The great changes Vigodman brought to Makhteshim Agan may hint at his plans for Teva. First, he focused on improving the agrochemical company’s gross profitability. Old factories at the firm’s Brazilian subsidiary Milenia Agrociencias were closed and 300 of its 800 employees were laid off…..
One reason for the pressing need for Vigodman to implement change is the significant threat to Teva’s profitability posed by the entry of generic competition to its blockbuster drug for treating multiple sclerosis, Copaxone, expected in May 2014. In that month, two generic versions, one developed by Novartis together with Momenta Pharmaceuticals, the second from Mylan and Natco Pharma, are expected to enter the market……
Copaxone delivers 20% of Teva’s revenues and 60% of its profits. Teva has estimated that generic competition to Copaxone will reduce its revenues by $500 million and stated that even a one-month delay in the launch of a generic version will increase its net profits by $78 million……..
Vigodman’s job will also be harder than his predecessors at Teva due to its reported net debts of $11 billion. Off-balance sheet liabilities for tax payments on “trapped profits” under Israel’s revised Encouragement of Capital Investments Law and Teva’s loss to Pfizer in a patent infringement case for heartburn drug Protonix, mean the company’s total net debt is actually $12.5 billion……
This debt, combined with the expected drop in Teva’s cash flow in less than a year due to generic competition, will make it hard for Teva to make acquisitions that will reduce its dependence on Copaxone.”
- Yoram Gabisom
