markets respectively.

3. The diverse portfolio of over 1300 molecules in generics across categories: TEVA operates in 5 categories central nervous system (CNS), respiratory, women’s health, oncology and others. It produces active pharmaceutical ingredients (APIs), biopharmaceuticals and branded drugs. It operates in various distribution formats as well, that includes B2B and B2C business. They also operate in healthcare services. Such diversified portfolio in terms of product offering and operating market segments allows them to hedge the risk with pharmacy business.

4. Patent of bestseller drug Copaxone: TEVA held 5 layered protections for their bestselling multiple sclerosis specialty drugs, Copaxone. Copaxone accounted for about 50% of TEVA’s profits in many years. Its patent protection gave them the price advantage and market leadership in the specific drug for years ever since 1987.Though the patent is near expiry, TEVA is leaving no stone unturned to continue the patent monopoly by launching a second variant of Copaxone in 2018 itself.

5. Membership of pharma’s trade association: TEVA after many controversies have become part of Pharmaceutical Research and Manufacturers of America (PhRMA).PhRMA is the most powerful US trade association of branded drugs manufacturers in the US. It gives them the power to influence regulations and price fixing by colluding with other key players in the market. They have been alleged to fix their respective market shares in advance and increase drug prices with consensus that in turn reduces risk associated with the business.

Weakness

This section is available only in the 'Complete Report' on purchase.

Opportunity

1. Leverage upon the strengths of acquisitions: TEVA has had many acquisitions and mergers in past which have helped them grow rapidly. TEVA’s can leverage the core competencies from recent acquisitions like Taiyo, to penetrate in the Japanese market, Ratiopharm and Actavis Generics from Allergan to penetrate in the new category of drugs, P&GT Joint venture to expand further using their distribution channel. Acquisitions consolidation is desirable as they allow easy venturing into emerging generic markets and expanding the business.

2. Tap growing demand for existing and new products: As countries are developing and disposable income of people is rising, people are expected to spend more their health prospects. Developing countries like India and China are emerging as growth markets which are already contributing a significant share i.e. 25-30% to revenues of TEVA. Leveraging on the strengths of their global acquisitions, they can expand in international markets before their markets develop.

Threat

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References

1. TEVA’s 2017 annual report- form 10-K: http://www.tevapharm.com/files/Teva_Form_10-K%20-2017.pdf

2. TEVA Pharmaceutical warns on 2018 profits citing US market, Copaxone: https://www.cnbc.com/2018/02/08/generic-drugs-giant-teva-warns-on-2018-citing-us-market.html

3. TEVA’s 2016 social impact report: http://www.tevapharm.com/files/docs/Teva_2016_Social_Impact_Highlights.pdf

4. TEVA’s news releases 2017-18: http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-news&nyo=0

5. TEVA to cut over 25 percent of global workforce: https://www.firstwordpharma.com/node/1530082

6. TEVA’s official Facebook page: https://www.facebook.com/tevapharm/

7. TEVA’s official LinkedIn page: https://www.linkedin.com/company/5239/?trk=tyah&trkInfo=tarId%3A1421348704576%2Ctas%3Ateva%20pharmaceuticals%2Cidx%3A2-1-4

8. TEVA Reports 2017 Full Year and Fourth Quarter Financial Results: http://www.tevapharm.com/news/teva_reports_2017_full_year_and_fourth_quarter_financial_results_02_18.aspx

9. TEVA 2017 financial outlook: http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-presentations

10. generic-drug-makers-face-pricing-issues-unlike-other-pharma-companies: https://www.investors.com/news/technology/generic-drug-makers-face-pricing-issues-unlike-other-pharma-companies/

11. u-s-states-allege-broad-generic-drug-price-fixing-collusion : https://www.reuters.com/article/us-usa-generics/u-s-states-allege-broad-generic-drug-price-fixing-collusion-idUSKBN1D0201

12. Top 50 Global Pharma Companies 2017: https://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=370

13.TEVA’s history: http://www.tevapharm.com/about/history/

14.Teva planned for second generic Copaxone to enter market in 2018: https://in.reuters.com/article/us-novartis-ms-approval-teva-pharm-ind/teva-planned-for-second-generic-copaxone-to-enter-market-in-2018-idINKBN1FX1LA

15. Quality issues lead to shuttering of Tevas Hungarian plant: https://www.fdanews.com/articles/182076-quality-issues-lead-to-shuttering-of-tevas-hungarian-plant

The PESTLE/PESTEL analysis of TEVA Pharmaceutical Industries is presented below:
Political
Economical
1. Trump's vision to ease drug prices 1. Effect of macroeconomic fluctuations in international markets
2. Efficiency of financial markets and exchange rates
Social
Technological
1. Rising income levels and health concerns
2. TEVA’s restructuring plans and its social impacts
1. R&D needs consistent investments to keep the innovation-driven edge
2. Issues regarding quality and supply needs technological intervention
Legal
Environmental
1. TEVA blamed for price collusion by attorney generals of 20 states of US
2. Expiry of patents
1. Abiding by environmental norms of different markets
2. Evolving consumer behavior towards ecological products.
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Detailed PESTLE Analysis of Teva Pharmaceutical Industries

 

Political

1. Trump's vision to ease drug prices: Increase in the number of generic drugs approvals by the U.S. Food and Drug Administration has initiated price wars among generic drug manufacturers in the US market. This has a purpose to make healthcare more affordable. US-FDA has also relaxed its regulations that have lowered entry barriers. Invalidating many patents for branded drugs so that their generic production could begin is also a high impact political move that has adversely affected US market.

Economic

1. Effect of macroeconomic fluctuations in international markets: Economies are constantly evolving their regulations, operating procedures and quality standards especially for generic drugs. Hence to keep up with the pace in 80 operating countries becomes challenging. Domestic markets are also rapidly growing in developing countries giving stiff competition in the export market. A limit on FDI and FII also restricts expansion opportunities. The cheaper cost of producing drugs in developing countries such as India and China are also posing threats to international markets

2. The efficiency of financial markets and exchange rates: Exchange rates affect the supply chain. Seasonality and other variations affect the business as well. Increase in accounts receivables because of operations in B2B segment increase liabilities on businesses. Shares of TEVA have been consistently trading low which is a major concern. TEVA is into restructuring to deal with changing aspects of the business.

Social

This section is available only in the 'Complete Report' on purchase.

Technological

This section is available only in the 'Complete Report' on purchase.

Legal

This section is available only in the 'Complete Report' on purchase.

Environmental

1. Abiding by environmental norms of different markets: Environment protection rules are also becoming stringent.Hence, TEVA should abide by them according to various countries. Depending on the demography and its culture, environmental concerns differ. Hence, it should take care that it’s all manufacturing plants follow local norms to avoid legal actions and social upheaval by environmentalists and NGOs. As a result have of their practices, many international healthcare organisations including non-profits have made them their suppliers of life saving drugs.83% employees of TEVA also believe that TEVA has high impacts on society and communities. It has used its greenhouse emissions and use of ozone depleting substances by 11% and 14% respectively which reflects their concerns for environment sustainability. Compliance to law and TEVA’s policies are integral part of its code of conduct, hence no compromise is made on them as seen in their decision to shut down the plant alleged of quality issues.

2. Evolving consumer behavior towards ecological products: As people are becoming environmental friendly and cautious they are seeking for green products. Hence, TEVA should keep on their focus of using renewable energy i.e.56% usage in operations so far. Waste management and lowering carbon footprint initiatives are appreciable and should be promoted.

References

1. TEVA’s 2017 annual report- form 10-K: http://www.tevapharm.com/files/Teva_Form_10-K%20-2017.pdf

2. TEVA Pharmaceutical warns on 2018 profits citing US market, Copaxone: https://www.cnbc.com/2018/02/08/generic-drugs-giant-teva-warns-on-2018-citing-us-market.html

3. TEVA’s 2016 social impact report: http://www.tevapharm.com/files/docs/Teva_2016_Social_Impact_Highlights.pdf

4. TEVA’s news releases 2017-18: http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-news&nyo=0

5. TEVA to cut over 25 percent of global workforce: https://www.firstwordpharma.com/node/1530082

6. TEVA’s official Facebook page: https://www.facebook.com/tevapharm/

7. TEVA’s official LinkedIn page: https://www.linkedin.com/company/5239/?trk=tyah&trkInfo=tarId%3A1421348704576%2Ctas%3Ateva%20pharmaceuticals%2Cidx%3A2-1-4

8. TEVA Reports 2017 Full Year and Fourth Quarter Financial Results: http://www.tevapharm.com/news/teva_reports_2017_full_year_and_fourth_quarter_financial_results_02_18.aspx

9. TEVA 2017 financial outlook: http://ir.tevapharm.com/phoenix.zhtml?c=73925&p=irol-presentations

10. generic-drug-makers-face-pricing-issues-unlike-other-pharma-companies: https://www.investors.com/news/technology/generic-drug-makers-face-pricing-issues-unlike-other-pharma-companies/

11. u-s-states-allege-broad-generic-drug-price-fixing-collusion : https://www.reuters.com/article/us-usa-generics/u-s-states-allege-broad-generic-drug-price-fixing-collusion-idUSKBN1D0201

12. Top 50 Global Pharma Companies 2017: https://www.rankingthebrands.com/The-Brand-Rankings.aspx?rankingID=370

13.TEVA’s history: http://www.tevapharm.com/about/history/

14.Teva planned for second generic Copaxone to enter market in 2018: https://in.reuters.com/article/us-novartis-ms-approval-teva-pharm-ind/teva-planned-for-second-generic-copaxone-to-enter-market-in-2018-idINKBN1FX1LA

15. Quality issues lead to shuttering of Tevas Hungarian plant: https://www.fdanews.com/articles/182076-quality-issues-lead-to-shuttering-of-tevas-hungarian-plant

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TEVA Pharmaceutical Industries SWOT and PESTLE analysis has been conducted by Asweta and reviewed by senior analysts from Barakaat Consulting.

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