At the JPMorgan Healthcare Conference, Jeremy Levin, Teva's CEO and a former executive at Bristol-Myers Squibb Co., described the virtues of the company's unique drug creation platform as a maker of generic and branded therapies as well as active ingredients for other pharmaceuticals while also providing more detail about the restructuring that the company has undertaken.
On Nov. 30, Teva unveiled a wide-ranging initiative that it said will save it between $1.5 billion and $2 billion over the next five years. That plan will hit all parts of the company, including raw materials expenses and real estate purchasing, information technology, research-and-development activities and marketing materials.
As part of the effort, Israel's Teva also wants to globalize many of its processes, including how it ships and stores products, while looking to reduce inventory levels. The program isn't centered around job cuts. Instead, it's designed to help Teva deal with a number of things, such as pricing pressures, widening its cash base, and confronting the generic onslaught heading for its biggest revenue producer -- injectable multiple sclerosis drug Copaxone, which it loses market exclusivity for in 2015.
"[We are] going to walk through the company carefully and thoughtfully and start to strip out these costs that are essentially unrelated to head count and much more focused on operational improvement," Levin said Tuesday. "We are going to be completely prepared for these headwinds by releasing this cash and building our operational base."
Levin emphasized that Teva will have two different significant growth drivers: so-called new therapeutic entities, or NTEs, which are new combinations or formulations of older drugs, and biosimilars, which are generic biologic drugs. Levin stressed that Teva's R&D capabilities as both a maker of branded and generic drugs position it to take advantage of NTEs.
"This is a multibillion-dollar opportunity," Levin said of NTEs. "It's a unique capability that only Teva is able to assemble. We have the formulation systems and we have the APIs [active pharmaceutical ingredients]. We're launching the platform and the pipeline for them."
Meanwhile, Teva won Food and Drug Administration approval in September for a recombinant form of Amgen Inc.'s blockbuster Neupogen and as a result of a patent litigation settlement with Amgen can begin selling the drug, which is used to treat neutropenia, a loss of white blood cells that is a common side effect of chemotherapy, in the U.S. next November. Teva has already been selling the product in Europe for several years. Teva submitted a full Biologic License Application for the product and won FDA approval for the drug in September.
Levin added that Teva has been stocking its biosimilars platform, having "invested heavily" in them since 2009.
Levin also indicated that there could be other divestitures coming as Teva works to restructure itself into a company long on its specialties, such as treatments for respiratory and central nervous system diseases, and away from areas where it's not a market leader. Teva, for example, sold it animal health business to Bayer AG subsidiary Bayer Healthcare LLC for $145 million in September as part of the effort.
"We want to focus on what we do really well and do better than everyone else and divest everything else," Levin said. "We'll be constantly looking at the business, and what it is we should really focus on and where we can bring all of our power to."
Such streamlining won't, however, turn Teva back solely into a generics company or for that matter a branded drugmaker.
"The very fact that we fused our R&D shows that we see our engine is fusion," he said.
Levin took over for Shlomo Yanai as Teva's CEO in May. He was formerly Bristol-Myers' senior vice president for external science, technology and licensing and was a major player in that company's own revamp, adopting a so-called string of pearls approach of smallish acquisitions and development deals to restock the company's pipeline while turning it into a pure-play pharmaceutical entity.
French mergers and acquisitions lawyer Laurent Faugerolas joined Dechert LLP. For other updates launch today's Movers & shakers slideshow.
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