Israeli pharmaceutical giant Teva mulls halting development of brand drugs
Incoming CEO appoints team to rethink development of brand drugs; drugs under development are for conditions from diabetes to nervous disorders and cancer.
Jeremy Levin, the incoming chief executive of Teva Pharmaceutical Industries, has set up a team to reexamine the company's pipeline of brand drugs under development.
The team rethinking policy is headed by Dr. Medy Wiener, former head of medical research at Novartis Israel. It is being advised by the head of Teva Innovative Ventures, Dr. Aharon Schwartz.
Many of Teva's drugs under development originate from the $6.5 billion acquisition of U.S. company Cephalon in 2010. Others are being developed by the dozens of startups in which Teva has a stake. More than half have reached the pivotal stage of human clinical testing. The drugs under development are for conditions from diabetes to nervous disorders and cancer.
Levin formally takes the reins from incumbent chief executive Shlomo Yanai on May 9, when Teva publishes its financial statement for the first quarter. Any decision to halt or scale back research and development would have a big impact on Teva's accounting: it would have to write down projects in process.
For instance, Teva ascribed $1.5 billion of the price it paid for Cephalon to the fair value of dozens of brand products in Cephalon's development pipeline. As none of these have alternative uses, in the extreme event Levin pulls the plug on Cephalon's R&D, Teva will have to mark down its investment in the company by $1.5 billion.
Teva is the world's biggest maker of generic drugs that imitate the biological action of proprietary drugs developed by other companies. The generic drugs can be sold once the proprietary drugs lose their patent protection. But profit margins on generics are narrow. That's the whole point - they're cheaper than brand versions.
A hefty chunk of Teva's profits over the years has come from Copaxone, its treatment for multiple sclerosis. It also has a brand drug called Azilect to treat Parkinson's disease. And it has around 40 drugs in its development pipeline.