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Teva Pharmaceutical Industries SWOT & PESTLE Analysis

ID : 52362953| Sep 2020| 13 pages

COMPANY PROFILE -Teva Pharmaceutical Industries

Business Sector :Pharmaceutical

Operating Geography :Israel, Asia, Global

About Teva Pharmaceutical Industries :

TEVA Pharmaceutical Industries is 117 years old, headquartered in Israel and the world's leading generic pharmaceutical company. It is focused on catering to the 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 Trump’s focus on reducing generic drug prices, TEVA is under high financial distress due to price erosion and high operating costs. This global pharmaceutical company’s goal is to provide a broad range of affordable and effective medicines to patients around the world.
Teva’s mission statement read “Our mission is to be a global leader in generics, specialty medicines and biopharmaceuticals, improving the lives of patients.”

Teva Pharmaceutical Industries Revenue :


$ 18,854 million – FY ending 31st Dec 2018 (y-o-y loss – 15.8%)
$ 22,385 million – FY ending 31st Dec 2017

Competitive Analysis of Teva Pharmaceutical Industries

SWOT
PESTLE
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. Dipping sales volumes and weak performance in US generic drug 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
3. Strengthening the speciality medicines portfolio
1. Price erosion in the US and its global impacts
2. Consolidated consumer base in US generic markets
3. Competitive market conditions
4. Long running legal costs weighing heavily on Teva’s finances
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Detailed SWOT Analysis of Teva Pharmaceutical Industries

 

Strength

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Weakness

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Opportunity

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Threat

1. Price erosion in US generic market and its global impacts: Price erosion is further deteriorating profit margins of TEVA. No significant regulatory approvals are required for authorized generics create very low entry barriers. Also, the price war is occurring in US generic market, which is inducing huge financial burden on firms. The decline in branded multiple sclerosis blockbuster drugs of TEVA, Copaxone is also having the adverse effect on TEVA. Copaxone was protected under 5 different layers of patent protections out of which 3 were invalidated by 2016. It was a branded drug by TEVA which contributed to about 50% TEVA total profits in recent years. The emergence of generic competition for Copaxone from Mylan NV and Sandoz, the generic drug unit of Novartis AG is also posing a threat on losing appeal to the top-selling multiple sclerosis drug. Austedo’s sales more than doubled to $74 million and are projected to touch $350 million for the full fiscal, 2019.

2. Consolidated consumer base in US generic markets: A consistent reduction in revenues from US market is a growing concern. The consolidated consumer base is having high bargaining power, and along with the support from Trump's government, sustainability is emerging as an issue even for market leaders like TEVA. In fiscal 2017, certain of these Group Purchasing Organizations (“GPOs”) made aggressive requests for pricing proposals and established commercial alliances which scaled up their bargaining power. Due to such consolidation and commercial alliances, there are three large GPOs that account for approximately 85% of generics purchases in the United States. As per industry expectations, the trend of increased pricing pressures from Teva’s customers and price erosion in the U.S. generics market will continue for the coming fiscals.

3. Competitive market conditions: More and more companies are entering generic drugs market due to reduced entry barriers because of relaxed regulations in few economies. While global supply chains are getting affected by unstable financial markets and exchange rates making it tough to operate. Regional players are also coming up, Indian and Chinese markets are giving fierce competition in terms of prices. Economies have varying rules and regulations on quality and sourcing, which requires additional costs of operation in international markets.

4. Long running legal costs weighing heavily on Teva’s finances: Potential heavyweight legal expenses are becoming a great threat to Teva’s debt paying abilities and reviving its fortunes against the current headwinds of low sales and pricing pressures. Since May 2014, about 1,500 complaints have been slapped on the generic drug manufacturer in the U.S. state and federal courts related to opioid sales and distribution, according to the 2018 annual report of Teva Pharmaceuticals. Teva was forced to dish out $646 million in costs for legal settlements in the quarter ended June, 2019, the majority related to opioid litigation. The Ohio litigation could cost the company $1 billion or more. Teva reached an $85 million settlement with the state of Oklahoma in May 2019. HSBC estimates that Teva might have to rake up an additional $3 billion in cash to settle the lawsuit and cut its target price for Teva stock to $10 from $13. Analyst Steve McGarry said the company was in a deep soup as it was cited as the central figure in the alleged price fixing scam. Anxiety surrounding the impending opioid allegations and potential settlement costs have spiraled concerns among investors, said Irina Koffler, an analyst at Mizuho Americas LLC.

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TABLE OF CONTENTS
DELIVERY AND FORMAT
WHY CHOOSE US?
References used in Teva Pharmaceutical Industries Analysis Report

1. Teva Annual Report 2017 - https://www.annualreports.com/HostedData/AnnualReportArchive/t/NYSE_TEVA_2017.pdf

2. Teva 2019 Q1 Financial Report - https://www.tevapharm.com/news/teva_reports_first_quarter_2019_financial_results_05_19.aspx

3. Teva 2018 Financial Report - https://www.tevapharm.com/news/teva_reports_fourth_quarter_and_full_year_2018_financial_results_02_19.aspx

4. Teva Company Profile - https://www.reuters.com/finance/stocks/companyProfile/TEVA.K

5. Teva Revenue 2019 - https://marketrealist.com/2019/05/teva-pharmaceuticals-revenue-guidance-for-fiscal-2019/

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SWOT & PESTLE.com (2020). Teva Pharmaceutical Industries SWOT & PESTLE Analysis - SWOT & PESTLE.com. [online] Available at: https://www.swotandpestle.com/teva-pharmaceutical/ [Accessed 26 Nov, 2020].

In-text: (SWOT & PESTLE.com, 2020)

Copyrights and Disclaimer

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

Copyright of TEVA Pharmaceutical Industries SWOT and PESTLE Analysis is the property of Barakaat Consulting. Please refer to the Terms and Conditions and Disclaimer for usage guidelines.

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Teva Pharmaceutical Industries SWOT & PESTLE Analysis
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