The rise and rise of Teva
By Alex Brummer
One of the great untold stories of Israeli commerce is the rise and rise of the generic pharmaceutical company Teva which this week launched a $40 billion bid for a European competitor Mylan.
It is by the far the biggest takeover every attempted by an Israeli enterprise and comes at a time when the patent on Teva’s multi-schlerosis drug Copaxone, which accounted for almost half the company’s sales, is about to run-out leaving a big hole in the company’s in income.
The deal is of more than passing interest to Britain because drugs manufactured by Teva worldwide account for one-in-seven of every prescription fulfilled by Britain’s National Health Service.
Israel’s huge contribution to medicine, cyber-security, media and health care in the UK rarely rates a mention in the British press with its obsessions with Gaza and settlements.
If successful the proposed deal between Teva and Mylan would help to lift the status of the Tel Aviv Stock Exchange on which Teva is quoted raising it to among the top rank of international share exchanges.
Teva has a distinguished history having been founded in Jerusalem in 1901 as Salamon, Levi and Elstein, a drug wholesaler. It adopted the name of Teva (meaning nature in Hebrew) in the 1930s, long before the State of Israel was established. One of its early shareholders, after the company was quoted on the Tel Aviv exchange, was the late British press tycoon Robert Maxwell.
Generic drug makers like Teva adopt the rights to produce compounds based on tested and tried drugs after the patents, taken out by the big research based pharmaceutical companies run out. Mylan is mainly in the same generic area as Teva so a deal would offer the chance for some big cost savings.
What is perhaps most interesting about the proposed transaction is that it marks a reversal of a trend of many Israeli firms falling to foreign ownership, when they reach a certain size, rather than expand and become global giants in their own right.
Ronny Gal an analyst at American brokers Sanford C Bernstein told the Wall Street Journal that if Teva is successful other Israeli companies could follow in its footsteps. ‘The fact that many Israeli companies have gone public in the last two years does suggest that more Israeli companies will become acquirers.’
In the past it was thought that Israeli companies lacked the management expertise to compete in the global mergers market. But a new generation of professional managers is starting to emerge with much more experience on the international stage. Israel’s reputation in business has been built on the image of the start-up nation that quickly invents, develops and markets new products in the tech and biotech areas and then sells them on to global firms. The Jewish State is regarded as the most fruitful for developing new technologies outside of Silicon Valley in California.
Alex Brummer is vice-president of the Board and heads the International Division