Saturday, February 4, 2012
This Israeli pharmaceutical company, specializing in generic drugs, has been on my radar for quite awhile. Teva allows me to diversify into an area I do not currently own, has good numbers, had dipped below its normal trading rate (when I purchased it), and carries a Motley Fool 5 star rating. This purchase was also a direct response to trying to diversify away from my two largest holdings, Red Hat and Under Armor. As the purchase price of Teva was roughly 1/2 of what I sold some of my Under Armor, I plan to follow this in conjunction with UA to see how good or bad my choice was. I sold UA at $82 and it is currently at $77 (still a strong long term holding - look around, you see the logo EVERYWHERE) whereas I bought Teva at $40 and it's at about $46 so so far so good.
Teva, originally Salomon, Levin, and Elstein Ltd. started in Jerusalem in 1901 as a distributor of medications. During the Nazi rise in the 30's, drug imports from Germany dried up so the three founders of Teva, recognizing this market vacuum bought land and started a drug factory. During World War II, imports in general stopped, so the local companies supplied all the pharmaceuticals for the local market. During this time, Salomon, Levin, and Elstein (SLE) became one of the first companies to offer a public offering and be listed on the Tel Aviv stock exchange. When the war ended they were positioned to expand into global markets. In order to fully compete, many of the small local factories including SLE merged forming Teva, so-called for the Hebrew word for Nature. Through further acquisitions including multiple manufacturing plants, they were able to separate their penicillin and non-penicillin making plants. Evidently, this is important for health regulators and authorities and allowed Teva to enter the US market. Throughout the 80s they continued to expand, buying manufacturing plants, medical device companies, etc. They have continued to expand and became the largest generic drug manufacturer in the world in addition to one of the top 15 pharmaceutical companies.