Teva reported Wednesday that CEO Jeremy Levin will step down from his role to be replaced on an interim basis by current chief financial officer Eyal Desheh. The company noted that its board of directors has formed a committee to begin the search for a permanent successor.
A report earlier this week suggested that Levin, who was appointed as CEO last year, was considering resigning over differences with chairman Phillip Frost related to the implementation of the drugmaker's recent plan to cut 5000 jobs. According to the Channel 2 News report, Frost wants Teva to move ahead with the reductions in Israel, where up to 800 employees could be affected, while Levin was looking to make the cuts in coordination with the workers' union and a government ministry. At the time, Teva said the claim was "baseless."
On Wednesday, Frost remarked that "the board and management team are fully committed to the implementation of Teva's strategy, including the development of new compounds, making strategic acquisitions, forming joint ventures and the planned acceleration of the company’s cost reduction program."
Commenting on Levin's departure, Excellence Nessuah Brokerage analyst Gilad Alper said "this is bad news." He added "this makes it very clear: Teva’s situation could be even worse than what the market had realised. I think Jeremy Levin was doing exactly what he was supposed to do but this is a dire situation. You don’t get rid of a CEO on a whim."
Teva is scheduled to report third-quarter financial results on October 31, with analysts predicting that sales of the company's drug Copaxone will probably fall as patients switch to newer oral drugs for multiple sclerosis, such as Biogen Idec's Tecfidera (for related analysis, read ViewPoints: Biogen Idec's multiple sclerosis treatment Tecfidera set to become one of pharma's fastest-ever blockbusters). "It’s possible we are not aware to what extent things have gone bad there," Alper said, noting "there might be a bigger hit to earnings from Copaxone than what the market is expecting."
For related analysis, read ViewPoints: Could departure of Teva's Levin come at a worse time?
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