Israel’s Teva Pharmaceuticals is looking fragile as CEO Erez Vigodman steps down and the company loses patent exclusivity on its billion-dollar Copaxone franchise.
Experts are now questioning whether Teva’s best days are behind it.
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The company disclosed on Monday that Vigodman had resigned from the top job “effective immediately.” Chairman of the board Yitzhak Peterburg will reportedly step in as interim CEO.
While the news release was vague and focused on the new appointments, Vigodman was allocated a short quote.
“I believe that now is the right time for me to step down,” he stated. “It has been a privilege to lead Teva, and I am proud of all we have accomplished. I am confident that the Company’s future is bright.”
Teva and Vigodman have faced significant internal and external pressure in recent years.
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In mid-2015, the company began a drawn-out acquisition of Allergan’s generics business, Actavis Generics, for $40.5 billion. The deal was initially well-received by Wall Street, but over time investors began to question whether Teva had overpaid.
To be fair, Allergan had a lot of leverage. Teva’s top-selling multiple sclerosis drug Copaxone was on the verge of its patent cliff. It finally tumbled with a court ruling in February of this year.
“The worst-case scenario for Teva now looks likely,” wrote EP Vantage on February 1. “It previously said Copaxone sales could fall by $1-1.2 billion if two generic 40mg competitors emerged next month, and there are already several waiting in the wings.”
Teva shares fell six percent in early morning trading when the news first broke. Novartis/Momenta and Mylan prepared their generics for the coming launch.
As sales decline, significant resources are being consumed by the courts.
Teva was fined $519 million in December 2016 for bribing government officials in Russia, Ukraine and Mexico. The illegal activity is said to have happened prior to Vigodman’s appointment as CEO in 2014.
At least one ugly legal battle did kick-off on his watch, however, involving the owners of a drug company in Mexico.
Teva acquired Representaciones e Investigaciones Medicas SA (Rimsa) for $2.3 billion in 2015, with a plan to expand its presence in the emerging market. It then tried to back out of the deal. Teva alleged Rimsa was involved in fraudulent activities; the owners of Rimsa said the claims were fabricated to dissolve the deal.
Meanwhile, in the United States, Teva has been in the cross-hairs of politicians denouncing excessive price hikes on longstanding drugs.
Despite being approved in 1997, Copaxone registered substantial increases every year from 2011-2015, according to Arcadia Healthcare Solutions’ drug cost calculator.
Source: Arcadia Healthcare Solutions
As one of the largest generics manufacturers in the world, Teva can’t easily hide behind high R&D costs — though it is funding some clinical programs. Most notably SD-809 (deutetrabenazine), a treatment for involuntary movements caused by Huntington disease. After several setbacks, Teva resubmitted its NDA filing to the FDA in October of last year. A ruling is expected in April.
All going well, a new CEO will be at the helm to steer the subsequent commercialization push. But Teva’s problems can’t be solved with a new drug or a new leader. The issues are far more systemic.
Photo: MENAHEM KAHANA, Getty Images