Published On: Tue, Jul 15th, 2014

Activist Investor Benny Landa : Why I Care about Teva


See also: Teva Pharmaceuticals Denies Picking New Chairman 

Benny Landa

I am an industrialist, not a financial investor. I focus on running my own businesses and have never gotten involved in the management of financial investments, which I leave to professional investment managers.

So why did I get involved in Teva? Well, I am also a Zionist, which means that I care passionately about my country, Israel. I have worked tirelessly to help put Israel on the high tech map, to create employment, to generate exports and to draw foreign investment into our country. My ambition was for one of my companies to become the “Nokia of Israel” (back when Nokia was at its apex, the crown jewel of Finland). Indigo, which I founded 37 years ago, did indeed become a substantial business (accounting today for about 0.5% of Israel’s GDP and employment), but it never became the global giant that would come to symbolize the State of Israel itself. Teva did.

Eli Hurwitz was a friend and colleague whom I greatly admired, though I never had any dealings with, or investments in, Teva. In December, 2012, out of curiosity, I logged onto a webcast in which Teva Management presented their vision and strategy for the Company. It blew me away. Though not a pharma maven, I thought the NTE strategy was brilliant and I decided to buy Teva stock.  At this stage my interest in Teva was purely as an investor.

Months later, dismayed by Teva’s lackluster performance, I took a closer look at the Company’s financial history, trying to understand how it could have lostover $20 billion of shareholder value during the prior three years. How, I wondered, could a pharma-knowledgeable board have approved the $6.8 billion acquisition of Cephalon, which turned out to be such a misadventure?  So I went to Teva’s website and read the bios of its directors – then I stopped wondering. What I found was a 16-person board comprised of highly accomplished and respected individuals whose backgrounds ranged from medicine and law to banking and finance, from industry to academia (even including a Noble laureate) – but not a single director with global pharma experience. Even the Company’s venerable entrepreneurial Chairman, Dr. Philip Frost, did not come from big-pharma.

At Teva’s Annual Meeting of Shareholders on August 27th, 2013, I voiced my concerns:

  1. Teva’s board of 16 is the largest in the industry, unwieldy, and should be reduced to a more practical, normative size of no more than 12.
  2. Though the Board is comprised of highly accomplished respected individuals, they are for the most part inexperienced in the pharmaceutical industry and should be bolstered by individuals who have at least some big-pharma experience.
  3. Though Teva is an Israeli company, it must be run as a global enterprise, which  can be achieved only by infusing its board with global pharma-experienced directors.

Dr. Frost responded that the Board would look into my concerns.

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About the Author

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