Teva Pharmaceutical Industries has named board Chairman Yitzhak Peterburg, M.D., Dr.P.H., as interim president and CEO.
He succeeds Erez Vigodman, who stepped down from both his position and the company’s board by “mutual agreement” with the board, Teva said in a statement yesterday. Vigodman is the third CEO to resign during this decade.
Teva’s board has hired a firm to assist in a search for a permanent CEO that the company says has begun. Dr. Peterburg has stepped down from the board following his appointment, which took effect immediately.
“I believe that now is the right time for me to step down,” Vigodman said in a statement, without elaborating. “It has been a privilege to lead Teva, and I am proud of all we have accomplished. I am confident that the Company’s future is bright.”
Vigodman’s exit comes about a month after the company offered 2017 revenue and profit forecasts below analyst consensus expectations, the second such reduction since November.
On January 6, Teva projected earnings per share of between $4.90 and $5.30 on revenue ranging from $23.8 billion to $24.5 billion. Analysts on average expected EPS of $5.41 per share on revenue of $24.82 billion, according to Thomson Reuters I/B/E/S.
“2016 was a transition year for Teva. The entire healthcare sector has faced significant headwinds, and we have not been immune,” Vigodman stated at the time.
Teva has faced several additional challenges under Vigodman. The company intensified its focus on generic drugs—Teva is the largest generic drug maker by sales—by acquiring Allergan’s generics business for nearly $39 billion in a deal completed last year. However, the company cited delays of new products stemming from the purchase of Actavis Generics, as well as the likelihood of continued governmental pressure to contain prices for its generics as factors in scaling back its revenue and profit projections.
“The Company is focusing on executing its strategic priorities to transform Teva, with immediate focus on realizing the cost synergies and strategic benefits of the Actavis Generics acquisition,” Dr. Peterburg said in today’s Teva statement. “I look forward to working with the entire Teva team to conduct a thorough review of the business to find additional opportunities to enhance value for shareholders.”
Also, the company’s best-selling branded drug, the multiple sclerosis treatment Copaxone®, faces potential generic competition after a federal court in January invalidated four patents. The entry to market of two generic competitors in the U.S. in February could reduce revenues by $1.0 billion to $1.2 billion, Teva projected last month, though the company also said it did not foresee facing generic competition in the U.S. this year.
In December, Teva agreed to pay a $519 million fine to settle U.S. Securities and Exchange Commission charges that it violated the Foreign Corrupt Practices Act by paying bribes to government officials in Russia, Ukraine, and Mexico. The company is also among drug companies under investigation for fixing the prices of generic drugs in the U.S.
“There’s a crisis of confidence around Teva right now and that stems from the lack of credibility at the top of the organization,” Andy Summers, a portfolio manager at Janus Capital Management, told Bloomberg News, adding that the company should split into separate generics and branded drug businesses.
Vigodman became CEO in January 2014. He succeeded Jeremy Levin, D.Phil., who resigned 3 months earlier after he unveiled a cost-cutting plan that included the elimination of 5000 jobs worldwide, but which touched off a political uproar in Israel, where the company is headquartered.
Succeeding Dr. Peterburg on Teva’s board is Sol J. Barer, Ph.D., who has been a member of Teva’s board since January 2015. Dr. Barer was a founder of the biotechnology group at Celanese Corp., later spun off as Celgene, where he served as chairman and CEO from 2007 to 2010, among a series of top leadership roles he filled at the biotech giant from 1987 to 2011.
