Israel's Teva Bidding For World Generics Leadership

With its acquisition of US generics company Biocraft (Market-letter February 5), Israel's Teva Pharmaceuticals should increase its sales and profits in the US generics market, which has been plagued by severe competition in the last 18 months. The merger of Teva's existing US generics subsidiary Lemmon with Biocraft will create the largest generics firm in the USA, says the Marketletter's Israeli correspondent, with annual sales of around $400 million.

Many investors, he observes, were taken aback by the Teva move. While Biocraft stock soared 40% on the news, Teva's shares were marked down immediately by about 3%, and there has been subsequent weakness. This is partly due to recent investor focus being more on the expectations of international marketing approval for Teva's innovative multiple sclerosis product Copaxone (copolymer-1), as well as its stepped-up activity in Europe - mainly via the acquisition of small to medium-sized pharmaceutical and pharmaceutical/chemical firms (Marketletters passim).

From recent financial reports, the Market-letter's source comments, one can detect that Teva's US generics activity has been impacted negatively both by price erosion and by the difficulties regarding the approval and timing of new Abbreviated New Drug Applications with substantial market potential. As Teva's head of US operations Mr W Fletcher sees it, "the acquisition of Biocraft will broaden our product line, expand distribution and increase manufacturing capacity (particularly of antibiotic raw materials), thereby further strengthening Teva's competitive position in the growing worldwide generic pharmaceutical market."