Teva CEO Erez Vigodman steps down from role

Teva announced that CEO Erez Vigodman is stepping down from his position following an agreement with the board of directors. "I believe that now is the right time for me to step down," said Vigodman, adding "I am confident that the company's future is bright."

The company noted that Vigodman, who assumed the role of chief executive in 2014, will be replaced on an interim basis by Yitzhak Peterburg, who currently serves as chairman of the board of directors. Teva indicated that it is undertaking a search to identify a permanent CEO. Meanwhile, Sol J. Barer, who has been a member of the Teva board since 2015, has been elected to replace Peterburg as chairman.

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Commenting on the news, Bloomberg Intelligence analyst Elizabeth Krutoholow said "it's certainly not good news at this point in time," highlighting 2017 as a turning point for Teva. "It doesn't send a good signal about the future of the company, though a new CEO may be just what the company needs to turn things around. Vigodman hasn't been the best dealmaker," Krutoholow added. Meanwhile, Bernstein analyst Ronny Gal called Peterburg "a good caretaker CEO, but clearly not a candidate to run the company long term."

Some investors have called for Teva to split into separate generics and branded businesses, with Evercore ISI analyst Umer Raffat suggesting that more than half of its clients support such a move. However, Peterburg said that the drugmaker's "immediate focus" is "realising the cost synergies and strategic benefits of the Actavis Generics acquisition." Peterburg added "I look forward to working with the entire Teva team to conduct a thorough review of the business to find additional opportunities to enhance value for shareholders."

RBC Capital Markets analyst Randall Stanicky said it was unclear what the review would encompass and whether asset sales could be on the agenda. "We find it interesting that Teva would pursue a review before naming a permanent CEO, which may be suggestive of further close involvement of the board and broader management team," Stanicky said. Meanwhile, Halman-Aldubi analyst Tal Levi suggested that Teva needed to manage cash flow better and deliver the synergies from its acquisition last year of the Actavis generics business.

Last month, Teva announced that sales this year are forecast to be in the range of $23.8 billion to $24.5 billion, with earnings per share of between $4.90 and $5.30. However, the estimates came in below analyst predictions of $24.8 billion in revenue and earnings of $5.41 per share. Teva is scheduled to release its fourth-quarter financial results on February 13.

For related analysis, read ViewPoints: Teva seeks another new CEO, but challenges remain the same; if not harder.

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