Teva Pharmaceutical Industry Case Solution
1.Brief over view of Teva pharmaceutical industry
Teva pharmaceutical’s company is considered as one of the leading drug manufacture firms. Over the past few years; Teva has redefined its ways and has started to achieve the finest business in the healthcare industry. It is also listed on the New York Stock Exchange and has a huge market capitalization of approximately 32.17B USD. It was the leading producer of generic pharmaceuticals. It is promoted as the gold standards in Israel.(Khanna, 2006)
2.Generic Business strategy of Teva pharmaceutical industry
To analyze the generic business strategy; Porter’s five forces has been the greatest tool of analyzing the company’s overall competitive environment and its worth in the market place.
Porter’s model is an inclusive strategic structure used for analyzing the existing competition in the market. It is very focused and helpful in promoting the fact that how Teva Industries Ltd can create a competitive advantage for drug manufacturers. It is also helpful in improving the position of Teva and other companies, and can also be helpful in exploring the profitable opportunities across the healthcare sector. The profitability of Teva Ltd. industry can be dependent on the following 5 strategically analysis;which are:(Khanna, 2006)
Porter’s Five forces Model
2.1 Threat of New entrants
The danger of new contestants for the Teva Ltd is very high in drug producing society. The difficulties faced by Teva Ltd businesses and various contenders are lower estimating technique, lower cost and offering new benefit suggestion to the clients, These are the potential hindrances, which are being faced by Teva Ltd in holding a protected spot on the lookout.
How Teva Pharmaceutical Industries Limited can tackle the Threats of New Entrants
- By lowering the production cost.
- By innovating the new products to attract the old and new customers in the market.
- By spending more time in analyzing the R&D of any product in order to gain the maximum benefits.
2.2 Bargaining power of suppliers
Almost every drug industry like Teva Ltd., has been extended by the suppliers, which means that industries buy their raw material from numerous suppliers. Suppliers on the other hand decrease the margin and profit for the Teva Ltd. The powerful bargaining power of suppliers lowers the margin of profitability for Teva Drug industry.
How Teva Pharmaceutical Industries Limited can tackle the Bargaining power of suppliers
- By maintaining efficient supply chain techniques.
- Developing devoted and honest suppliers whose business solely depends on the firm.
2.3 Bargaining power of buyers
Buyers always want the best products in the limited and at the least price. This became the barrier for the Teva Ltd for the long run. The smaller yet most powerful the base of customer for Teva is, the higher would be the bargaining power of its customers.
How Teva Pharmaceutical Industries Limited can tackle the Bargaining power of Buyers
- By developing the efficient and large base of customers.
- By innovating a new product which decreases the surrender of existing clients of Teva Pharmaceutical Industries Limited to its rivals.
2.4 Threat of substitutes
As the drug industry is growing rapidly; the threat of substitutes are higher for Teva industries Ltd.
How Teva Pharmaceutical Industries Limited can tackle the Threat of substitutes
- By developing the products based on the customer’s needs.
- By growing the switching cost of the product.
2.5 Competitive rivalry
Teva Ltd has been operating in a very competitive drug industry’s environment, such as: Merch, Novartis, Pfizer etc. These drug industries compete with Teva in a very ruthless manner.
How Teva Pharmaceutical Industries Limited can tackle the competitive rivalry?
- Expanding its business.
- Providing good quality products at reasonable prices.
- Innovating new products.
These are the important factors for the Teva Ltd to look up to and understand the surrounding environment in order to gain the maximum profits and to hold a safest place in the drug’s market………………………
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