Transfer pricing with ABC

Robert S Kaplan, Dan Weiss, Eyal Desheh

Research output: Contribution to journalArticlepeer-review


When Teva Pharmaceutical Industries Ltd. decided to enter the international generic drug market in the mid-1980s, its managers wanted to introduce a transfer pricing system, which they hoped would enhance profit consciousness and improve coordination between operations and marketing. In 1989, Teva's senior management decided to begin implementing activity-based costing (ABC). The structure of Teva's early retrospective ABC models and the current prospective model recognizes the ABC hierarchy of unit, batch, product sustaining, and plant-level costs. The company's ABC method of transfer pricing is described. Also discussed are the ongoing benefits of this system.
Original languageEnglish
Pages (from-to)20-28
Number of pages9
JournalManagement Accounting
Issue number11
StatePublished - 1997


  • Business And Economics--Accounting
  • Case studies
  • Advantages
  • Marketing
  • Costs
  • Product mixes
  • Market prices
  • Multinational corporations
  • Pharmaceutical industry
  • Product lines
  • Transfer pricing
  • Activity based costing
  • Production capacity
  • Corporate profits
  • Inventory
  • Profitability
  • Israel
  • 9510:Multinational corporations
  • 4120:Accounting policies & procedures
  • 9178:Middle East
  • 8641:Pharmaceuticals industry
  • 9110:Company specific/case studies
  • 32541:Pharmaceutical and Medicine Manufacturing


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