Phillip Frost: The right man for Teva

Teva's new chairman, Phillip Frost said, shortly after his appointment as head of one of Israel's largest and most successful companies, that he never dreamt of being chairman of Teva. His career experience didn't point to his assuming the leadership of the company at the age of 73.

Frost actually started out studying French literature, but later earned a medical degree from the Einstein Medical School at Yeshiva University in New York. In the 1970s, Frost opened a fish farm in Florida. Drought hit the area, dried up the ponds and killed the fish, but the value of the land increased, and Frost sold the property at a handsome profit. He then established the dermatology department at Mt. Sinai Medical Center of Greater Miami, a unit which he headed until 1990.

In 1972, he and his partner, Michael Jaharis, bought Key Pharmaceuticals, which had been on the verge of bankruptcy, for $50,000. The pair increased annual sales of the company from $1.5 million to $200 million, ultimately selling it to Schering-Plough for $800 million. Frost's share alone was $150 million. He then established Ivax as a pharmaceutical industry holding company, which from the moment it was founded, began to acquire other firms. Frost made Ivax into an attractive takeover target due to its strong presence in the growing generic drug markets in Central Europe and Latin America, but it was the firm's production of advanced inhaler devices that caught Teva's eye and motivated the Israeli company to court Ivax for 12 years. In 2006, Frost relented and sold Ivax to Teva for $7.4 billion.

Mergers and acquisitions are seen as opportunities that present themselves along the way, but the fact that Frost was involved in two huge deals within a 20-year period was apparently not a matter of chance. Frost has the rare combination of a profound understanding of the pharmaceutical and medical device markets and intuition and skill in marketing. This includes marketing corporate securities.

Frost is a man of initiative and marketing and less of fastidious management. Teva's people discovered this when they began integrating Ivax's operations into the Israeli company and found considerable outstanding assets, not all of which were managed with the greatest of efficiency.

As someone who promoted his companies' pharmaceuticals and financial securities, Frost put the emphasis on growth and not necessarily in increased profits. It looks like Frost will exert his influence to push Teva's business development and its penetration into emerging markets.

One of his great strengths is his unceasing involvement in developing proprietary drugs through investment in a large number of start-up companies. His vast experience and knowledge could help accomplish one of Teva's most important tasks: the development or acquisition of proprietary medicines that can, when the time comes, replace the long-time multiple sclerosis drug Copaxone, which generates annual revenues of $3 billion for Teva.

Teva's major problem in taking advantage of a rare asset such as Frost the mega-entrepreneur is the amount of time he has available. Frost is owner, chairman and CEO of a private pharmaceutical investment firm. He is also shareholder and chairman of a financial services company and a board member of many other corporations and organizations. Anyone who thought Frost would conduct himself in the mold of the warm-hearted Jew who was handed the chance to lead the largest symbol of Israeli business and would relocate to Israel and devote all of his time to Teva, is in for a disappointment. Frost was quick to make it clear that he has no intention of making substantial changes in how he lives, so it is possible Teva has gotten an extraordinarily high-profile entrepreneur, but not necessarily the warm-hearted Jew or the most committed chairman.