Teva’s New CEO Is Battle-Tested. Good Thing

Investors expectations are already running high for Jeremy Levin, who was named
new CEO of Teva Pharmaceuticals (NASDAQ: TEVA ) Tuesday. Levin is highly
regarded for his series of successful acquisitions at Bristol-Myers Squibb
(NYSE: BMY ). But his ability to reenergize Israel-based Teva could be derailed
if the company can't fight off generic competition for its leading drug,
Copaxone. While Teva is the world's biggest generic-drug maker, it relies
heavily on Copaxone, one of only two proprietary drugs it makes. Used to treat
multiple sclerosis, Copaxone is estimated to account for 40% of Teva's
profits. The company's weak stock performance of late has been attributed to
concerns that generics will cut deeply into Teva income when Copaxone loses
patent protection in 2014, according to the Israeli news source Haaret z.
Generics aren't Copaxone's only potential worries. Tevas injectable
treatment already is being challenged by the first oral MS drug, Gilenya from
Novartis (NYSE: NVS ). And Biogen Idec (NASDAQ: BIIB ) has a promising medicine
in clinical trials thats reported to be safe and reduces relapses in MS
patients. Yet, investors evidently are confident Levin can work his magic
quickly. Teva shares are up about 8% since Friday's close, but at $43.65, they
still have a way to go before the 52-week high of $57 is within sight. The
investment community is certainly high on Levin, too. Analysts are praising his
appointment, confident he can duplicate his success at Bristol, where he
spearheaded the company's "string of pearls" strategy. This involved
Bristol making a number of acquisitions intended to help replace the revenue
that will be lost when its blockbuster blood thinner Plavix loses market
exclusivity this year. His success led one industry observer to tell Bloomberg
that Levin is "the number one person in business development" in the
industry. "A lot of companies say they want to acquire and license stuff, but
I cant think of a company thats done it as successfully as Bristol, added ISI
Group analyst Mark Schoenebaum. Ori Hershkovitz, partner at Sphera Funds
Management, also weighed in on the move, telling Bloomberg: If Jeremy can do one
or two good product selections as he has done in the past for Bristol-Myers,
that will be very, very good for Teva. Levin, 58, will take over in May for
retiring Teva CEO Shlomo Yanai, a physician who was educated at Cambridge
University. Levin served as senior vice president for strategy at Bristol. At a
press conference in Tel Aviv Tuesday, he said hell work closely with Yanai to
achieve an "orderly transition," reported Bloomberg. "There are some
parallels between Bristol-Myers from a few years ago and Teva," Les
Funtleyder, a New York-based portfolio manager for Miller Tabak & Co., said in
an e-mail yesterday, according to Bloomberg. "BMY had to come up with a new
strategy to deal with slow sales and looming patents." The performance of
Teva's shares in 2011 certainly helped seal Yanai's fate. The company's
stock price plunged the most since 2006. During the year, Yanai made a move to
broaden Teva's product line by acquiring Cephalon for $6.5 billion. Despite
the deal, investors were disappointed to learn last month that Teva was unlikely
to reach its long-term target of $31 billion in sales by 2015.