The Making of Teva
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1a. Globalization is a powerful authentic aspect of the novel world systems, and it represents one of the most significant forces in determining the future course of the planet. According to Yips, globalization has assorted dimensions: economic, political, security, environmental, health, social, cultural, and others. The focus here is on the conception of “globalization” as applied in generic and branded pharmaceuticals. Yips attribute this growth to the interdependence of Countries, and Globalized Competitor Strategies as applied by different companies such as Teva, (Jannarone, J. 2010)
According to Yips economies of Scale and Scope has been applied by companies in order to remain at bay in the generic market. Many companies are sourcing for efficient work force thus attracting more customers. Teva has resulted into calculated investments in nations where the cost of doing business is cheaper and thus attracting huge returns. This is according toThe Teva press release (2012)
There has been remarkable growth in generic pharmaceuticals trade and exchanges, not only in traditional international trade in goods and services, but also in exchanges of currencies, in capital movements, in technology transfer, in people moving through international travel and migration, and in international flows of information and ideas, this according to Teva has brought about a wider market as well as product development.
With the cost of innovation and the necessity to achieve economies of scale, the generic pharmaceutical industry is continuously re-organizing on a worldwide scale. According to the Yips framework, such companies have moved from the traditionally industrialized nations to countries. This has been seen in companies such as Teva in Israel which has gone further and opened various branches thus increasing their revenues.
B. According to The Teva press release (2012), over the past 20 years, there has been an increase in globalization of both branded and generic drugs. This has driven major generic companies to merge with small companies as well as franchising to increase their capital. This has privileged generic companies and thus their growth. Moreover, some companies (in India) have come up with fixed dose combination which is economically cheap to produce and package.
Globalization in this segment has occurred with respect to both distribution of medicines in new markets as well as shifting and manufacturing to lower cost markets. Such has attracted political goodwill especially from the economically small nations. This is because citizens can now afford drugs especially for HIV/AIDs- a disease that has been ailing these nations economically. This information was given in The Teva press release, (2012).
Innovative (branded) pharmaceuticals industry on the other hand has come up with various strategies to remain afloat in the wake of stiff global competition from the generic producing companies. Many of these companies were concentrating on branding and marketing their products to the outside world-China-InfoTech, (2010). This strategy did not win much revenue as the generic companies were directly dealing with physicians thus the generic companies were miles ahead in the marketing of their products.
Moreover, the generic prices remained attractive to the new markets, a factor that the branded companies did not put into consideration as it tried to tap the outside markets. However, some branded companies have come up with some good strategies which have lead to an increase in their sales. These companies have come up with their own generics. These are cheaper than the ones produced by generic companies by 20%, (InfoTech 2010)
2.) Teva has widely benefited from its location in Israel. According to Porter, a Country’s conditions govern how a nation’s businesses are created, organized and managed. Teva took advantage of the stable political environment in the country during the Second World War. One of these advantages was availability of related and supporting industries. The resulting factors and advantages can be found in The Teva press release (2012).
According to porter, Teva employed the factor condition which stipulates that a company can take advantage of abundance of labor, but hasn’t yet developed into skilled labor for its benefit. This was brought about by the presence of highly trained scientific refugees from the Nazi holocaust. According to, Reuters, (2010), This Company took the scientists and thus they lead to its development. Moreover, the company was a key drug supplier during the war; this condition was natured by the country’s stability during this period.
Israel offers a favorable environment for running business with limited bureaucracy. This allowed the company to merge with other smaller companies and increase its capital and consequently its market penetration thus development. Thus the company used firm strategy by taking advantage of favorable working conditions in the country to their advantage.
b. Teva has in the last years made huge profits owing to its sophisticated and up-to-date management. The company has conducted both transactional and direct investments around the world. It has also been manufacturing both the branded and generic drugs. This has increased its sales significantly especially in Europe (which makes up 21% of the company’s revenue) where branded drugs had enjoyed free market penetration, (Reuters 2010).
The company has also taken advantage of the marketing and distribution rights in Europe and the United States (a country that contributes over 50% of the company’s total revenue) to market its products. Teva has also set base in the rest of the world thus increasing its sales through marketing and excellent services. Although there has been a low penetration in the European market, the company has taken advantage of the current changes in the country’s legislation to further its market share. Despite the fact that generics are way cheaper the company employs economics of numbers, thus making profit from huge sales.
Teva has come up as a socially adaptive institution, producing the much needed drugs at affordable prices. The production of copaxone, Laquinimod and Synribo medications for sclerosis has contributed to the company’s international growth. The company has also produced cancer medication- a factor that has increased its sales as well as public support as one of the contemporary oriented drug producer in the world not mentioning its post-modern technology which has lead to the consistent production of medicine to meet the market demands, (Reuters 2010).
3a. The Integration-Responsiveness Framework summarizes two basic strategic needs: to integrate value chain activities globally, and to create products and processes that are responsive to local market needs. Teva has been vocal in this aspect. By researching and instituting a department that looks into the current issues in the world of medicine and coming up with solutions. Such has seen the company produce medication for sclerosis and also cancer which are rated as the most current diseases, (Jannarone, J. 2010)
Global integration means coordinating the firm is value chain activities across many markets to achieve worldwide efficiency and synergy to take advantage of similarities across countries. Teva has established a firm base in the world with various branches in the world that offer advice and strategies to be adopted at different levels and nations in the globe, (Reuters 2010).
Teva has positively reacted to the industry pressures for global integration and local responsiveness. This has been seen from the global sales even in places where the company has not established branches. The company has reduced its expenditure by operating from nations where the cost of doing business is attractive. This has lead to creation of jobs and widening of the market.
b. Given the revenue raised by the company from the foreign countries, it is evident that its foreign marketing strategy is a viable. The company has remained afloat making profits despite the current credit crunch. This proves that its marketing strategy is well organized to take advantage of any economical challenges. Moreover, the company is rated as the best in the world in production and revenue in terms of both the generic and branded medication, (Walsh, R. 2010).
4a) Teva’s expanding into physician-driven countries for generic pharmaceuticals was a well thought and calculated move. This is because it proved as to be productive and also raised a lot of revenue for the company. This was a move that many companies would rather have shelved given the fact that most of the small economies are unpredictable, (Walsh, R. 2010).
However, due to the cheap generic drugs and the need to offer health by the governments, the company made huge profits thus its growth from these nations. The company was also able to establish new places where it could conduct business at a relatively low cost. This reduced the company’s overall cost of exporting goods and further increased is profit margin, (InfoTech 2010).
b.) Expanding into innovative (branded) drugs in countries like the US brought about reduced prices and competition in the country. Medication was thus affordable and as a result the company appealed to many users. This largely contributed to the growth of the company’s revenue as a result of authentic drugs which were cheap and also effective. The company was also able to capture a wider population a factor that had strained most branded companies whose prices were too much for the consumers, (InfoTech 2010).
Given the major changes in the global economic trends, the company should lay emphasis on the physician driven countries. This is so because these are countries that are developing with a fertile impetus for business operation unlike in the industrialized nations where we have a myriad of bureaucracy that hinders development of upcoming businesses according to InfoTech, (2010). This will increase the revenue for this company. Countries like china, UAE, and Malaysia are growing fast and thus offer a good opportunity for future growth of the company.
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