Tel Aviv: The tempestuous fortunes of the world’s largest generic drugmaker, Teva Pharmaceutical Industries Ltd., nosedived further as Erez Vigodman announced his decision to step down as the chief executive officer of the company. The company said that it will “conduct a thorough review of the business”.
The resignation of the company’s top executive comes barely two months after the resignation of Sigurdur Olafsson, the former head of its generic drugs division. Olafsson and Vigodman had engineered Teva’s $40.5-billion acquisition of Actavis Generics in July last year. The investors said that the price was too high. However, that wasn’t the only bad news for Israel’s largest company.
The Israeli behemoth has had to scale down its profit forecast twice since the Actavis deal, sending its stock values on a tailspin to touch a 12-year low. The matters haven’t been helped by the lost court cases meant to prevent Teva’s competitors from selling a cheaper version of the company’s flagship product Copaxone. The multiple sclerosis injection accounted for a fifth of the company’s sales last year.
The fiasco sent Teva’s shares to a 10-year low of $32.20 on the New York Stock Exchange last week. That, along with the fact that Teva’s debt level is now hovering over its market value, sums up the challenge faced by the interim CEO Yitzhak Peterburg, who is Teva’s current chairman, of bringing about a change in the company’s fortunes. Former Celgene Corp CEO Sol Barer will be appointed as the company’s new chairman.
Vigodman’s resignation, which sent the shares down by 2 percent in extended trading, will come into effect immediately, with the board of directors all set to embark on their search for a full-time CEO.
Erez Vigodman had joined Teva in 2014 after turning the tables at an ailing Israeli agrochemical firm. His reputation of a turnaround specialist and dealmaker, however, was hit hard by a series of deals that left Teva in a fix, which eventually led to the investors clamoring for a shakeup.
Prior to the embarrassment of the Actavis deal, Vigodman had also anchored the company’s negotiations with Mexican drugmaker Rimsa, which saw both the sides dragging each other to the court.
The company also paid $144 million to get a migraine patch called Zecuity, which it had to pull out of the market last year after it was reported that some patients had been scarred or burned.
The matters were aggravated when the company admitted before US authorities that it paid bribes in some countries to gain business for its medicines, for which it was slapped with a $519 million fine.
All in all, the company’s shares fell by 11% during Vigodman’s three-year reign.
“It’s certainly not good news at this point in time,” said Elizabeth Krutoholow, an analyst at Bloomberg Intelligence. “It doesn’t send a good signal about the future of the company, though a new CEO may be just what the company needs to turn things around. Vigodman hasn’t been the best dealmaker.”