Teva Pharmaceutical Industries Ltd. is making its boldest move in China with plans to set up a joint venture with Guangzhou Pharmaceutical Holdings Ltd. to make and sell the Israeli company’s generic drugs in the world’s second-biggest market for medicines, according to its partner.
Teva, the world’s largest generic drugs maker, is striking as China’s demand for medicines surges because of its aging population and as chronic diseases such as cancer and diabetes become commonplace. Sales of copycat drugs there are expected to surpass the U.S. this year, topping $80 billion, according to the U.S. Department of Commerce.
At the same time, China is revamping its approval system for medicines that will ease bottlenecks in getting new treatments to consumers. The change is a potential boon for multinationals from Pfizer Inc. to GlaxoSmithKline Plc.
“We hardly have any presence in China, but nobody else does,” Eyal Desheh, Teva’s then chief financial officer, said at an investor conference last September. “Entering the Chinese market is a huge challenge, and making money there is a huge challenge.”
Guangzhou Pharma is already seeing the benefits of China’s determination to speed up approvals. The company’s received about as many drug approvals in the last three quarters as it did in the past three years, Li said. With the regulatory revamp, now is the time for foreign drug makers to work with local manufacturers, he said.
“China is taking a liberalized route to open up, and we hope foreign companies will come in with a spirit of cooperation,” he said. “The truth is, with technology and products, you might not be able to get market share. You need to have manufacturing, network, talent. We have these advantages.”
Teva, like other copycat manufacturers, is scouting for growth as the profit margins for generics face steady price erosion. Its generics unit has underperformed as it contends with increased competition, pressure from customer consolidation and a delay in key launches. It agreed to sell its women’s health unit and oncology and pain franchises in Europe to pay off its $34.7 billion in debt.
Guangzhou Pharma also plans to buy a controlling stake in an Indonesian listed pharmaceutical company, Li said, declining to provide details. The company will build a manufacturing plant there. In China, it plans to build specialized hospitals for maternity care, elderly care and rehabilitation centers, said Li.
5 november 2017