Outgoing Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) CEO Israel Makov told the “Globes” Israel Business Conference today that the golden age for the globalization of Israeli companies still lay ahead. “I say this based on the extensive experience in globalization that I gained, after Teva led the trend toward globalization among Israeli companies now entering the international arena,” he said in a speech to the session on global competition. Makov added that he believed that the conditions in both the Israeli and global arena, “now supported the boosting of the globalization process among Israeli companies.”
According to Makov, the conditions are now right since there is no need for a large local market to achieve the advantage of a critical mass in production and marketing, and finance is more easily accessible. He added that companies go global once they have become innovative and have demonstrated initiative within the globalization process, not just in terms of technology, but also in production management and the use of advantages available in different countries. One example of this would be to carry out product design in Italy, production in Taiwan and assembly in Ireland.
“Nokia, Barbi Dolls and Teva all do it,” claimed Makov. “We can begin producing ingredients in China, continue in India and end in Israel. We can carry out development work in Canada, produce in Europe and sell in the US. Innovation and initiative have become key variables in the global arena.” He said that Teva had brought “a good deal of sophistication to the globalization process” in generic pharmaceuticals, which had lacked sophistication in its global organizational structure. Teva, he said, had harmonized advantages across the globe.
“Because of the business sophistication that we introduced to an unsophisticated field, we became a leader in the global market. Today all the players are running after us, keen to learn how we did it.” He added that companies such as Delta Galil Industries (Nasdaq: DELT; TASE: DELT), Ness Technologies (Nasdaq: NSTC), and Israeli service exporters also bring business sophistication to the global arena.
Makov stressed that it was extremely important that Israeli companies were not tempted into moving their headquarters away from Israel. If Teva’s headquarters had been relocated to the US, the company would have undergone a complete change in management style, he said.
According to him, Israeli companies prefer, misguidedly, to acquire more and more small companies, which entailed a waste of management resources since the energy expended on integrating small and large companies was almost the same.
Makov added that the mad dash from start-up to exit was also a fatal error. He said that he would be happy to see more managers willing to take on the critical challenge facing their companies which, he felt, did not lie in their development, but in their progress into large global companies, instead of leading them to an exit. He added that he believed that now that globalization processes had been speeded up, Israeli companies could break through the globalization barrier quicker than Teva did.
Published by Globes [online], Israel business news - www.globes.co.il - on December 10, 2006
© Copyright of Globes Publisher Itonut (1983) Ltd. 2006