In the 1980s, Teva Pharmaceutical Industries (TASE: TEVA; NYSE: TEVA) was dubbed “the people’s stock” in Israel. The high weighting of the stock in the leading index on the Tel Aviv Stock Exchange meant that it was the one most commonly found in investment portfolios, and it could be said that every Israeli was invested in it directly or indirectly.
Even ten years ago, however, it was hard to regard Teva as the people’s stock any more, and other stocks have overtaken it in trading volume on the Tel Aviv Stock Exchange.
Teva’s current weighting in the Tel Aviv 35 Index is similar to that of Bank Leumi (TASE: LUMI), Israel Discount Bank (DSCT), and Bank Hapoalim (POLI), and lower than that of Nice Systems (TASE: NICE). At NIS 32.3 billion, Teva currently has the fifth highest market cap of the companies on the index, after Bank Leumi, Nice Systems, Bank Hapoalim, and ICL (Israel Chemical Industries) (TASE: ICL).
Teva reached an all-time high in the summer of 2015, buoyed by the euphoria set off by its report of the acquisition of Actavis Generics from Allergan for $40 billion. Teva’s share price rose to over $70, giving it a market cap of $61 billion.
The acquisition, led by the company’s CEO at the time Erez Vigodman, was perceived as a positive move that would help Teva to grow, despite the high leverage and the debt that the company took on to finance the deal. In the year following the deal, however, and even before it was completed, doubts started to arise about the high price Teva was paying.
In the end, the Actavis acquisition proved a real danger to Teva. Instead of fortifying the company’s position, it turned it into a company in financial difficulties, and doubt was cast on its ability to service its debt.
After Vigodman’s resignation/removal in early 2017, Teva looked for a CEO with standing who would save it. It eventually found Kare Schultz from Denmark, who introduced aggressive efficiency measures that included the layoffs of thousands of employees and an end to dividend distributions.
During Schultz’s tenure, Teva’s debt has reduced, but he has had to cope with other difficulties, headed by Teva’s exposure to expensive legal proceedings. The most important ones were in connection with the sale of addictive opioid painkillers and with price fixing in the US generic drugs market.
Schultz recently announced that he was bringing forward his retirement, and Teva has announced the appointment of Richard Francis as his replacement in the CEO job. In the past, Francis served as CEO of rival Sandoz.
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In 2021, the company employed nearly 36,000 around the world, down from a peak of nearly 57,000 in 2016. Only about 10% of its employees, 3,600, are now in Israel, half the number employed in the country in 2012.
In the past few years, the proportion of Teva’s global workforce employed in Israel has been steadily falling. Nevertheless, in accordance with its memorandum and articles, Teva’s CEO runs the company from its Israeli headquarters. In addition, five of the company’s twelve senior managers are Israelis.
At any rate, since January 2018, Teva has been defined in the US as a US Domestic Issuer, and it is required to report as a US corporation. This is because the completion of the acquisition of Actavis in 2016 led to a situation in which more than 50% of its assets were located in the US.
Published by Globes, Israel business news – en.globes.co.il – on December 11, 2022.
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