This Strategy Could Boost Teva’s Growth Prospects Even More



Geographic diversification

Excluding API (active pharmaceutical ingredient) sales, in 2016, Teva Pharmaceutical Industries (TEVA) is expected to earn about 50% of its net sales from its North American market. The company also ranks first in North America, ahead of peers such as Sanofi (SNY), Novartis (NVS), and Pfizer (PFE).

Teva is expected to report about 30% of its 2016 net sales from European markets, which would include its Medis business. Currently ranking third in the generic pharmaceutical market in Europe, Teva could further strengthen its position by leveraging its established infrastructure and sales teams.

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Teva is expected to earn its remaining 20% net sales from growth markets in 2016. These markets are expected to drive future growth for the company. If these projections prove correct, it could boost Teva Pharmaceutical’s share prices as well as those of SPDR S&P World ex-US ETF (GWL). Teva makes up about 0.32% of GWL’s total portfolio holdings.

The Teva-Allergan generics deal

The acquisition of Allergan (AGN) Generics business (previously known as Actavis Generics) is part of Teva Pharmaceutical’s geographic diversification strategy. The deal has proved instrumental in strengthening Teva Pharmaceutical’s (TEVA) position in key markets like the US, United Kingdom, Canada, and Russia.

In 2014, Allergan acquired Silom Medical Company, a leading generic pharmaceutical company, in Thailand. The deal helped the company increase its presence in the growing Thai market. Allergan’s Generics has also increased Teva’s penetration in growth markets like Singapore, Brazil, Vietnam, and Korea.

Since Allergan had already sold off its Western European business prior to its deal with Teva, Teva could not leverage the acquisition for expansion in certain non-overlapping markets. But the deal still strengthened Teva’s drug pipeline in markets like Germany, France, Japan, Italy, and Spain. (For more about the deal synergies, please refer to “Can Allergan Generics Boost Teva Pharmaceutical’s 2016 Revenues?“)


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