Following the resignation of Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Erez Vigodman, many questions are being asked about the company's vision and future. The selection of its CEO will determine the company's future path. For Benny Landa, an activist shareholder in the company, the right profile for the CEO is obvious.
"What was obvious to me in the past is now clear: the most suitable CEO is someone with a strong background in global pharma - ideally, a person who has managed a pharma company or was in a very senior position in a pharma company. In addition to his qualifications and experience, he has to be a person whose vision for Teva matches that of the board of directors."
Landa adds, "I hope that this vision includes splitting Teva into two companies. When you look at the successful companies in the world, the key word is focus. Companies split so that each company after the split will be able to focus on its sector. Teva should be split into a generics company and a separate branded drug company. Teva has recently focused on generics to the extent that it lost direction, and didn't realize that it should invest in the innovative field for the sake of its future. These are actually two sectors with almost no connection between them."
"Globes": Can these companies be worth something after the split?
Landa: "There's no getting around it - Teva has declined in recent years, as have each of its parts. The two companies will be starting from an inferior position. A split, however, ensures that each company gets its fair share of the debt and cash in order to give each company its chance to take off."
Will most of the debt go to the generic company?
"Yes."
But the innovative company will be like a startup. It will not have many innovative products that still have patent protection and are already in the market.
"That's true, but the company has invested a lot in a new products pipeline that can make it a strong innovative company."
Another possibility is selling the company
"I very much hope that it isn't sold, but if it is, I believe it's better to split it first and sell only the generic part, in which Israelis have no added value, and leave the innovative part in Israel."
Do you think it's important for the next CEO to be an Israeli?
"Teva has been going back and forth on this matter. The previous appointment was Jeremy Levin, because he was a leading pharma figure, but the board of directors didn't get along with him, because he wasn't 'one of us,' so they went in the opposite direction. The new CEO can't be 'one of us,' because in Israel, Teva is one of a kind, and 'one of us' can't lead it unless he arose from within the company. I think that the appointment of a CEO should be done very carefully, because the company can't afford another mistake."
The turnover rate is fast. Maybe the board of directors does not give Teva's CEO enough of a chance.
"The board of directors appoints and the board of directors fires. The mistake is in the appointments."
Published by Globes [online], Israel Business News - www.globes-online.com - on February 7, 2017
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