The Search is Over: Struggling Teva Finally Gets a New CEO
September 11, 2017
By Alex Keown, BioSpace.com Breaking News Staff
This morning Teva announced it had tapped Kåre Schultz as its new CEO. Schultz joins the world’s largest generics company as it faces numerous financial challenges. The company is shouldering a massive debt of between $30 and $35 billion and has seen a serious decline in sales in the United States. Copaxone, Teva’s top-branded drug for multiple sclerosis, is facing patent challenges. Other challenges include calls from critics to break the company into two different entities, one for generics and one for patented drugs like Copaxone.
Those are issues Schultz will be forced to address when he steps into his new position.
In an interview with Bloomberg, Schultz said he enjoys handling the kinds of challenges that face Teva. However, he said it was too early to announce a clear strategy he would like to initiate at the Israel-based company.
“What drew me to Teva, and what makes Teva different from its peers, is its unique commitment to growing an extensive global reach while continuing to provide new and high-quality treatments for patients and an innovative culture for its employees. I am proud to be joining a company that helps millions of patients around the world on a daily basis with its broad range of generic and specialty drugs and solutions,” Schultz said in a statement.
Teva’s announcement pleased investors. Company shares are up more than 15 percent this morning, hitting $17.92 as of 10:04 a.m.
Schultz most recently served as CEO of Danish company H. Lundbeck A/S. Teva said Schultz will move to Israel to helm the company, although it did not provide a specific time change for when he will begin his duties. For a time, Schultz will actually serve double. He will remain CEO of Lundbeck until a replacement has been found, all while assuming his duties at Teva, Lundbeck said in announcing Shultz’ departure. Schultz joined Lundbeck in 2015 after serving as chief operating officer Novo Nordisk (NVO). He was passed over for the role of CEO at that company and stepped down after a 26-year stint there.
Schultz said in a statement issued by Lundbeck that he could have remained at that company for many years, but received an offer that he couldn’t refuse. According to a filing with the U.S. Securities and Exchange Commission, that offer included a $20 million signing bonus.
As he assumes control of Teva, he will have to map out a plan to right the company ship. Last month, Teva said it planned to terminate thousands of employees and shutter several manufacturing facilities as it deals with its financial issues. That news came on the heels of disappointing quarterly reports where the company posted an 18.4 percent drop in earnings for the quarter. In that announcement, Teva said it may look for partnerships to fund its pipeline development and sell off some assets to pay down its debt. Part of that debt is related to Teva’s 2015 $40.5 billion acquisition of Actavis (ACT), Allergan (AGN)’s generics division. Many industry analysts have suggested that Teva paid too much for Actavis. Criticism over the Actavis acquisition lead to the abrupt departure of Teva Chief Executive Officer Erez Vigodman earlier this year.
Still, Schultz has already proven he is adept at handling those kinds of challenges. Sol Barer, Teva’s chairman of the Board, told Bloomberg that when Schultz took over Lundbeck that company faced similar problems. He was able to turn that company around in two years, making him the ideal candidate, Barer said.
In addition to the loss of Schultz, Lundbeck also announced Chief Commercial Officer Staffan Schüberg was leaving to take over the role of CEO at an undisclosed company. Shares of Lundbeck are down more than 13 percent this morning.