|Teva CEO Jeremy Levin|
Teva Pharmaceutical Industries ($TEVA) is far from a darling with shareholders. But renewed criticism of the company from leading analysts has the company on the defensive. Chairman Phillip Frost was forced to ride to CEO Jeremy Levin's aid, backing Teva's new management strategy in an interview with Bloomberg.
"We need to do what's important for the company and I personally have expressed my confidence in the way I know how to do it, and that's by buying shares," Frost said during the interview.
Frost said he doesn't pay much attention to analyst comments. That must be good for his current peace of mind, because the outspoken Goldman Sachs analyst Jami Rubin has sent some barbs Teva's way over the past several weeks, Bloomberg notes: She advised investors in July to sell Teva shares, saying the stock offers "0 percent return potential." And when Teva announced its latest quarterly results--which were none too encouraging--Rubin asked company executives whether the board still backed the CEO.
Since then, Rubin's counterparts at Morgan Stanley have also cut their rating on the stock. The impetus for that was clear; Teva lost a key patent fight over its top-selling multiple sclerosis drug, Copaxone. Long the company's prime generator of cash, Copaxone was set to face generic rivals in 2015--and that was soon enough to put Levin under pressure to get fresh products onto the market, particularly Teva's new, long-acting Copaxone product. But a U.S. appeals court recently stripped the drug's 2015 patent, leaving Teva holding exclusivity only until next May.
Even if the high-dose, long-acting Copaxone version can make it to market as hoped, that leaves Teva little time to convert existing patients to the new brand before they're wooed away by cheap generics. And Levin's plans to develop new formulations of existing drugs, while promising in the long term, won't deliver new sales by next year.
Levin was one of the architects of Bristol-Myers Squibb's ($BMY) string-of-pearls strategy, which built up the company's pipeline via a series of small deals. When he was tapped to take over as Teva CEO, market-watchers figured he'd bring that approach along with him. And while Levin's biggest announcements have involved layoffs, cost cuts and manufacturing plant shutdowns, he does say he's looking for small deals. If he comes up with a solid buy--or three or four--investors might grow more optimistic. Or if Teva appeals the Copaxone patent decision and wins. In the meantime, Frost and Levin can expect to stay on the defense.
- read the Bloomberg story
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