Teva CEO vows to reshape company
New strategy sees more transparency, less reliance on a single product.
Teva Pharmaceuticals' new CEO, Jeremy Levin, promised yesterday to reshape the company into "the most indispensable medicines company in the world" and provide significant value to its shareholders.a
At a meeting in New York with investors and analysts, Levin, who took over in May, said Teva would sustain "profitable growth" through 2017 and beyond despite numerous challenges, such as the looming 2015 patent expiration of its most important branded product, the multiple sclerosis drug Copaxone.
By 2017, he said, "Teva will be a reshaped company," and one that will be more transparent and accountable to investors than in the past.
Teva's stock was off 1.7% in late trading on the New York Stock Exchange, at $41.82.
Levin said he does not want Teva to be so dependent on one product for a significant portion of its profits. He plans to achieve this in part through growth of branded generics in emerging markets, as well as through its joint venture with Procter & Gamble Co. in over-the-counter consumer products.
But Levin, a former executive of Bristol-Myers Squibb, said Teva would increasingly focus on bringing new medicines to market in its core areas of expertise, such as central nervous system and respiratory diseases.
He said it also would focus on new therapeutic entities, or NTEs. These could be new uses, formulations, delivery methods or combinations of existing products.
Levin said China represents a big opportunity for sales of respiratory disease products. "We haven't yet scratched the surface of how to get into that part of the world," he said.
The company took a step toward adding to its portfolio of branded medicines earlier yesterday by announcing a deal for worldwide rights to an experimental pain drug being developed by Xenon Pharmaceuticals, a company founded by Michael Hayden, Teva's new chief scientific officer.
But it also broke off a contractual relationship with MediWound, a Clal Biotechnology unit, telling the Israeli company yesterday that wound treatment is not one of the fields in which it will be focusing its strategy.
Hayden said because NTEs, come from proven effective medicines, they would provide high returns with lower risks than developing new molecules. He said the company set a goal of approving development of 10 to 15 NTEs in 2013.
Levin reiterated his desire for mid-sized or small transactions through licensing deals, acquisitions or strategic alliances.
The company said on November 30 that it would streamline operations and cut costs by up to $2 billion during the next five years, with most of the savings realized in the next three years.
Teva provided details yesterday of where it would find much of the savings, including up to $700 million by centralizing global purchasing power rather than relying on local procurement. It sees up to $175 million in savings by shifting to larger, more efficient manufacturing sites.
A move to centrally controlled supply chain inventory levels could save another $110 million to $140 million, the company said.Levin said Teva would also continue to divest non-core assets.