Teva CEO: No New Acquisitions Planned
From Globes (Tel Aviv) (February 24, 2013)
Feb. 24--In an interview with "Yediot Ahronot", Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) president and CEO Jeremy Levin was asked if the company had plans to renew its acquisitions campaign. He said, "No. Teva already has an amazing global reach, with activity in scores of countries, and 46,000 employees. 74 facilities can produce 100 billion tablets of different drugs. Teva's future expansion will be based on internal growth engines. It will be organic growth."
Levin says that Teva relies on Israeli research to support hybrid drugs (improving and combining current generic drugs). "We will soon announce ten combined drugs, an unprecedented record. This is a multibillion dollar business."
Is there a medical segment in which Teva will specialize in under your management?
"Teva should focus primarily on neurology, the central nervous system, and the brain. We will also strongly develop innovative drugs for women's diseases, and non-prescription drugs." responded to claims that the company paid too few taxes, and he spoke about other issues.
Last week, "Globes" examined Teva's tax payments in the past ten years, 2003-12, and found that the company paid $1.9 billion in taxes on $17.2 billion profit in this period an effective tax rate of just 10.7 percent. In 2012, for the first time in at least ten years, Teva paid an negative tax rate of minus 7.5 percent -- it received a rebate of $137 million.
Excluding Teva's taxes on its Israeli operations alone, Teva paid $787 million on profits of $14.2 billion, for an effective tax rate of just 5.6 percent.
"Yediot Ahronot": The public feels that Teva pays too little in taxes; that you make billions in profits and throw crumbs to the state.
Levin: "Teva paid all the taxes it owes by law. Years ago, the government and the Knesset decided to encourage investment in the pharmaceuticals industry, and established a tax regime, which applied to Teva too. The decision was smart and far-reaching: this industry developed here magnificently. The policy to encourage investment made it possible to keep Teva's patents and its intellectual property in Israel, and helped create 7,000 jobs at our facilities, mostly in the periphery from the Galilee to the Negev."
Would things have looked differently had Teva paid a companies tax rate of 5 percent or 8 percent rather than zero?
"In 2010, a committee chaired by Ministry of Finance director general Haim Shani recommended raising the tax rate on profits of Israel-based big multinationals, such as Teva, from zero to 5 percent. Teva participated in the committee's discussions, contributed to them, and supported the recommendations. The change did not affect our position in or our relationship with Israel. Teva was, is, and will be Israeli."
You won't run away, whatever is decided?
"We will pay the taxes that the government demands from us, just as we've done in the past. Every company should pay taxes."
You've accumulated NIS 40 billion in trapped profits. What will you do with them?
"I reject outright the term 'trapped profits' with regard to Teva. We have no such profits. Teva does not feel as if it is a foreign business that came to Israel from outside to reap profits. We've been partners for decades in the country's development. Our profits were, and will be, invested in Israel -- in facilities, laboratories, and manpower. We don't measure ourselves only by the share price, but also by our contribution to Israeli society. Israel is Teva's commitment, it is our heart, and our presence in the country has unquestionably had a positive effect on other multinationals."
(c)2013 the Globes (Tel Aviv, Israel)
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Posted: February 2013