Shareholders in Teva Pharmaceutical Industries (TASE: TEVA; NYSE: TEVA) filed four petitions for discovery of documents in the Tel Aviv District Court last week, for the purposes of a derivative action against the company. This follows the publication of initial findings of an antitrust investigation by the EU Commission.
In a letter from the Commission to Teva, the company is alleged to have violated EU antitrust laws in practices delaying competition for its multiple sclerosis treatment Copaxone. Among other things, the European Commission alleges that Teva artificially extended Copaxone’s patent and distributed misleading data about rival products.
Some of the shareholders who have petitioned the court claim that company officers at Teva are responsible for the violations and have a fiduciary duty of care under the law.
“The facts detailed below represent an indication that senior people at Teva acted unlawfully, in a way seen to be manipulative and deliberate, and likely to cause severe damage to the company, or at least were severely negligent,” the petition from Lightcom (Israel) Ltd. and Revital Strugano, filed through Advs. Shachar Ben Meir, Renan Gersht, Ophir Naor, Adi Granot, and Yitzhak Aviram, states.
The shareholders are requesting that Teva should discover documents relating to the EU Commission investigation and to the extension of the patent on Copaxone for the purposes of filing a derivative action, a procedure whereby, when the directors of a company fail to sue company officers for damage to the company, shareholders can act. If the claims in a derivative action are upheld, any compensation is paid to the company.
Copaxone is the most widely used treatment for multiple sclerosis, and was Teva’s flagship product for years. In recent years, its contribution to Teva’s profits has declined substantially, as generic competition entered the market. Whereas in 2014 Copaxone accounted for 21% of Teva’s revenue, by 2019 the proportion had fallen to 6%.
Following the announcement by the EU Commission, Teva said in a statement: “We regret that the EU Commission has decided to continue with the investigation of Teva. The Commission’s declaration is a disappointment to Teva, which cooperated intensively with the Commission from the moment that it learned of the investigation in 2019. Teva will defend itself vigorously, and continues its discussions with the Commission to resolve the matter. Teva remains committed to the legal conduct of our business and to the mission of providing accessibility to medicines for millions of people.”
In response to the court petition filed by shareholders for the discovery of documents, Teva stated: “Teva will respond through the accepted channels in the court after the requests are submitted to Teva.”
Published by Globes, Israel business news – en.globes.co.il – on October 20, 2022.
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