TEVA, the “Generic Giant,” as I once referred to it back in November when I recapped its quarterly earnings, continues to outshine and outclass its peers on pretty much every level. Since I have followed healthcare equities for quite some time now and kept my focus solely on this sector, it is easy for me to say that Teva (TEVA) is one of the best managed companies out there, and I think you would agree based on its recent performance and strategic moves. Earnings for the fourth quarter were highly scrutinized by all investors and Street analysts as our financial crisis continues onward, perhaps even getting worse. Many companies unloaded their books for fourth quarter earnings, marking down what is left. Others squeaked out positive gains but still were hesitant on guidance. Well, I obviously do not blame Teva, but how can a company who provides guidance at the low-end of the Street and then misses on revenue have the Street ecstatic and excited about it going into the future?  Why don’t we just take a closer look at Teva, and I will provide you those reasons.

Successful Acquisition Strategy

Teva’s acquisition strategy has brought tremendous growth to a once small wholesale drug business in Jerusalem that began distributing imported medicines to customers by the backs of camels and donkeys. So why does Teva have such a strong acquisition focus? Many investors often criticize firms with such a strategy, because they believe that acquisitions destroy shareholder value when companies continuously grow inorganically. In Teva’s case, that is simply not true. Since the focus and need for global expansion hit our economy in recent decades, Teva has been extremely proactive and has sought after developed and under-developed nations ranging from micro-mid cap companies in the generic and pharmaceutical market. Why can’t its competitors do this? Some have tried, like Mylan (MYL). Mylan destroyed shareholder value for much o f 2007 and 2008 because of its poor capital structure and lackluster management following the Merck KGA acquisition. In simple terms, nobody amongst its peers has the flexibility and cash on hand to expand like Teva.

First, I will discuss the most recent acquisition, Barr Pharmaceuticals. The price tag of the acquisition was $7.46 billion to take-over the fourth largest generic drug maker, with revenues behind Mylan and Novartis (( NVS)) (Sandoz).