Who wants to step into Teva's CEO hot seat?

In the aftermath of Teva ($TEVA) CEO Jeremy Levin's departure announcement yesterday, media reports offer a few puzzle pieces that combine into one picture: Who in the world will the generics giant find to take on the job?

In making his exit, Levin leaves a company in disarray, with deep rancor among the board and management, and a controversial cost-cutting program in the works. Labor leaders are unhappy with the company, thanks to the threat of layoffs in Israel. And Chairman Phillip Frost has been cast as the control-seeking bad guy, whose leadership style could scare CEO candidates away.

One major red flag: Levin told Israeli news service Calcalist that he didn't actually resign as Teva's press release stated. "The correct words that should be used are that Teva's board of directors and I agreed that I will leave my post," he said in an interview (as quoted by Ynet). "I said two days ago that I would not resign, and I acted accordingly."

Red flag two: Analysts and institutional investors appeared none too happy with Teva's leadership during yesterday's conference call to discuss Levin's departure. Analysts pressed Frost about his conflict with Levin and questioned Teva's ability to attract a qualified replacement willing to step into the hot seat. As Bloomberg notes, one analyst actually told Frost that Teva is "a very dysfunctional organization" during the call.

Red flag three: Bloomberg points out that bringing a CEO into Israel, where Teva is based, could be problematic. Frost himself said during yesterday's call that he wouldn't be willing to live in Israel himself. And look at the politics: Cost cuts aimed at the country ignited a firestorm of protest. Government officials got into the act. Though Teva is a multinational company now, the country still sees it as a "national champion" with an obligation to the Israeli economy. That's a heavy expectation for a company already struggling to turn around.

And red flag four: Moody's actually issued a report on Levin's departure, calling it a "credit negative," because it could change the ex-CEO's "clearly articulated business strategy closely crafted by Dr. Levin and board since he joined the company."

Levin joined Teva from Bristol-Myers Squibb ($BMY), bringing Big Pharma experience and business development chops to the job. If Frost really wouldn't grant Levin enough power to pilot the ship, then who would he trust at the helm? "A candidate will now ask himself if he should be joining a company in which the last CEO couldn't function," said Ori Hershkovitz, a partner at Israel-based Sphera Funds Management (as quoted by Bloomberg). "When Levin took the job at Teva he was considered a pharma god. But at Teva there's only one boss and that is Phillip Frost. And Jeremy made the mistake of thinking he would be able to manage the company."

According to The Times of Israel, Levin leaves the company with the promise of two years' salary and a $3 million parting payment. He may find himself feeling well shut of the company. Meanwhile, Teva's CEO search reportedly has a front-runner already: Erez Vigodman. As an Israeli, he wouldn't have to relocate to take the job. Plus, he's already a member of Teva's board. Presumably that means he knows how to work with Frost and the rest of the directors (or at least knows where the pitfalls are). Whether that means he could satisfy investors and analysts is another question.

- see the Ynet story
- get more from Bloomberg
- read the Times story

Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva | The 25 Most Influential People in Biopharma - Jeremy Levin