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Expanding in Philly, Israeli Drug Firm Puts Brand on Generics

March 24, 2011 By:
Rachel Vigoda
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A rendering of the new Teva distribution center

 

Israeli company Teva Pharmaceutical Industries has big plans for expanding its Philadelphia presence.

The biggest generic drug-maker in the world is opening a new distribution center on Red Lion Road in Northeast Philadelphia. The plan is to merge the company's current distribution operations in Bucks County, the Lehigh Valley and North Wales, Montgomery County, where the U.S. headquarters is located, into the new site.

About 70 percent of the inventory that passes through those three existing facilities comes from Israel, according to Bruce Murray, vice president of supply chain operations for Teva Pharmaceuticals USA.

"For efficiency's sake, it will work better to consolidate most of that activity -- that's why we've been looking for a site in this area for the last few years," he says.

The Red Lion Road facility will be made up of three attached buildings totaling more than a million square feet, set on a 140-acre parcel that's now a golf course. Construction is slated to begin later this year, with completion tentatively scheduled for 2013.

The deal isn't completely sealed: Teva still has paperwork to wade through and hasn't yet closed on the sale. The back-up location was actually the first -- Warrington, Pa. -- which doesn't sit well with members of the Warrington Coalition, a group of local residents whose intent, according to their website, is stopping "careless development" and increased traffic in their community.

Murray says the small pocket of dissent in Warrington was not a factor in Teva's decision to go with the Red Lion site instead.

The response from neighbors in the Northeast, he adds, has been largely positive: "The tone of the questions has been different. They're asking about traffic, but they're pleased a big company with job-growth potential is relocating inside Philadelphia."

This year marks Teva's 110th anniversary. The company started in Jerusalem in 1901 as a wholesale drug business, selling imported medicines to local customers. In the 1930s, as scientists and chemists emigrated from Europe to Palestine, the company opened a pharmaceutical plant and became a manufacturer, as well as a distributor.

The Israeli pharmaceutical industry as a whole got a big boost during World War II, as imported drugs became scarce.

Fast-forward to 1976: Teva merged with two competitors, Assia and Zori, to become Israel's largest health care company. It broke into the U.S. market the following decade.

"Teva went from $19 million in sales in 1983" to between $8 billion and $9 billion just in this country the past year, says Murray. "It's grown tremendously, and we expect it to double in size by 2015."

The company currently employs about 200 people in its area distribution centers and expects that number to swell to 500, also by 2015.

Much of the growth is fueled by Teva's strong foothold in the expanding generic drug market.

A generic is an FDA-approved medicine that has the same amount of the same active ingredient as a brand-name drug. It can be sold only after the patent for a brand-name drug expires. Manufacturers of generics are able to charge much lower prices for their wares, since, unlike a branded-drug maker, they haven't poured millions into research and development, or advertising.

Generics make up 75 percent of all prescriptions filled in the United States, according to IMS Health, a market-research firm.

Murray points out that Teva also makes proprietary drugs: Copaxone is a leading treatment for multiple sclerosis.

"We're not only generics. We have branded products," he says, "and we are very aggressively growing that part of the business."

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