Teva will cut $2 billion in costs to get ahead, CEO Levin says
Teva Pharmaceutical Industries CEO Jeremy Levin today gave Wall Street an early picture of what the company will look like going forward and it showed it having a much slimmer profile. He said it will cut up to $2 billion in costs over the next 5 years as it remakes itself into something more than just a generic drug manufacturer.
The talk with investors today followed news that the company will miss 2013 earnings forecasts. Levin told them Teva ($TEVA) will cut $1.5 billion to $2 billion in costs across the board in the next 5 years, Reuters reports. It will nix some research and development programs, change the way it buys raw materials and reduce its real estate holdings. It will even take a different tack for how it buys its information technology.
The big plans that Teva investors were looking for from deal-maker Levin when he came over from Bristol-Myers Squibb ($BMY) to take over as CEO are not panning out exactly as hoped. The generics giant says revenue will be between $19.5 billion and $20.5 billion, not the $20.8 billion analysts were looking for, Bloomberg reports. That amounts to $4.85 and $5.15 a share, short of the $5.63 that had been forecast.
Levin, who took over as CEO in May, told investors in a call today that "Teva will look like a very different company going forward," Reuters reports.
Teva has long been a global leader in generics but Levin has been aiming it toward higher ambitions. Levin wants it to be a Big Pharma, with a stable of successful branded drugs with high profit margins to supplement its low-margin generics business. It also is looking to make up for the patent loss of cash cow Copaxone, a multiple sclerosis treatment, and to offset a generics market which is not growing. With that in mind, the company snapped up Cephalon last year, along with its branded drugs Provigil and Nuvigil, among others. Earlier this month, Chairman Phillip Frost said the company would pursue smaller deals to get to where he sees the company going.
But investors have been growing uncertain and Teva's shares have suffered this year, making it one of the worst-performing pharmaceutical stocks among the biggest companies.
- read the Reuters story
- here's the Bloomberg story
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