Teva Pharmaceutical Industries, a prominent player in the global pharmaceutical sector, has announced its plans to divest its active pharmaceutical ingredient (API) division, known as TAPI (Teva Active Pharmaceutical Ingredients). This strategic decision aligns with Teva's overarching "Pivot to Growth" strategy, wherein the company seeks to streamline its focus on core business areas and redirect capital towards fostering innovation and fuelling growth engines. The divestment is anticipated to bolster TAPI's standing as a frontrunner in the global API market, which holds a substantial valuation at $85 billion.

TAPI, renowned for its leadership in the small-molecule API industry, specializes in the production of small-molecule active pharmaceutical ingredients. With approximately 4,300 employees across the globe, TAPI boasts a robust portfolio of 350 products spanning various generic and therapeutic categories. The company's operations play a vital role in ensuring the delivery of top-tier, safe, and efficacious medications to patients worldwide. This commitment is upheld by TAPI's sophisticated supply chain, dedicated to innovative manufacturing practices, regulatory and quality excellence, and a steadfast commitment to sustainability.

The divestiture of TAPI is poised to enable Teva to sharpen its focus on specific markets and propel growth through its flagship product offerings. This strategic move is anticipated to yield added value for Teva's shareholders and stakeholders by unlocking resources for increased investment in growth initiatives and expediting the progress of its innovative and biosimilar pipeline. Additionally, the divestment will empower the separated entity to explore fresh avenues for growth, enabling it to capitalize on the diverse opportunities presented by the expansive $85 billion global API market.

The company's expressed goal of enabling TAPI to operate independently outside of Teva is aimed at unlocking its full growth potential. By doing so, TAPI can actively pursue a broader range of opportunities with third-party customers, leveraging its technology, expanding its capabilities, and maintaining its support for generics players and innovators on a global scale, including Teva. This increased focus on growth and expansion could indeed contribute to heightened competition in the global API market. With TAPI aiming to capture more opportunities and attract a broader customer base, other API suppliers may face intensified pressure to innovate, improve efficiency, and offer competitive pricing. As a result, there could be downward pressure on API prices, including for widely used medications like Azithromycin, as companies vie for market share and customer loyalty.

The completion of the divestiture is projected to take place in the first half of 2025, subject to the negotiation of favourable transaction terms with a potential buyer, fulfilment of closing conditions, and approval from Teva's Board of Directors. However, Teva acknowledges that the exact timing and structure of the divestiture are uncertain, and there is no guarantee that the transaction will occur as planned, or at all.