Alvotech vs. Teva Pharma: Which Generic Drugmaker is the Better Play?

Core Insights - Alvotech (ALVO) and Teva Pharmaceuticals (TEVA) operate in the biosimilar market with distinct business models, where ALVO focuses on partnerships for market access while TEVA leverages its scale as a global pharmaceutical leader [1][23]. Alvotech Overview - Alvotech's revenue model is based on collaborations with established generic players, allowing it to minimize commercialization risks and costs [3][4]. - In H1 2025, Alvotech's product revenues surged over 200% year-over-year to nearly $205 million, driven by strong sales of its immunology biosimilars Simlandi and Selarsdi [4][9]. - The company has expanded into ophthalmology with the EU approval of Mynzepli, a biosimilar to Regeneron's Eylea, and is pursuing additional biosimilars in neurology and oncology [5][6]. - Alvotech's partnerships with Dr. Reddy's and Advanz Pharma are crucial for developing multiple biosimilar candidates [6]. Teva Pharmaceuticals Overview - Teva is the largest generic drug company globally, holding approximately 7% of the U.S. generic market, and has a strong manufacturing presence [7][23]. - The company has launched several successful biosimilars, including Truxima, Herzuma, and Epysqli, and expects to introduce up to 12 biosimilars in the U.S. and Europe from 2025 to 2027 [8][11]. - Teva aims to double its global biosimilars sales by 2027, with a pipeline that includes biosimilars of Amgen's Prolia and Regeneron's Eylea [12][14]. Financial Performance - Alvotech's sales and EPS estimates for 2025 indicate a year-over-year increase of nearly 35% and 133%, respectively, with upward trends in EPS estimates [15]. - Teva's 2025 sales and EPS estimates suggest a modest year-over-year increase of 2%, with mixed trends in EPS estimates for 2026 [15][17]. - Year-to-date, Alvotech shares have decreased by over 14%, while Teva shares have fallen by 39%, both underperforming the industry [9][17]. Valuation Comparison - Alvotech's shares trade at a price/sales (P/S) ratio of 3.26, indicating a higher valuation compared to Teva's P/S ratio of 1.32 [18]. Investment Considerations - Both companies hold significant positions in the generics/biosimilar market, with Teva benefiting from its scale and diversified portfolio, while Alvotech's partnership-driven strategy has led to strong revenue growth [22][23]. - Alvotech is viewed as a safer investment option due to its growth potential and solid fundamentals, despite its higher valuation [24].