My theory is that corporations with a foreign head office are "tolerated" by the US market as long as they are small upstarts, but once they rival big home based US corporations they run into challenges
and the share price suffers. Thinking teva is now large enough to come up on the radar and it just might be the best exit strategy is to sell to a big US based pharma for a premium. Now my theory could be wrong but seems to me it happens in other sectors as well. The other theory is that teva has out grown its management style and now needs a US home base and US management. any comments?
Why home base relevant as you describe. Much to be said for escape from latest bureaucracy/ autocracy/ emperialism in USA & exploiting proven & lately envied managerial talent in Israel who also are very well informed about other foreign markets which USA has only discovered in past 50 years as internationalization & globalization was realized. Tevas & Israels employees are from a vast number of countries, know the cultures, speak the languages while Americans are playing catchup - more like Ketchup. My strong buy is bolstered in recent few years by constant doubling down as TEVA dropped from $65 to $35 and new batches have averaged down nicely while waiting for NET & PER to rise over next few years to justify my optimism in management & see TEVA at well over $70 & split once more for a very cool return exceeding the Indexes & thus apparently over 75% of the wise traders, institutions, funds which return less to investers if commisions etc deducted, all at less risk as I dope out big picture. Good luck to all operating their own theories & formula & happy investing.
Sentiment: Strong Buy
Certainly 'outside the box" thinking but not sure it would stand the test of comparison. Red Bull doing just fine in Austria, Toyota in Japan, GSK in the UK, E.Merck in the GDR, world's largest food company Nestle in Switzerland, Siemens, Phillips, all traded in the US, (some more easily than others, dare U to easily find Nestle) shall I go on? I think better to ask how Teva learned to love the margins of patented products to the detriment of sticking to dominating, everywhere, the generic drug market. Once one falls for the patented margins, the "siren's call" of the U.S. market becomes too tempting for their investors to ignore and very challenging to have cutting-edge follow-ups in one's pipeline.
Teva very unlikely to move its current r&d base from israel. i'm sure it does not scoff at integrating r&d from usa plus plus. It has been enlarging and building new labs and massive manufacture in israel. I believe it got caught up in its own success and cash rich became over enamoured with m&a at the worst of times. it may shed unprofitable or non complimentary sections. it may move its headquarters symbolically to the usa, but its essentially an israeli born and bred company. copaxone is an issue but its not as though it will lose all sales and profit over night. they will lose margin and sales but not the lot. don't forget the r&d from purchased of mini startups eminating from highly regarded universities and academic reseachers leaving that system plus teva own r&d with an abundance of qualified hungry unemployed of all ages. teva purchased marketing structures w/w which are yet to pay off. but it will regain balance maybe not so soon as i expected a year ago. i noticed for years it had a small negative beta, when markets drop as i believe they will, teva will remain undervalued quality on fundamentals and sector. where will flight to quality go? (i really would like some ideas on this one.) long term teva investors can't really complain and new investors should see this as a buy and hold, not a company to be day traded as some have suggested or shorted now as the upside is way higher that downside risk. i hold teva and cashed out of most other holdings. overweight teva i still have some standing buy orders should it fall below 36. we'll see in two - three years if it outperform most indices - i believe it will. good health and happiness.
Dont think they would leave Israel, not physically. Could easily see head office relocated by a big pharma making an acquisition at some premium to todays valuation. Problem is that if a big US pharma did pick up teva one might expect R&D to be relocated to US and other top jobs as well. Of course the economy of scale would have existing managers in the acquistion pharma make many jobs redundant. this would all happen to unlock more value. teva at this share price is too tempting. jmho
Ever hear of 'Reverse Engineering"?
TEVA keeps the firm International base, and takes the Good Old Boy Management from the U S all the way over to the hot spot of the world.
BTW, Foreign Incorporation can keep onerous, as in SEC, DOJ and other alphabet soup poision, to a minimum.
My theory is that corporations with a foreign head office are "tolerated" by the US market as long as they are small upstarts, but once they rival big home based US corporations they run into challenges.
In this day and age of globalization it make no sense since the major holder could be US private/public funds/instituions or individuals.
Also it's not reflected in othe rcompanies such as Toyota , ARMH etc.
The era of globalization is here, but my theory still makes sense. There are still borders, and there is still nationalism and also fear over what analysts call foreign risk. On the foreign risk issue there is always a bit of uncertainty or what if the other government deceides to impose some regulations that impact profits etc.
According to an 2011 information source which had Pfizer at the top had Teva listed as number 12 pharma by revenue just behind Bristol myers squibb and in front of Amgen.
The scrolling by revenue at the time showed no big jumps from one company to other the differences were very smooth from one company to the next.
Novartis a swiss pharma had the second place,Sanofy-Aventis was third ,Glaxo-Smith -klyne an english one was fith. It looked as if growth evolutionary stage had no relation with a supposed US or other International Power blockade ,in my view all depends on the strategic manouvers and in the R&D each compay devotes.Your hypothesis is original though.
Now talking about business quality Teva Gross Profit Margin was 52,31 % sep 12 compare to next competitors Myl 43,57 and Wpi 43,66.
So why has Teva been the only one left behind ??! Headquartered in Israel do not justify such a meager valuation.
By the way Cash Flow has been satisfactory and R&D budget just in line with its line of business.In fact Teva R&D is much bigger that Myl plus Wpi together.
So my theory is that this company is a mere unloved-distressed one-just that.
But keep researching and share your thoughts.