As a global operations manager for a major pharmaceutical company, one of the sad conclusions reached by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) cluster head of Middle East, Africa & Ukraine and Teva Israel general manager Yossi Ofek, is that each country actually manages its own healthcare by itself. "We saw that during Covid, and we see that now in Ukraine. In moments of truth, when there is real trouble, no country really helps out another. Help comes from people and sometimes from businesses."
The Ukraine experience only reinforced what he began to sense during the Covid-19 pandemic. "This was a global virus run at the local level, which was a real pity," says Ofek. "Every country had its own strategy. At a critical stage in terms of vaccines, 20% of countries bought 80% of the vaccines, and the new variants were largely a result of that."
Israel felt it less, he says, thanks in part to Teva. "During this period, the fact that we are a global but Israeli company helped a lot. Governments nationalized the production of raw materials during this period, but thanks to Teva's capabilities around the world we were able to bring in critical drugs, such as anesthetics and respirators."
"A significant delay in drug approvals"
Each country under Ofek’s management is dealing with its own set of problems. In Ukraine, Ofek found himself directing a war room, with Teva's security officers dividing company employees into operational units and - using satellite telephones to communicate - helping them escape westward, first to Lviv and then to Poland, where some workers have been taken up by the local Teva branch. Currently, he is handling the distribution of medicines, as much as is possible under fire. In Africa, the company is trying to build a profitable pharma market in countries that, at present, have no framework for it. In the United Arab Emirates, Teva is now ardently fulfilling what had been, until recently, a discreet, under-the-radar relationship.
For Ofek, one of the most burning issues regarding marketing of drugs in Israel is the amount of time required to obtain new drug approval from the Ministry of Health. "My dad died waiting to get a drug that was not in the basket [of reimbursable drugs]. Generic drugs are 50% cheaper than branded drugs. If the drug had been cheaper, if there had been a generic version, it might have been in the drug basket," he says.
The patent-holding companies are not the problem. "There is a significant delay in drug registration in Israel, both new and generic. The Ministry of Health set itself a reasonable time limit for approving new generic drugs, but doesn’t meet it, sometimes by years. This happens because, in total, there are only 10-15 job slots for pharmacists at the Ministry. For some reason, the Ministry of Finance has difficulty in expanding this number. In their absence, the health system loses tens to hundreds of millions of dollars.
"The Ministry of Health also needs to make a move. It’s unnecessary to check generic products so meticulously. The damage caused by delay is greater than what might be missed in a reasonable, not-overly-long examination of a generic product that has already been approved in the US or Europe. We were a bit forgiving about this issue because the government and the Ministry of Health were busy with Covid, but we won’t be now."
"Africa is not economically viable"
Meanwhile, on the other side of the world, Teva is developing the most complex markets in Africa. "We operate in South Africa, and in November we decided to enter the sub-Saharan countries (Ghana, Kenya, Nigeria, Ivory Coast, Malawi, Namibia, Botswana, Zimbabwe, and others). I don’t think there is another international pharmaceutical company with significant activity there, because economically, it isn’t worth it. The markets are completely private and the public’s purchasing power is very low. Counterfeit drugs and cheap drugs from China and India are sold there. There are also regulatory problems and issues of corruption."
According to Ofek, Teva views this as part of its social action efforts, and hopes that developing these markets will make them economically viable in the future. "We started treating children with cancer, in Ghana, and Malawi. In these countries, child mortality from cancer is 80% -90% while in the West, 80% -90% recover from the same types of cancer. We also train doctors. We will work with local companies, because it is necessary from a regulatory standpoint, and it’s also the way to reach the doctors and pharmacies there, with the right language and regulation.
"We approached companies with operations in several countries; I trust them, but I also examine them myself. We believe that if we market in several countries through one entity, and with synergy between countries, we will eventually have a profitable economic model.
"The pessimists say 'Africa in another 50 years will still be Africa'. I say 'The Africa of another 15 years will be the China of 15 years ago'. We see how things are developing. For example, pan-African drug regulation; more and more countries are joining, and it will happen, maybe in another five years. That is access to 2 billion and more people, all at once. You can’t ignore that."
Have you encountered widespread Chinese influence in Africa?
"In South Africa no. In East Africa yes. The Chinese actually bought governments debt in the form of infrastructure, agriculture, raw materials. It is an indirect takeover of the countries. That is why China controls East Africa. For China, this is a smart move. For Africa - I can’t say. At that moment, it helped them, but I don’t know where it will put them in the long run. "
Since the signing of the Abraham Accords, Teva's activities in the UAE have also been made public. "In the past, we operated in these places in a minor way, through companies related to some of our past acquisitions. After the agreements, it became clear this secret love affair was just waiting to break out into the open. Commercial and interpersonal ties significantly advance diplomatic ties. We intend to develop business in these countries greatly, in Morocco as well.
"In terms of Israel, I believe the main asset we bring to the UAE is our medical innovation. They, however, offer the ability of testing new products and new treatment methods, even before FDA approval. We can do research together, that's what it means. They have money to buy drugs, but even wealthy countries have set targets of including more generics in their lists of approved medicines. Like in Japan, where 20 years ago they would only buy branded drugs, until they saw that health spending was becoming untenable."
"We go out of our way to stay in touch with Israel"
There is a sentiment that, over the years, Teva has become less Israeli. Although the headquarters are still here and the CEO lives here, the feeling is that the connection with the local ecosystem has weakened somewhat, and the number of employees in Israel has also grown significantly smaller.
"We go out of our way to stay in touch with Israel and the local ecosystem. Teva is investing in digital health technology incubator Sanara Ventures. We recently set up, together with several large pharmaceutical companies, the AION project for drug development using the methods of the future, and we have strong ties with Israeli academia."
Ofek notes that the company has also launched two social enterprises: one is intended to address stateless residents in Israel, who do not receive proper medical treatment, purchase counterfeit drugs, and do not receive appropriate advice. "If you walk through Tel Aviv’s Central Bus Station, you’ll see blankets spread out with medicine on them," he says [describing the illegal points of sale]. "Thanks to our donations and our large investment, we’ve set up a venture that provides low-cost medicines, mainly for infectious diseases, to pharmacies in the areas where those people live."
Another project that began about two years ago, supports the primary caregivers of chronic patients. "We have identified that quite a few of these people are [nonprofessionals] outside the workforce, and even those who are educated and working within the health system understand that they lack healthcare management information. So, we provided information, built a community. It’s expensive. The question comes up constantly, whether to go on, and we go on."
Is Teva already in a position where it can hire new employees in Israel again?
"We have focused in Israel on factories with unique capabilities, such as the factory in Kfar Saba, which will soon increase production lines for biological drugs. Many companies avoid sterile biological production because it is very complex. The Kfar Saba factory will take in production lines from other Teva factories, and will take the lead in this area."
Teva's operations in Israel include activities it does not conduct in other countries, such as infant formula, as well as cannabis. "We know it's not a pharma product. It's more like wine, each bottle is different. But on the other hand, it's clear that this plant has an effect on health."
A few months ago, the company signed a distribution agreement for a product made by Tikun Olam Cannbit. "We made life difficult for them as regards quality assurance so that we would feel comfortable putting the Teva brand name on the product. In the next quarter, we will launch the first product. Ukraine was also supposed to approve medical cannabis, and that probably will not happen soon, but the Tikun Olam agreement includes an exclusivity clause for marketing the product in Ukraine."
"Set up a vaccine factory? It’s easier to develop a fighter jet"
Over the past two years, Covid was the focal point of Teva Israel’s activity. Teva also managed the acquisition and distribution of the vaccines, and also supplied the kits for the educational system’s antigen test campaign. "70 million antigen tests, planes coming in ‘round the clock. Everything from moment to moment. And we saw that strongest countries were buying all the goods and leaving the other countries with the leftovers. We had enough but again, it was a reminder that the strong have control."
That’s why some people said we must set up a vaccine production plant in Israel.
"It's easier to develop a fighter jet."
Several companies have made the case to us that they have existing factories that could be converted, relatively easily, to vaccine production.
"Yes, but they need knowledge, not of the present situation but of the next event. Suppose we had a factory. We would still have to identify, in real time, the company with the winning technology, sign a cooperation agreement with it, and then take a year or two to convert the factory over to this technology. I don’t think it would stand a chance. It is possible to set up a vaccine plant in Israel, but that’s not our response to the pandemic."
In the current pandemic, Pfizer and Moderna haven’t let any company produce the vaccine on their behalf.
"I don’t know if the offer made to them was serious. Come the next epidemic, I think it will be inevitable to require companies to give the knowledge, not to another company but to the country, to the world. Of course - not for free. But under this model, a company could earn more, its production capacity would grow, and in the end, it would sell more doses during the epidemic’s peak period. "
Has Teva considered producing a Covid vaccine or medicine?
"That’s not our field."
Published by Globes, Israel business news - en.globes.co.il - on April 14, 2022.
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