Teva chief says company prepared in case of Israel-Iran conflict

Without actually saying "Iran," Teva Pharmaceutical Industries Ltd.'s chief executive officer said Wednesday that the Israel-based company was prepared as best as possible to deal with potential manufacturing disruptions if Israel is attacked by Iran or its allies.

Tensions have risen in recent weeks over Iran's nuclear program and whether Israel might launch a military strike to disable the program before Iran can make a weapon. The assumption is that Iran and its allies would attack Israel in retaliation.

Teva's Americas headquarters is in North Wales and it is building a facility in Northeast Philadelphia. Teva bought Frazer-based Cephalon Inc. last year for $6.8 billion to expand its portfolio.

During Wednesday morning's conference call to discuss 2011 earnings, chief executive officer Shlomo Yanai was asked by an investment analyst about how much of Teva's manufacturing operation is in Israel. Yanai responded by saying he assumed the question related to "contingencies or emergency or regional issues."

It was.

Yanai said that 30 percent of Teva's manufacturing was done in Israel.

"Unfortunately, as you all know, we have been at this for many, many years," said Yanai, who spent most of his professional career in the Israel Defense Forces and is leaving the company this spring, perhaps to start a political career in Israel.

Jeremy Levin was named last month as Yanai's replacement.

Yanai said the company, which employs almost 40,000 worldwide, had contingency plans and assessed the corporate risk of disruption as "very minute, around 1 to 2 percent."

"For major products in our pipeline," Yanai said, "we have redundancies. For example, with Copaxone [the company's best-selling drug, treating multiple sclerosis], we have three different sites in three different countries. All are qualified for use immediately and to supply 100 percent of demand, with six months of inventory to back up the manufacturing facilities."

State media in Tehran reported Wednesday that Iran had taken two major steps toward mastering the production of nuclear fuel, a defiant announcement in response to increasingly tough Western sanctions.

For the last quarter of 2011, Teva reported a 28 percent revenue increase from a year earlier as the Cephalon acquisition brought in dollars. But it also increased expenses. Profit fell 34 percent, to $506 million, or 57 cents per share.