Pharma giant Teva looks to steady ship with new CEO in coming weeks
Chief will not be Israeli but someone with ‘top class pharma experience,’ says Chaim Hurvitz, whose family is Teva’s largest private shareholder
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Israeli drugmaker Teva Pharmaceutical Industries Ltd. is likely to announce the name of its new chief executive officer in another “month or so,” Chaim Hurvitz, whose family is the largest private shareholder in the firm, said in an interview with the Times of Israel.
Hurvitz — the son of Teva’s legendary CEO and one of its founders, Eli Hurvitz, who built the company into a generics pharma giant, is a member of Teva’s founding family, which is still the largest private shareholder in the company.
Teva has been on the hunt for a new CEO ever since Erez Vigodman said in February he would step down, three years after he took the post in an effort to turn around the fortunes of the drugmaker. Yitzhak Peterburg was appointed interim president and CEO and has been at the helm of the firm since.
There are candidates that Teva has been vetting, Hurvitz said. “We now have to make the final touches to get to the right conclusion. I don’t want to elaborate. All I can say is that they are not Israelis — none of them unfortunately, and whoever it will be, it is going to be somebody with extensive pharma experience. Top class. Top class pharma experience.”
A series of missteps
Teva’s first and only non-Israeli CEO, South-African born Jeremy Levine, lasted less than two years at the job before leaving, reportedly amid disagreements with the board regarding cost cutting measures.
When asked why another foreign CEO can succeed after the first failed, Hurvitz said Levine “was not a classical pharma guy, he did not have commercial experience at all.”
“Levine’s background was more in research and science, areas that are very different from what we are looking at now,” he said.
Hurvitz is on sabbatical leave from his board activities at Teva because of his other business interests, he said. But “still being one of the large private shareholders, my family and I are fairly involved in everything” regarding developments at the Jerusalem based company, he said.
Vigodman’s departure came after the Israeli company, which has been a source of national pride and a fixture of local investment plans, has been dogged by a series of purported missteps, including a $40 billion acquisition of drug company Actavis Generics, which turned out to be an expensive deal; a failure to fend off competition for its blockbuster proprietary medication for multiple sclerosis, and inability to find an alternative revenue-maker to Copaxone, as its patents expire.
The new CEO’s first and key mission, Hurvitz said, will be to oversee and implement Teva’s merger with Actavis, “to make sure that this is on track. Because it is the most important thing we have at the moment.”
In 2016 Teva completed the acquisition of Actavis Generics, the generics arm of rival Allergan, in a $40 billion deal. Unfortunately, soon after the acquisition, the generics market changed,making the acquisition expensive: US regulators suddenly and unexpectedly accelerated the approval process for generic drugs, a move that created more competition and cut prices.
The Actavis deal is expected to generate some $1.4 billion in deal-related synergies and tax savings by the end of 2019, Teva has said.
Seeking an alternative to its blockbuster drug
Teva is also working hard on its pipeline of new drugs to ensure it has a backup in revenues as Copaxone faces more competition, Hurvitz said. This Copaxone competition won’t happen overnight, he said, “we have some time to get things ready and up and running.”
Copaxone, Teva’s first major brand-name drug launched in 1996, is still the leading medication for multiple sclerosis patients. The drug’s patents are now expiring and in 2015 competitors started marketing a generic version of this drug. More may enter the fray as early as this year, as the court ruled against Teva earlier this year. The introduction of two Copaxone generic versions in the US could cut as much as $1.2 billion in revenue in 2017, Teva has estimated.
“So far in our box we have two products that are at very advanced stages before commercialization,” Hurvitz said. The first one, a treatment for involuntary and random twitching movements associated with Huntington’s Disease, could help yield millions of dollars in revenue, Hurvitz said, even if it is a niche product. The second product, Teva’s drug for migraines, “is a very exciting product and it could be a product of a couple of billions of dollars if we do it right,” Hurvitz said. “In the right way this could be very quickly a mega blockbuster, easily, because it is an untapped sector of medicine.”
Teva said in June that its experimental drug to prevent migraines was proven to be effective and safe in a Phase III study. Teva plans to apply for a permit from the Food and Drug Administration for fremanezumab later this year, in both episodic and chronic migraines, and anticipates approval and launch in the second half of 2018, the company said in June. Analysts estimate that the migraine drug could generate at least $1 billion in sales annually, Reuters said.
“If the remaining clinical studies will substantiate what I say, this is really a revolution in terms of pain management and reduction of relapses of migraine attacks,” Hurvitz said. “This is probably our best bet in the near term. In the longer term, we have a couple of very interesting products but it is too soon to predict how they will behave in the clinical studies.”
Hurvitz said he expects pharma companies to do a little bit better under US President Donald Trump’s healthcare reforms. Pharma shares plunged last year as US presidential candidates Hillary Clinton and Donald Trump took aim at the high price of prescription drugs. The firms have come under intense pressure to come up with ways to cut prices amid calls from Congress and US users. Even so, Trump has been seen taking a softer approach to pharma, backing down from the more draconian measures.
Hurvitz, who has just returned from a trip to New York, said that the mood in general is now “more favorable toward pharma, definitely more favorable toward generics.” Trump’s healthcare reform “should give a very nice boost, I think, to the generic sector.”
Teva is also battling the former owners of Mexican drugmaker Representaciones e Investigaciones Medicas SA, known as Rimsa, which it bought for $2.3 billion, in a court case. It has also been accused in a lawsuit, together with other pharma companies, for fixing the price of drugs.
Hurvitz said that the court case against Mexican drugmaker will be a prolonged matter. He added that Teva is collaborating with all parties involved regarding allegations of price fixing.
Hurvitz said he doesn’t believe Teva was involved in any price fixing, and perhaps the issue is a technicality. “Teva is not that stupid to do these kinds of things,” he said.
Teva shares, which are traded both in Tel Aviv and in New York, have declined some 36 percent in the past 12 months. There was no immediate comment from a Teva spokesman in Tel Aviv.
