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| Jeremy Levin |
So much for denials. Monday, Teva Pharmaceutical Industries ($TEVA) and CEO Jeremy Levin said he wasn't weighing a resignation. Today, the Israel-based company announced his imminent departure. Levin's exit comes in the wake of last week's layoffs announcement--and, so the story goes, amid a behind-the-scenes dust-up between Teva's board and management team.
Early this week, Israeli media reported that Levin and his board were butting heads over his latest cost-cutting moves, which initially included significant job cuts in Teva's home country. The layoff plans had cued an outcry from labor leaders, who lambasted Teva executives for collecting big paychecks while slashing their jobs. Some leading shareholders publicly joined in last week, calling on Levin and his team to take pay cuts. By Monday, according to a Channel 2 report, Teva management had issued a written demand for the board to back off, and Levin had threatened to resign if the board didn't rally behind him and his strategy.
Teva denied any such conflict. But now, Levin is bowing out, with CFO Eyal Desheh taking his place on an interim basis. "Since I joined Teva, we have made tremendous progress in setting a new course for the company," Levin said in today's statement. "I wish the company and its people, who I respect greatly, every success."
Since Levin took Teva's CEO post in May 2012, he has made some radical moves to turn around the company. Facing the loss of exclusivity on Copaxone, by far its biggest drug with $4 billion in 2012 sales, Teva had bought up a few companies and advanced a long-acting formulation of the drug through its pipeline. But the stock languished, as investors and analysts worried Teva couldn't add new revenue quickly enough.
So, Levin rolled out a $1.5 billion to $2 billion cost-cutting program, including layoffs, plant closures and consolidations, plus some procurement and supply-chain moves. He eyed some bolt-on deals and set R&D to work on more new branded formulations of older meds. But then a U.S. appeals court squashed a key patent on Copaxone, putting it in line for generic competition in May 2014, rather than November 2015 as previously expected. And last week, Levin said that cost-cutting plan would definitely hit the $2 billion mark, with another 5,800 layoffs, including serious cuts in Teva's home country, Israel.
And according to Chairman Phillip Frost, the departing CEO's plans will roll on. The company's board and management are "fully committed to the implementation of Teva's strategy" including "the planned acceleration of the company's cost reduction program."
But the devil is in the details, and continuing Levin's cost-squeezing doesn't necessarily mean sticking to the more controversial parts of the plan, including those layoffs in Israel.
- see the announcement from Teva
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