In today's world, most companies span several regions and sell across the world. As my Foolish colleague Morgan Housel notes, less than a third of S&P 500 revenue came from overseas 10 years ago. Today, more than half of the S&P 500's growth comes from overseas.
And that number is growing. The truth is that investors regularly underestimate how much demand comes from abroad. More importantly, for large, multinational corporations that have already established a presence in their home markets, much of their future growth comes from abroad.
With that in mind, today we're looking at Israel-based generic kingpin Teva Pharmaceutical
Where Teva Pharmaceutical’s sales were five years ago
Five years ago, Teva Pharmaceutical relied on North America for nearly 60% of its sales. Combined with European sales, the two markets contributed 89% of Teva’s total sales.
Source: Capital IQ, a division of Standard & Poor's.
Where Teva Pharmaceutical's sales are today
Today, Teva Pharmaceutical's sales haven’t changed as drastically as many of its peers in the pharmaceuticals business. While most large businesses continue to expand away from developed markets, Teva actually saw its percent of sales to North America increase to 62%.
Source: Capital IQ, a division of Standard & Poor's.
However, there’s also plenty of international opportunity ahead for the company. Teva’s international sales, as a proportion of its total sales, doubled from 5% in 2005 to 10% in 2010. While sales growth was fantastic across all segments of the company, its international segment saw the highest growth rates by far.
|
Segment |
5-Year Total Sales Growth |
|---|---|
| North America | 217% |
| Europe | 158% |
| International | 504% |
| Israel | 84% |
Source: Capital IQ, a division of Standard & Poor's.
Competitor checkup
One last point to check is how Teva Pharmaceutical's footprint compares to some of its peers across the broader pharmaceuticals and health care industry:
|
Company |
Geographic Area With Most Sales |
Percent of Sales |
|---|---|---|
| Teva Pharmaceutical | North America | 62% |
|
Novartis |
Other* | 42% |
|
Watson Pharmaceuticals |
United States | 88% |
|
Merck |
United States | 44% |
Source: Capital IQ, a division of Standard & Poor's. *In 2008, Novartis reclassified its sales. "Other" includes regions in Europe not including Switzerland, Germany, and France, in addition to Asia, Africa, and Australasia. In terms of a defined segment, the United States is Novartis’ largest segment.
Next to Watson, its closest generic medication peer in the group, Teva is truly a globe-trotter. Novartis has quite a large amount of international exposure, but its unit that offers generic medication -- Sandoz -- accounts for just 17% of the company’s sales. Finally, Merck -- a company that fears the dreaded “patent cliff” -- is the most geographically diversified of the bunch.
The important point to remember with Teva is that there are a large amount of pharmaceutical patents going offline between now and 2013. As these patents expire, Teva should see its sales continue to climb, especially in already booming international markets.
Keep searching
If you're looking to stay updated on Teva Pharmaceuticals, or any other companies listed above, make sure to add them to our watchlist service, My Watchlist. It's free, and it helps you constantly stay updated on news and analysis on your favorite companies.
- Add Teva Pharmaceuticals to My Watchlist.
- Add Novartis to My Watchlist.
- Add Watson Pharmaceuticals to My Watchlist.
- Add Merck to My Watchlist.
