Teva chief executive to step down amid boardroom tensions

The head of the world's largest generic drugs company is to step down, less than two years after he took on the job in an effort to turn round the company.

Teva, based in Israel, said on Wednesday that Jeremy Levin will step down as president and chief executive.

Teva and Mr Levin had in recent weeks been the focus of controversy in Israel over the generic drugmaker's plans to lay off hundreds of workers and the generous tax breaks it enjoys.

The company, founded in 1901 and seen as a national champion in Israel, this month said it would sack 5,000 employees worldwide, about a tenth of its workforce, to cut costs and restructure its operations.

Teva initially said that it would cut about 800 jobs in Israel, but Mr Levin later backed down on this after facing an outcry from the Histadrut trade union and ruling and opposition politicians.

Teva's plan to sack workers was conflated in the public debate with the generous tax breaks it enjoys under Israeli law, which many saw as quid pro quo for preserving jobs at home.

Shelly Yachimovich, leader of the leftwing Labour party, accused the company of having "grossly violated its contract with the state".

There had also been longer running shareholder frustration at efforts by the company to develop a new strategy and products, including high-margin patented drugs to replace Copaxone, its multiple sclerosis patent which will soon be vulnerable to competition.

Israeli television reported a leaked memo calling on the Teva board to interfere less in day-to-day management, hinting at tensions over cost cutting.

Bernstein said in a research note on Monday this indicated tensions between Phillip Frost, the chairman, seeking aggressive cost cutting, and a more cautious attitude by management including Mr Levin, notably over reductions in Israel.

The Bernstein note cautioned: "The leak itself is a major concern. If Teva is unable to keep this level of information from the media, how can they expect to keep business plans hidden from rivals?"

Teva said it was appointing Eyal Desheh, executive vice-president and chief financial officer, to temporarily replace Mr Levin while searching for a replacement.

Phillip Frost, chairman, said in a statement: "On behalf of the entire board of directors, I would like to thank Dr Jeremy Levin for his meaningful contribution to Teva during the last two years. The board and management team are fully committed to the implementation of Teva's strategy, including the development of new compounds, making strategic acquisitions, forming joint ventures and the planned acceleration of the company's cost reduction programme."

Teva shares were 0.48 per cent lower at Shk14,410 after the news.

© The Financial Times Limited 2013. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation