Eli Hurvitz was an industrialist with a Midas touch. When he died in November 2011, the former leader of Israeli drug giant Teva Pharmaceutical Industries had already ensured that his story would be told.
A new posthumous biography from Professor Yossi Goldstein, who was handpicked by Hurvitz himself to serve as author, does just that. But just how accurate is the tale?
Writing about a person like Hurvitz was, according to Goldstein, "difficult and problematic from every angle. In large part, he was a highly positive person, a successful man by any standard, and all that is left to write about him is praise."
Hurvitz was an incredibly accomplished man, and for the most part, his legacy is squeaky clean. In an attempt to write by the standards of historical research, Goldstone says he strove to be objective about Israel's most prominent businessman to date.
In that case there's a snag in his research: a primary source for the book is 120 hours of interviews with Hurvitz himself. And no one is objective about himself.
Strictly righteous in that sense the book may not be, but thanks to the very wealth of first-hand material, the book is chock-full of charm. Hurvitz, in addition to his other talents, was a gifted storyteller and this book overflows with fascinating tales. But the inescapable bias chips away at the book's accountability. For example, it is doubtful that Israel Makov, who replaced Hurvitz as Teva CEO, would agree with his representation.
The book is mostly the history of Teva as told by the victor, the man who grew the company into the largest generic pharmaceuticals firm in the world.
Respectability ripped off
Hurvitz told his story as he battled the cancer that would kill him. His forthrightness with Goldstein produced a vein of journalistic gold. His candor removed the mask of respectability and the coveted image of ideal organizational culture that had always been associated with Teva.
One of the juiciest scoops that he handed Goldstein involved the story of Makov's departure from the company.
Makov was appointed chief executive of Teva in 2002, when Hurvitz moved aside after 25 years at the helm. Hurvitz stayed with the company as chairman of the board of directors, which among other things hires and fires CEOs. He was, essentially, Makov's boss.
After Makov left the company, Teva produced a lame cover story about not renewing his contract. But rumors made the rounds. Hurvitz and Makov's relationship had been tense, some whispered. Hurvitz, the gossip went, had taken offense to Makov's strained relationship with Hurvitz's son Chaim, who had been the director of Teva International Group.
In his testimony to Goldstein, Hurvitz told his explosive version. Makov hatched a back-room deal, Goldstein writes, to hand over control of Teva to an international corporate giant and push Hurvitz out while Makov retained his position.
But Hurvitz got wind of the plot thanks to a lucky slip-up: One of the people who stood to potentially take control of Teva asked him what his thoughts on the takeover were, not knowing that Hurvitz was meant to be kept in the dark.
In their conversations, Goldstein writes, Hurvitz said, "I was deeply hurt Teva had been betrayed."
Of course, that's his version.
Private investment firms know and investigate the transactions of companies marked for acquisition. Not only should they have known who was serving as CEO, they should have had deep, intimate knowledge of the company's going-ons. Goldstein did himself no favors when he chose not to clarify whether or not Makov ever confirmed Hurvitz's story. Beyond the sketchy-sounding way in which Hurvitz allegedly got wind of the alleged plot, Goldstein's "objective" biography has some serious holes.
Goldstein does devote a chunk of the book to highlighting Makov's shortcomings, which seem to the reader to have no bounds. He was incapable of managing investor expectations in Teva stock. He had a tendency to surround himself with a close-knit cabal of managers and push away those loyal to Hurvitz. He was weak on strategic short-term planning.
Will medicate for peanuts
Over the years, Teva has become a proud and arrogant firm. It is in no rush to discuss its failings in general or anything that has to do with acquisitions and mergers – usually a company's main source of pride – in particular.
Regarding the acquisition of the American injectables manufacturer Sicor, which was Makov's pet project and for which he paid $3.4 billion over Hurvitz's objections, Goldstein writes: "Sicor was one of the few companies that not only did not meet expectations, but also became a source of disappointment." In almost the same breath, Goldstein reveals endless ego battles between Hurvitz and Makov, who allegedly tended to take credit for Teva's successes.
The clash of the CEOs is one of the book's highlights. Goldstein is also very adept at handling Hurvitz's rags-to-riches tale.
"How did a humble young man from Tel Aviv, a former kibbutznik whose whole academic training was a bachelor's degree in economics, transform a small pharmaceuticals company in Petah Tikva into one of the largest generic pharmaceuticals firms in the world?" he writes.
One of the answers, he explains, has to do with the role that random luck, and an individual's autonomy, play in shaping historical events.
Tzvi Hurvitz, Eli Hurvitz's father, was an incorrigible individualist and man of many talents, Goldstein relates. The 10th son of a Polish rabbi, Tzvi left yeshiva to become a merchant.
Fearful of being drafted during World War I, he abandoned his career and fled
Scrappy, resourceful Tzvi passed his courage and intelligence onto his son.
Eli was fearless – one incredible passage in the book tells how he plowed the fields of Kibbutz Tel Katzir under Syrian sniper fire. He was also a Tel Aviv wunderkind, attending excellent schools run by first-rate educators who had fled Nazi Germany.
Hurvitz had charm. Living on Kibbutz Tel Katzir after high school, he convinced David Ben-Gurion himself to intervene in a disagreement with the local authorities over the kibbutz's name. He also persuaded Levi Eshkol, who was at the time director of the Department of Settlement in the Jewish Agency, to provide additional protection for the kibbutz from Syrian attacks.
But it wasn't all spunk and brains that made Hurvitz. Coincidence also played a role.
In 1951, Dalia Solomon, a member of the Israeli scouting movement and a daughter of the Solomon family, one of the three shareholders in the Assia pharmaceuticals firm, laid eyes on Hurvitz. At the time, he was secretary of Kibbutz Tel Katzir, and his marriage into her family gave the young genius the ideal platform to develop his ideas.
The tale of Hurvitz's trajectory, from bottle-washer in Assia's analytical laboratory to mastermind of mergers in the pharmaceutical industry, takes up about half the book, and with good reason. His story reminds the reader how with a little charisma, a bit of analytical skill and a helping hand from the universe, the possibilities are nearly endless.
Goldstein excels at describing Hurvitz's originality and creativity in commerce, manufacture, mergers and acquisitions. He recounts how Hurvitz sold medications out of a van at the Niger River delta in
Hurvitz oversaw the implementation of advanced production techniques at Teva. He made long-term planning a management standard. He transformed Teva.
Biter almost eaten alive
The Teva empire grew from a tiny pharmaceuticals distribution company founded more than a century ago, in 1901.
The company's first real boost came in 1962, during a meeting between Hurvitz and the American expert, Professor Don Jeffries.
The Israeli government had invited Jeffries to lecture to owners of pharmaceuticals companies. He advised them to merge in order to use size to their advantage, and to make pains to become more efficient.
Hurvitz, who at the time was only 30 years old, was the only one who listened. He began a process of mergers and acquisitions that has lasted to this date.
Through countless manipulations, Hurvitz recruited the conservative owner of Assia to the vision and throughout, he showed shrewdness, determination and sophistication, from financing to tax planning, on a scale never before seen in Israel.
This part of the book contains a slightly sour description of one of the most astounding episodes in the history of Israeli finance.
One hot Friday in 1983, Dan Suesskind, who was Teva's chief financial officer for 31 long years, was dismayed to learn – from an envelope handed to him by a factory guard– that Koor Industries had built up a 41-percent stake in Teva stock and was threatening to do to Hurvitz, the man brought Wall Street culture to Israel, what Hurvitz had been doing to his peers in the Israeli pharmaceuticals scene.
Today it's hard to believe that Koor, now worth a mere 1.5 percent of Teva, was so close to gaining control over the drugs behemoth. The story becomes even more amazing when we learn that in the battle between Eli Hurvitz and Yaakov Levinson, then the CEO of Bank Hapoalim and the man behind the hostile takeover, both sides employed tactics that today would earn them, at the very least, a grilling at the Israel Securities Authority.
In the book's final pages, Goldstein is tripped up by his superficial knowledge of the financial world and also perhaps by a tendency to take Hurvitz's statements at face value.
Goldstein may not have pressed him for disclosure, but Hurvitz undoubtedly had some failures. The most prominent of them is Copaxone, the drug that Teva developed to treat multiple sclerosis.
Copaxone, one Teva's few original medications, had sales amounting to tens of billions of shekels. With good reason, Goldstein is lavish in his description of Hurvitz's vision and determination. He recounts how Hurvitz, upon seeing an extraordinary opportunity, put the strategy on the table, and how, in a burst of praiseworthy opportunism, pushed the company to shoulder the financial burden of developing an original medication. He nearly single-handedly guided Teva to its greatest success.
But Goldstein does not talk about Hurvitz's role in Teva's failure to deal with patent law. He fails to describe the moment that the patent for the original Copaxone expired and its sales plummeted like a stone down the well.
Over the past two years, the question of how Teva would replace the medication that had brought it 50 percent of its profits in 2011 has cast a pall over the price of Teva's stock, once known as "the people's stock," and troubled its owner. None of this is really touched upon.
The description of the Promedico affair, one of the low points in Hurvitz's otherwise vaunted career, is similarly skewed. Goldstein unilaterally adopts Hurvitz's story of the trial that dragged on for six years, during which the CEO was accused of abetting tax evasion amounting to $18 million.
The ruling of Judge Ayala Procaccia, which was overturned by the Supreme Court, was a series of tough, practical questions and embarrassing comments about the appearance of high-ranking consultants for Teva and for Hurvitz. But Goldstein sketched Hurvitz as an unwitting victim and the trial almost as a deliberate conspiracy against him.
The Tax Authority assessed that Teva owes a whopping NIS 2.7 billion and is taking legal steps. One can only imagine how the press, which is up in arms these days over the commission's far-reaching interpretation of the Encouragement of Capital Investments law, would respond to a case like Promedico. This is a book that would have benefitted from greater attention to detail.
Flawed description of compulsive perfectionist
It is rather ironic that the biography of a compulsive perfectionist such as Hurvitz suffers from unnecessary errors (Avonex is not a company, but rather a multiple-sclerosis drug that competes with Copaxone).
The book also fails the average reader, throwing out complex terms without bothering to define them for the uninitiated. For example, when Makov is described as having "failed time after time to manage expectations for Teva," this means that Makov did not provide the capital market with precise predictions of profit that would minimize fluctuations in its stock prices.
The biography of Eli Hurvitz is written in a flowing style. Based as it is on the fascinating life story of the most successful businessman in Israel's history, it contains some real gems. So it is reasonable to assume that many readers will find it interesting.
Those who are more familiar with the local business world in general and with Teva's transactions in particular, however, will have trouble setting aside Goldstein's lack of familiarity with its current situation, and his simplistic description of Teva as an exemplary success story, one that unfolded thanks to a single, faultless hero.
Yoram Gabison, senior capital market correspondent for Haaretz-TheMarker, has been covering Teva for many years.
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