Eli Hurvitz
and the creation of Teva Pharmaceuticals
An Israeli Biography
Yossi Goldstein
Yossi Goldstein
Eli Hurvitz, and the creation of Teva Pharmaceuticals
An Israeli Biography
English Translation: Geremy Forman
Editors of English Edition: Heidi Gleit, Yadin Roman
Graphic Design:Einat Perelman Rogel
Cover Photo: Moshe Shai
All rights reserved, including translation into other languages. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying or otherwise, without the prior permission of the publisher, except in the case of brief quotations embedded in critical articles or reviews.
Publisher: ERETZ Press, Magazine ERETZ Hatzvi
© Vered Shalev-Hurvitz, Dafna Kariv, Chaim Hurvitz
First Edition 2018
ISBN 9781976778421
Table of Contents
Preface
Introduction
Part I
Early Years
Chapter 1
From Hořovice to Jerusalem
Chapter 2
Tel Aviv and North Tel Aviv
Chapter 3
A Kibbutznik from Tel Katzir
Chapter 4
Dalia
Chapter 5
From the University to Turkey
Chapter 6
A Miracle in Africa
Chapter 7
The Perfect Merger
Chapter 8
Teva
Part II
Achieving Glory
Chapter 9
The Road to CEO
Chapter 10
Eli’s Force
Chapter 11
A Dutch Story
Chapter 12
A Palace in Kfar Saba
Chapter 13
President of Israel’s Manufacturers
Chapter 14
Thwarting a Hostile Takeover
Chapter 15
Conquering America:
The First Steps
Chapter 16
In the Service of Bank Leumi
Chapter 17
Teva’s Final Acquisition in Israel
Part III
Creating an Empire
Chapter 18
Turning 60
Chapter 19
Copaxone
Chapter 20
Eli’s Six Lost Years
Chapter 21
The World’s Largest Generic Pharmaceutical Company
Chapter 22
Mr. Teva
Chapter 23
Teva’s Plans for the Future
Chapter 24
A Time to Live, A Time to Die
Bibliography
Notes and Glossary
Preface
Eli Hurvitz (April 1932-November 2011) has become a legend in Israel and beyond. His accomplishments in the business world from the 1980s onward earned him a prominent place in the Israeli public consciousness. Considered a pillar of Israeli industry, he was the financial and business genius who transformed Teva into one of the world’s largest pharmaceutical companies and launched Israeli industry into the international arena. Under Eli’s deft management, Teva doubled its sales every four years and by 2011, the company was worth $54 billion, making it the most successful company in Israel.
In addition to his standing as a respected business leader in Israel and around the world, Eli was a well-known Israeli public figure. He received more awards and prizes than any other industrialist in the country’s history. Israeli prime minister’s eager to expand the “miracle of Teva” to the entire Israeli economy asked him to serve as finance minister more than once and the heads of the country’s major political parties courted him.
Writing about Eli Hurvitz presents the professional biographer with substantial difficulties on several levels. To a great extent, the source material depicts an overwhelmingly positive figure of unquestionable and unqualified success about whom all that can be written are hymns of praise. I therefore was concerned from the outset that writing his biography would be a daunting task and felt that it might be easier to write about a somewhat less flawless protagonist. However, I attempted to write an objective biography of Eli that meets the standards of historical scholarship. As I looked into the many clichés about his accomplishments, I discovered they were indeed true.
Even the most cursory consideration of the historical events that transpired during the decades that Eli’s led Teva demonstrates the degree to which the company’s success should not be taken for granted. After all, Teva is based in Israel, a country that is subject to substantial political, security, and economic constraints; is the target of an organized international Arab boycott; and has yet to be recognized by many countries around the world. Transforming Teva into a successful international corporation therefore posed a greater challenge to its management than the management of a pharmaceutical company based elsewhere. For example, the worldwide distribution of Teva’s pharmaceutical products involves logistical challenges stemming not only from Israel’s natural geographical distance from Europe and America, but also from its unnatural diplomatic, political, and military relationship with the international community. Moreover, although Eli held a B.A. in economics from Tel Aviv University, his professional training lagged far behind that of the CEOs of modern Western companies. Indeed, in many ways he was an autodidact.
In the course of researching and writing this book, I quickly discovered that the challenge I had taken upon myself – trying to provide a rational explanation for Eli’s extraordinary success – was not easy for other reasons as well. Because Teva’s CEO became such an economic icon in Israeli society over the years, telling his story required carefully sifting through reams of information of secondary importance in order to uncover the true essence of the man behind the reputation. As challenging as all this was, getting to know the uniquely captivating character of Eli Hurvitz has made it more than worth the effort.
•••
I would like to thank all those who provided me with invaluable assistance as I researched and wrote this biography. I am deeply grateful to the people of Teva, particularly Professor Moshe Many, Dan Susskind, and Uzi Karniel, and to Eli’s friends and associates Zvika Levanon, Professor Michael Sela, Mishael Cheshin, and Menachem Tulchinsky. I am also grateful to Einat Barzilai, to Eli’s office manager Adi Duanis, to his personal assistant Chava Nachshon, who worked with him for more than three decades, and to his driver Zvika Daskalo. I would like to extend special thanks to the management of the Teva Archive in Ariel, to Rachel Idelman and Yael Hadas of Schoken Books, and to Yael Clipper, editor of this book’s Hebrew version. Most importantly, I am deeply indebted to the Hurvitz family – Dalia, Vered, Chaim, Dafna, Tomer, and Eli’s sister Ruth – for their trust, dedication, and assistance.
And finally, I would like to thank you, Eli. It is unfortunate that during the 120 hours we spent together, I never got a chance to tell you how much I loved you. It has been a privilege to know you. May you rest in peace.
Yossi Goldstein
Motza Illit, January 2014
Introduction
In the mid-1950s, Eli Hurvitz, then a 24-year-old former kibbutznik with a newly minted degree in economics, to
ok a break from his main responsibility of washing lab equipment at Assia Pharmaceuticals to address the greatest challenge Assia was facing on the business front and craft the company’s first successful international transaction. Israel, then only six years old and surrounded by hostile neighbors, had access to very few markets abroad to which its nascent pharmaceutical industry could export products. Turkey was the first country nearby that normalized business relations with Israel. However, the Turkish economy maintained strict currency controls and punitive exchange rates that made it nearly impossible for foreign companies to export any profits they made. This made doing business with Turkey so unprofitable it was starting to cause Assia considerable financial damage.
Assia, however, could not afford to lose its first major customers abroad at a time when Israeli industry was new to the international arena. In a daring departure from trading Assia’s pharmaceutical products to Turkish buyers in exchange for illiquid local currency, Eli accepted payment in nuts, which he promptly exported from Turkey and sold in the United States for hard currency. Valued at $10 million in today’s currency, this transaction was the most profitable deal in the company’s history.
•••
Years later, Eli provided the following account of his role in this innovative deal:
I went to Turkey with Nachman as his assistant and we made some calculations.… At the bank, we paid 30 Turkish liras per dollar, yet on merchandise for export, they paid us no more than seven liras per dollar. I was convinced that we could not continue exporting on such terms. I proposed a barter transaction that enabled us to use the system’s folly to our advantage. … At that point, we were still not certain what kind of product we would receive in exchange for the medicines we sold.… [Next,] in an effort to assess what type of product would be worthwhile to acquire from the Turks in exchange for merchandise supplied by Assia, I traveled from Turkey to Greece, where merchants were in close contact with the American market. In Athens, I met a Christian merchant who had been born in Palestine, spoke excellent Hebrew, and had been a good friend of Israel during the War of Independence in 1948. I asked him: “What merchandise would be the most profitable for me to export from Turkey to sell in the United States?” His answer surprised me: “Nuts.” …
In the course of our conversation, I began to understand that exporting to America would require a financial investment that Assia did not have at the time.
Eli’s thinking stemmed from the fact that food exports to the United States from Turkey and other markets outside the US were subject to substantial bureaucracy. US authorities strictly regulated the import of food, adding significantly to the costs involved.
The solution was to find a bank to underwrite the transaction for the entire cycle of financing… This meant that the moment the medicines reached the Turkish importer, Assia would receive interim financing from the bank by means of a letter of credit. In the meantime, the Turkish product [the nuts] received in exchange for the pharmaceuticals would be exported to the United States by the pro-Israel Greek [merchant]. After its sale in the United States, the interim financing would be returned to the bank, along with a profit. Assia would also retain a profit, which would certainly be much greater than the sum it had been receiving previously.
We built a deal that consisted of all these elements worth one million dollars – an unimaginable sum at the time.… We built a deal from which everyone profited in the end, especially Assia. The profits generated by the barter transaction were extremely high; they exceeded the total profits of the export transactions concluded by Assia during the period in question [1956-1959].
•••
The Assia nut deal reflected wisdom, resourcefulness, savvy, market insight, and strategic planning. These are just a few of the qualities that would enable Eli Hurvitz to go on to build and manage a worldwide pharmaceutical empire and turn him into “Mr. Teva.” After the Turkish deal, he began to launch his own initiatives in export development. He focused on Africa, despite the objections of Assia’s owners and the many theories that the lower a country’s standard of living, the more difficult it is to penetrate its market with pharmaceutical drugs. Young Eli reached every corner of the massive continent – inventing advanced packaging, supplying merchandise in a timely manner, and achieving success that was phenomenal by any standard. Once again, he was the architect of Assia’s most profitable deals at the time. In the years to come, through a process of mergers and acquisitions that were all works of art in themselves, Assia evolved into Teva, the largest pharmaceutical company in Israel and, subsequently, the largest generic pharmaceutical company in the world.
Part I
Early Years
Chapter 1
From Hořovice to Jerusalem
The Hurvitz family tree has many branches. Genealogists, particularly those who are members of this fascinating family, have cited a variety of traditions and historical sources to claim that its roots date back to ancient times, when the exiles from Jerusalem were welcomed in Spain. Others have maintained that the family’s origins can be traced back to the eleventh century, when the family established itself in Girona on the Iberian Peninsula under the name Halevy. In 1391, as the Catholic conquest of Iberia took hold and anti-Semitism flourished, the family’s patriarch, rabbi Josef Elisha Halevy, left Catalonian Barcelona with 37 of his relatives and migrated to Provence, France. There, he hoped to find a better life than in the Catholic kingdom, which sought to rid itself of its Jewish inhabitants. At first, the family settled in the cities of Narbonne and Lunel in southeast Provence. One of Halevy’s sons continued to wander through Western Europe and eventually reached America, where he established the American branch of the Hurvitz family. The other sons continued northward, eventually settling in a pastoral town near Prague: Bohemia at Hořovice – or de Hořovice, as it is pronounced in Ladino, the language of Spanish Jews, which remained the sons’ primary language.
In the decades that followed, the Hurvitz family laid down roots in Hořovice. Like their Jewish neighbors, they earned their livelihood as merchants, middlemen, and moneylenders. Manifestations of their Sephardic culture, including the language of Ladino, were gradually replaced with the Central European equivalents, such as Yiddish. One family member by the name of Yeshaya Halevy became so wealthy that he bought the town from its local lord in the late fifteenth century. He most likely was the first family member to adopt the town’s name. Subsequent generations appended the town’s name to Halevy. As time passed, they gave up their original name and retained only Hořovice, as was customary at the time.1
The Hořovice family, whose descendants can be found all over Europe, the United States, and the Middle East, eventually grew into the largest family in the Jewish world. They frequently quote the Baal Shem Tov, the founder of Hassidism, who described the Hořovices as one of the three families that were of distinguished lineage “generation after generation.” They also liked to quote prominent Hebrew author S.Y. Agnon, who in chapter three of A Simple Story states that 92’s father Boruch Meir was a member of the Hurvitz family and that “being called Hurvitz carried a weight of its own.”
Despite adopting the name of the town he had acquired, Yeshaya Halevy Hurvitz moved to Prague because it was easier to manage his business from there. The rest of his family soon followed him. The fact that the family had its own synagogue was a distinct sign of its prominence in the Czech capital. Some family members became public leaders in Prague, while others became prominent leaders and sages in different parts of Central and Eastern Europe. Some continued eastward until they reached the Land of Israel (Eretz Israel). The most prominent was rabbi and philosopher Isaiah Halevi Horovitz, who moved to Palestine in 1621 and ultimately settled in Safed (sometime after 1625). As was the custom at the time, he was referred to as the holy Shelah, the acronym of his most famous book, Shnei Lukhot Habrit (Two Tablets of the Covenant), which deals with Jewish ethics. In A Simple Story, Agnon emphasizes, “ev
en though Boruch Meir himself was not a direct descendent of the renowned 16th century rabbinical authority Yesha Leib Hurvitz, the name still entitled him to respect.”2
The holy Shelah had two daughters who married his two most promising students. Neither proved capable of surviving in the Holy Land, then a remote corner of the Ottoman Empire. They eventually joined their relatives in the Polish-Lithuanian kingdom, settling near Kiev. Over the years, the Hurvitz sisters, their husbands, and their offspring in particular remained dissatisfied with their place of residence. They therefore continued moving westward and finally settled in Warsaw and the adjacent towns, where they apparently enjoyed greater economic security and grew into a relatively large branch of the family. Hanoch Hurvitz, Eli’s grandfather, was born in the second half of the 1860s in the Polish town of Ćmielów, approximately 70 kilometers southwest of the Polish capital. He served as the local rabbi, but since the town’s hundreds of Jewish residents belonged primarily to the lower socioeconomic classes, this position alone was not enough to generate a sufficient livelihood for him, his wife Gittel (whom he married in 1885), and their 10 children. To support his large family, Hanoch also filled other key roles in the Jewish community, serving as the shohet (kosher meat butcher), a teacher in the Talmud Torah school his children attended, and, on occasion, as a mohel (performing Jewish ritual circumcision).
•••
Hanoch’s youngest child was Hirsch (Zvi in Hebrew) Meir, Eli’s father. Zvi was born in February 1900 during a wave of mass Jewish emigration from the Russian empire. During this period, two million Jewish immigrants arrived in the United States from Eastern Europe, together with millions of non-Jewish immigrants, mainly from southern and Eastern Europe.
The Hurvitz family, despite facing the same economic hardships, chose to remain in its remote Polish town. The family survived the tumultuous events of the early twentieth century – the Russian revolutions of 1905 and 1917, World War I, the liberation and establishment of the independent country of Poland, and the emergence of the Zionist movement – and remained attached to its European homeland, unlike the tens of thousands of other Jews who left.
Eli Hurvitz and the creation of Teva Pharmaceuticals: An Israeli Biography Page 1