Teva Pharmaceuticals Case Study

EXTERNAL ENVIRONMENT (General Environment) A company like Teva Pharmaceuticals is subject to all of the factors of the external environment given the nature of its business and global expansion. Pharmaceuticals is an industry where high profits can be achieved, but it is also an extremely challenging business when one considers all of the political/legal aspects involving government regulation and patents. Every country has strict regulation and testing requirements for drugs that affect companies differently depending on their position in the market. Originally, innovative pharmaceutical companies had to obtain patent protection and FDA approval but this would translate to years of protection from the generic competition. Once the Hatch-Waxman Act was put into effect in the United States, this opened the door for generic pharmaceutical companies to legally challenge patented drugs. Generic drugs have an easier time getting FDA approval and under “Paragraph IV” of the act, the first company to file an Abbreviated New Drug Application would enjoy a 6 month exclusivity period where the only two competitors in the market would be the first-mover generic company and the innovative firm. A liberalized market, like in the United States, is much more attractive to the generic pharmaceutical firms because they required less marketing and sales expense as well as no government price regulation. The legal aspect of the pharmaceutical industry ultimately dictates the type of competition that exists within the market. Innovative firms must do a good job of protecting their accomplishments while strategizing in order to deal with the repercussions of the Hatch-Waxman Act. The generic companies on the other hand now have to be vigilant in order to be the first-movers with respect to ANDA, and must be capable of competing with the branded firm and its possible “authorized generic,” along with any other generics companies that are able to compete after the 180-day