Tags: Teva | Shares | CFO | Costs

Teva Shares Climb as CFO Vows to Cut Costs

Tuesday, 14 Jan 2014 07:01 PM

Stock of Teva Pharmaceuticals Industries Ltd., the world’s largest maker of generic drugs, rallied to its highest value in New York trading in 20 months after Chief Financial Officer Eyal Desheh said the company remains committed to cutting costs.

American depositary receipts of Petach Tikva, Israel-based Teva increased 6.7 percent to $44.21 at Tuesday's close in New York, the highest price since May 8, 2012. The receipts fell to a two-year low on Nov. 4 after Jeremy Levin, Teva’s former chief executive officer, resigned. Each receipt is equal to one regular share.

The drugmaker chose board member Erez Vigodman to become chief executive officer on Jan. 9 and replace Levin, who left in October amid differences over how to respond as patents expire on Teva’s top-seller, Copaxone for multiple sclerosis. Levin had embarked on the company’s largest cost-cutting program, promising to eliminate jobs and save $2 billion. Desheh, Teva’s acting CEO, reaffirmed the company’s target.

“We are committed to reducing our costs by $2 billion, hopefully even further than that,” Desheh said Tuesday during the JPMorgan & Chase Co. health-care conference in San Francisco. Teva is “moving quickly” to figure out changes to strategic programs and plans and the company is shutting down “inefficient plants and plants in expensive locations.”

Teva’s new CEO will have to rescue Israel’s biggest company after its shares slumped and investors speculated about a possible breakup. While Levin was a drug-company veteran, Vigodman will need to win over investors skeptical of his lack of industry experience.

Fast Changes

Vigodman, who will remain a Teva board member, “made himself available on a very short notice,” Desheh said Tuesday. “He’s aware, we’re aware, our board is aware that we need to move fast. Fast is not a year, fast is a few months.”

Teva expects to move most U.S. production to eastern Europe and Asia, without losing sales, Desheh said. Acquisitions are also a “legitimate” way to grow the company, he said.

“We believe in growing by acquisitions, look at our history,” Desheh said.

Levin took over after his predecessors spent more than $30 billion on acquisitions in the past decade while failing to wean Teva off its dependence on Copaxone. The medicine, which analysts estimate accounts for at least 50 percent of profit, faces possible generic competition this year. At the same time, analysts predict sales of the injected treatment will decline as patients switch to newer oral drugs for MS such as Biogen Idec Inc.’s Tecfidera.

Strengthening Copaxone

“We are rather focused on strengthening the Copaxone franchise, on building it, and learning more about it, and making sure that this drug gets recognized for its incredible safety record, its efficacy, and maintaining sales,” Chief Scientific Officer Michael Hayden said Tuesday during a question-and-answer session at the conference. “We have a big story around Copaxone. It’s a difficult product to make. Our goal is not to block generic Copaxone, our goal is to protect patients, serve the interest of patients, and also serve our shareholders.”

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InvestingAnalysis
Stock of Teva Pharmaceuticals Industries Ltd., the world's largest maker of generic drugs, rallied to its highest value in New York trading in 20 months after Chief Financial Officer Eyal Desheh said the company remains committed to cutting costs.
Teva,Shares,CFO,Costs
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2014-01-14
Tuesday, 14 Jan 2014 07:01 PM
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