Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) On Track to Becoming Largest Generics Manufacturer

June 8, 2016

Portfolio Manager Sean Gavin of Fidelity Management & Research Company says that Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) is on its way to becoming the lowest-cost and largest generic pharmaceuticals manufacturer.

Another of my larger active holdings is Teva Pharmaceutical. Teva is a generics pharmaceutical manufacturer that also has some specialty drugs in its portfolio as well, namely Copaxone. They are purchasing Allergan’s (NYSE:AGN) generic pharmaceutical business right now, which would make them by far the largest generic manufacturer in the world and the lowest-cost manufacturer in the world in a space that’s growing volumes very nicely.

They generate a lot of cash. They have a year-old management team that is cutting costs rapidly throughout the business. And they also have two drugs in Phase III in their specialty business that could be very additive to the franchise.

The generics business is very competitive. And the only way that you can distinguish yourself is, one, by being the low-cost provider and, two, by getting drugs to market faster than anyone else. When they combine the company with Allergan, they are likely going to be the number-one company in terms of first to file in the world, and they should have a consistent number of drugs that are first to file over the next three to four years. So they could have both speed and cost advantages.

Sean Gavin