Jeremy Levin has resigned as Teva’s chief executive after a difference of opinion with the company’s board on how to implement the company’s new strategy.
Levin is leaving the Israeli drugmaker after just 18 months in the job and within weeks of unveiling an accelerated cost-reduction plan that will slash Teva’s workforce by 10 per cent and carve $2 billion a year off its costs by the end of 2017.
His abrupt departure – on the eve of Teva’s third-quarter results – comes hard on the heels of a statement earlier this week in which Levin said rumour of the resignation were “baseless” and he had ” the confidence and full faith in the professional team to implement … the strategic plan that we have formulated together.”
He has been replaced by chief financial officer Eyal Desheh on in interim basis – effective immediately – while Teva convenes a committee to seek a replacement.
Israeli media reports suggest Levin and Teva’s chairman Phillip Frost clashed on the details of the strategy put in place by Levin since taking over in May 2012. Frost told investors on a conference call today that Levin and the board had been “fully aligned on the direction and strategy of the company” since his arrival.
“However, we have had different views on the best way to carry out that strategy,” he said. “In recent weeks the board and I personally have had discussions with Dr. Levin and ultimately concluded together that it would be best to part ways.”
He stressed that Teva is “as strong a company today as it has ever been,” although a dive in the drugmaker’s share – down more than 6 per cent at the time of writing, suggests investors do not wholly share that view.
Analysts voiced concerns on the conference call that the departure is a sign of a deeper dysfunction at Teva, and also that it may be hard for Teva to find a replacement of suitable calibre if candidates fear interference from the board.
Frost insisted there was no ‘malaise’ at the company and hiring a new CEO would not be a problem. He also expressed his support for management hired by Levin during his tenure.
Either way, strong leadership will be imperative for Teva as it drives through the restructuring programme and it faces the loss of US patent protection on its multiple sclerosis blockbuster Copaxone (glatiramer acetate), which could see generic competitors a year earlier than expected in May 2014.
The company is also expected to find its operating environment a little tougher for its generics business, now that a number of big pharma companies are claiming to be past the worst of the patent cliff.
