Bethel Finance: "Teva must overcome dependence on Copaxone"

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"This was a process. You don’t wake up one morning and decide to quit. I deliberated over the matter, and concluded that this was the right time to embark on a new road. A year at Teva is like five years somewhere else, because of the intensity and heavy responsibilities. It's good for the company to bring in a new CEO with a new perspective every few years," outgoing Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) president and CEO Shlomo Yanai told "Globes" today, after announcing his resignation after five years at the company.

Yanai previously served as CEO of Makhteshim Agan Industries Ltd.. He spent most of his career in the IDF, where he rose to major general, serving as OC South and Head of the Planning Directorate. He is known as a strategist who believes in planning ahead. After arriving at Teva, he prepared a five-year plan, which when its end in 2012, Teva should have $20 billion revenue and a net profit margin of 20% of turnover (the 20-20 Plan). Today, it can be said that the company will probably exceed the targets by the end of the year.

Yanai considers this one of his key achievements. "The strategy provides an answer to the challenges of the coming years. Its essence is diversity - in markets and in medical fields," he says. Mapping the challenges facing his successor, Dr. Jeremy Levin, Yanai says, "Teva has two challenges: its dependence on Copaxone, and its dependence on the American market, specifically generics."

Copaxone, Teva's flagship treatment for multiple sclerosis, accounts for half of the company's profit.

Yanai adds, "In the past few years, we pulled in more global directions. We took important measures around the world, so that today's Teva is more balanced. In addition, the acquisition of Cephalon turns us into a business with an $8 billion a year branded drug business, reducing the dependence on Copaxone, and it will fall further."

Yanai says that Teva's two important growth engines are biosimilars (generic biological drugs) and non-prescription over-the-counter (OTC) drugs. Teva has joint ventures in both fields. "People don’t always see it, because they're used to looking at the company from one moment to the next, but things take time in a manufacturing company," he says, in an implication about Teva's share price. Teva's current market cap is $35.7 billion - a 21% return during Yanai's tenure, but 36% off from its peak in early 2010.

"Globes": Has there been miscommunication with the capital market?

Yanai: "I don’t think so. We've invested heavily in public relations about our strategic moves. The capital market sometimes understands sooner and sometimes it understands later. It's the nature of the world to focus on the short-term share price, and less on the strategy."

Are you disappointed by the market's reaction to your resignation - a 3% rise in Teva's share price?

"No. It's immaterial. I see the share price as something very important, but Teva is a manufacturer that works in the long term, and that's how investors should look at it. A person who invests that way will always see a return on his investment. I have no doubt that the share price will reflect Teva's real economic activity and achievements."