4 Min Read
TEL AVIV (Reuters) - Teva Pharmaceutical Industries (TEVA.TA), the world's largest generic drugmaker, said its chief executive Jeremy Levin was stepping down and finance chief Eyal Desheh would stand in on an interim basis, effective immediately.
Earlier this week, Teva and Levin denied an Israeli media report that Levin was considering resigning due to a rift with the company's board of directors over Teva's strategy.
Levin took the helm of Israel-based Teva (TEVA.N) in May 2012, promising to reshape the company by developing its own medicines amid increasing competition in the generics market, and to divest businesses in non-core areas.
Earlier this month, Teva said it would cut 5,000 jobs - 10 percent of its workforce - accelerating a cost-cutting plan as it prepares for lower-priced competition to its best-selling multiple sclerosis drug Copaxone.
"We have had different views on the best way to carry out the strategy," Chairman Phillip Frost told a conference call with analysts on Wednesday without providing details.
Bernstein Research analyst Aaron Gal said Levin's departure calls into question whether Teva is operating in the classic model where the CEO runs the company and the board's role is to select, compensate and supervise.
"If the decision-making power is driven more by the board, than any new CEO would struggle with the situation," said Gal, who lowered his price target for Teva to $43 from $47.
Ori Hershkovitz, managing partner at Sphera Global Healthcare Fund, said Frost, not Levin, was running Teva.
"No one is doing anything. The finance minister and prime minister are watching him run the company into the ground and it's costing pension funds billions of dollars," added Hershkovitz, whose fund is shorting Teva.
After being halted following the announcement, Teva shares in Tel Aviv fell 6.2 percent to 135.9 shekels. Its shares in New York were down $2.40 to $38.62 in early trade.
Levin joined Teva from Bristol-Myers Squibb (BMY.N), where he was vice president for strategy, alliances and transactions. At Bristol-Myers, Levin implemented a "string of pearls" strategy of alliances, partnerships and acquisitions with small and large companies.
"Levin was a star at Bristol-Myers and could have been a living god if he stayed there," Hershkovitz said.
Teva's board has formed a committee to search for a permanent successor for Levin. Frost said he believes the new CEO must be willing to be mostly in Israel and that while the successful candidate could come from any background, experience in the drugs industry would be helpful.
"The board and management team are fully committed to the implementation of Teva's strategy, including the development of new compounds, making strategic acquisitions, forming joint ventures and the planned acceleration of the company's cost reduction program," Frost said.
Channel 2 television had quoted unnamed sources this week as saying part of the problem between Levin and Frost stemmed from conflicting ideas of laying off workers in Israel. Under the plan, hundreds of Israeli employees were set to lose their jobs, but under pressure from the government and union Levin agreed to coordinate any reductions with the union and state.
Levin had built his team by recruiting many outside executives to the company. Frost said the board had "every indication" the new hires would remain.
Frost also said Teva was not seeking to be bought when asked whether the company might be an acquisition target.
Teva will report its third-quarter results on Thursday.
Desheh said Teva narrowed its outlook for 2013, and now sees revenue of $19.7 billion to $20.3 billion and adjusted earnings per share of $4.95-$5.05. It had earlier forecast revenue of $19.5 to $20.5 billion and EPS of $4.85-$5.15.
The company will provide its outlook for 2014 during the second week of December, Desheh said.
Additional reporting by Steven Scheer; Editing by Mark Potter/Mark Heinrich