Teva’s board of directors may never be the same again after a ferocious editorial in the Financial Times charging them with total managerial incompetence.
The prestigious British newspaper said that the troubled pharmaceuticals giant needs a new chairman, and that the 16-member board “knows nothing about running a company.”
“The board of Teva is a brains trust of scientific and medical knowledge. Shame that so few of its 16 members seem to know anything about running a company,” it lamented.
Teva chairman Phillip Frost has lately come in for sharp criticism for the company’s downturn in recent months, and the editorial calls for ousting him.
“It has taken a shareholder — the Israeli entrepreneur Benny Landa to point out the obvious: that the world’s largest generic drugmaker by revenue needs more than a new chief executive. It needs a new (or at least smaller) board, and a new (or at least clearer) strategy and a new chairman.”
Globes supports the argument that “Teva’s board is too big for a company of its size.” The smaller Pfizer and Novartis, have 13-member 14-member boards, respectively. A number of the Teva board members are past retirement age, as well.
The Financial Times holds out qualified hope for the future: “There is a lot at Teva to build on, even without Copaxone. The patent expiry is largely priced in. Teva’s shares trade on just 8.5 times 2014 earnings, below the sector average, and have fallen 40% since early 2010. A new chief executive could start to recover this lost value — but only with the full support of the Teva board. A brains trust with no idea what to do is worse than having no brains at all.”