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Teva finally announces successful CEO appointment

Published on 11/09/17 at 09:10am
Image: News Øresund, Malmö, Sweden

Teva has announced that its protracted search for a new CEO has finally come to end, as it revealed the appointment of Kåre Schultz. The decision to bring in Schultz means that the CEO search comes to a close for the company after seven months, with several twists and turns occurring over this period.

The news will come as a relief for investors in the company that has struggled after its $40 billion acquisition of Actavis Generics, formerly a division within Allergan. Share price in the company has plummeted by over half amid mounting uncertainty in the amount of debt the company holds and the previously mentioned deal.

The appointment of Schultz should reassure investors somewhat, he arrives from Lundbeck – a Danish biopharmaceutical company. Teva’s press release noted that, at the company, Schultz “is credited with leading significant restructuring initiatives and launching a robust turnaround strategy focused on driving a sustainable global cost structure and operational model. As a result of his leadership, the company is on track to achieve all-time high revenue and earnings.”

Schultz will face a similar challenge once he arrives at Teva, although some of the tasks of cutting costs have begun under interim CEO, Yitzhak Peterburg. Under his temporary stewardship, the company has stated that it will cut away 7,000 roles from global operations and will look to close 15 facilities from its manufacturing network.

The financial compensation he will receive for the challenges ahead was revealed by Globe to include a basic salary of $2 million and a potential 200% bonus based on performance. He will also receive $5 million stock unit award, alongside a sign-on cash award of $20 million. It’s a big financial package and not too dissimilar to the offer that was apparently placed in front of Pascal Soriot in an attempt to lure him from AstraZeneca.

For Schultz, his appointment to the position of CEO of a large, if ailing, pharmaceutical company represents a turnaround after his ignominious exit from Novo Nordisk. He had spent 20 years climbing the ladder at the company, eventually reaching the position of Chief Operating Officer. However, he was passed over for the leadership position and his poor relationship with CEO Lars Rebien Sorensen led to his exit from the company.

Schultz commented on his appointment, “I am honoured to join Teva, an iconic company that I have long admired during my career. What drew me to Teva, and what makes Teva different from its peers, is its unique commitment to growing an extensive global reach while continuing to provide new and high-quality treatments for patients and an innovative culture for its employees. I am proud to be joining a company that helps millions of patients around the world on a daily basis with its broad range of generic and specialty drugs and solutions. I look forward to working closely with the entire team at Teva to build a future of success for the Company and its stakeholders.”

Peterburg said, “We are delivering on the commitments we have made over the last several months. We are optimizing our operations and geographical footprint while focusing our resources on the specialty and generics pipeline assets that offer the most attractive return on investment. In addition, we are on course to hit our target of generating at least $2 billion from the sale of non-core assets, which we will use to strengthen Teva’s balance sheet. It is a privilege to lead Teva and I look forward to continuing to do so during this time, and will work with Kåre to ensure a seamless transition once he joins.”

Ben Hargreaves

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