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Teva sheds R&D chief after new CEO takes the helm

Kåre Schultz begins remoulding the Israeli pharma firm

Teva

New chief executive Kåre Schultz has lost no time in remoulding Teva to his liking, announcing a new organisational structure and jettisoning top management just a few weeks after joining the company.

Schultz has introduced sweeping changes including the departures of R&D chief Michael Hayden who joined the company in 2012, head of Teva’s specialty medicines unit Rob Koremans, and Dipankar Bhattacharjee, who leads its generic medicines group. All three will retire at the end of the year.

Another 4,000 positions are set to be cut from Teva’s headquarters and other facilities within Israel - something that prior CEOs have struggled to accomplish due to political backlash that has sometimes found support within the company’s own board. Teva employs around 7,000 people in Israel, with thousands more working in companies serving the pharma company.

The reorganisation will see Teva's generics and specialty medicines divisions integrated into one organisation, operating through the three regions of North America, Europe and growth markets, and R&D will also be combined into one global research group rather than being split between specialty and generic units.

The changes will “achieve better commercial focus and drive value creation,” said Schultz, who said there was a need to take “decisive and immediate action to address external pressures and internal inefficiencies”.

The departures were mirrored by a series of new appointments, with Hafrun Fridriksdottir - previously head of generics R&D - heading up the combined global R&D operations and Michael McClellan taking the position of chief financial officer on a permanent basis having served on an interim basis.

Brendan O’Grady is named commercial executive vice president for North America, with Richard Daniell taking that role in Europe and Gianfranco Nazzi heading up the growth markets unit. Sven Dethlefs has been appointed executive VP, global marketing & portfolio.

Investors seemed to welcome the tough stance from Schultz - who has a reputation for turning around struggling companies from his time at Lundbeck - and shares in Teva closed up 5.3% in the wake of the announcement.

Schultz has taken up the CEO position at Teva at a challenging time, with sales slumping and thousands of jobs culled as a result of pressure on its generic drugs business, mainly due to pricing pressure, as well as the lingering effect of losing patent protection for multiple sclerosis blockbuster Copaxone (glatiramer acetate) and disappointing clinical data for its would-be successor laquinimod.

In September, shortly after the new CEO was announced, Teva kicked off its restructuring drive with two separate deals to sell off its women’s health business, raising around $2.5bn that it said would go to pay down debt.

“It remains our absolute priority to stabilise the company’s operating profit and cash flow in order to improve our financial situation, while being focused on short-term revenue and cash generation, and at the same time, ensure we deliver on our commitment to supply high-quality medicines to patients around the world,” said Schultz.

Article by
Phil Taylor

28th November 2017

From: Research

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