What inspiration does the world's "largest generic drug" company bring to China?

This policy has greatly stimulated the supply of generic drugs in the US market. In 2000, the rate of generic prescriptions in the United States exceeded 50 percent.

After its establishment, Teva has not been able to embark on the road of original research and innovation like European and American pharmaceutical companies, but insists on generic drugs as its main business. On the one hand, Teva considers itself less capable of research and development than the century-old pharmaceutical companies in Europe and the United States; In the Middle East, on the other hand, there is a huge market opportunity for efficient and cheap generics. Teva knows exactly where it is.

In 1985, Teva first established TAG Pharma in a joint venture with W.R. race, a U.S. specialty chemical production giant, and then saw the opportunity to acquire Lemon at a low price because of the infamous quaaludes incident, and use Lemon's sales channels to gain a foothold in the United States.

This series of actions has brought rich returns to Teva, the first three years in the U.S. market, Teva's sales doubled; By the 1990s, the U.S. accounted for half of Teva's business.

Third, the merger thunder

Teva sticking to generics doesn't mean it's not expanding. Generics are available to everyone, but there are few major competitors. After Teva established its foothold, it began to further expand overseas markets.

As early as the 1970s, Teva has embarked on a path of expansion and acquisition for "going global", and most of them are famous people: such as Japan's third largest generic drug company Ocean Commodities, Peru's top 10 companies Corporacion Infarmasa and so on. It's just that these companies are generics, so Teva's expansion has been quiet.

In 2016, Teva acquired Actavis Generics, a generic drug giant owned by Allergan, for a total of $40.5 billion, directly joining the ranks of the top 10 global drug companies, becoming a pioneer in the history of generic drug mergers and acquisitions.

But successive acquisitions have saddled Teva with a heavy debt burden. With Actavis, Teva's total debt reached $57.8 billion, the highest in its history. Teva was forced to pay off its debts. At the end of 2020, the company still owes nearly $40 billion in debt.

Teva's massive debt problem won't be easy to solve. Unlike innovative drugs that can sell more than 10 billion dollars in a single product, the threshold for generic drugs is very low and the profit margin is limited. The only way to increase revenue is to expand sales, but when Teva expanded year after year, the United States pulled back.

In 2012, Congress approved the Generic Drug Fee Act (GDUFA), which heralded the end of the good times for generics.

Because of the long-term favorable policy in the United States, the number of generic drugs submitted to the FDA has soared, and the review has been backlogged. Data show that the average review time for each generic drug marketing application approval is nearly two and a half years, and by 2012, the FDA's backlog of applications has reached more than 2,800.

This is very similar to the situation before China's drug review reform in 2015, the difference is that the United States has opened an approval channel for innovative drug lists, so new drug applications are still very smooth.

In response to the accumulation of generic drug applications, the FDA issued a rule: Fees!

Generic drug companies pay a fee at the time of application, and the FDA uses this money to recruit people and set up a special generic drug office to improve the approval efficiency.

America's generics world is getting in on the act: everyone is paying, and the result is that generic drugs are piling up and getting cheaper.

In 2016, Teva had a 16% share of the U.S. generic drug market, but by 2020, that share had fallen to less than 10%. Teva's global revenue plunged from $22.385 billion in 2017 to $15.878 billion in 2021 due to a weak U.S. generic drug market and the expiration of one of its blockbuster patented drugs for multiple sclerosis.

Is there a way out for generic drugs?

In terms of quality, there's nothing to be said for Teva's generic. In 2020, the industry published a well-known book called The Truth about Generic Drugs. Us investigative journalist Catherine Eban writes in her book that when doctors replace drugs, they mostly choose Teva products because they know the company's products are "better quality" and "more effective."

Because according to the United States "Hatch-Waxman Act", after the expiration of a new drug patent, generic drugs no longer need to do experiments from scratch to prove the safety and efficacy of their own products, the quality of many generic drugs is difficult to fully guarantee.

In fact, both in the United States and China, generic drugs account for the vast majority of the drug market. Previously, Li Yan, president of Hisun Pharmaceutical, said that the current domestic market share of generic drugs and innovative drugs is roughly 95:5. Even in today's world of innovative drug concepts, most patients still use generic drugs.