Teva faces further disruption as company reorganizes - again
This article was originally published in Scrip
Teva is being shaken up once more as new CEO Erez Vigodman puts his stamp on the company by reorganizing its structure to place focus on Teva's staple generics business once more.
From 1 July, Teva's main business efforts will be split between two units in particular: Global Specialty Medicines (GSM), established in April 2013, and the newly-formed Global Generic Medicines group (GGM). The GSM unit is responsible for Teva's specialty R&D efforts and will continue work started by former CEO Dr Jeremy Levin to develop new drugs (scripintelligence.com, 4 January 2012).
But GGM seems to be Teva's way of highlighting its renewed commitment to generics under the leadership of Mr Vigodman. This unit will be formed from the existing generics units, and will be responsible for all existing generic markets and Teva's over-the-counter portfolio led by the company's joint venture with Procter and Gamble. Sigurdur Olafsson, who recently left his role as president of one of Actavis' business units following the company's merger with Forest Laboratories (scripintelligence.com, 16 May 2014), has been appointed to head up the new GGM unit. He will be based in the US. His appointment and the formation of the GGM unit seems to indicate that Teva is once again prioritizing its core generics business, which Dr Levin sought to downplay during his tenure at the company.
Teva has said that these two units will work closely together to leverage synergies between its product portfolios. This, it says, will allow it to create "a unique and differentiated business model as a catalyst to create value over time."
The company has also boosted two other departments: Corporate Development, Strategy and Innovation, and Global Corporate Marketing Excellence and Communications Group. The strategy group will focus largely on Teva's emerging markets initiatives, a priority for Mr Vigodman who has experience in China, as well as looking for new partnerships and technologies. No leader has been appointed yet for this department. The marketing group will take care of brand management, corporate communications and corporate social responsibility. It will be led by Iris Beck-Codner, who joined Teva from McCann Erickson Israel where she was group CEO.
The new structure is an evolution of Teva's existing structure and is the latest in a string of attempts by the company to establish a clear strategic direction. The GGM unit will be formed from all of the existing generics units, which are currently led by regional heads. Corporate Development, Strategy and Innovation is an expansion on the functions of an existing team, and the same goes for the Global Corporate Marketing Excellence and Communications Group.
In addition to these changes, Teva has appointed Eric Drapé global head of quality. Mr Drapé is currently head of sterile, respiratory and specialty operations, and will take up his new role 1 July. He will report to Mr Vigodman.
Lastly, Teva has reduced its executive committee from 15 members to nine. The company announced its plan to reduce the number on its committee in January (scripintelligence.com, 23 January 2014). The company has not yet released details of the committee's composition.
Previous disruption
Teva has been through a tough couple of years and experienced several sweeping changes of management and strategy in that time.
Former CEO Shlomo Yanai left the company in 2011 when the company's share price was in decline, and was replaced by Dr Jeremy Levin who promised to reshape the company by focusing on developing innovative branded medicines to counter increasing competition in the generics market (scripintelligence.com, 4 January 2012).
Before he left, after just a year and half, Dr Levin managed to cause plenty of disruption: he created a new management team and reorganized the company's structure, before slashing 5,000 jobs (scripintelligence.com, 10 October 2013 & 18 June 2013). Meanwhile, Teva suffered from the loss of exclusivity on one of its most important products, Copaxone (glatiramer acetate).
Dr Levin's reign ended amid rumors of squabbles between him and his board (scripintelligence.com, 30 October 2013).The company's CFO, Eyal Desheh, took the reigns as interim CEO before Mr Vigodman was appointed in January this year (scripintelligence.com, 9 January 2014).
Mr Vigodman's background is in generics, unlike Dr Levin who had previously worked with innovative pharma companies. Mr Vigodman also brought Teva knowledge of the Chinese market, where the company has expressed an interest (scripintelligence.com, 7 January 2014). His entry to the company marked yet another change of direction for Teva, and this latest reorganization is the proof.
The market seems to approve of Mr Vigodman's direction, as the company's share price rose 3% on 2 June when the reorganization was announced from $50.48 at close of play on 1 June to a high of $52.11 on 2 June.