Teva CEO: The industry is undergoing a shakeup

Erez Vigodman
Erez Vigodman

Erez Vigodman: Size isn't everything; it's important to be better.

"Size is important in the industry, but it isn't everything. It's important to be better. You have to make acquisitions that will suit the company's strategic direction and contribute to its differentiation, not just in order to be bigger," Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) president and CEO Erez Vigodman said at a conference of Sanara Ventures, a joint technology incubator of Teva and Royal Philips Electronics focusing on medical equipment and technologies. Teva is in the midst of an attempt to take over Mylan Pharmaceuticals (MYL), its competitor, in a deal worth over $40 billion.

In a talk with Royal Philips CEO Frans van Houten and Sanara CEO Assaf Barnea, Vigodman was asked about the mergers and acquisitions trend in the industry (there were several recent mega-deals in the medical equipment industry). "Without mentioning Mylan, we'll try to understand the dynamic - the industry is undergoing a very big shakeup. There is a trend in which many players are trying to protect their market share, cutting costs, and turning to consolidation. In many cases - not all - they choose to win the wrong war and adopt a short-term strategy," he said. Vigodman emphasized the important of differentiation in the industry, and the need for a clear strategic direction.

Vigodman and Van Houten noted that Teva and Royal Philips have similar views of the changes in the industry. They both cited the trend towards more consumer power and an emphasis on prevention of disease, rather than treating it. Van Houten stressed the importance of technology, for example information analytics and cloud computing, which will facilitate more accurate information about the patient.

Vigodman commented on the culture of exits, saying, "Israel needs much more than just development centers. That's important, but it's also important to have industry, production, and exports - added value. I'm against the startup nation in its current form. I think that the government should do more." Vigodman emphasized that he was not opposed to what now exists, but said it was important for there to be much more - a much larger industry.

Teva and Royal Philips, which own Sanara, have undertaken to invest jointly up to NIS 100 milion (50% each) in Sanara over an eight-year period. In addition, the companies promised to put at the disposal of Sanara and the companies it supports their knowledge of what is happening in the global markets, and their vast experience in the development and marketing of medical technologies.

Over the past six months, Sanara has examined over 250 companies, and has chosen its first two, which have been approved for receiving financing and support by Sanara's investment committee and the Office of the Chief Scientist. The two companies, which are in the advanced development stages, will move to Sanara's offices in Ra'anana. According to Sanara's investment model, most of its companies will receive additional financing at its discretion, in addition to the budget approved by the Chief Scientist, in order to enable them to achieve significant milestones in creating value during their incubation period.

Published by Globes [online], Israel business news - www.globes-online.com - on July 1, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

Erez Vigodman
Erez Vigodman
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