Teva CEO promises to reshape, refocus company by 2017
* CEO says Teva to be reshaped by 2017
* Seeks to be less dependent on one product for high portion of profit
* Has 15 drugs in late stage development
* Will focus on new uses, alterations of existing medicines
By Bill Berkrot
NEW YORK, Dec 11 (Reuters) - Teva Pharmaceutical Industries' new Chief Executive Jeremy Levin promised on Tuesday to reshape the company into "the most indispensable medicines company in the world" and to provide significant value to its shareholders along the way.
At a meeting in New York with investors and analysts Levin, who took over as CEO in May, said Teva would sustain "profitable growth" through 2017 and beyond despite numerous challenges, such as the looming 2015 patent expiration of its most important branded product, the multiple sclerosis drug Copaxone. It accounts for about 20 percent of Teva sales and an even higher percentage of its profits.
By 2017, he said, "Teva will be a reshaped company," and one that will be more transparent and accountable to Wall Street and its investors than it has been in the past. The Israel-based company provided more details about its cost-cutting plans and new product development.
Levin said in the future he does not want Teva to be so dependent on one product for a significant portion of its profits, in part through growth of branded generics in emerging markets and through its joint venture with Procter & Gamble Co on over-the-counter consumer products.
But Levin, a former executive of Bristol-Myers Squibb Co. , said the world's largest maker of generic drugs would increasingly focus on bringing new medicines to market in its core areas of expertise, such as central nervous system disorders and respiratory diseases.
He said it also will focus on what Teva is calling new therapeutic entities, or NTEs. Those could be new uses, formulations, delivery methods or combinations of existing products.
Levin said China represents an enormous opportunity for future sales of respiratory disease products. "We haven't yet scratched the surface of how to get into that part of the world," he said.
Teva has 15 drugs in late-stage development and another 13 programs in mid-stage trials, but has discontinued 12 other products in its pipeline to focus on core areas of expertise.
The company took a step toward adding to its portfolio of branded medicines earlier on Tuesday by announcing a deal for worldwide rights to an experimental pain drug being developed by Xenon Pharmaceuticals, a biotech company founded by Michael Hayden, Teva's new chief scientific officer .
Hayden said NTEs, as they come from proven effective medicines, would provide high returns with much lower risks than developing new molecules. He said the company set a goal of approving development of 10-15 NTEs in 2013.
While Teva was built through a series of large acquisitions, Levin reiterated his desire for mid-sized or small transactions, whether through licensing deals, acquisitions or strategic alliances with large pharmaceutical companies.
The company, whose shares have badly underperformed those of its smaller rivals during the last two years, said on Nov. 30 that it would streamline operations and cut costs by $1.5 billion to $2 billion during the next five years, with most of the savings realized in the next three years.
Teva provided details on Tuesday of where it would find much of the savings, including $400 million to $700 million by centralizing global purchasing power rather than local procurement of goods. It sees another $150 million to $175 million in savings from shifting away from many small production facilities and instead relying on larger, more efficient manufacturing sites.
A move to centrally controlled supply chain inventory levels could save another $110 million to $140 million, the company said.
Levin said Teva would also continue to divest non-core assets, a process it began by selling its U.S. animal health business to Bayer for up to $145 million.
"We have a plan that's reasonable and achievable," Teva Chairman Phillip Frost said.
Teva's stock was off 62 cents, or 1.46 percent, at $41.90 in afternoon trading on the New York Stock Exchange.
- Rescuers scour sea for Malaysian jet lost in 'unprecedented mystery' |
- The search for missing Malaysian jet
- Mexico kills drug kingpin reported dead years ago: official
- Missing Malaysian jet may have disintegrated in mid-air: source |
- Exclusive: Malaysia plane probe narrows on mid-air disintegration - source