Teva Pharmaceutical Industries Limited (TEVA - Free Report) announced the appointment of Kåre Schultz as president and chief executive officer (CEO), thus ending the Israeli generic maker’s more than six-month long search for a permanent CEO. Share rose more than 12% in pre-market trading on Monday.
Schultz, until now, served as president and CEO of Denmark’s H. Lundbeck A/S. He joined H. Lundbeck in 2015 when the company was struggling due to loss of patents for key drugs and helped the company to turn around. He has also worked as chief operating officer of another Denmark based drug giant, Novo Nordisk A/S (NVO - Free Report) .
Teva’s CEO, Erez Vigodman, had stepped down in February this year. Dr. Yitzhak Peterburg took over as interim CEO while the search for a permanent CEO began. Teva’s chief financial officer, Eyal Desheh, also retired in June. Until Schultz, aged 56, takes over, Peterburg will continue to serve as interim CEO.
Teva has been facing tough times and is a Zacks Rank #5 (Strong Sell) stock.
A challenging environment in the U.S. generics business and the continued deterioration in Venezuela have been hurting Teva’s sales.The U.S. generics industry is facing significant competitive and pricing pressure. These have been affecting the company’s top-line performance. Increase in FDA generic drug approvals and ongoing customer consolidation have increased competitive pressure in the industry. The challenges in the U.S. generics market are expected to continue this year.
Meanwhile, delay in the launch of some new generic drugs and increased competition for some others is also hurting segment sales.
Management expects lower revenues and profits in the U.S. Generics unit in 2018 and potentially 2019 due to generic industry pressure.
Teva is also facing several other challenges in the form of generic competition for multiple sclerosis drug, Copaxone, its key revenue generator, new competition for branded products, a high cost base and debt load. While a generic version of the 20 mg formulation of Copaxone is already on the market, Tevais facing patent challenges for the 40 mg thrice-weekly formulation of Copaxone. Companies like Mylan N.V. (MYL - Free Report) and Momenta Pharmaceuticals, Inc. (MNTA - Free Report) are looking to get approval for their generic versions of the 40-mg thrice-weekly formulation of Copaxone.
Teva missed on both second quarter earnings and revenues and lowered its outlook for the year. The company’s shares were down significantly following the release of disappointing results in August. Year to date (YTD), Teva has lost 57.3% of its value compared with 17.2% decline of its industry.
In August, Teva also announced a 75% cut in its dividend.
During this critical period for Teva, it remains to be seen if Schultz can use his 30 years of extensive global pharmaceutical experience to help the company regain lost ground.
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