As my fellow Fool Rick Steier points out, Teva Pharmaceutical Industries
There's no brand loyalty for generic drugs. You probably don't know who makes the generic drugs in your medicine cabinet; I certainly don't. The customer turns in a prescription to the pharmacist and gets whatever copycat version is on the shelves. The purchaser for CVS Caremark
That kind of low-margin selling is a dangerous game to invest in. Sure, Teva is the largest generic-drug maker. Like Wal-Mart Stores
Teva's branded drugs do provide some cushion from competition, but its top-selling Copaxone is itself under attack from generic-drug makers. If its patents aren't upheld in court, Teva could lose $2.8 billion in sales. That's 20% of its revenue, and presumably a larger percentage of profits, since the branded drug's margins are likely higher.
I'm not saying that Teva will go down the tubes tomorrow. In fact, I've pointed out the outstanding free cash flow that Teva produces year after year. But investors do have to make sure that they don't fall asleep in Teva's pool of cash. Drowning in competition wouldn't be pretty.