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We learned officially today that Jeremy Levin CEO is leaving Teva behind and has resigned.Jewish Business News reported yesterday on a purported row that had broken out between Teva’s Chairman and significant shareholder, Phillip Frost, and the CEO he had hand-picked for the job, Jeremy Levin, who came on board in May of 2012. The story first broke on Israeli Television’s Channel 2.The row was supposedly about how to handle the Israeli end of impending layoffs under Teva’s world wide 10% trimming of its 50, 000 strong work force, one which is intended to save it US$2 billion annually by 2017.
It was claimed that Levin resented Frost’s interference in his handling of the layoffs in Israel, where he had apparently preferred consultation rather than confrontation as a means to pursue them, with Frost demanding a much blunter approach.
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Well today it is all out in the open, Levin is going and Frost has won the argument between them. As a large shareholder of the company this is after all not surprising, but it is a pity as Jeremy Levin appeared to be trying to do the right things to re-position Teva as it faces stiff competition in generics and as its’ primary cash-cow the patented drug copaxone loses it patent protections in another year’s time.
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TEVA : Chairman Phillip Frost CEO Jeremy Levin
Frost said in a conference call earlier today: “differences of opinion emerged between us over implementation of strategy. In the past few weeks, we spoke with Levin and we have decided that it would be better to part ways.”
“In the past 18 months, Teva has demonstrated impressive progress. Teva is stronger today than ever before, with extraordinary opportunities ahead of it. Teva has an exceptional management team, which has already chalked up achievements.”
It is always sad when there is dissension in the board room of a company such as Teva, as the individuals concerned are after all clever people, who generally are all striving to make the company better in important ways.
However the obvious stress level in the management of the company, revealed today in spades, in a way reflects its situation where the company is still at a strategic cross-roads. Coming from its roots as an efficient manufacturer of generic drugs Teva later morphed into a proprietary drug manufacturer, ending up with a major cash cow in the proprietary product copaxone.
Once hooked on proprietary patented products, it becomes harder to go back to where you came from when the patents some day run out. When Levin came in he faced this same conundrum that had brought down his immediate predecessor Shlomo Yanai.
Under Levin and Frost the strategy has been to build up a larger proprietary portfolio, so far with only mixed success, whether by acquisition or by in-house development. In this respect Teva has become like many of the other “big pharma” companies, who have had little success in researching their way to the future in recent years – and have generally found it cheaper to buy up other companies instead.
Sooner or later of course that approach ends up yielding diminishing returns; somebody has to fill up the pipeline of new proprietary drugs in what is very much a research intensive, long time-frame, regulatory-intensive, very expensive low-odds race; one though with high rewards to those who can succeed and make it to the finishing line.
At Teva, perhaps now the company should even consider changing course and go back to its roots as a generic manufacturer, and find ways to once again be the lowest cost producer world-wide which it once enjoyed.
So both the strategy and the execution now will still be significant challenges for Frost and whoever comes in as the company’s new permanent CEO.
In the mean time the store is being minded by Teva’s current CFO, Eyal Deshesh – who might possibly now like to be considered for the top job himself.
Back in in August 2012, some time after Jeremy Levin had taken up his new appointment as CEO there were extraordinary leaked Israeli press reports indicating that CFO Eyal Deshesh was “unhappy” at the way investor relations were going to be conducted, and that there were tensions between him and CEO Levin at the time.
Then, as yesterday, both Teva and Levin were forced to publicly completely deny such reports. Maybe those press reports were also not so far off the mark at the time however. Perhaps one might even infer that Eyal Deshesh may overall not be too unhappy at how both incidents in the end have turned out.
In any case Jeremy Levin will be walking away with very substantial compensation for his severance from the company. As an individual with key management competencies, who had made Aliyah to take the job, it will be a shame if he doesn’t stay and fight it out in another business here – more such cosmopolitan outside talent is needed in this country rather than less.
