2009 opened in the US with the inauguration of a Democratic president in the White House who later in the year introduced an ambitious reform of the nation's healthcare system. For generic drug makers, Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) included, the reform is a positive development, but until the reform passes, everyone is trying to influence the legislation in their favor.
This effort is reflected in the spending on lobbying by pharmaceutical companies. In 2009, Teva increased its spending on lobbying of Congress by 50%, compared with 2008, to $3.3 million. Teva spent $780,000 on lobbying in the fourth quarter, compared with $510,000 in the corresponding quarter of 2008, and $770,000 in the preceding quarter.
Teva's lobbying budget may be rising, but the sums are still modest compared with the spending by large pharmaceutical companies. Pfizer Inc. (NYSE: PFE; LSE: PFZ) spent $5.6 million on lobbying, and GlaxoSmithKline plc (NYSE; LSE: GSK) spent $2.6 million in the fourth quarter alone.
Teva lobbies the members of the House of Representatives and the Senate, the US Trade Representative, Patent Office, and other federal agencies. In addition to efforts on swaying healthcare reform, the lobbyists are also focused on biogenerics legislation, intellectual property, and trade agreements.
Teva's recently announced five-year strategic plan includes a target of a net profit of $6.8 billion on $31 billion in sales in 2015. The target assumes 9.5% annual sales growth in the US, and increasing the company's share of the US generics market from 22% to 35%. Teva president and CEO Shlomo Yanai said that the US healthcare reform would give an additional 31 million Americans healthcare coverage, which would create great potential for increasing generic drug sales. The reform will result in lower drug prices, because the US administration want to cut the health budget, but Yanai believes that greater sales will more than offset lower prices.
Published by Globes [online], Israel business news - www.globes-online.com - on January 24, 2010
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