CORRECTED - UPDATE 2-Israel's Teva says Chairman Hurvitz stands down

(Corrects to 25 from 30 in fourth paragraph)

* Hurvitz steps down to recover from illness

* Vice Chairman Frost to become chairman

(Recasts, adds analysts' comments, share price)

By Tova Cohen

TEL AVIV, March 9 (Reuters) - Eli Hurvitz is standing down from the chairmanship of Israel's Teva Pharmaceutical Industries TEVA.O, ending a 30 year term at the company during which he led it to become the world's biggest generic drugmaker.

Vice Chairman Phillip Frost will replace Hurvitz, who had taken a three-week medical leave of absence in mid-February to recuperate from treatment for an undisclosed illness and was due to return this week.

In a statement on Tuesday Teva said Hurvitz had indicated in a letter he wished to be released from his duties in order to focus on making a full recovery.

Born in 1932, Hurvitz had been chairman of Teva (TEVA.TA) since 2002 and before that was chief executive for over 25 years. He is credited with transforming it into Israel's largest company with a market value of $57 billion.

"We are all saddened by the circumstances that have caused this development," Frost said in the statement. "We are all keenly aware of the unique role Eli Hurvitz has played for so long in Teva`s development."

U.S.-based Frost, 73, served as vice-chairman of Teva since January 2006, following its acquisition of Ivax Corp. He was chairman and CEO of Ivax from 1987 until 2006 and is the single largest individual shareholder in Teva with 1.74 percent.

Teva's Nasdaq shares were up 1.4 percent at $61.32 at midday, close to a year high of $61.73 set on March 5.

VERY SOPHISTICATED

Some analysts saw a smooth transition under its new leadership.

"Frost is an industry veteran, very smart and successful and Teva is too big to be dependent on one person, even Hurvitz," said Gilad Alper at brokerage Excellence Nessuah. "If all else stays equal then this is neutral for Teva."

Limor Gruber, head of research at brokerage Psagot, said Teva was not a one-man show. "Teva is a very sophisticated machine. It can still be active and fulfill its strategies and goals no matter who is the chairman," she said.

Israel's News1 website reported on Sunday that a group of U.S. investors would like to see Frost become chairman and would also seek to eventually move Teva's headquarters to the United States, the company's biggest market. Yet some analysts do not believe this would happen.

"If they decided to move Teva to the U.S., this would be negative, so negative I don't think there's any chance they would do it," Alper said. "It doesn't make any sense. If it ain't broke, why fix it?"

Alper said Teva's bylaws would make such a move very difficult. Moreover, Teva's growth is not coming from the United States, but from Europe, Japan and in the long run China, he said, and therefore headquarters in Israel makes more sense.

"Also, I don't think Teva would risk losing a lot of good people because of such a move," Alper said.

Israel's Calcalist financial news website quoted Frost as saying the headquarters would not be moved to the United States.

Gruber said investors should take advantage of any weakness in the stock to buy shares.

Frost expressed support for Teva President and Chief Executive Shlomo Yanai. "I fully support our commitment to leadership in the global generics market from our headquarters in Israel," he said in a statement. (Additional reporting by Steven Scheer; Editing by David Holmes)