Teva’s President and CEO Launches New Pivot to Growth Strategy
Teva’s President and CEO, Richard Francis, who assumed the helm of Teva in January, outlined this week the company’s new strategic framework to drive growth. The company’s Pivot to Growth strategy encompasses four main pillars to deliver short- and long-term growth from the company’s commercial portfolio and biosimilars, innovative pipeline, generics business, and focused capital allocation.
New CEO launches growth strategy
Teva is proceeding with a new growth strategy from Richard Francis, who became Teva’s President and CEO in January (January 2023). He succeeded Kåre Schultz, formerly Teva’s CEO, who retired, effective December 31, 2022.
Schultz had been Teva’s CEO since 2017 and came on board to lead a major restructuring plan, which was announced in late 2017. The plan addressed declining revenue from the company’s generics business, large debt caused by its $40.5-billion acquisition of Allergan’s generics business in 2016, and declining revenue from its number one specialty innovator product at the time, Copaxone (glatiramer acetate) for treating multiple sclerosis, which faced its own generic-drug competition. Schultz was hired to turn the company around. He oversaw the company’s restructuring and developed the ensuing strategy of further diversifying in innovator drugs and optimizing the company’s generics portfolio by rationalizing the company’s generics product portfolio and moving it away from less profitable areas to more value-added products, such as complex generics, biosimilars, and other products with a higher barrier to market entry.
Francis is now leading the company and is charged with continuing the company’s turnaround, which he plans to do so through its “Pivot to Growth Strategy,” which consists of four main growth areas: innovative drugs, biosimilars, the company’s core generics business, and capital allocation to further reduce debt.
Teva’s growth strategy
The first pillar of Teva’s growth strategy is to advance its innovative drug pipeline as a means to diversify from its core generics business. A key part of that is achieving annual revenues of more than $2.5 billion by 2027 for Austedo (deutetrabenazine), a drug to treat chorea, a movement disorder associated with Huntington’s disease, and tardive dyskinesia, also a movement disorder caused by prolonged use of treatments that block dopamine receptors in the brain, such as antipsychotics commonly prescribed to treat mental illnesses. The company also cited the potential of Uzedy (risperidone), a new long-acting formulation of the established drug, risperidone, for treating schizophrenia. Uzedy was approved last month (April 2023) by the US Food and Drug Administration in an extended-release injectable suspension dosage form.
In its innovative pipeline, Teva is focused on three core therapeutic areas: neuroscience, immunology, and immuno-oncology, Key assets cited by the company as part of its growth strategy are a long-acting form of olanzapine, which is in Phase III development, for treating schizophrenia; ICS/SABA (inhaled corticosteroid/short-acting beta agonist), a fixed dose form in Phase III development for treating asthma; and an anti-TL1A drug in Phase II development for treating ulcerative colitis and Crohn’s disease.
Teva also sees promising application of its Attenukine technology, a new mechanism of action for a broad array of immuno-oncology indications. The company said that the technology’s potential was demonstrated by the results of a CD38-targeted Attenukine drug for treating multiple myeloma (out-licensed) and with an in-house anti-PD1-IL2 drug in oncology. Additional assets within Teva’s pipeline include: an anti-IL15 drug in Phase I for treating Celiac disease; an anti-PAR2 drug in Phase I in neuroscience; and a drug in Phase I for treating multiple system atrophy, a rare condition of the nervous system that causes gradual damage to nerve cells in the brain.
Biosimilars are also part of Teva’s growth strategy. The company has seven products in late-stage development and/or under regulatory review.
The company says it is also committed to its generics business as part of its growth strategy by seeking to focus on complex, differentiated products, such as drug–device combinations and long-acting injectables. In 2022, the company’s generics business posted revenues of $8.1 billion. Also in its generics business, the company is continuing a plan to rationalize its manufacturing network. It is closing selected sites to reach 40-44 sites by 2027. As of May 2023, the company has 52 manufacturing sites: 16 active pharmaceutical ingredient and biologics sites and 36 final dosage sites.
In terms of capital allocation, Teva says it is staying committed to continue serving its debt and has reiterated its financial targets for 2027. The company reported that it had reduced its net debt to $18.5 billion in the first quarter of 2023. For its financial targets by 2027, the company projects mid-single digit revenue growth, an operating income margin of 30%, 2.0 x net debt/ adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), and cash to earnings of 80%.