This excerpt taken from the TEVA 6-K filed Jul 23, 2008.
Gerard Van Odijk - Teva Europe - President CEO
Thank you very much. It is a real pleasure to have the opportunity to talk about all of this wonderful company, what is happening outside of the US. I think it is important to realize that Barr has acquired PLIVA less than two years ago. And that has been a very impressive company in Europe for many, many years. And within the roles and under the roof of Barr it has even become a better company, I tend to believe. I dont know and I cant compare, but Im sure it will be. We were very impressed with [Tipoli Max] and what we saw, both from last few months but also from before that time.
You should also realize that, although I will in my short presentation only talk about a few markets, the company is outside of the US active in more than 30 markets. So we will flag up a few more specifics, but it is underplaying basically the value that this opportunity brings.
What does it do? As Bill already alluded to, and Shlomo as well, we have these five pillars that are underpinning our Teva strategy. If you find a [secret] translation of those five pillars into what it means for this particular deal for Europe, I think we could carve out three.
One is it enhances our geographic footprint in Europe, both on the western side, and I would talk about Germany a little bit more later on, and on the eastern side of central eastern side of Europe.
It is important to see that we will be a number a top 10 player in Russia. We will be one of the lead players in the Polish market. Shlomo said so. It is the sixth biggest market in Europe their success in the EU. So with a lot of growth potential.
In Germany, if you put together all the different funny trading spaces that our competitors have, were number five, and very, very close to number four.
That is a very interesting mix of a few markets that I would like to mention. We dont even mention in Croatia, the $0.5 billion market where we will be number one. Very interesting, and also a market that is about to enter the European Union in the next few years.
We dont mention here Spain, which has nothing to do with this deal, but tomorrow we will be closing Bentley. So were really building up a very strong portfolio by this and with other things we do in the European business we have established.
I dont mention to you the business we get in the UK, the business we get in Slovenia, the business we get in Slovakia, the business we get in Czech, the business we get in all sorts of other countries in Europe. I dont mention that to you. And it is not part of my presentation, but it is important to realize that it is part of the deal.
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It strengthens our portfolio in key countries. We will double our number of products that we will have in Germany and Poland. And Bill said it, it is both the depth and the breadth that is exciting us. We are excited about the total amount of product that we will bring together through the market as a combined company. We are also very excited about the new type of products we get, which will broaden our offer through the trade and to our customers.
I mention here LCT products, hospital, oncology products, proprietary products, pain, antibiotics, cardiovascular. It is a very, very nice portfolio of product that will add on to our European business.
Then finally customers. I believe that the big to big dynamics that are going on in Europe are also getting stronger and stronger. And this particular deal will put us in the best position, compared to our competitors, to be the preferred partner for doing business with the major players in Europe, whether it be retail chains or it will be big wholesalers with all the activities they have in forward influencing the pharmacies. So then we will be a very attractive player.
But it is also good for our position with payors and with prescribers. So all in all a very exciting and very well in the strategy fitting deal.
What I would like to do now is to talk to you a few words about three of these key strategic markets. Those of you who were here on the 21st of February may remember that we talked about a few markets that were in the heart of the strategy of the development of Teva within the European regions. And we mention there a few of the markets that are on here.
Russia was clearly mentioned, Germany was clearly mentioned, Poland, an attractive market. And I could show you here today that those three markets are very much in the heart of the part of the deal that were doing in Europe as part of the Barr deal.
So we are excited about that. I told you, we will be number five in Germany. That is a very, very important position. And that is not the end of it. That is not the end of it because it gives us a very strong position. We will be on the shelf of every single pharmacy in Germany because of the nice specialty franchise that AWD, which is a trading name of the company under which Tivo operates in Germany, it will be present in every single pharmacy. So that is important.
We also will bring together the two portfolios of generic products, which will give us a much stronger position in the ongoing tender dynamics in the German market.
Just as a sort of an evidence of the past that these two companies know what theyre doing, if you would have combined the overall winning of tenders in the first AOK tender that was done a couple of years ago, AWD, PLIVA and Teva together would have covered 50% of the total tender. We won together 50% of the total tender.
So these two companies, bring them together and let them go after the next tender season, and you have got a nice blend of people who know how to deal with that opportunity in Germany.
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On top of that it will double our sales. So we have a much bigger presence player in the market for everybody who deals with us.
The second point is Russia. Russia is a fast-growing and a very important market for everybody. As mentioned, we talked a lot about it. For us it is a very nice way of getting our way into the top 10 of Russia.
It is interesting to see that the offer that both companies make to the Russian market is different. Teva has got a very good position in the government tenders, whereas PLIVA has a very strong position in the private market. By blending these two specific knowledges and specific segments of the market and the positions we have, we believe we will have some leverage on both sides of the fence there. And that should help us to strengthen our position the year, to build on that.
It is also important to realize that it brings new products to the portfolio that we have been looking for ourselves for sometime. And it is in there now, so it fits very well with our need for a portfolio broadening, a deepening in Russia.
Then finally, Poland. Poland is an important market. Poland is not an easy market to understand. It is an important market and is the sixth largest market in Europe. Its a market with a lot of potential and a market that is moving very, very quickly and very ambitiously towards the dynamics of the Western European business.
So for us it is the essential moment in time to take a leadership position in that marketplace. And the acquisition of the activities of Barr in Poland is extremely important to leverage here.
It has got a very nice portfolio. Good OTC business, which is quite important in Poland, but also its got an excellent reputation in the marketplace. That is something we would like to build on to make sure that we really reap all the benefits out of that.
Just a few words on the breadth of the portfolio. These are some numbers. If you look at Germany, as I said, we double our business, our portfolio. The coverage is making us more competitive. It brings us a long way forward to where we want to be. It is maybe not the end of it. I told you five months ago that were investing a lot of money in R&D. And part of that R&D will be to make sure that we can grow our offering of generic products to the marketplace.
This deal helps us a long, long way forward. We still have to grow some more. We also have the proprietary drugs I talked about, which are going to give us a strong position in the (inaudible).
If you look at Poland, it is the same picture. We both increase our breadth and our depth of products in Poland, the same story. And it is important in these markets if you want to be competitive.
Finally, back to customers. It is both a trade, the prescribers and the payors that are important in Europe. If you talk to the trade, there is more and more chain [formuling] going on in Europe. You see a few of the famous brands that are going on, and there will be more.
And there is very active development of chaining on the retail level. Sometimes they are independent; sometimes they are owned by wholesalers. And it is important to understand these people are looking for easy and practical and high service relationship with their suppliers. That is exactly what this deal will bring to the party.
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We will be able to have an offer of a broader portfolio. For that we will be able ourselves to get a better sell share and more attention from the retailers. And by doing so, we can create value, which can be shared between them and us. So give us a better deal. But it also the OTC portfolio is an important value creator in pharmacies. And by that we can really create some synergies between the different parts of the portfolio.
The second point is on prescribers. Just as a fact, we will have a greater outreach to our prospective sales forces. We more or less double our total sales force by getting together with these two companies. And that is important in markets where branding is the name of the game.
We have a complementary portfolio for hospitals, and that is important as well. As you know that hospital businesses are still a growing a very strong growing area in the Pan European setting.
We will be able by doing this to cross-sell the different brands that we have in the European market from the different companies. And we should be able to leverage to get more out of our sales forces than we were doing before these two companies got together.
And then finally, on payors. There is an increasing influence on the decision-making process in Europe from payors. And the better you are in dealing with the payors challenges and opportunities, the more profitable you can be on that. I think that is where we can that is where the point of distinguishing you from the number two and having more leadership, being in the top players, that gives you extra opportunity for winning. That is exactly where it plays out.
So we will have a broader offering, more products and therefore more opportunities for payors to do business with us in particularly Germany and Russia. As I said to you before, with the example I gave on the AOK tender, we are very confident we should be able to play there a head role, a lead as well.
All in all, if you have been able to retain some of the comments I gave you on the different countries, that would be great. But even if you havent, I think what you should remember, we really are very, very happy with the opportunity that this deal gives us to enhance our global footprint in the markets I mentioned, in the 30 markets, but in particularly the ones I highlighted to you.
It strengthens our portfolio in key European countries, and that is a very broad statement. That is a very broad statement and brings really continuity and stability to our business and growth opportunities.
Finally, for our customers, we will be the ideal player to work with, which should give us possibilities to enhance our position in the European markets.
With that, I would like to thank you for your attention, and would like to hand over to Eyal.
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