ELI HURVITZ Chairman of Teva Pharmaceuticals

Mr. Eli Hurvitz

Our decision to enter the American market was the most paramount decision we ever undertook as a company. The decision was made in the mid-eighties as a product of a two-year effort to develop a long-term strategy. The first year of research was dedicated to educating our management; in essence we all underwent MBA studies specifically geared to our needs. During the second year we devoted our efforts to developing a strategy for a company that would manifest our goal of $100 yearly revenue. The end product of our research was what we dubbed the one billion theory. Essentially we realized that in order to be a significant company in our industry we had to obtain a worth of at least $1 billion; the reason being that the complexities and demands of the market can only be traversed by a very well based and balanced company.

A long time ago, Teva was a conglomerate of numerous small companies. One of our first tasks was to merge all of the companies as a preparation for entering the American market. Once that was accomplished, we began investigating potential markets and initially decided to begin expansion in Europe. We quickly discovered that Europe is not one Europe and the necessities of registering and being licensed in every country separately eventually deterred us from Europe and shifted our focus to the American market. At the time we knew nothing about what generic meant but our research quickly showed us that the generic niche is the way to go in terms of the American market. Finally, we reached a stage where we had a great strategic plan, the right management but not enough capital and so we searched for a partner who would supply the funding. In 1986 we found our partner and the rest is history.

Strategically, we took being a leader very seriously. The core of our strategy is based on being a market leader, and as a small company that was the cornerstone of our rapid growth. We saw every weakness of ours as a challenge and asked ourselves how long until we can overcome them. Every challenge raised the meticulous process of analyses, strategizing and overcoming and those three factors have been at the heart of our development ever since. On a macro level we implemented a three stage plan: stage one consisted of creating a corporate foundation, stage two referenced becoming a market leader, and stage three focused on innovative products. Through our dual strategy of entering the generic industry and developing new products we arrived at where we are today. Early on, outsiders were skeptical but by the early 90s, the market started to understand that we were going to become big. By 2000 we became a $1 billion dollar company, exactly as planned. Our success is not a miracle, and it is not a function of genius. Our success is the outcome of a decision made by regular Israelis doing things correctly, in a very systematic and methodological fashion.

UNITED WORLD
"2007 was an outstanding year for Teva - a year in which we achieved record-breaking results across the board, fortified our leadership in key markets, and significantly grew our business", your President and CEO Mr. Shlomo Yani commented after the release of the 2007 figures. The 2007 net sales showed an increased by 12% as compared to 2006, bringing the net sales up to $9.4 billion. On a U.S. GAAP basis, 2007 net income and EPS more than tripled. Could you please explain the key factors behind your company's growth and success in 2007?

Mr. Eli Hurvitz

First of all, Mr. Yanai said something very correct and I am sure that he will repeat himself for many years too come. We firmly believe that if you want to be a businessman you must be an optimist, while always preparing for the worst. When you plan, try to be balanced and remember that every challenge is an opportunity and a risk. Bad things happen such as new FDA regulations that can set us back a few weeks or months, but these are challenges that have solutions. We are a very balanced company and that balance serves to keep us on top of things. For instance, no one expected the shekel to become so strong and its strength is bad for business but our exposure is limited because we are balanced by the fact that we operate in multiple currencies.
At any rate, what matters is not the currency and the markets, quality of products and fluctuations in currency are not a primary problem for us. Another example is markets. We are active in a plethora of markets that have different demands, different salaries and different regulations and if we were not a balanced company even small changes would have paramount consequences for us.

UNITED WORLD
Copaxone (for MS)was Teva's first innovative drug, developed in Israel to receive FDA approval for marketing in the US, and Azilect (for Parkison), was Teva's second innovative drug, just to mention two out of the many. As of February 7, 2008, Teva had 160 product applications awaiting final FDA approval. Could you please tell us about TEVA's innovative Research & Development centres, and how you strive to meet the world's needs and demand for new innovative pharmaceutical products?

Mr. Eli Hurvitz

We have two Research & Development departments, one is for innovative products. Research & Development is very expensive. The cost is demonstrated by the fact that last year the FDA approved 16 products and the total investment in Research & Development in the market was around $80 billion. Developing a new product is a $4 billion process. A company like our size cannot develop many products so we have developed a network of affiliates and cooperatives with whom we develop. We do not pursue original discoveries but we do develop scientific breakthroughs into products. In order to maintain a reserve of products to work, we invest a few tens of millions of dollars in Israeli start-ups a year and sometimes they develop a product we like.

Today biotech is less than 15% of the total pharmaceutical market, but everyone agrees that around 2018 it will grow to 30%. Personally, I do not believe such forecasts because biotech products are ridiculously expensive and are habitually, accessible to only a very small number of patients. Teva can make affordable biotech solutions and we will. We will not reduce our profits, but will do so by pioneering technologies that will dramatically reduce the price of production. We have recently acquired a research laboratory that has developed a new technology that facilitates the manufacture of certain proteins with sustainable release properties. We bought the laboratory not because of the potential for new products, but because we want to use the most advanced technologies to produce a less expensive product.

UNITED WORLD
One of the growth factors and success for a company is to have a highly experienced and qualified management team. It is said that TEVA's success lies in the leadership of its management, and the skills and devotion of its people. To what extent has your management team and employees contributed to the success and growth of TEVA in Israel and abroad?

Mr. Eli Hurvitz

People are different. In any plant I enter, I can immediately tell who the management is. In Teva it does not matter if the plant is in Pennsylvania or Hungary or Israel, the Teva identity, the culture and the aura are always there. It begins with exchanging views without fear and being very transparent with our employees and customers. We encourage people to speak their mind and treat our workers fairly. We never cheat or mislead our subordinates. For instance we never tell companies that we merge with, that we will not dismiss people and therefore, the people that stay, believe and respect us.

UNITED WORLD
Teva USA has an aggressive Research and Development effort and one of the best overall ANDA approval records in the industry. Could you please share with our readers, TEVA's activities and operations in the US, and how you position yourself in the US market?

Mr. Eli Hurvitz

I am proud to say that Teva USA is the largest generic company in the United States with an excellent management team that comes from within the market. Today, because of our size and transparency, we can build systems not according to what we think but according to what our clients think they need to be. We are able to receive these insights from our clients because we are transparent, but they would not take the time to give us such insight if we were a small company. We are creating IT, commercial and logistic systems that have suited our customer's needs from day one. We always try to play a real Win/Win game, and we have become a major income source for many American companies. In fact, we just received an award from Wal-Mart. We received a prize for our service and product center despite the fact that we are not responsible for a significant part of Walmart's revenue. We received that award because we are the best in everything we do, including customer service. In terms of brand recognition we take a number of steps. First every tablet we produce has our name on it, and that is a very important point. This signifies that our brand is constantly being reinforced and we are the best in terms of price and quality.

UNITED WORLD
Israel tends to be a major producer of news and headlines. With international media focusing exclusively on the conflict and political issues, little is known on Israel's stunning economic, social and technological developments. What role does TEVA play, and what responsibility do you feel the company has in bringing a positive awareness on Israel and on its business opportunities to the international community?

Mr. Eli Hurvitz

You don't choose your parents or your neighbors, just like other countries in the world. It took hundreds of years for Europe to settle down. We have a problem and it will take time to solve it in the right way. However, when you look at the economic and social issues you must remember to take political and security issues at their true value, which is usually over inflated by the media.

I am a member of a group that has analyzed twenty years into our future and we think that the security issue will not change the results, but rather the speed in which they will come. On the other hand there are things that we must take very seriously, for instance the Sderot issue. Sderot is a real issue because we do not want a village of ours bombed every day, but on the other hand the economic implications of the Lebanese war were nearly insignificant.

UNITED WORLD
2008 will mark the 60th anniversary of the creation of Israel. This 60th anniversary constitutes a perfect opportunity for the country to proudly reassert its position as a vibrant, modern, and diverse nation. What does this anniversary mean for you and TEVA, a company that was established even before the State of Israel, and has played an important role in the Israeli development and growth?

Mr. Eli Hurvitz

First of all we are a proud Israeli company and many times when I speak to our colleagues in other places, I believe every worker we have is proud of Teva's Israeli roots. Teva is something different and it does not erode the traditions of the local companies with whom we work.

UNITED WORLD
Our readers are very interested in learning about the people who are at the forefront of the companies and institutions that we highlight in our report. You have served as Chairman of the Board of TEVA since April 2002. Prior to this , you were the President and CEO for over 25 years and recently completed over forty years of employment at TEVA. You have received numerous distrinctions and awards during your career. In your professional path, what are the accomplishments that have given you the most personal satisfaction?

Mr. Eli Hurvitz

I am a simple person in the sense that if I go to a restaurant I am as happy eating falafel as I am eating a gourmet meal. I am equally satisfied as a CEO and as a lab worker, but when I look at the big picture I feel something different. When I look at the sum of my achievements, I feel proud.

United World
Thank You for this interview.