What were you thinking, Mr. Levin? That life was all about PR, lobbyists and image consultants who jump through hoops and create brilliant media spins for you? That in one meeting and one photo op that was scheduled for you with Eini you would succeed in neutralizing the harsh State Comptroller’s report that put the finger on Teva, the hubbub over the layoffs, and the truth about the tens of billions in trapped profits and tax incentives that yielded zero tax?
What were you thinking? That if you released a statement about massive layoffs, the stock markets would understand that you were taking dramatic steps toward streamlining business operations and that the stock would then soar and stay high, despite the situation, and despite the threats, and that the shareholders would then love you more?
In real life, Teva is facing a difficult and frightening reality. The real hard work - salvaging Teva’s status as an international mega-corporation, keeping it as company that governments beg to set up plants, and are willing to pay tens of billions of dollars for the privilege (see Israel) - is still waiting around the corner. And maybe the salary won’t be that great anymore - NIS 14.7 million, as it was in 2012 - if only because the board of directors is no longer so enthusiastic. So, bye-bye Jeremy, and don’t forget that you are a new immigrant and you are still entitled to an absorption package that includes an exemption from taxation and reporting for 10 years on all foreign income, tax credits, full exemption from taxation on interest from foreign currencies for 20 years, a full exemption from tax on your pension, and more. You staying?
Preservation time
The late Eli Hurvitz was a legendary leader. Years after his departure, the company is still struggling to find a worthy heir. The problem is that they are searching for a similar figure, but Hurvitz was more “salt of the earth”; a military officer, a charismatic leader who grew slowly, bit by bit. He began as a dishwasher at the fledgling Assia Chemical Labs, rose to dominate all the pharmaceutical companies in Israel, and then set out to lead the company into the global arena, and turned it into a generics giant. Everyone who came after him tried to follow in his footsteps. And perhaps that is what the board of directors expected.
The result? Buy, buy, expand, grow. Only, this path no longer brought the blessings it once did. Hurvitz’s successor, Israeli or imported, ought to have known that preservation time had arrived. That after such a dramatic climb, it is critical to consolidate what already exists. In other words, it is clear, for example, that years before zero hour - when the patent on Copaxone, the joint creation of Teva and the Weizmann Institute, is about to expire - the company should focus its energies on things that will generate similar returns, and engage far less in scheming, lawsuits, and court cases.
Savings portfolios exposed
It’s going to be tough on the outside and tough on the inside. The relationship between the “Israelis” in the company’s management and the “foreigners” is not amicable. Things worsened when the Israelis stopped feeling comfortable with the Americans. The foreign shareholders who have been with Teva for years, did not want more Israelis at the company’s helm. They didn’t want to raise a new manager, even if he was a relative, or a successful military man. That’s what happened in 2010 when names like Moshe Shamir, Eli Hurvitz, and Meir Heth were replaced with Phillip Frost, and in 2012 names like Israel Makov and Shlomo Yanai were replaced with Jeremy Levin. The new Americans are remote, even arrogant.
This is what Meir Heth - one of the company’s founders, a former chairman, and a current shareholder - had to say about Phillip Frost: “He didn’t try to draw me closer to him. The only time he invited me to talk was when he was trying to talk me out of the protest over the board members’ salaries.” Starting now, Israelis’ and foreigners’ long-term savings portfolios, in which Teva is a key component, are exposed.
Published by Globes [online], Israel business news - www.globes-online.com - on October 31, 2013
© Copyright of Globes Publisher Itonut (1983) Ltd. 2013