Procurement Insights from Generic Development

Abstract

The pharma industry is witnessing the emergence of more generic drug manufacturers than ever. This is because of patent expiries, along with worldwide government focus on affordable healthcare for citizens. One such company with increased focus on generics (1,800 molecules in portfolio) and a higher growth percentage (~13 percent) is Teva Pharmaceuticals.
With plans to increase their global reach, portfolio in every therapeutic area, and in specialty drugs, Teva is expected to retain its position as the leading global generic manufacturer. The strategy followed by Teva includes various acquisitions and joint ventures to broaden its pipeline; global reach are some of the major reason for their increased growth, as opposed to the top large pharma companies whose growth is around 8–9 percent. This article focuses on the various reasons behind Teva’s success in generic business, and what could other pharma companies infer from them.

Introduction

Forbes estimated 30 percent net margins for generics pharmaceutical industry in 2016. According to EvaluatePharma, worldwide prescription sales of generics would increase by around 7.5 percent in 2017. Teva, Sandoz and Mylan are the top three companies, based on total revenue from generic drugs in 2015. Teva pharmaceutical has witnessed a growth of around 13 percent in profit margins from the sales of generic drugs. It has continuously delivered a profit margin in the range of 24–30 percent on a quarterly basis from Q4 2015 to Q4 2016.