Teva Finally Appoints New Chief Executive After Months of Speculation -- 4th Update

By Rory Jones Features Dow Jones Newswires

The world's biggest seller of generic drugs for months looked for an experienced chief to steer the troubled company, who could navigate a series of daunting challenges, from falling medicine prices to the company's high debt.

Continue Reading Below

Teva Pharmaceutical Industries Ltd. ended that search on Monday by appointing Kare Schultz, a nearly 30-year pharma industry veteran, as the company's new chief executive.

Mr. Schultz honed his skills at Novo Nordisk A/S, one of Denmark's biggest firms, before moving as chief executive in early 2015 to H. Lundbeck A/S, which he successfully restructured to put the Danish company on track to post record earnings.

That know-how will be key in turning around Teva, which recently shuffled its board and is shedding assets, while coping with new competitors. Its shares have been under pressure for months as concerns mounted about its future.

"This is a critical time in Teva's history, Chairman Sol Barer said in an interview with The Wall Street Journal. "We had to make sure we got the right person."

Teva has searched since February for a new chief executive that ostensibly could fill the shoes of previous longtime leader Eli Hurvitz, who is credited with turning the firm from a small-time pharma firm into a global generics drugs seller and a household Israeli name. Mr. Hurvitz was chief executive for more than 25 years and involved in Teva until his death in 2011.

Continue Reading Below

Since then, the firm has churned through a series of chief executives that have struggled to manage global expansion and found it hard to implement changes amid scrutiny over operations by Israeli lawmakers and other local stakeholders. Boardroom squabbles over whether the chief should be Israeli also hampered the growth of the multinational in the eyes of many investors.

Like Teva, Novo Nordisk became a global leader based out of a small country with a similar-sized population to Israel and with a reputation for innovation. Mr. Schultz, 56, joined Novo Nordisk in 1989 before becoming chief operating officer in 2002 and then also president from 2014 to 2015.

Novo Nordisk pioneered the development of insulin for diabetes but recently has struggled to encourage doctors, health-plan managers and insurers to pay for its newest version of the drug. Teva is similarly facing competition for its groundbreaking multiple sclerosis drug, Copaxone.

Mr. Schultz joins an executive board at Teva that in recent years has fought over whether the firm should focus on generics drugs or take advantage of Israel's focus on research and development and invest in specialty medicines, like Copaxone.

The new Teva chief, only the second non-Israeli to lead the firm, understands the "cultural framework" of working for a pharmaceutical firm that, like Novo Nordisk, is also considered a national champion, Mr. Barer said.

Mr. Schultz will review the firm's operations before articulating a new strategy as soon as possible, Mr. Barer said. The new CEO would relocate to Israel and be based out of Teva's Petah Tikva headquarters in a "sign of his commitment" to the firm, the chairman said.

"It sounds just what the doctor ordered," said Phillip Frost, chief executive of Miami-based health-care firm Opko Health Inc. and former chairman of Teva, of Mr. Shultz' appointment. "He has turnaround experience...He has credibility with investors."

Teva didn't give a date for when Mr. Schultz will join the company. There has been plenty of speculation about who might take the reins at Teva, with AstraZeneca PLC CEO Pascal Soriot cited at one stage as a contender by local media.

Teva's share price rallied on news of Mr. Schultz's appointment, rising roughly 8% in early trading Monday in Tel Aviv. AstraZeneca shares rose 2%.

In August, Teva lost about a quarter of its market value in one day on mounting concerns about the future of the company after it cut its full-year outlook and slashed its dividend, blaming the rapid deterioration of the U.S. generic-drug business. Teva took a $6.1 billion write-down on that unit and posted a quarterly net loss of $6.04 billion.

This isn't the first time an outsider has tried to restructure Teva. In 2012, Teva hired Jeremy Levin from Bristol-Myers Squibb Co. to take the helm, but he was forced out the next year during a dispute with the board over the company's direction.

His Israeli replacement Erez Vigodman departed the company in February for undisclosed reasons amid a steep fall in the firm's share price and after a buyout binge that was criticized by investors.

Mr. Vigodman's acquisition last year of Allergan PLC's generics unit -- Teva's biggest-ever deal -- left the company with debt of roughly $35 billion. It is attempting to pay down those borrowings with asset sales, but has so far found few takers for its businesses.

In an effort to address investor concerns that its board lacked international pharmaceutical experience, Teva in June nominated four new directors and Mr. Schultz further addresses those concerns.

At H. Lundbeck, he was credited with launching a turnaround, including job cuts and the restructuring of its business, which last year returned the firm to full-year profit. H. Lundbeck shares fell 11% following news of Mr. Schultz's move to Teva.

"Overall, we believe adding a highly creditable CEO with significant industry and turnaround experience represents a clear positive for Teva, " J.P. Morgan said in a note to investors Monday. "At the same time, we do not see any quick fixes for Teva."

Write to Rory Jones at rory.jones@wsj.com

(END) Dow Jones Newswires

September 11, 2017 14:10 ET (18:10 GMT)