Company: Teva Pharmaceutical Industries
Beginning Price: $43.10
Ending Price: $39.71
Teva Pharmaceutical Industries ($TEVA) has been a worldwide leader of the generics pack for years. But the Israel-based company has bigger ambitions. It wants to be a Big Pharma, with a stable of successful branded drugs with high profit margins to supplement its low-margin generics business--and to make up for the impending loss of patent protection on its cash-cow brand Copaxone, a multiple sclerosis treatment. The company snapped up Cephalon last year--along with its branded drugs Provigil and Nuvigil, among others--to that end. It also recruited Bristol-Myers Squibb ($BMY) dealmaker Jeremy Levin to take over as CEO when Shlomo Yanai stepped down in May.
Investors appeared to like that idea. The stock began the year on a high note as the news was announced and stayed there as the company announced better-than-expected fourth-quarter numbers. And it's clear Levin has change in mind. In early November, Teva announced that North American pharma chief Bill Marth would be stepping down, and his SVP, Allan Oberman, would take over. Levin also created a new executive slot overseeing women's health and handed that job to a former Bristol-Myers colleague, Jill DeSimone. And the recent word from Teva Chairman Phillip Frost was that Levin plans M&A on a smaller scale.
Apparently, investors aren't yet sure that Levin has the secret sauce to take Teva to the next level. And they're tired of counting on promises that Teva will reach that storied place. Despite some investor dissatisfaction with Yanai's performance, the company's shares went on a long decline in May as he retired, and good-news events such as a patent victory on Copaxone, profits growth in the second quarter and sales growth in the third haven't moved the needle much. Levin is set for a strategy update in a couple of weeks--and we'll see then how the market responds.
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