Eli Hurvitz and the creation of Teva Pharmaceuticals: An Israeli Biography

by Yossi Goldstein

  Teva achieved its first foothold in the Mediterranean basin of southern Europe with its acquisition of the Italian companies, which specialized in chemical products and marketing pharmaceutical products. It established an initial Eastern European presence with its partial acquisition of the Hungarian company, which specialized in pharmaceutical products. Later, it acquired a Romanian pharmaceutical distribution firm for the purpose of increasing Teva’s activities in the eastern portion of the continent. By this time, the group was already operating in Western Europe; its acquisition of the Orphahell chemical production plant in Holland had been a harbinger of Teva operations in the region. By acquiring the German company, Eli sought to expand the sale of Teva’s medicinal products to the wealthy markets of Western and Central Europe.

  Eli did not limit his work to Teva’s three main target markets at the time: Israel, the United States, and Europe. He also cast his eyes on other parts of the world. For example, the group entered into a partnership with a large Argentinian company to market approximately 30 Teva-produced drugs that had been patented in the enormous South American country. Argentina had only recently opened its doors to foreign drug companies; they previously had been locked due to high customs duties. Along with the Asian market centered in Japan, Eli viewed this inexhaustible market, which was valued at an estimated $2.5 billion per year, as another potentially important target market for Teva products.

  •••

  Eli was completely engrossed in the goals he had set for himself, orchestrating the dramatic expansion of Teva from his office in Petah Tikva. Upon leaving Bank Leumi, he was bombarded with offers to serve in a variety of public positions. However, after the trauma he had experienced as the bank’s chairman of the board, all he wanted was to be left alone and allowed to focus on his goal. This feeling did not last long.

  “I had been bitten by the bug of public service,” Eli admitted, explaining why after just two years, he decided to return to the public sphere.

  In 1989, he again entered the public sphere, this time taking on positions in two public institutions that were close to his heart.

  As the city of his birth, Jerusalem held a special place in Eli’s heart. Toward the end of the 1980s, some of his associates and acquaintances began trying to secretly persuade him to replace Teddy Kollek, the revered mayor of Jerusalem who had led the city for two and a half decades and who, they claimed, had reached the point when he should retire. Eli rejected their appeals out of hand, including those voiced by extremely senior public figures; he believed that Kollek still had important things to offer as mayor. Deep in his heart, he believed that contributing to the city that he loved so much “would not do him any harm.” But aside from his personal desire to refrain from interfering with the current mayor, he knew that serving as mayor would distract him from Teva, which was something he was not willing to accept. Instead, he accepted Kollek’s offer to chair the Jerusalem Development Authority (JDA).

  Over the past three decades, the JDA had played a major role in initiating and advancing projects that shaped Jerusalem’s economy and influenced the planning of its main public areas. The authority promoted dozens of projects that enhanced the quality of life in the city by: promoting physical infrastructure such as Begin Highway, which crosses Jerusalem from north to south; planning residential neighborhoods and buildings, including tens of thousands of residential units in the city’s new neighborhoods; and encouraging local employment by initiating and establishing industrial and technological parks. In 1988, the Knesset enacted the Jerusalem Development Authority Law, which made the authority a statutory corporation, in an effort to develop Jerusalem.

  When Kollek asked Eli to accept the position of chairman of the authority, with the support of then-finance minister Yitzhak Peres, the Likud Party, which then was in the opposition, opposed the appointment, arguing that the job should be given to one of its supporters. Others opposed the appointment on the grounds that Eli lived in Ramat Hasharon and not in Jerusalem. The opposition proved unsuccessful and for the next three years, Eli worked to improve Jerusalem. From time to time, he reported to the authority offices, where he worked in full coordination with Kollek to achieve this goal. After one term in office, however, Eli concluded that the authority needed someone with more time to invest in the job than he and decided to give up the position. Teva, he felt, needed his time more.

  •••

  Eli’s appointment as the chairman of the Jerusalem Development Authority marked the beginning of a renewed period of public activity, during which he agreed to fill positions in other public bodies as well. For example, between 1991 and 1995, he served as a member of the Bank of Israel Advisory Board, which advised the bank’s governor and was composed of senior economic figures. However, the most important public position Eli filled, in his eyes, was the chairmanship of the Weizmann Institute of Science’s executive committee. The institute’s president, Haim Harari, and other prominent faculty members led by Professor Michael Sela, thought that Eli was the right person for the job. Eli had always regarded the Weizmann Institute as a scientific institution that was of the utmost importance for Israeli society and whose development must be encouraged and cultivated. During his six years of service as chairman of its executive committee, between 1989 and 1995, he worked devotedly for the advancement of the institution.

  His two terms as chairman of the Weizmann Institute gave him a distinct sense of satisfaction.

  “I sincerely and genuinely enjoyed every day I spent there,” he recalled later.

  True, it was not all smooth sailing. The institute was completely dependent on external sources for funds – first and foremost, on the Planning and Budgeting Committee of the Israeli Council for Higher Education – and its scientific work required an enormous budget. This dependence created a web of formidable problems with which the various figures and bodies at the institute, including the chairman of the executive committee, needed to contend. In addition, they not only needed to safeguard their regular funding allocations, but also to increase them from time to time, as the institute grew. Eli was expected to address this issue, as well as the everyday problems of one of the world’s most advanced scientific institutions, from its steady expansion and the acquisition of expensive laboratory equipment to handling the personal problems of its senior scientists.

  The pleasure Eli derived from his years as chairman of the executive committee of the Weizmann Institute stemmed from the interest in, and familiarity with, certain elements of science he had gained during his management of Teva. Indeed, he had always believed that a fundamental part of the group’s work was based on scientific research. Teva’s Research and Development Department had consistently been the apple of his eye and he was often asked in astonishment why it was so large. During the Teva road show that was conducted in the United States in June 1991 to promote the company’s upcoming public issuance, Eli was asked by investors why (as reflected in the prospectus) Teva’s R&D expenses were so high in comparison to other generic pharmaceutical companies. After all, Teva was not an innovative company whose goal was producing new medications.

  “It was a question I was expecting,” Eli recounted. “To those who asked, I explained that this was part of the secret of success. Scientific research and development was its top priority. Generic drugs were also based on science and their development required scientists. Therefore, the more scientists Teva employed, the more successful it would be.”

  Indeed, it was precisely for this reason that Eli had recruited Professor Moshe Many and Professor Michael Sela, two internationally renowned Israeli scientists, to serve on Teva’s board of directors.

  In this way, Eli’s emphasis on scientific development at Teva can be understood as directly connected to his activities as chairman of the executive committee of the Weizmann Institute. Moreover, thanks to his experience at Teva, Eli was typically successful in handling the complex financial problems he encount
ered at the Weizmann Institute. As a result, most of its leaders regarded him as a particularly successful chairman.

  Chapter 19

  Copaxone

  Teva’s dramatic growth during the first half of the 1990s required some adaptation on the organizational level. Eli vigilantly maintained Teva’s long-term strategy of development in accordance with distinct models that resulted in gradual, predictable growth. However, because the company was growing at such a rapid pace, it became necessary to adjust the plans. Eli contended with this dynamic by embracing the principle that every well-built schema must also account for, what he referred to as the “moment of the unknown,” which could fundamentally transform its strategic conceptions. As a result of Teva’s unanticipated growth rate in 1993, Eli resolved that the time had come to revise the group’s production and marketing strategy.

  During this period, a new approach emerged at the world’s major pharmaceutical drug companies: assessing not only a drug’s health-related effectiveness but also its economic sensibility. Eli decided to adopt this approach in accordance with the group’s needs. It was necessary, he concluded, “to adapt Teva to the changing reality of the sector.”

  The new approach was well suited to the changes required at Teva as a result of the company’s dramatic growth. As part of these changes, the group’s various marketing units, which until that point had been dispersed among its different companies, were unified under one roof through the establishment of a subsidiary named Israel Pharmaceutical Marketing. The new entity was entrusted to Aharon Agmon, a talented young Teva executive who had excelled as the CEO of the Ashdod-based company Tribunal. Veteran organic chemist Dr. Aharon Schwartz, who had previously been in charge of marketing, was appointed to oversee the group’s business development. These two administrative functions – marketing and business development – were key elements of the organizational transformation that Eli and his corporate management implemented to address both the group’s need for change and Teva’s adoption of the new approach that had emerged in the pharmaceutical sector.

  •••

  While these developments were still underway, Teva made another change that would prove to be even more dramatic and that would ultimately transform the company. In January 1994, Eli announced the construction of a new plant in Beersheba that would require an investment of $30 million and employ a workforce of more than 100 people. The plant would manufacture a new drug for treating the chronic autoimmune disease Multiple Sclerosis, in which Teva had invested tens of millions of dollars.

  The scientific development of the new drug, which was still referred to simply as Cop-1 at the time, but later came to be known as Copaxone, was based on studies that professor Michael Sela and his student, professor Ruth Arnon, conducted at the Weizmann Institute in the 1950s and 1960s. During the decade that followed, the effort was bolstered by the doctoral research of Devorah Teitelbaum, who under their direction began to monitor changes in the immune system of patients with Multiple Sclerosis.

  Autoimmune diseases develop when the body’s immune system, which is meant to protect it from foreign invaders, mistakenly attacks healthy substances that are essential for the proper functioning of different bodily systems. In the case of Multiple Sclerosis, the immune system attacks the central nervous system in the brain and the spine. Until the mid-1990s, the disease was treated with steroids and other substances that suppressed the entire immune system. Such treatment, however, detracted from the body’s ability to defend itself from other illnesses and proved to be ineffective.

  Sela and the group of researchers working with him to find a vaccine for Multiple Sclerosis understood that science still lacked a clear understanding of the disease’s causes. In scientific jargon it often is referred to as a mysterious disease, which is how it was described by French neurologist Jean Martin Charcot, who is believed to have been the first to diagnose it in 1868. Modern-day researchers are still far from solving the mystery regarding its causes. Researchers had no doubt that one possible cause for its onset is injury to the immune system and the subsequent erroneous attack on myelinated axons (axons coated with myelin, a protein that insulates axons and facilitates the transmission of electrical pulses between nerve cells) in the brain. By means of the electrical pulses transmitted by these axons, the brain sends signals to and controls different parts of the body. The resulting injury to the myelin, which can be compared to damage to the protective coating that isolates electrical wires from one another, disrupts, slows, and stops the nerve signals. This hinders the proper functioning of the brain (which is based on the transmission of electrical pulses), causing defective functioning of the nervous system and impacting overall body functioning. The process ultimately damages different bodily organs, typically the spinal cord, the brain, and the optic nerve.

  The symptoms of Multiple Sclerosis usually begin to appear at a relatively young age, between 20 and 40, and it is twice as common in women as in men. The disease’s diverse symptoms include deficiencies in the body’s motor and cognitive functions and in the functioning of many of the body’s movement and sensory faculties, such as sight, speech, movement of the limbs, bladder and intestinal functioning, and coordination. The disease typically culminates in brain damage and paralysis. Still, Multiple Sclerosis is not classified as a fatal disease and only in rare circumstances are complications likely to result in death.

  Although Multiple Sclerosis is considered the world’s most common degenerative disease, its relative incidence is not high (less than one tenth of a percent or one in every one-thousand people). In numerical terms, approximately 400,000 people suffer from Multiple Sclerosis in the United States, with 1,700 in Israel (in 2009) and 600,000 in other countries. During the first stage of the illness, symptoms may be isolated and appear sporadically at an increasing pace, making diagnosis difficult.

  •••

  Research on multiple sclerosis focused on drugs that might stop the immune system from attacking myelin in the first place, an approach that has yet to succeed. Sela and his group had a different idea that was so simplistic in concept that the entire establishment ridiculed it. They set out to create a “decoy target” that would distract the immune cells from attacking the myelin sheaths of the nerve cells. By the second half of the 1960s and the beginning of the 1970s, after years of frustration and reversals, Sela and his team had identified the core of the drug they were trying to develop to stop the disease. For 16 years, studies had been testing Cop-1, a synthetic substance they had developed, on different species of animals. The test results had confirmed their expectations: the substance could delay and in some cases suppress the appearance of Multiple Sclerosis in human beings. Moreover, with the passage of time, it also became evident that Cop-1 was not only a “decoy” but somehow provided a degree of immunization that could be transferred from treated animals to non-treated animals.

  The researchers hypothesized that the substance would also be effective in the treatment of humans; the only means of testing this postulation was controlled clinical trials, at first on monkeys and baboons (rhesus) and then on humans suffering from MS. In the tests on monkeys, not only were the subjects relieved of their paralysis and completely cured, but the substance proved to be nontoxic and devoid of side effects. This cleared the way to the final stage of the process: human testing. In 1977, neurology professor Oded Abramsky, of the Neuroimmunology Unit of Hadassah Medical Center in Jerusalem, began clinical trials on patients. The trials were unsuccessful, apparently due to incorrect dosage and the fact that they were conducted on terminal patients with no chance of recovery.

  Despite the failure of Abramsky’s tests, the scientists did not throw in the towel. One year later, American neurologist Murray Bornstein contacted Sela and Arnon and asked to continue the clinical testing that Abramsky had started at Albert Einstein Medical School in New York. For a period of nine years, beginning in 1978, Bornstein conducted a battery of experiments. One of th
e conclusions Sela and his colleagues reached, in conjunction with Bornstein, was that the effective dosage of Cop-1 for humans was much higher than the dosage that had been administered to the patients who participated in Abramsky’s tests at Hadassah. Those patients had been injected with 2 mg of the drug and not on a daily basis. In the New York tests, it was decided to administer patients 20 mg of Cop-1 on a daily basis for a period of two years.

  Bornstein’s first trial was conducted on 16 Multiple Sclerosis patients, including 12 who contracted the disease in its chronic form and four who suffered from recurring attacks of paralysis. The results were encouraging. Cop-1 demonstrated promising therapeutic potential, particularly in the early stages of the disease. However, it was an open trial, meaning that trial participants were aware that Cop-1 was a new product and that the improvement in their condition may also have stemmed from a positive psychological or emotional reaction, which is known as the placebo effect. This is why scientific proof depends on “double blind” studies in which neither the patients nor the doctors know who is getting the drug and who is getting the placebo. Bornstein and his team then assembled 48 Multiple Sclerosis patients between the ages of 25 and 35 from 11 hospitals throughout the United States; they had been selected from a pool of 600 patients who volunteered to test the medication. The patients selected were still able to walk and were not yet in critical condition, but had been classified as being in the aggressive stage of the disease and had suffered at least three to four attacks in the two years preceding the trial. In the course of the study, 24 of the participants were injected with Cop-1, while the remaining participants, who constituted the control group, were administered a placebo. Neither the patients nor the physicians were aware of who was being injected with which. Each patient was administered the drug for a period of two years, but because not all the participants were recruited at the same time, the trial was conducted over a period of four years.