At EuroBiotech, Teva The Contender

We've long thought that the largest, most successful generics companies can teach big pharma a thing or two about efficiency and execution. After all, Teva's profit margins rival those of Big Pharma, and could soon surpass them on average(Teva's net margin was 21.8 percent in 2009 and analysts project it will be 25.7 percent this year, compared to 23.6 percent for Big Pharma's group average, according to a consensus analysis by EvaluatePharma, but that's another story).

In addition to efficiency, Teva also believes it can compete with Big Pharma in dealmaking and has chosen some of the most competitive, expensive therapeutic areas to make its mark—oncology, neurology and auto-immune diseases.

Teva's not the obvious choice in these categories. It isn't at all clear that the company is willing to pay top dollar for high-quality assets, and most of its deals to date on the innovative side have been small with tiny upfronts. Still, it seems to be making some in-roads.

According to Gerard van Odijk, president of Teva Europe, however, Teva has a slightly different profile compared with big pharma. “We are attractive because we are quick, and we make deals happen. And when we commit, that’s our deal in a particular area,” van Odijk told Elsevier Business Intelligence’s 17th annual Euro-Biotech Forum last week.

Teva derives about 30 percent of its revenues from branded products, a balance it aims to retain even as it moves to double revenues by 2015. To help maintain that ratio, van Odijk said the company is always seeking either clinical or preclinical partnerships with biotech companies and academic institutions in its areas of expertise.

“There is no lengthy process of debate: if it’s the right fit, the right product, you will get the right decision,” he said. Once its business development group vets an asset, a small group of its top executives signs off on the decision, including van Odijk and his North American counterpart, Bill Marth. Other potential advantages include a highly experienced intellectual property team, and a strong global marketing presence, he said.

That may resonant with biotechs, some of which appear frustrated by the dichotomy between Big Pharma's message, which is that it needs innovation, and its reality: many Big Pharmas striving for greater R&D efficiency, warn that each in–licensed program means a cut from some internal project, leading to higher hurdles to get organizational support for a deal and cautious and slower decision making.

For biotechs thinking about their products' future commercial support, Teva's presence in neurology is obvious, but it is also a leading oncology company in many countries through its generic oncologics, and its subsequent knowledge of the market, van Odijk pointed out. It now has three proprietary oncology drugs in mid-to-late clinical trials, all of which it gained through partners, including an antisense drug in-licensed from Oncogenex in December for $20 million upfront, a $10 million equity stake and up to $370 million in potential milestone payments, and a stem cell product, which is in Phase III for patients with haematological cancers and is being developed by a Gamida Cell-Teva joint venture.

Teva likes to see strong IP and in vivo proof of concept, and not necessarily toxicology studies, and is happy to consider either equity investments or licensing approaches to deals. “There is no one size fits all, we take a pragmatic approach,” he remarked.

With company acquisitions, it was no secret that Teva was interested in increasing its market share in southern Europe, Central and South America, and some Asian markets, he told the crowd. -- John Davis