Teva Pharmaceutical Industries Ltd.
) fell 8.09% with the company announcing the departure of its
President and Chief Executive Officer (CEO), Dr. Jeremy
Levin. Eyal Desheh, Teva's Executive Vice President and
Chief Financial Officer, will act as the interim President and
CEO until a permanent replacement is found.
Dr. Levin was yet to complete 2 years at Teva at the time of
his departure. His departure comes a few days after rumors about
disagreements between him and the Board surfaced.
On a conference call, Teva's Chairman said that although Dr.
Levin and the Board were fully aligned on the strategy and
direction of the company, there was a difference in views
regarding the execution of the strategy.
Teva's Board said it remains committed to its strategy which
includes the reduction of assets that are no longer fitting into
the core business or are not critical to its future, scaling down
of oversized parts of the company while the company will keep
focusing on growing its generics business and core R&D
programs. Focus areas remain high-value complex generics,
expansion in emerging markets and broadening of the specialty
medicines and OTC business portfolio.
The company is also seeking to cut costs and expects to reduce
year-over-year costs by $1 billion. Earlier this month, Teva had
said that it will cut its work force by about 5,000 employees or
10%. A major part of the reduction will be completed by the end
of next year.
2013 Outlook Narrowed
Teva narrowed its 2013 outlook and now expects earnings of
$4.95 to $5.05 per ADS on revenues of $19.7 billion - $20.3
billion. Earlier, the company was expecting to achieve the
mid-point of its guidance range of $4.85 - $5.15 per ADS on total
net revenues of $19.5 - $20.5 billion. The Zacks Consensus
Estimate for revenues and earnings is currently $20.0 billion and
Teva is going through a transition period. Headwinds include
EU pricing pressure, potential new competition for branded
products and fewer generic product launches compared to 2012. A
major challenge for the company will be for Teva to replace
Copaxone (multiple sclerosis) revenues once generics enter the
market. With the U.S. Federal Court of Appeals delivering
unfavorable rulings regarding the validity of certain Copaxone
patents, generic competition could materialize in May 2014, much
sooner than expected. Additional competition has entered the
multiple sclerosis market in the form of
) Tecfidera which is off to a strong start.
The sudden departure of Dr. Levin comes on top of the
above-mentioned headwinds. At present, concerns remain about
finding a new CEO who will be willing to take on the post
especially considering the rumors regarding rifts between the
previous CEO and the Board.
Teva currently carries a Zacks Rank #3 (Hold). Investor focus
will remain on additional commentary regarding the company's
strategy on the third quarter conference call. Guidance for 2014
will be provided in the second week of December.
At present, companies that look more attractive include
). Both are Zacks Rank #2 (Buy) stocks.
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TEVA PHARM ADR (TEVA): Free Stock Analysis
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