This post/article is worth a read for those interested in the evolution of Pharma Business models:
Pharma Exec – The Teva Turnaround
Over the last five years, we have seen multiple pharmaceutical companies, such as Novartis, Merck, Pfizer, J&J, and GSK, spin out their generic and OTC/consumer business units to focus on innovative medicines.
This is effectively Big Pharma saying you can’t mix generics and innovation—it’s like oil and water.
However, Teva, under CEO Richard Francis, is revitalising its innovative medicines business by doubling down on M&A and internal R&D while focusing on improving operating efficiency in the Gx and Bx parts of the company.
This is a breath of fresh air in an industry well known for its herd mentality, launch of me-too drugs, and copying rivals’ strategic moves (e.g., moving out or into certain therapy areas).
So far, over the last eight quarters, Teva has shown growth. However, it is still $5.8 billion away from the heady heights of its Copaxone success in 2017, and so it will be interesting to see how things progress.
If Teva succeeds, will innovative companies reconsider whether selling generics or their internally developed off-patent medicines for longer is beneficial?
Or will we see a new Harvard Business Review case study on the dangers of combining Cost Leadership and Differentiation in a business that lacks a competitive edge?