Teva Pharmaceutical Industries seeks further growth

Teva Pharmaceutical Industries’ $40.5bn (€36.2bn) purchase of Allergan’s generics unit, which has formally been completed, doesn’t signal that the Israeli drugmaker will let up its quest for innovative branded medicines.

Efforts to introduce new copycat drugs and integrate operations gained through its largest acquisition “doesn’t mean we confine our business to just generics,” chief executive Erez Vigodman said in an interview at Teva’s headquarters in Petach Tikva in Israel.

“The strategy and vision are much broader.”

Teva reclaimed its spot as the world’s biggest maker of generic medicines with the purchase, but at a difficult time.

Copaxone, the blockbuster multiple sclerosis injection that at one point delivered half the company’s profits, faces the threat of cheaper copies.

Vigodman’s comments suggest he won’t hesitate to resort to one of Teva’s favourite tools — acquisitions.

The company will target “attractive specialty assets, or branded drug assets or pipeline assets” that fit with the disease areas it’s looking to treat, the 56-year-old CEO said.

The drugmaker seeks medicines for pain, migraines, neuro-degenerative, and movement disorders, as well as respiratory diseases.

Even so, integrating Allergan is Teva’s No 1 priority, according to Mr Vigodman, who’s pledged a boost in revenue of as much as 40% by 2019. It will also need to absorb its US distribution unit, which it agreed to buy yesterday for $500m.

The macroeconomics underlying Vigodman’s rationale for the acquisition have worsened since an accord was announced.

US regulators have sped up approvals for generic drugs, creating more competition and driving down costs, while forcing Teva to divest some assets to overcome antitrust concerns.

Mr Vigodman counters with a different view. The generics industry is growing and will reach about $300bn by 2020, and Teva plans to take advantage of that by launching between 1,000 and 1,500 products every year, mitigating an expected 5% decline in prices.

The Allergan deal has already put Teva in a stronger position, he says. In the US alone, the company has 338 treatments awaiting approval.

Concerns over declining drug prices and the delays in obtaining US antitrust approval for the Allergan deal sapped enthusiasm. Teva’s American depositary shares now trade 26% below the record high they reached after the agreement was made public in July 2015.