Teva Facing Bribery Charges in Israel
Israeli drugmaker – the world’s largest generics producer – has moved into the spotlight again, days after it said it was replacing its CEO Erez Vigodman. According to the Israeli newspaper Haaretz, the company is under investigation on charges mirroring those recently settled with US authorities, that is, paying hundreds of million dollars” in bribes to foreign officials and then creating falsified documents to hide the payments. Teva has confirmed the investigation
In the US case, which concerned issues occurring between 2007 and 2013 in Russia, Mexico and Ukraine, The drugmaker in December 2016 agreed to pay nearly $520 million to the US Department of Justice and Securities and Exchange Commission to resolve violations of the Foreign Corrupt Practices Act, in addition to the $236 million to be paid to the US stock market watchdog Securities & Exchange Commission (SEC) and $283 million to the US department of Justice (DOJ).
Since buying Allergan’s generics unit for $40.5 billion deal last year, Teva’s prospects have been looking down rather than up, as the company expected, analysts said. One reason, they said, was that some investors had lost faith in the company in the time it took to close the transaction. The frustration was compounded by the unexpected departure of generics CEO Siggi Olafsson, called a “cheerleader” for the Allergan deal,” shortly after closing, as he was considered essential to making it work. What’s more, a tough pricing environment for generics is said to be taking its toll.
Teva’s stock is now down more than 50% against its August 2015 high. But while many in the financial market currently see the drugmaker through a bearish telescope, Credit Suisse has told investors in a note to clients that the changes at the top may portend well for the company, as this will allow for a fresh start. “It will be imperative for TEVA to bring in a CEO who understands the intricacies of the generics business but who can also work to bolster a specialty pharma business,” the bank’s analyst Vamil Divan said.
The Israeli company is due to report 2016 results next week.