Global Investin...'s  Instablog

Global Investing Editor
Send Message
My name is Vivian Lewis. I was born to immigrant German Jewish refugee parents in New York, so I started out as a multilingual baby and won the American Association of Teachers of French prize for high school grads in my year. I went on to study European history, first at Harvard, where I was... More
My company:
agorot limited
My blog:
global investing
  • Why Teva Looks Unhealthy 0 comments
    Oct 30, 2013 2:13 PM

    Teva's boardroom battle royal, on which we commented in on Monday, this morning produced the surprise resignation of CEO Dr Jeremy Levin, who has held the post for 18 months. Levin's temporary replacement is CFO Eyel Desheh, an MBA with wide experience in Israeli corporations, unlikely to set TEVA strategy to handle its imminent crisis when multiple sclerosis blockbuster Copaxone goes off-patent. In fact, Desheh was part of the prior management which allowed the Israeli generic company to become overly dependent on the MS drug. Dr. Levin was hired to rebalance Teva.

    Here are some lessons from NYSE-TEVA:

    1) Government and unions have far too much clout over Israeli companies. The Teva crisis was triggered by Jewish State workers being treated like others sites in Dr. Levin's cost-cutting program.

    2) Teva's problems are probably worse than expected. It is due to report on Q3 tomorrow, and I suspect bad news is coming.

    3) A company cannot have two masters. Here is my Monday note after Citigroup raised Teva to buy because of the planned cost cuts:

    "Over the weekend the Israeli generics drug-maker's stock trading in Tel Aviv was roiled by rumors of boardroom battles and the near-resignation of CEO Dr Jeremy Levin, apparently in the wake of Israeli union agita against cuts in manning levels TEVA is undertaking worldwide to cut costs. Only in Israel were there protests from unions and the government.

    "Reportedly some board members called for Levin's head among them Philip Frost, an American, my least favorite drug rainmaker. Teva is gearing up for a drug patent cliff. Citi in fact cited cost-cutting as part of the Teva "franchises" apart from Copaxone (the multiple scleroris drug whose patent expires partly next May.) Citi also cited rationalization and growth targets set by Dr. Levin as reasons why Teva stock can rise 17% from its c$41 [ed: then] current level. We dislike Dr. Frost because another company he controlled, Prolor, was merged with another Frost holding, Opko Health. We owned PBTH; Frost's buying manipulated both share prices."

    At the wild conference call this morning Frost said in reply to a question that he has friends who are loyal TEVA investors. One analyst suggested that Dr. Frost meet "other shareholders who aren't so happy".

    "I don't have to travel with you to believe that you have such friends," Frost responded, perhaps frostily. The unresolved issue is whether Dr. Frost will let the next CEO run Teva without interfering.

    High-flyer South African-born and British-educated Dr. Levin was hired away from Bristol Myers to head Teva, reportedly with the support of Dr. Frost, an American serial pharma start-up investors who chairs Teva's board and is its largest shareholder."

    "We view this news as a significant setback ... as the company's recently implemented strategy to [get] back on a growth path, including recent accelerated cost reduction initiatives, could be called into question," Goldman Sachs's Jamie Rubin said. She rates TEVA a sell.

    Disclosure: I am long TEVA.

Back To Global Investing Editor's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


  • Banned By Seeking Alpha
    Apr 10, 2014
  • foreign bank preferreds, Israeli tech stocks, and Brazil. for 10% yields (banks), for capital gains Israelis), and for buying & holding
    Aug 28, 2009
More »

Latest Comments

Most Commented
  1. Banned By Seeking Alpha ( Comments)
  2. Solar Eclipse ( Comments)
  3. XIN XIN ( Comments)
  4. Crocodile Dundee Bonds ( Comments)
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.