Tevax Case Summary

After analyzing the different internal resources and capabilities at Teva, there are several resources which effectively give them a sustained competitive advantage, and distinctly set them apart from the competition. Going forward, it is critical for Teva to continue some business practices that have led them to be an industry leader in the pharmaceutical realm. One example of a resource that they have effectively exploited is their acquisition strategy. Their proactive approach to acquisitions has proven to be extremely prosperous in a number of ways.
Teva’s arguably most important acquisition was Ivax, which provided them with a great amount of value and competitive advantage. Ivax gave them a large global presence, which they had previously
been lacking. This strengthened and broadened their geographical reach, especially in the generics sector. Additionally, Ivax had a very strong system for the “first-to-file” pipeline, which gave an even greater edge for the sale of generic drugs. As Teva’s pipeline was getting weaker, Ivax helped reestablish and empower the pipeline by also including two of the biggest selling generics at the time, which were Zocor and Zoloft. By acquiring Ivax, Teva was also able to establish a costly to imitate economies of scope which has proven to be a critical vehicle in obtaining a sustained competitive advantage.
Another successful acquisition was Sicor, which provided even further benefits in terms of expanding their scope and overall competitive position. Sicor added a host of new products, customers, and technologies which aided Teva in diversifying themselves, especially concerning biosimilars.
Aside from acquisitions, Teva also operated a highly efficient and global supply chain, which dramatically increased their economies of scale.
Their dedication to low costs paired with an essentially unmatched scale advantage through supply chain management has proven to distinctly separate them from their competitors. The supply chain brought tremendous value to the organization in terms of cost reduction; it’s broad reach and unique manner of management clearly made it a rare resource that provided costly to imitate scale advantages. No other firms in the industry operate a supply chain with the depth that Teva does; they have sustained competitive advantage for supply chain
management.
The joint venture with W.R. Grace was an absolutely essential resource in Teva’s growth, development, and overall efficiency and propagation into the U.S. market. This alliance generated immense value for Teva since it facilitated entry into the U.S. by providing them with capital and contacts, while also reducing the cost of entry. This joint venture can also be viewed as a rare resource, since it developed into a rare combination of complementary resources between the firms. The Teva and Grace joint venture can also be considered a costly to imitate alliance. While the case does not disclose the full details of their relationship, we can deduce that Hurvitz and Mr. Grace had a trusting relationship from the information given. This type of relationship can create value and be very difficult to imitate; therefore, the Teva and Grace joint venture provided them with a sustained competitive advantage, and ultimately became the foundation for Teva’s expansion into the U.S.
The rigorous integration and execution of acquisitions, joint-ventures, supply chain and inventory management, and the broad portfolio of products have all proven to be incredibly successful in terms of achieving sustained competitive advantages.
Continual expansion of scope and scale, a dedication to low prices, as well as being “first-to-file” have also profoundly contributed to Teva’s competitive edge in the industry. Each acquisition was done effectively and strategically and resulted in a variety of different benefits for Teva. If they wish to maintain their dominant presence in the pharmaceutical industry, they should certainly adhere to the acquisition and supply chain strategies that have propelled them to the top. Careful maintenance should be done in areas where Teva has a sustained competitive advantage to ensure that they keep the edge that they worked so arduously to obtain. They should also be cautious to not become too large and acquire too many other firms as it could cause them to become too diverse, which can complicate some of their strategies; acquisitions may not always generate value or competitive
advantages. Other areas in which Teva does not have a competitive advantage could use some more attention. They market a broad portfolio of different drugs and not all of them provide them with competitive advantages.