Teva Pharmaceuticals: Analyisis - Case Study Example

As the company extremely relied on external institutions for drug discovery, they could develop highly effective drugs at relatively lower costs. Therefore, it was a difficult task for the rival firms to develop substitutable drugs that possess competitive advantages over Teva’s drugs. In addition, the external assistance for drug research and development assisted Teva to launch drugs that could not be easily imitated by others. Since the Teva’s drugs had distinctive advantages over the competitors’ products, it dominated different market segments and millions of consumers.

Potential employee groups are other potential resources of Teva pharmaceuticals. From the case study, it is obvious that the company has a good will for its fair employee retention. The exhibit 4 clearly reflects that the Teva possessed more number of employees than any other competitor did (Khanna, Palepu and Madras, 20). The higher employee potential aided the company to easily deal with its market expansion process and thereby to add value to the firm’s profitability. As Teva was a well established company with a good range of potential product lines, they had the strong financial background to employ enough human resources.

However, the firm’s potential competitors including Sandoza, Ranbaxy, and Dr. Reddy’s had not the financial capacity to appoint such a large volume of employees. Moreover, the good financial background and reputation benefited Teva to recruit highly efficient and skilled employees. While assessing the history of the Teva, it is clear that employees played an inevitable role in lifting the company to the current position. 2. In order to assess the long term sustainability of Teva pharmaceuticals, it would be better to analyze the company using the Porter’s Five Forces model.

Threat of new entrants While analyzing the pharmaceutical industry, it seems that Teva does not face threats of new market entrants. Financial as well as intangible barriers ranging from higher fixed costs to extreme intellectual property protection regulations raise potential challenges to new entrants. In addition, new entrants are forced to spend heavy budget on research and development for the troublesome process of drug discovery and manufacture. Moreover, they need to attain the approval of various regulatory bodies including Food and Drug Administration (FDA) in the Unites States.

Threat of substitutes Until the mid 1980s, there were no substitutes for the medications prescribed by a physician as a result of stringent drug replication regulations. Currently, the Teva pharmaceuticals is greatly threatened by substitutes since a large number of companies sell their drugs after a single name. Therefore, when a patient reaches the medical shop with the prescription, pharmacists tend to give him a cheaper drug of the similar name or another company’s medicine in order for taking financial benefits.

This situation can threaten the business sustainability of Teva. Supplier power The case study clearly says that Teva is one of the leading players in the pharmaceuticals industry. As we discussed earlier, the company maintained strong business relationship with the key players in the industry including Israeli academic institutions and Weizmann. It enabled the company to obtain raw materials and other supplies at moderate costs by