Change at the top at Teva as Vigodman departs

Samuel SharpFeb 08, 2017

The board has appointed Dr. Yitzhak Peterburg as the company's interim President and Chief Executive Officer.

Peterburg has served as the chairman of Teva's board of directors since Jan 2015. He was a founder of the biotechnology group at Celanese Corporation, later spun off as Celgene Corporation, where he served in top leadership roles from 1987 to 2011, including as chairman and CEO from 2007 to 2010. More than that, RBC Capital Markets finds it interesting that TEVA would pursue a review before naming a permanent CEO which may be suggestive of further close involvement of the Board (and broader management team) as the firm has historically seen which will be a consideration for any incoming CEO.

Following the announcement, shares of the Israeli generic pharmaceuticals company declined nearly 1% in after-hours trading.

Before his departure, Vigodman had pledged a "culture of compliance".

Bernstein analyst Ronny Gal, in a video released to clients, said the management move was in part due to "the current crisis in the company after the price they paid for the Allergan generics business".

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Investors and analysts are concerned that the company, in which nearly every household in Israel has a stake through pensions and savings plans, is zigzagging ineffectively in its efforts to find an alternative to its blockbuster proprietary multiple sclerosis drug Copaxone, which is being threatened by competition as its patents expire. The drug accounted for nearly a fifth of Teva's revenue a year ago.

Launched in 1996 by Teva as its first major brand-name drug, Copaxone is still today the leading medication for multiple sclerosis patients. The company is facing patent challenges for the 40 mg thrice-weekly formulation of Copaxone. The drug's patents are now expiring and in 2015 competitors started marketing a generic version of this drug.

In early January, Teva said new products stemming from its purchase of Allergan Plc's generics business would be unexpectedly delayed, while prices of its copycat medicines are likely to remain under pressure in the US, prompting a cut to its 2017 profit forecast.

Recent challenges include a US court last week finding patents invalid on Teva's most important branded product, the multiple sclerosis treatment Copaxone, integration of the Actavis generics business it bought previous year for $40.5 billion amid criticism that it paid too much, and a USA investigation on generic drug price fixing.

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