This evening, Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) presented the strategic plan that CEO Jeremy Levin has been working on since taking up the post in May. According to the presentation, the return to investors will be $1-2 billion annually, and the dividend will be 20-25% of the cash flow from operations. At the same time, the company will carry out a share buy-back program.
Teva chairman Phillip Frost opened the evening, saying, "Teva turned from a dynamic generics company under the leadership of its brilliant chairman Eli Hurvitz into a diversified and international pharma company. We have a logical and achievable plan. But there may also be opportunities along the way that will take us in other directions."
In the presentation to investors, it was stated that the company's organic growth will continue despite the expiry of exclusivity on multiple sclerosis drug Copaxone in 2015.
CEO Jeremy Levin said, "Teva is an extraordinary, wonderful company, that started as a small company in Jerusalem and Petah Tikva. Today, we are in 60 countries, and generate significant revenue and profits, and we have a broad portfolio. We have to understand the needs. Where the industry is going. I ask you to broaden your view beyond the US, to the entire world. Three changes are taking place. Every country has its story. There are medical needs, social needs, and the needs of the consumer. Consumers want different things in different part of the world. To succeed, we have to understand these needs."
Levin listed five pillars in the implementation of Teva's strategy: boosting growth platforms; boosting global presence; strategic business development; focus on and protection of core business product lines; and reducing the expense base.
"Our goal in the next five years is to grow our sales organically," Levin said. "At the same time, we will save $1.5-2 billion, which will enable us to present a strong, stable operating profit. With a strong cash flow, we will also be able to invest in non-organic growth and in shareholder return.
"Yes, we have challenges. What company does not? Nevertheless, we have amazing opportunities for growth and generating value. We know what the challenges are, and we know exactly how to deal with them."
Yesterday, Teva's head of global R&D and CSO Dr. Michael Hayden talked in an interview about a new program in generics called NTE (new therapeutic entities) in which Teva will combine generic products that it already produces and sells, with the aim of improving their safety and efficacy. Teva's portfolio contains some 1,400 drugs. The company intends to examine 200 possibilities of combinations annually, and to start developing about 20 of them.
Also today, Teva and Xenon Pharmaceuticals Inc. announced a collaborative development and exclusive worldwide license for XEN402. XEN402 is currently in clinical development for a variety of painful disorders. This product specifically targets sodium channels which are abundantly found in sensory nerve endings that can increase in chronic painful conditions. Under the agreement, Teva will pay Xenon an upfront fee of $41 million. In addition Teva will pay development, regulatory, and sales-based milestones totaling up to $335 million. Xenon is entitled to royalties payable on sales and an option to participate in commercialization in the US.
Jeremy Levin said of the agreement, " Teva is building a focused pipeline of novel medicines in select areas of medical need. XEN402 fits this strategy. It holds the potential to address the significant unmet medical need for the many patients who suffer from chronic pain. In addition, XEN402 has the potential for broader therapeutic use across other pain conditions.”
Published by Globes [online], Israel business news - www.globes-online.com - on December 11, 2012
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