Earlier this week, struggling and newly CEO-less Teva announced it would embark on a strategic review to help find ways to turn things around. Problem is, that process could keep it from landing a top-tier helmsman, one analyst figures.
As interim chief Yitzhak Peterburg said in a statement following the announcement of skipper Erez Vigodman’s departure, he will be “working with the entire Teva team to conduct a thorough review of the business to find additional opportunities to enhance value for shareholders.” But to RBC Capital Markets’ Randall Stanicky, the timing for that review is puzzling.
The way Stanicky sees it, it makes more sense to bring the new chief aboard before running the review. “What does this say about how much strategic input a new CEO will have? More to the point, how is this going to help recruit a top global executive?” he wrote in a Friday research note. “To us this is a concern that Teva’s ‘search’ will ultimately revert to a local executive who is not a known leader in global pharma,” he added.
He’s not alone in that concern. Activist investor and longtime Teva critic Benny Landa has said time and again that Teva needs a pharma vet at the wheel. "The most suitable CEO is someone with a strong background in global pharma—ideally, a person who has managed a pharma company or was in a very senior position in a pharma company,” he told Israeli newspaper Globes this week.
Landa, though, has some other recommendations for Teva, including splitting the Petah Tikva-based drugmaker in two. A generics-specialty divide “ensures that each company gets its fair share of the debt and cash in order to give each company its chance to take off,” he said.
As Stanicky wrote to clients, many investors have been asking over the last week if a dramatic change is something Teva does in fact need—and whether enacting one is even possible. And while he didn’t lay out the case for a straight breakup, he did point out that selling the non-MS portion of the branded portfolio and pipeline—while hanging onto the blockbuster Copaxone franchise—could take out about two-thirds of Teva’s debt, “leaving a reasonably levered and more focused generic platform.”
Shareholders, meanwhile, will be looking for clarity when the company reports Q4 earnings Monday. “There remain several unanswered questions that need to be addressed on the upcoming earnings call,” Stanicky noted.