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EF: What can we expect from Teva Spain in 2024?
JCC: Certainly, our outlook for the upcoming year is optimistic, aiming for sustained growth. Teva boasts a diverse portfolio encompassing innovative medicines, generics, and over-the-counter (OTC) products, placing us as a leading company in the Spanish Pharma market. Despite the challenges associated with managing such a vast portfolio, we have demonstrated the ability to grow, achieving high single-digit growth last year; this year, we expect almost touching double digits.
Our key areas of focus for continued growth include the severe migraine market, where our product has positioned us as a market leader with expectations for sustained growth in 2024. Additionally, the respiratory business remains a significant source of growth, driven by innovative products and devices. In the generics segment, despite market challenges, we are among the top three companies and continue to see growth. Notably, the OTC market presents a substantial opportunity for us. Generally, we anticipate making strategic investments to capitalize on this potential for high-level growth in the coming years.
EF: Can you describe the strategic importance of Spain and the Spanish market for Teva as a major multinational organization?
JCC: Certainly, when considering the broader perspective, Spain stands as the 8th largest pharmaceutical market globally, ranking within the EU top five. In the broader context of the global pharmaceutical landscape, it is among the top 10 markets globally, including the EU and major players like the US and Japan. Teva recognizes the significance of having a strong presence in Spain to truly have a global impact, and our commitment dates back to 2005, with further consolidation of companies that had a historical footprint in the Spanish market. Our long-standing experience in Spain, where we hold a top-three position in key segments, reflects a deep understanding of the market dynamics. Spain is pivotal to Teva's global strategy, not just as a business stronghold but also due to its role as one of the major players in the worldwide pharmaceutical landscape.
From a scientific perspective, Spain offers unique advantages. Its well-established healthcare system, supported by highly skilled professionals engaged in cutting-edge research and investigations, makes it an invaluable hub for Teva's research and development initiatives. As Teva moves forward into a phase of growth, Spain's significance goes beyond its economic value, extending into the scientific and research domains, aligning with Teva's commitment to advancing healthcare solutions.
EF: There is a lower generic penetration in Spain, approximately 40 percent, compared to the European average of 65 percent. How can a collaborative effort be initiated to align policies and enhance generic utilization?
JCC: Absolutely, your observation is accurate. While it is true that our penetration in the use of generics could be higher, it is not an insurmountable gap. The primary challenge lies in recent years, where new generic products, specifically molecules emerging post-patent, struggle to achieve substantial penetration due to existing legislation and norms. Currently, we witness a mere 40% penetration, a figure that could easily be elevated to 60 or 70%.
Interestingly, historical generic products launched in the past enjoy an impressive 90% to 95% penetration, demonstrating the normalcy and acceptance of generics among patients, pharmacists, and doctors. However, the landscape changes for recent launches, where penetration hovers around 15%. This underperformance in capturing growth is predominantly attributed to legislative factors, specifically the absence of incentives for new generics to penetrate the market.
Legislation plays a pivotal role, given that generics and brand-name medications often enter the market at the same price. With no incentive for the Healthcare System to prioritize generics, the competition remains stagnant. In the past, there was a beneficial rule requiring pharmacies to provide generics at the same price, but unfortunately, it has vanished from the current legislation. To revitalize the growth of generics, reinstating such policies is essential.
For a modern healthcare system like Spain's, fostering a healthy and dynamic generic segment is crucial. It not only makes medicines more affordable, thereby enhancing access but also streamlines the market, saving resources for broader investments within the healthcare system. Moreover, the generic industry in Spain is substantial, comprising both national and international companies with significant production capabilities. This industry serves as a robust source of income, contributing to salaries, exports, and taxes for the country. Considering these factors, it becomes imperative for the government to reevaluate and facilitate the penetration of generics to align with the nation's overall health and economic objectives.
EF: Could you provide insights into how Teva's strategy, leveraging its legacy and stable portfolio in the Spanish market, is driving innovation in its pipeline?
JCC: Globally, our generics business constitutes approximately 70% of total revenue, with the remaining 30% attributed to the innovative business segment. The generics business, especially in Spain, presents significant growth potential as market penetration could further increase.
On a global scale, the generics business is anticipated to experience a single-digit growth. To achieve accelerated growth, it is imperative to invest in launching new products on the innovative side.
Teva recognizes this and is shifting its focus to invest more in innovation. Already, we have introduced innovative products and groundbreaking treatments for severe migraines, Huntington’s Disease, and tardive dyskinesia, and in the pipeline, we have included a promising long-acting injection for Crohn's disease and Ulcerative colitis. In the future, we hope to have some of these products and others already launched in the US and Europe as well.
This influx of innovative products signifies a positive outlook for Spain. The unique market situation suggests more room for growth in the generics segment compared to the global scenario. Additionally, there is untapped potential in the OTC business in Spain, coupled with the introduction of new products from Teva's global R&D pipeline. The strategic approach is poised for continual growth, positioning Teva for a future marked by sustained expansion and innovation.
EF: Could you provide insights into the plan in Zaragoza and elaborate on why Spain is deemed a strategic location for Teva's production capacity?
JCC: Zaragoza stands out as an exceptional production plant for Teva, boasting a workforce of 600 employees. Teva has made substantial investments in the facility, estimated to be 70 million euros over recent years, making it one of the largest production plants globally within Teva's extensive volume-oriented pharmaceutical manufacturing.
Zaragoza's significance extends beyond its size; its efficiency and service level are paramount contributors to its substantial growth. Despite the trend of some pharmaceutical powerhouses relocating to cheaper locations in Europe and outside Spain, and particularly Zaragoza maintains a favorable balance. Spain offers a compelling equilibrium, not as expensive as countries like Germany or the UK, yet more productive than other parts of Europe elsewhere with lower labor costs.
The productivity in Spain is evident in the volumes per Full-Time Equivalent (FTE), showcasing the efficiency of production plants in the country. Moreover, Spain is recognized for its pool of talented individuals, including a robust presence of young talent. Despite historical perceptions of the Spanish labor market, the country has proven to be a source of well-prepared and eager professionals. This dynamic, spanning both blue-collar and white-collar roles, enables companies like Teva to swiftly recruit highly capable individuals, particularly those with degrees in fields such as chemistry or biology.
EF: How is Teva actively contributing beyond medications to support the overall healthcare system?
JCC: The company's ESG (Environmental, Social, and Corporate Governance) agenda revolves around these main points. Firstly, as a pharmaceutical entity, its core mission inherently contributes to societal well-being by promoting health and facilitating cures. Beyond this foundational aspect, their ESG initiatives primarily focus on two major realms.
The first involves enhancing access to medicines, particularly addressing issues prevalent in less developed regions or within certain socio-economic segments. This includes global market access programs, with a notable example being a collaboration with a nonprofit organization in Spain aimed at supporting economically disadvantaged individuals who may struggle with medication costs. The second crucial area is minimizing the environmental impact of their operations. With 53 production plants globally, the company actively seeks ways to reduce its ecological footprint while continuing to produce essential medicines. In Spain, a noteworthy initiative under their ESG umbrella is the "Humanizing Health" program. This project originated in Spain and expanded to 10 locations worldwide. "Humanizing Health" involves evaluating and supporting diverse projects that focus on enhancing the quality of life for patients, particularly on the human and emotional aspects of healthcare. An exemplary project within this initiative involves supporting programs, like visits to pediatric oncology patients, showcasing the indirect yet meaningful impact on patients' well-being. The company conducts an annual event in Madrid to showcase and celebrate these impactful initiatives, highlighting the stories and efforts of those involved.
EF: As you are celebrating your 20-year milestone at Teva in the next few months, reflecting on this significant period, could you briefly highlight the achievements that stand out to you and of which you are most proud?
JCC: Over the course of my tenure with the company, I have experienced significant personal and professional growth. The workplace has become a significant part of one's life, and during my time here, I have cultivated valuable relationships, both professionally and personally. I have had the privilege of learning from my colleagues and, in turn, have hopefully made a positive impact on them. Throughout various roles within Teva, I have actively pursued ambitious goals for both business and team development. While I do not want to sound boastful, I can confidently say that in the various positions I've held, we've achieved success in accomplishing our objectives.
