By Rory Jones
This article is being republished as part of our daily
reproduction of WSJ.com articles that also appeared in the U.S.
print edition of The Wall Street Journal (September 12, 2017).
The world's biggest seller of generic drugs for months looked
for an experienced chief to steer the troubled company, who could
navigate a series of daunting challenges, from falling medicine
prices to the company's high debt.
Teva Pharmaceutical Industries Ltd. ended that search on Monday
by appointing Kare Schultz, a nearly 30-year pharma industry
veteran, as the company's new chief executive.
Mr. Schultz honed his skills at Novo Nordisk A/S, one of
Denmark's biggest firms, before moving as chief executive in early
2015 to H. Lundbeck A/S, which he successfully restructured to put
the Danish company on track to post record earnings.
That know-how will be key in turning around Teva, which recently
shuffled its board and is shedding assets, while coping with new
competitors. Its shares have been under pressure for months as
concerns mounted about its future.
"This is a critical time in Teva's history, Chairman Sol Barer
said in an interview with The Wall Street Journal. "We had to make
sure we got the right person."
Teva has searched since February for a new chief executive that
ostensibly could fill the shoes of previous longtime leader Eli
Hurvitz, who is credited with turning the firm from a small-time
pharma firm into a global generics drugs seller and a household
Israeli name. Mr. Hurvitz was chief executive for more than 25
years and involved in Teva until his death in 2011.
Since then, the firm has churned through a series of chief
executives that have struggled to manage global expansion and found
it hard to implement changes amid scrutiny over operations by
Israeli lawmakers and other local stakeholders. Boardroom squabbles
over whether the chief should be Israeli also hampered the growth
of the multinational in the eyes of many investors.
Like Teva, Novo Nordisk became a global leader based out of a
small country with a similar-sized population to Israel and with a
reputation for innovation. Mr. Schultz, 56, joined Novo Nordisk in
1989 before becoming chief operating officer in 2002 and then also
president from 2014 to 2015.
Novo Nordisk pioneered the development of insulin for diabetes
but recently has struggled to encourage doctors, health-plan
managers and insurers to pay for its newest version of the drug.
Teva is similarly facing competition for its groundbreaking
multiple sclerosis drug, Copaxone.
Mr. Schultz joins an executive board at Teva that in recent
years has fought over whether the firm should focus on generics
drugs or take advantage of Israel's focus on research and
development and invest in specialty medicines, like Copaxone.
The new Teva chief, only the second non-Israeli to lead the
firm, understands the "cultural framework" of working for a
pharmaceutical firm that, like Novo Nordisk, is also considered a
national champion, Mr. Barer said.
Mr. Schultz will review the firm's operations before
articulating a new strategy as soon as possible, Mr. Barer said.
The new CEO would relocate to Israel and be based out of Teva's
Petah Tikva headquarters in a "sign of his commitment" to the firm,
the chairman said.
"It sounds just what the doctor ordered," said Phillip Frost,
chief executive of Miami-based health-care firm Opko Health Inc.
and former chairman of Teva, of Mr. Shultz' appointment. "He has
turnaround experience...He has credibility with investors."
Teva didn't give a date for when Mr. Schultz will join the
company. There has been plenty of speculation about who might take
the reins at Teva, with AstraZeneca PLC CEO Pascal Soriot cited at
one stage as a contender by local media.
Teva's share price rallied on news of Mr. Schultz's appointment,
rising roughly 8% in early trading Monday in Tel Aviv. AstraZeneca
shares rose 2%.
In August, Teva lost about a quarter of its market value in one
day on mounting concerns about the future of the company after it
cut its full-year outlook and slashed its dividend, blaming the
rapid deterioration of the U.S. generic-drug business. Teva took a
$6.1 billion write-down on that unit and posted a quarterly net
loss of $6.04 billion.
This isn't the first time an outsider has tried to restructure
Teva. In 2012, Teva hired Jeremy Levin from Bristol-Myers Squibb
Co. to take the helm, but he was forced out the next year during a
dispute with the board over the company's direction.
His Israeli replacement Erez Vigodman departed the company in
February for undisclosed reasons amid a steep fall in the firm's
share price and after a buyout binge that was criticized by
investors.
Mr. Vigodman's acquisition last year of Allergan PLC's generics
unit -- Teva's biggest-ever deal -- left the company with debt of
roughly $35 billion. It is attempting to pay down those borrowings
with asset sales, but has so far found few takers for its
businesses.
In an effort to address investor concerns that its board lacked
international pharmaceutical experience, Teva in June nominated
four new directors and Mr. Schultz further addresses those
concerns.
At H. Lundbeck, he was credited with launching a turnaround,
including job cuts and the restructuring of its business, which
last year returned the firm to full-year profit. H. Lundbeck shares
fell 11% following news of Mr. Schultz's move to Teva.
"Overall, we believe adding a highly creditable CEO with
significant industry and turnaround experience represents a clear
positive for Teva, " J.P. Morgan said in a note to investors
Monday. "At the same time, we do not see any quick fixes for
Teva."
Write to Rory Jones at rory.jones@wsj.com
(END) Dow Jones Newswires
September 12, 2017 02:47 ET (06:47 GMT)
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