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GEN News Highlights : Oct 30, 2013
Teva's CEO Resigns after Cost-Cutting Plan Sparks Uproar
Jeremy Levin, D.Phil., is stepping down as president and CEO of Teva Pharmaceutical Industries after 17 months, the company announced today—about three weeks after unveiling a global restructuring program that included the elimination of 5,000 jobs worldwide, touching off outrage in Israel.
Eyal Desheh, a 12-year Teva veteran who until now had been evp and CFO, was named to immediately succeed Dr. Levin on an interim basis. Teva added that the company has formed a committee that will “promptly” begin a search for a permanent successor.
Teva disclosed Dr. Levin’s resignation this morning. Two days ago on Monday, the company denied a news report from Israel’s Channel 2 television that cited unnamed sources as saying Dr. Levin was considering resigning the position he had held since May 2012 due to differences with Teva’s board of directors and its chairman, Phillip Frost, M.D.
The news report came about three weeks after Teva said it will eliminate roughly 10% of its workforce as part of the global restructuring, designed to cut $2 billion in costs by 2017 while streamlining company operations.
Teva put its cost-cutting effort on hold within two weeks of announcing it, hoping to quiet down a political uproar in its home country of Israel after it was revealed that 800 of the planned 5,000 job cuts would occur there.
Shelly Yachimovich, member of the Knesset and leader of the opposition Labor party in that body, likened the planned layoffs to “a mass terror attack” and “an act of cannibalism,” in remarks widely reported by Israeli media. She accused Teva of excessive greed and ingratitude given its receipt of tax breaks and other economic development benefits.
In 2011, Teva received about 12 billion shekels ($3.4 billion) in benefits, accounting for one-third of all tax breaks awarded that year, according to a report issued by Israeli State Comptroller and Ombudsman Joseph H. Shapira.
Yair Lapid, Israel’s finance minister and founder of the Yesh Atid party participating in the country’s governing coalition, told the Knesset on October 14 that he had expressed his dissatisfaction with the layoffs during a meeting with Dr. Levin, urging him to reduce the number of employees to be axed, according to a report in Israel Hayom.
If the Teva board’s differences with Dr. Levin involved the planned layoffs, the company offered no hint in a prepared statement by Dr. Frost: “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.”
Dr. Frost also publicly thanked Dr. Levin for his “meaningful contribution to Teva” during his two years at the company’s helm.
Under Dr. Levin, Teva's overhaul was well underway, with the company focusing on growing its generics business and core R&D programs, expanding in emerging markets, and broadening its portfolio. Teva’s R&D effort has struggled in recent months to recover from setbacks, as well as generate new blockbusters. Next year sales of its flagship branded injection drug, Copaxone for multiple sclerosis, are expected to start slipping due to newer oral versions of the drug as well as expected competition from new generic versions, which could occur starting in the spring.
Teva added that Dr. Levin’s resignation will not affect the company’s plans to release third-quarter results tomorrow.
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