* Seeks to be less dependent on one product for high portion
* Has 15 drugs in late stage development
* Will focus on new uses, alterations of existing medicines
* Shares fall 2 percent
By Bill Berkrot
NEW YORK, Dec 11 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 some 50 percent
of its profits.
Investors were not immediately convinced and Teva shares
fell 2 percent to close at $41.67 in New York.
The Israel-based company provided details about its
cost-cutting plans, areas of focus going forward and new product
"Teva will be a reshaped company," Levin said, and one that
will be more transparent and accountable to Wall Street and its
investors than it has been in the past. He said the dramatic
transformation was underway.
"We have a completely new organization, a completely new
management team," Levin told Reuters after the meeting. "We have
a process already ongoing inside the company. We are focused on
credibility. We are focused on new products. We are changing our
Teva said it would continue to return money to shareholders
through its dividend and $3 billion share buyback program, but
it did not announce increases to either.
"I and other investors were hoping for a little more
giveback of cash to investors ... a little short-term candy,
but they took an approach of being conservative," said Steven
Tepper, an analyst with Harel Finance said.
But he said Levin accomplished his mission for the meeting.
"He really put forward his strategy and he's going to make a
big difference in the company," Tepper said. "He's turning a
classical generic company with that extra bonus of Copaxone into
a company that will be much more a real pharma company - more
global, much more diverse and fully integrated."
Levin said that in the future he does not want Teva to be as
dependent on one product for a significant portion of its
profits, and would accomplish that in part through growth of
branded generics in emerging markets and its joint venture with
Procter & Gamble Co on over-the-counter 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 would focus on what Teva is calling new
therapeutic entities, or NTEs. Those could be new uses,
formulations, delivery methods or combinations of existing
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
pipeline programs that did not fit its new strategy.
The company has $10 billion available for business
development over the next five years, it said.
It 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. The company set a goal of approving
development of 10-15 NTEs in 2013 and getting them to market
beginning in 2016.
Hayden was particularly enthusiastic for the prospects of
Teva's experimental multiple sclerosis drug laquinimod, a
neuroprotective medicine with potential to address progressive
as well as relapsing MS.
It could hit the European market next year, but U.S.
regulators have asked for another Phase III study before
considering the drug for the world's largest market. That
two-year trial is just beginning.
Hayden sees the possibility of combining laquinimod with
Copaxone or other drugs to better treat MS as well as address
other neurodegenerative disorders such as Alzheimer's disease,
ALS and Parkinson's disease.
The company sees other prospects for extending Copaxone use
beyond the patent expiration with a new, more convenient,
three-times-a-week version compared with its current daily
formulation. That could reach the market in 2014.
MID-SIZED OR SMALL DEALS
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 alliances with
large pharmaceutical companies, somewhat mirroring the
successful "string of pearls" strategy of deals and
collaborations he implemented at Bristol-Myers.
Teva, whose shares have badly underperformed those of its
rivals during the last two years, on Tuesday provided details of
where its planned $1.5 billion to $2 billion in cost savings
over the next five years would come from, such as $400 million
to $700 million by centralizing global purchasing power. It sees
another $150 million to $175 million in savings by shifting from
many small production facilities to larger, more efficient
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.
RBC Capital Markets analyst Shibani Malhotra said there was
a lot of information to digest. "That said, Jeremy is a great
leader and he's got a great team together, so we remain
confident on the Teva story longer term."