Mexican regulator undermines Teva's Rimsa fraud claims with 'all clear' memorandum

Teva contends that Mexican generics buy Rimsa sold defective, illegal products and lied about it, duping not only itself as buyer, but regulators and the public as well. But a new memorandum from Mexico’s drug watchdog doesn't help its case.

According to a March 13 document seen by The Times of Israel, Mexico’s Federal Commission for the Protection against Sanitary Risk (COFEPRIS) found no “unexpected adverse effects” among Rimsa’s 147 products and has located authorization for all of them within its archives.

Sixteen COFEPRIS checks on Rimsa dating back to 2009 also failed to turn up any issues that could pose health risks, and the body found documentation provided by Rimsa to be “truthful and correct."

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The conclusions don’t exactly support Teva’s legal claims that Rimsa withheld discrepancies between manufacturing processes and descriptions in product registrations filed with regulators—or that it “took active steps to conceal the violations that were committed,” as a Teva spokeswoman put it last year.

"Teva has been working with the Mexican health regulator, COFEPRIS, to address and remediate identified issues," a spokeswoman said this week in a statement, adding that Teva is "committed to moving forward to bring the Rimsa products into compliance with applicable Mexican regulations by advancing its remediation plan in order to ensure the health and well-being of Mexican patients."

Those allegations cropped up not long after the Israeli drugmaker closed its $2.3 billion Rimsa acquisition last March. Teva had meant for the pickup to be a springboard for emerging markets expansion, with execs at the time praising Rimsa’s doctor relationships and local commercial presence.

But Rimsa’s new owner didn’t get what it signed up for, Teva says. Rimsa, however, sees things differently.

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According to the Mexican company's account, it was “buyer’s remorse” that led Teva to sue as it searched for a way out of the deal. The sons of the company's co-founder said in a counterclaim that Teva concocted false fraud accusations after realizing it didn’t understand Rimsa or the Mexican market.

He-said, she-said aside, the Rimsa deal fallout didn’t boost investors’ faith in Teva’s dealmaking abilities, which already were up for questioning. Shareholders widely booed its $40 billion acquisition of Allergan’s generics unit, the other big buy under CEO Erez Vigodman’s watch.

Now, though, Vigodman is out, and the CEO-less company’s interim leadership is doing its best to “fix what is not working.” Their remedy could include a $2 billion sale of Teva’s women’s health unit that could help pay down debt, Bloomberg reported last week.

Editor's note: This story has been updated with comments from a Teva spokeswoman.