Teva Pharmaceutical Industries Ltd. named H. Lundbeck A/S’s Kaare Schultz as its new chief executive officer, ending a seven-month search for a new leader to revive sales and reduce debt at the world’s largest maker of generic drugs.
Schultz, 56, will move to Israel and be based at Teva’s headquarters in Petach Tikva, the Israeli company said in a statement Monday. He replaces Yitzhak Peterburg, who has been acting CEO since Erez Vigodman left Feb. 6 by “mutual agreement” with the board.
Source: Novo Nordisk A/S
The new CEO is likely to face pressure from some investors to split the company into two businesses, one focusing on patented specialty medicines and the other on cheap copycat drugs. Vigodman departed after Teva shares plunged to a 12-year low amid legal challenges to the company’s best-selling patented drug and price pressures on its generics. Teva’s situation worsened in the months since, as the company lowered its profit guidance and slashed its dividend.
Shares of Teva jumped 7.8 percent to 58.75 shekels as of 10:45 a.m. in Tel Aviv trading, after earlier climbing by the most in 10 months. Its American depositary receipts rose 0.2 percent Friday to $15.50 in New York, giving the company a market value of $15.7 billion. The stock has plunged 57 percent in the past year.
Lundbeck plunged about 13 percent, the most in almost a year, and traded down to 364.10 kroner as of 9:45 a.m. in Copenhagen.
Schultz’s appointment marks the culmination of a challenging and what at times appeared to be an impossible recruitment effort. Teva’s board set out to find a candidate with prior experience at the helm of a drugmaker for its fourth CEO in less than six years as the company’s woes mounted. Finding the best person meant abandoning some of its unspoken principles: Schultz will be the first non-Jewish person to helm the company in its 116-year history.
Schultz joined Denmark’s Lundbeck in mid-2015 from Novo Nordisk A/S after he was passed up for the top job at the world’s biggest maker of insulin. He had spent more than 20 years climbing through the ranks there, garnering commercial and operational experience, before being promoted to chief operating officer in 2002. When he left, he was also president and first in line to succeed then-CEO Lars Rebien Sorensen.
In April 2015, Novo chose to extend Rebien Sorensen’s tenure at the helm. It also eliminated Schultz’s role as chief operating officer, effectively demoting him and prompting his departure.
Schultz “made no secret of looking forward to assuming my position,” Novo’s Rebien Sorensen said then.
When Schultz took the helm at Lundbeck, the company had been without a permanent CEO for more than five months, since Ulf Wiinberg left in November 2014 after failing to disclose a shareholding in a company in which his employer later made an investment.
As CEO of the Danish company, one of Schultz’s first steps was to cut about 1,000 jobs, or about 17 percent of the workforce. The cost-saving measure pleased investors, who’d grown concerned about its weak profitability and revenue erosion due to rising competition from copycat versions of its antidepressant Cipralex and Alzheimer’s treatment Ebixa.
Recruitment firm Heidrick & Struggles assisted Teva with the search for the new chief, the Israeli company said in its statement.
Peterburg, who stepped down as Teva chairman to become interim CEO, has put several assets up for sale, closed down factories and announced 7,000 layoffs, all in an effort to stabilize Teva’s financial footing. The Israeli drugmaker’s debt is more than $30 billion — twice the value of the company — and Teva warned investors that it risks breaching its debt covenants this year if it doesn’t reap the expected $2 billion from the asset sales.
Schultz will also face choices on whether to maintain Teva’s dividend or devote more money to paying down debt. The company saw its debt balloon largely from the $40.5 billion acquisition last year of Allergan Plc’s generic-drug business.
— With assistance by Phil Serafino
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