TEVA » Topics » Active Pharmaceutical Ingredients (API)

This excerpt taken from the TEVA 20-F filed Feb 29, 2008.

Active Pharmaceutical Ingredients (“API”)

In addition to its production and sale of finished dose pharmaceutical products, Teva manufactures and sells active pharmaceutical ingredients. Teva’s API division provides the benefits of vertical integration and also operates a significant third party business. With a leading global market share in many chemicals used in generic pharmaceuticals, Teva’s API division offers a high quality, long-term, reliable and cost-effective source of API.

The API division sells its products both to Teva’s finished dose pharmaceutical businesses, on an arm’s-length basis, and to third parties in a competitive market for APIs mainly intended for generic products. Teva’s API sales are affected by pharmaceutical trends and are directly related to the ability of its internal and external customers to launch new products and maintain market share.

Teva produces APIs worldwide through 18 production sites, some of which specialize in specific API categories or technologies, located in the U.S., Israel, Italy, Hungary, the Czech Republic, Mexico, Puerto Rico, India and China.

Teva offers over 250 different APIs, using a variety of production technologies: synthetic, semi-synthetic, fermentation process, peptide synthesis, plant extraction and production of highly potent compounds (compounds that have a therapeutic effect at very low dosages, typically at microgram levels). Teva is among the world’s principal suppliers of many of these chemicals. The API products are sold to formulators of pharmaceutical products mainly in the U.S. and Europe and also in Asia and Latin America, in each case subject to the local patent position. The portfolio of API products is a combination of high volume products and low volume, high value products.

In addition to the full range of more traditional APIs, Teva offers a broad portfolio of APIs for respiratory products, dermatological hormones, anti-inflammatories, oncolytics, immunosuppressants and muscle relaxants, as well as custom-manufactured APIs for a variety of proprietary drug manufacturers. Teva’s expertise in the chemistry of steroids and high-potency production enables it to continue and enhance its leadership in the inhalation, injectables and dermatology fields.

API production requires a high level of technical and regulatory skill. Most of the products are produced in dedicated computer-controlled facilities, which promote the optimization of high quality production processes. In order for APIs to be approved for use, the facilities and production procedures must meet the standards set by the applicable regulatory authority. Teva’s API plants meet such standards and are regularly inspected by the FDA (excluding the Chinese facility) and have additionally passed MHRA inspections, and inspections held by the Korean, Italian and Hungarian regulatory authorities. The Chinese facility does not manufacture for the U.S. market and was therefore not inspected by the FDA. However, production at this facility complies with all applicable regulatory requirements and Teva’s internal quality assurance and control procedures.

Teva’s API division maintains a portfolio of API intellectual property with over 3,600 registered and pending patents and a record of 90% of submitted patents being granted. The high standards that Teva applies to product and process patent clearance combined with its successful IP prosecution enable Teva to succeed in being “first to market.”

 

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This excerpt taken from the TEVA 20-F filed Feb 28, 2007.

Active Pharmaceutical Ingredients (“API”)

In addition to its production and sale of pharmaceutical products, Teva manufactures and sells active pharmaceutical ingredients. Teva’s API division has a large and growing third-party business, and also provides Teva with the benefits of vertical integration. With a leading global market share in the production of many major chemicals for generic pharmaceuticals, Teva’s API division facilitates Teva’s entry into new drug markets and offers a high quality, reliable long-lasting and cost-effective source of API.

Teva offers approximately 250 different APIs, using synthetic, semi-synthetic, fermentation and high-potent technologies (compounds that have a therapeutic effect at very low dosages, typically at microgram levels), for use in pharmaceuticals. Teva believes it is among the world’s principal suppliers of many of these chemicals. The products are sold, subject to the patent position, to formulators of pharmaceutical products mainly in the U. S. and Europe, but also in Asia and Latin America. The API division’s portfolio of products is a combination of high volume products as well as low volume, high value products.

Teva’s acquisition of Sicor complemented Teva’s existing API capabilities with a broad portfolio of APIs for respiratory products, dermatological hormones, anti-inflammatories, oncolytics, immunosuppressants, muscle relaxants and custom-manufactured APIs for a variety of proprietary drug manufacturers. The consolidation with Teva opened traditional Teva markets to Sicor’s API products and also gave Teva access to new customers, mainly in the inhalation, injectibles and dermatology fields.

The acquisition of Ivax has provided Teva’s API division with an additional 30 APIs and access to new technologies, mainly plant extraction technology. Through Ivax, Teva’s API division obtained access to new markets such as CEE and Latin America. In addition, the acquisition enhances and strengthens vertical integration activities with Teva’s pharmaceutical units. Teva’s existing API sales to Ivax shifted from third-party sales to intercompany sales, while Ivax’s own third-party API sales were included in Teva’s third-party API sales.

The API business sells products to Teva’s finished pharmaceutical product businesses and to third parties in a competitive market for APIs mainly intended for generic products. Sales to Teva’s finished pharmaceutical product businesses are on an arm’s-length basis, fulfilling Teva’s generic and proprietary manufacturing needs. Teva’s API sales are affected by pharmaceutical trends and are directly related to the ability of its API customers, both Teva itself and third-party customers, to launch new products and maintain market share.

The production of APIs requires a high level of technical and regulatory skills. In order for APIs to be approved for use in the United States, the facilities and production procedures utilized at such facilities must meet FDA standards. Teva’s API plants (other than China and India, which have recently been inspected by the FDA) meet such standards and are regularly inspected by the FDA. Many of the products are produced in dedicated computer-controlled automated facilities, facilitating optimization of the production processes and high quality.

Teva’s API division has developed and acquired an expertise in specialized technologies, such as fermentation processes, high potency and the production of peptide API. This expertise enabled the API division to support successful

 

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launches of pravastatin and simvastatin in the United States in 2006 and also enabled Teva to establish a leading position in the sale of fermentation products such as lovastatin, simvastatin, pravastatin and tobramycin. Sicor’s API expertise in the chemistry of steroids and high-potency production enabled Teva’s API division to continue and enhance its leadership in the inhalation, injectibles and dermatology fields. In addition, through the establishment of joint ventures, Teva has taken steps towards supplying various peptides such as desmopressin, calcitonin, octreotide and others to its customers.

During 2006, API sales to Teva’s various pharmaceutical units were approximately 56% of the division’s total sales as compared with 51% during 2005. Teva believes that its ability to produce these APIs is a strategic advantage for its production of finished pharmaceuticals.

EXCERPTS ON THIS PAGE:

20-F
Feb 29, 2008
20-F
Feb 28, 2007
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