Teva Pharmaceutical Industries Limited (TEVA) CEO Vows Cost Cuts, Deals, Divestitures in Reshaping Drug Maker; to End 5 Research Programs
12/11/2012 11:34:53 AM
Teva Pharmaceutical Industries Ltd.'s (TEVA) new leader vowed to reshape the drug maker, including a reduction in annual costs of up to $2 billion over the next five years. Jeremy Levin, who took over the Israel-based company in May, also said Tuesday in a meeting with analysts and investors in New York he would pursue small- to mid-sized acquisitions, as well as divestitures of certain non-core assets. Dr. Levin acknowledged that Teva had lost some of its focus and inflated its cost structure as a result of a series of acquisitions over several years that expanded Teva's core generic-drug business and diversified the company into certain non-generics businesses. "We are looking to reshape the company," Dr. Levin said. "We are firmly confident we will reward our shareholders. We will meet the needs of patients, meet the needs of employees." Dr. Levin said the company would achieve revenue growth over five years despite the expected patent expirations for certain branded drugs. The company also has the capacity to spend about $10 billion on business development over the next five years, Dr. Levin said. He was one of the architects of Bristol-Myers Squibb Co.'s (BMY) acquisition and license strategy that strengthened Bristol's drug pipeline in recent years. Dr. Levin said the company would use small- to mid-sized deals to build its portfolio of drugs for central-nervous system and respiratory diseases, among other areas. The company will also seek strategic alliances with other drug companies, and will consider shedding non-core assets. Teva last year bolstered its brand-name drug portfolio by acquiring Cephalon Inc. for $6.8 billion, and it expanded into over-the-counter drugs via a joint venture with Procter & Gamble Co. But Teva's core generics business has faced pressure, while the company faces increased competition for its top branded drug, multiple-sclerosis treatment Copaxone. At the same time, analysts believe there is room for cost-cutting by streamlining all the businesses Teva has acquired.