When CEO Jeremy Levin departed Teva Pharmaceutical Industries ($TEVA), many wondered who would want to take the lead there amid controversial cost-cutting, a rocky board-management relationship and an impending patent cliff. After less than three months, Teva's got its guy. Erez Vigodman will step into the helmsman's role as of Feb. 11, while interim CEO Eyal Desheh will return to his previous position as CFO, the company said Thursday.
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| New Teva CEO Erez Vigodman |
Unlike Levin, a drug-company veteran who joined the generics giant from Bristol-Myers Squibb ($BMY), Vigodman lacks pharma experience, per se. He'll leave his current post as the leader of an Israeli agrochemical company to take on the new job, having also previously run food company Strauss Group. But as Chairman Phillip Frost highlighted, Vigodman's resume does include a stint on Teva's board.
"As a member of the Teva Board since 2009, Erez has a deep understanding of the company and the industry in which it operates, putting him in a strong position to hit the ground running and deliver value for shareholders," Frost said in a statement.
Though he lacks a specific pharma background, Vigodman has steered his previous companies through trying times, some analysts point out. He'll need those skills at Teva, which smacks into generic competition for Copaxone, its best-seller by far, in May. That's 18 months earlier than expected--and the source of major turmoil at Teva.
Levin had already started slashing costs in advance of the anticipated 2015 patent expiration when a U.S. appeals court bumped that up to May of this year. That ruling put more than half the company's profits in peril. Levin amped up the cost cuts and layoffs, and labor disputes followed, spurring disagreements with the board that ultimately provoked his exit.
Many have scrutinized the board's role in the conflict, suggesting that its meddling prompted Levin to leave. One such critic, rebel shareholder Benny Landa, recently called for a slimmer, more experienced board and for changes to rules requiring a supermajority vote to dismiss directors. But for all his grievances, Landa this week expressed his approval of Vigodman's appointment.
"As critical as I am of Teva's board, I think this time they got it right," Landa wrote (as quoted by the Financial Times). "Certainly Vigodman does not bring pharma experience to the job, which is a pity. However … he knows what he doesn't know--and will be quick to learn."
While Teva has its fair share of issues to tackle, for now, Vigodman should cut down debt by selling assets and scout acquisitions that will boost earnings, Sphera Funds Management partner Ori Hershkovitz told Bloomberg. But first thing's first: Vigodman needs a team that knows the drug world.
"The first thing he needs to do--because he lacks knowledge of the pharma industry--is surround himself with management that has experience in turning around pharma companies," Hershkovitz said.
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