Between the bumped-up expiration date on patents for its top drug, fierce labor opposition to its restructuring plans, board-vs.-management conflict that resulted in its CEO's departure, and shareholder unrest, Teva ($TEVA) has faced plenty of problems over the past few months. But execs now say they know just what will turn things around: dealmaking.
As Bloomberg reports, CFO Eyal Desheh says Teva is ready to buy, and it has the financial resources to do so, thanks to a debt level he described as "reasonable."
"We have to do the clever deals that Teva was so good at doing in the past," CFO Eyal Desheh said at the J.P. Morgan Healthcare Conference in San Francisco (as quoted by the news service). "The ones that you can buy one and one and get to two, I know it's a cliché. But we're very good at doing that. And I think that these are the kind of deals that we'll be looking at in the future."
It's a blast-from-the-past strategy for Teva, whose most recent CEO, Jeremy Levin, spent less than $1 billion on deals, Bloomberg notes. Instead, Levin focused on growing through smaller partnerships and acquisitions, as well as cutting costs.
But it's perhaps no surprise that Teva is distancing itself from Levin, who recently left the company after disagreements with the board. The squabble followed a wave of public outcry over layoffs in Israel, Teva's home country.
Now, the company has replacement CEO Erez Vigodman ready to take the reins early next month--and Desheh isn't likely to be speaking out of turn. Sphera Funds partner Ori Hershkovitz told Bloomberg he "would not be surprised at all if these ideas are being supported behind the scenes by Vigodman."
Shareholders, too, seem to be on board with Teva's new plan, taking Israel-based shares up 7.2%, Bloomberg reports. As Hershkovitz told the news service, investors see Teva potentially following in the footsteps of companies like deal-happy Valeant Pharmaceuticals ($VRX), which managed to nearly double its stock gains last year as it went on a pickup spree. "The possibility that Teva will pursue the Valeant model for its M&A strategy is very compelling for investors," he said.
Vigodman, whose pharma experience consists of sitting on Teva's board, will need to surround himself with industry veterans upon taking the CEO's seat, analysts have said. But look for acquisitions sooner rather than later: With leading product Copaxone's patent expiring in a few months, Teva has no time to waste, Desheh said.
"[Vigodman is] aware, we're aware, our board is aware that we need to move fast," he said. "Fast is not a year, fast is a few months."
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Special Reports: Top 10 Generics Makers by 2012 Revenue - Teva | Top 10 Drug Patent Losses of 2014 - Copaxone