Teva’s stock price isn’t just “down.” It’s just about down to the levels it saw on the last day of Jeremy Levin’s chief exec stint in 2014. And some are wondering just how responsible current CEO Erez Vigodman is for the decline.
Vigodman, of course, got credit for previously sending shares up by 40%, Israeli newspaper Globes points out; they peaked in the summer of 2015, when Teva announced its $40 billion acquisition of Allergan’s generics unit.
Since then, though, things have changed. For one, investor sentiment has soured on the Allergan deal, which now looks as though it may have been overpriced. "At $40 billion, could Teva not have bought businesses with higher profit margins?” one industry source asked Globes.
Then there’s Teva’s other recent M&A move--a buy of Mexico’s Rimsa that went so wrong that Rimsa’s founders sued the company. The lawsuit accuses Teva of concocting false accusations of fraud to wriggle out of the deal. (Teva, for its part, says it was misled and that Rimsa itself committed violations.)
Fair or not, “some investors are connecting the two things,” Leader Capital Markets analyst Sabina Podval Levy told the publication--and they’re worried about a problem with Teva’s M&A engine.
The way Teva sees it, under Vigodman’s leadership, “we have delivered on our promises and continued to execute a growth strategy that we believe will deliver value for patients and shareholders alike,” a spokeswoman told FiercePharma via email.
And as Globes points out, two of the biggest factors affecting Teva’s stock are out of Vigodman's control. Price erosion is hurting the entire generics industry, and generics challengers are taking on star product Copaxone in a court battle analysts widely expect Teva to lose.
So what can Vigodman do to restore the faith in the meantime? Give the market a signal that Teva knows what it’s doing, Globes suggests, whether it’s a plan for Actavis cost-cutting that will justify the deal price, proof that the Rimsa debacle was a one-time blip, or--perhaps most importantly--evidence that Teva’s skipper is in control of what goes down at the drugmaker.
Teva shares rival Mylan's pain as both hit two-year lows
Teva at court's 'mercy' in key Copaxone patent trial: Analysts
Teva's trying to weasel out of its Mexican generics deal, new Rimsa lawsuit says
How can Teva buck industry trends for 5% yearly generics growth? Launches--and lots of them
With Allergan deal sealed, Teva turns its attention to branded M&A
Analyst cuts Allergan generics sales estimates as Teva deal close nears
Forget Mylan: Teva inks $40B-plus pact for Allergan's generics biz