Change at Teva's Helm - Analyst Blog


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Teva Pharmaceutical Industries Ltd. ( TEVA">TEVA ) recently announced a leadership change with current President and CEO,Shlomo Yanai , expected to retire from the company effective May 2012. Mr.Yanai will be succeeded by Dr. Jeremy Levin, a former senior executive at Bristol-Myers Squibb ( BMY">BMY ).

Mr.Yanai intends to move into a new phase in his career. He was responsible for convertingTeva from an $8.4 billion mainly generics business in 2006 to a more diversified company with a sales target of about $22 billion in 2012.

Yanai is credited with pulling offTeva's acquisition ofCephalon and BarrPharma , expanding the company's operations in Europe, Latin America and Asia, and forming partnerships forbiosimilars and over-the-counter (OTC)pharma markets. All these deals helped diversifyTeva's operations.

Meanwhile, Dr. Levin brings with him vast experience and knowledge of thepharma industry. He is credited with managing Bristol-Myers' successful strategic deals and alliances in the past few years. Prior to joining Bristol-Myers, Dr. Levin was the Global Head of Business Development and Strategic Alliances at Novartis ( NVS">NVS ) from 2003 to 2007.

Our Take

We are positive on the upcoming change inTeva's leadership. While Mr.Yanai has done a good job diversifyingTeva's business, the new CEO will have his work cut out with the company facing several issues.

The shares have been languishing this past year due to several issues like over-dependence onCopaxone (Copaxone accounted for 20.5% of total revenues in 2010), weak performance of the US generics business, manufacturing issues, pipeline setbacks (laquinimod ) and over-optimistic guidance.

Though we do not expect instant changes, given Dr. Levin's track record on the deal-making and branded products front, we expect increased confidence inTeva's future capital allocation plans and branded pipeline. We also expect the company to withdraw its 2015 guidance and issue more credible numbers. Dr. Levin intends to review the business before giving any guidance or insight on future plans for the company. We expect an update later this year.

We currently have a Neutral recommendation onTeva , which carries aZacks #3 Rank (short-term Hold rating).

BRISTOL-MYERS ( BMY ): Free Stock Analysis Report
NOVARTIS AG-ADR ( NVS ): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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