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 A costly acquisition spree in recent years has saddled Teva with
huge debts and eroded shareholder confidence in the generic drugs
maker, whose stock has dropped by 50 percent since early August when
it cut both its forecasts and its dividend.
The first task for Schultz, named CEO after a seven-month search,
will be to decide whether to maintain Teva <TEVA.N> as both a
generics and specialty drugmaker, split it in two or get out of
low-margin, high competition generics altogether.
Schultz said he will develop a joint strategy with the board and
management that would address the "various restructuring
initiatives" as well as Teva's more than $35 billion in debt.
Teva -- the world's largest generics drugmaker -- is selling off
non-core businesses such as its women's health business and European
oncology and pain unit to cut its debts.
"There will be a very clear strategy that will be communicated once
we're ready to do that," he told Reuters.
Teva's shareholders welcomed the 56-year-old's appointment, with its
Tel Aviv-listed shares rising by 13 percent.
But shares in Denmark's Lundbeck fell by over 12 percent as
investors digested the departure of both Schultz and Staffan
Schueberg, its chief commercial officer, who has also quit.
Teva, which cooperates with Lundbeck on a number of drugs, said no
start date has been set for Schultz, adding he will join the company
and relocate to Israel as soon as practicable.
The Israel-based company is facing accelerating price erosion in the
United States and working out how to reduce the debts it took on to
finance the $40.5 billion purchase of Allergan's generics business
last year.
Analysts and investors said Teva paid too much for Actavis and that
led to the departure in February of CEO Erez Vigodman.
"We need to restore credibility," Teva Chairman Sol Barer told
Reuters. "It's early but ... he (Schultz) will dive in and come up
rapidly with a strategic plan."
Barer said Teva had "no plans now" to split in two.
SIGNIFICANT CREDIBILITY
Barer and Teva's board have been criticized for taking so long to
hire a new CEO.
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"We wanted to make sure we got it right," Barer said, noting that
Schultz hit all of the board's criteria, including global and
pharmaceutical experience.
"Critically, he has successful turnaround experience. At Lundbeck,
it was a troubled company and he turned it around and created
significant value for shareholders. And, he has significant
credibility with stakeholders," Barer said.
Schultz will succeed Yitzhak Peterburg, who will continue as Teva's
interim CEO until Schultz takes over.
Schultz had been widely seen as heir apparent at the world's largest
diabetes drugmaker Novo Nordisk but quit in 2015 when Novo's former
CEO said he would stay until 2019.
He became CEO of Lundbeck in May 2015 shortly and the Danish firm's
share price has more than tripled since he took over and returned it
to profit by slimming costs.
At Teva, Schultz will also face significant challenges.
The company has put Iceland-based Medis, a supplier of development
work to third-party drugmakers, up for sale and is looking to team
up with other drugmakers to fund some of its development pipeline.
Its problems also stem in large part from its specialty business.
Its blockbuster multiple sclerosis drug Copaxone had contributed
much of Teva's revenue and profit, but its patent has run out and
now is facing generic competition.
(The story has been refiled to add dropped words in paragraphs 2 and
3)
(Additional reporting by Ben Hirschler in London and Abinaya
Vijayaraghavan in Bengalru; editing by Alexander Smith)
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