Global Crisis/Innovation Blog

 How to Build a $15 b. Global Company

By Shlomo Maital 

 

 

  Eli Hurvitz

The legendary founder, long-time CEO and Chair of Teva Pharmaceuticals Ltd. Eli Horwitz, recently passed away, at age 79.  He died of cancer.  

  Teva is a $15 global pharmaceutical giant, the world’s leading generic drug firm, and is on its way to “31 for everyone” ($31 b. in annual revenues).  It was driven by the vision and skill of Hurvitz, and his long-time CEO Israel Makov.   To create a global market leader is tough. To do so from an Israeli home base is nearly impossible.   How did Hurvitz and Makov do it?  Through sweeping vision and smallest-detail execution, qualities that rarely collaborate or even co-exist.

   Hurvitz spotted a press report, in 1985, describing the U.S. Hatch-Waxman Act, named after American political leaders Orrin Hatch (Senate) and Henry Waxman (House).  This act was designed to encourage generic drugs (ethical drugs whose patent has expired, and can be produced and sold by anyone), as a way of reducing health care costs, even then troubling America’s leadership.  Few pharmaceutical firms showed any interest.  Generic drugs are commodities, with low margins (compared to the enormous margins enjoyed on ethical drugs).  Why bother?  Hurvitz spotted a business opportunity. He realized that to excel in generics, Teva, his company, would have to be super-efficient at managing costs, and super-speedy in developing ways to produce generic drugs the instant patents expired (recall that pharmaceutical companies patent not only the molecule but also the way they produce it).  He also realized that Teva would have to scale up, and to do so would require many acquisitions – so he built world-class competency at acquiring and integrating companies.  His CEO Israel Makov was a great partner.  Makov offers this prescription for building a global firm:  first to imagine, first to move, first to scale.  Hurvitz and Makov imagined (a global giant, in generics),  moved (to build global capability) and scaled up.  Together they disproved the assumption that cost-effective production cannot take place in high-wage high-cost Israel (Teva’s Kfar Saba plant is its most efficient worldwide). 

     Innovator:  Keep your eyes peeled for news accounts of trends that embody business opportunities, like Hatch-Waxman.  Envision the possibilities.  Organize to implement.  Move and scale quickly.  And you too, like the late Eli Hurvitz, will create a market-leading global firm.  

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