On February 5, 2018, Pomerantz LLP (“Pomerantz”) filed an individual action in the United States District Court, Eastern District of Pennsylvania, against Teva Pharmaceutical Industries Ltd., Teva Pharmaceuticals USA, Inc. (together “Teva” or the “Company”) and certain of Teva’s current and former employees and officers, for violations of Sections 10(b) and 20(a) of the Exchange Act of 1934 (the “34 Act”), the Israel Securities Law, 1968, and the Pennsylvania Securities Act of 1972 (the “PSA”). The relevant period is February 6, 2014 through December 10, 2018, inclusive (the “Relevant Period”).
Plaintiffs are Clal Insurance Company Ltd., Clal Pension and Provident Ltd., Atudot Pension Fund for Employees and Independent Workers Ltd., Alumot Mutual Fund Management Company, Menorah Mivtachim Insurance Ltd., Menorah Mivtachim Pensions and Gemel Ltd., and Meitav DS Provident Funds and Pension Ltd. (together “Plaintiffs”).
Individual defendants are Erez Vigodman, Eyal Desheh, Allan Oberman, Sigurdur Olafsson, Deborah Griffin, Yaacov Altman, Yitzhak Peterburg, Dipankar Bhattacharjee, Michael Mcclellan, Kåre Schultz, and Maureen Cavanaugh.
Teva is the largest generic drug manufacturer in the world and one of the 15 largest pharmaceutical companies worldwide. The Company was founded in 1901 and is headquartered in Petah Tikva, Israel. Teva’s ADSs trade on the New York Stock Exchange under the ticker symbol “TEVA.” Teva currently produces 120 billion generic tablets and capsules per year in 87 pharmaceutical and API facilities around the world. As the Company readily acknowledges on its website “[t]he scale and breadth of [its] generics portfolio has an unprecedented impact on global healthcare.”
This action arises from misrepresentations and omissions that defendants made to plaintiffs concerning, inter alia, Teva’s generic drug business—viz., its drug pricing strategy, goodwill valuation, and legal compliance—during the Relevant Period. These misrepresentations and omissions caused the market, including Plaintiffs, to purchase Teva’s securities at artificially inflated prices. While Defendants loudly touted Teva’s robust revenue growth, they went to great lengths to conceal the true driver of Teva’s growth—the illegal pricing strategy for its generic drug portfolio whereby, in concert with its competitors, it methodically raised prices throughout its generic drug portfolio.
On November 3, 2016, various media outlets reported that U.S. prosecutors might file criminal charges by the end of 2016 against Teva and several other pharmaceutical companies for unlawfully colluding to fix generic drug prices. On this news, Teva’s ADR price fell $4.13, or 9.53%, to close at $39.20 on November 3, 2016.
The full extent of Teva’s years-long lies and misconduct was revealed on December 9, 2018, when Joseph Nielsen, an assistant attorney general and antitrust investigator in Connecticut who has been leading the State AGs’ investigation, announced that the scope of this investigation was far larger than initially reported. Specifically, Mr. Nielsen revealed that the investigation had expended to at least 16 companies and 300 drugs and had exposed “the largest cartel in the history of the United States.”
These disclosures destroyed billions of dollars in investor wealth.