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Teva Pharmaceutical CEO says health-care is facing 'huge disruption'

  • Teva Pharmaceutical interim president and CEO Yitzhak Peterburg said the health-care industry is undergoing a huge disruption.
  • Pharmaceutical companies will face increasing competition from non-pharmaceutical companies including many tech names, he said.
  • China is a challenging market for Teva because it takes too long to clear regulatory hurdles, he said.

The global health-care industry faces a "huge disruption" as technology heavyweights jostle for consumers with traditional providers, the chief executive of a major pharmaceutical company said.

Yitzhak Peterburg, interim president and CEO at Teva Pharmaceutical, told CNBC on the sidelines of the World Economic Forum's annual June meeting in Dalian that digital disruption is an enabler for health-care and pharmaceutical companies to serve today's customers.

"I am a very great believer that we are now in a huge disruption within the health-care (industry), and I think it will affect our industry," said Peterburg. "For me, the digital reform, or whatever we see, is a huge enabler."

Teva Pharmaceutical, headquartered in Israel, calls itself he largest producer of generic medicines. In specialty medicines, Teva has treatment for multiple sclerosis as well as late-stage development programs for other disorders of the central nervous system.

Big technology names have begun looking into ways they can disrupt the health-care sector through big data analytics, artificial intelligence and other technologies.

Earlier this month, CNBC reported that a secretive team within Apple's growing health unit has been talking to developers, hospitals and other industry groups about bringing clinical data, such as detailed lab results and allergy lists, to the iPhone. Meanwhile, it was reported in May that Amazon was hiring a business lead to figure out how the company can break into the multibillion-dollar pharmacy market.

Peterburg explained that pharmaceutical companies need to think about ways to navigate this changing landscape, where they face increasing competition from non-pharma players. Being good at manufacturing pills and injections is no longer enough for pharma companies, he said. Consumers, he added, have also changed and they expect very different value from pharmaceutical companies and the health care industry as a whole.

An employee collects newly-manufactured pills at the tablet production plant at Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem, Israel
Adam Reynolds | Bloomberg | Getty Images
An employee collects newly-manufactured pills at the tablet production plant at Teva Pharmaceutical Industries Ltd.'s headquarters in Jerusalem, Israel

"Part of my competitors are not only the Novartis of the world, and the other pharmas, but really the Amazons and Googles," he said. "Like any company, we need to think about where we invest and how we invest, and what is the right time to jump into the water."

But the answer to the question is not straightforward, according to Peterburg, because different parts of the health-care industry are not moving at the same pace. "It's very, very difficult, especially for incumbents, to find the right way and where to move," he said. "That's why we have to do it by collaboration maybe with start-ups, with small companies, and try to find the solution."

Aside from competition from non-traditional players, in some markets, pharma companies also need to navigate regulatory hurdles. For example, in China, Peterburg said Teva has found it challenging to establish a foothold over the last few years.

"China is a challenge," he said. "Teva was trying in the last — maybe not even few years — to go into China (and) I don't think we've done a great job at this."

The company has one manufacturing facility in the mainland, according to Peterburg, and it's speaking with local pharma companies to try and find the right way to succeed in China's vast market. Regulation is a big hurdle because it takes too long to pass, he said.

"It takes too long, even to register. Now remember, we have the biggest cabinet of drugs in the world. We really are part of the good guys. We are the generic ones. We can bring quality into this market but if the time to register a drug takes two, three, four, five years, it's too long."

— CNBC's Christina Farr contributed to this report.