The drama in Israel-based pharmaceutical giant Teva continues: A day after he denied his plan to resign, the company announced Wednesday that Dr. Jeremy Levin would step down from his position as president and chief executive officer instantaneously.
The board of directors has appointed Vice President and CFO Eyal Desheh as his interim replacement, effective immediately, and has set up a search committee to seek a permanent successor.
Teva is scheduled to release its financial results for the third quarter of 2013 on Thursday. Trading of its share on the Tel Aviv Stock Exchange has been suspended.
On Tuesday, Levin denied a media report that he was considering resigning due to a rift with Teva Chairman Phillip Frost over the expected cuts in the company.
In a letter leaked to the media on Sunday, the company's management criticizes the board of directors for intervening in the daily course of business, which is "preventing the management from being able to manage Teva effectively."
In the letter, Levin asserted that there was no room for the board's intervention in the company's restructuring plan, as part of which it is expected to cut about 10% of its workforce worldwide and fire some 5,000 workers. The letter points to alleged differences of opinion between the board and the management over the plan to dismiss 700 to 800 employees in Israel.
'I look forward to pursuing new opportunities'
Levin took the helm of Teva in May 2012 after the company had grown rapidly through acquisitions. He promised to reshape the company by developing its own medicines, amid increasing competition in the generics market, and to divest businesses in non-core areas.
"Since I joined Teva, we have made tremendous progress in setting a new course for the company," Levin said Wednesday. "I wish the company and its people, who I respect greatly, every success. I look forward to pursuing new opportunities where I can continue to apply my experience and contribute to the evolution of the global pharmaceutical industry."
Following the announcement on Levin's resignation, Frost issued a statement saying, "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 programs."
Interim CEO Deshe said, "I have full confidence in the ability of Teva's management and employees to achieve our goals and execute the strategy laid out for the company. My colleagues in Teva's management and I will continue to drive execution and results in full collaboration with our board of directors, for the benefit of our patients, shareholders, customers and employees."
Mistrust in capital market
Teva is one of the biggest pharmaceutical companies in the world, the leading company in the genetic field and the largest commercial company in Israel. The company has production, research and marketing facilities in Israel, North America and Europe.
The company's greatest achievement was receiving the Food and Drug Administration's approval for its Copaxone drug in 1996. The medication was developed by a team of researchers at the Weizmann Institute of Science to treat to treat multiple sclerosis. That was when Teva went from being a company producing generic drugs to a company making drugs of its own.
The company's market value in January 2011 was NIS 186 billion (about $52 billion). By the end of 2012 Teva had 45,948 workers, 7,397 of them in Israel. Most of the company's employees are located in Europe – 19,749 workers. In North America the company employs 9,483 workers, in Latin America 4,374 workers, in Asia 4,893 workers, and in other countries – 52 workers.
In the past two years, the company's share has been suffering mistrust in the capital market amid concerns of an erosion in Teva's profitability and growth after losing exclusivity for Copaxone, which was a key component of the company's profits. Teva's share has lost 12% of its value since Levin took office.