Teva fills top spot with Lundbeck CEO
- Teva Pharmaceutical Industries Ltd. ended on Monday a seven-month-long search for a new CEO, tapping the head of Lundbeck A/S to fill the Israeli company's top spot.
- Kåre Schultz, 56, will take the reins from Yitzhak Peterburg, who has served as Teva's interim CEO since the drugmaker's most recent head stepped down in February. An industry veteran, Schultz worked for more than two and a half decades at Novo Nordisk A/S in various roles, including president and chief operating officer, and has been chief at Lundbeck since May 2015.
- Per his latest appointment, Schultz will receive annually a salary of $2 million, a potential performance-based bonus equal to 140% of that salary and equity incentives worth $6 million. What's more, Schultz stands to take home $40 million in cash and stock signing bonuses.
Teva has faced a slew of challenges over the past few years. Revenues for its blockbuster multiple sclerosis medication Copaxone (glatiramer acetate) have dipped as copycat version inch their way closer toward market; in December, it agreed to pay the U.S. government $520 million to settle criminal bribery charges; and just last, citing a challenging generics market, it decided to eliminate 7,000 positions and do away with 15 manufacturing facilities.
Amid those and other upheavals, Teva has struggled to hold on to CEOs — Schultz will be the company's fifth since 2012.
Yet, Schultz could be a welcome addition, at least for Teva investors. He comes with years of experience in higher level positions at big pharma companies, something his immediate predecessor, Erez Vigomod, lacked.
Also helping Schultz's case is Lundbeck's performance under his leadership. In 2016, for example, the Danish drugmaker had DKK 15.6 billion (around $2.5 billion) in revenues, up 7% from the year prior. Lundbeck attributed much of the growth to a new strategy implemented the same year that narrowed its focus to four therapeutic areas — Alzheimer's disease, depression, Parkinson's disease and schizophrenia — and sought develop drugs for those diseases without collaborators.
"Kåre has deep insight into the global pharmaceutical industry and a keen knowledge of the generic and specialty drug markets. His proven strategic, financial and operational capabilities and his strong commitment to growth will enhance value for all stakeholders and position Teva for long-term success," Sol Barer, chairman of Teva’s board of directors, said in a Sept. 11 statement.
Investors appear to share in that optimism. Teva's stock rose more than 19% on Monday, trading at $18.50 by close of market. Before news of Schultz's appointment, Teva shares were down nearly 60% year to date.
Schultz is relocating to Israel for his new job, and Teva has agreed to pay for housing and moving expenses. In exchange for those perks and his lucrative pay check, Schultz is responsible for guiding Teva through a turnaround — namely by bringing down the company's monster $35 billion debt load and ushering new products to market.
On that former front, the company revealed during its first quarter earnings call intentions to sell off its global women's health business, as well as its European oncology and pain businesses.
On the latter, it has notched several regulatory successes throughout 2017, including securing Food and Drug Administration approval for a limited generic version of GlaxoSmithKline plc's Advair (fluticasone propionate and salmeterol) and Gilead Sciences Inc.'s Truvada (emtricitabine/tenofovir disoproxil fumarate). However, Teva also suffered a major setback in May when its follow-on drug to Copaxone, laquinimod, failed a Phase 3 study testing it in patients with relapsing-remitting multiple sclerosis. Teva subsequently shelved development for the drug in that indication.
"We are optimizing our operations and geographical footprint while focusing our resources on the specialty and generics pipeline assets that offer the most attractive return on investment. In addition, we are on course to hit our target of generating at least $2 billion from the sale of non-core assets, which we will use to strengthen Teva’s balance sheet," Peterburg said in the Sept. 11 statement.
- Teva Pharmaceutical Industries Ltd. Press release
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