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

by Yossi Goldstein

  The second effort, in 2007, generated a more substantial sum of $86 million. The final effort, in 2011, raised $88 million for the third fund in just a few months.

  Pontifax began operating by means of a management company that Eli, Kariv, and Nussbaum set up. During the fund’s first seven years, they invested in dozens of start-up companies specializing in biotechnology, some of which became extremely successful. One example was Protalix (Pontifax I), whose scientists focused on developing human proteins through genetic engineering of plant cells. The fact that it had already completed experiments up to extremely advanced stages made Protalix a potential goldmine. Protalix fulfilled the faith of Pontifax’s investors with its first product, an enzyme to preserve life in children born with Gaucher’s disease. Another example was Kite Pharma (Pontifax II) was one of Pontifax's first forays into the nascent fields of cell therapies and immunotherapy. Eli harbored great respect for Dr. Arie Belldegrun, the founder of notable biotech successes such as Agensys Inc., and Cougar Biotechnology. When Dr. Belldegrun raised money for his new venture, Pontifax was there to join. Coincidentally, and to Eli's delight, a significant share of Kite intellectual property, like Copaxone, derived from the Weizmann Institute.

  For Eli, it was significant and a source of pride that Protalix had developed its products in Carmiel, in Israel’s peripheral Galilee region. Indeed, Pontifax invested in many companies based in the Galilee, as well as in the Negev desert and the town of Ashkelon in the south. Eli would regularly bring international visitors to CollPlants’ greenhouses at Yesud Hama’ala in the Galilee, showing off the sophisticated science and technology being employed in this remote area, Eli’s driver, Zvika Daskal, recounted.

  Pontifax also invested in biotechnological research and development centers that the Israeli government set up and then privatized in places such as Kiryat Shemona and Ashkelon. These centers nurtured start-up companies in different areas of the life sciences, including biotech companies working on imaging, vaccines, medical equipment, and biological substances.

  Pontifax only invested after the completion of due diligence assessments of the companies in question and after their shareholders accepted the condition stipulated by Eli: that his company enjoy the right to intervene in management decisions and the manner in which its funds were invested, even if the amount invested by Pontifax did not exceed that invested by the other partners. Typically, the companies expressed clear, unequivocal agreement. After all, they too sought to have their initiative benefit from Eli’s proven talents, as demonstrated in his management of Teva. In fact, as a result of Eli’s reputation, biotechnology companies actively sought out Pontifax and requested it to invest and intervene in them.

  In addition to the right to intervene in issues of management and investment, Eli and his two young partners insisted that Pontifax be represented on the company’s board of directors. Nonetheless, Pontifax’s investment in the companies in question was typically relatively small, no more than 20% of the value of the company, with the option to increase the investment. The relative risk involved was small but not insignificant. That being the case, both parties benefited: Eli and his associates benefited from the potential success of the company in which they had invested, and the company benefited from Eli’s reputation. As one analyst explained, “Pontifax’s entry into the management was meant to substantially strengthen the companies in which it invested, in terms of future capital mobilization and the forging of strategic relationships with international pharmaceutical and biotechnology companies.”

  The investors had good reason to believe in Eli and the investment firm he had established. Between 2004 and 2011, Pontifax boasted very high returns. Pontifax 1, for example, generated an annual return of 44% and, as of late 2010, yielded a cash return 2.1 times greater than the initial investment. A large portion of the fund’s high return can be attributed to its holdings in Protalix, which was traded on the NASDAQ. Pontifax’s second fund, for which capital was mobilized in 2007, also generated high annual returns.

  This was due primarily to its investment in Kite Pharma, a leader in the field of immuno-oncology.

  By 2011, Pontifax had become one of the largest investors in biotechnology in Israel, eventually emerging as the most profitable among them. Since it was the most active fund in the seed stage of the investment, one analyst commented that it had become “a substantial force active in advancing the Israeli life sciences industry.”

  Pontifax’s importance for the biotechnology industry received public expression on June 17, 2009, when Eli signed a joint-investment agreement with Swiss pharmaceutical giant Roche.

  In the past, Johnson & Johnson’s venture capital fund had operated in Israel, but this was the first project in which a large pharmaceutical company had invested directly and systematically in young Israeli start-up companies. The agreement stipulated that Roche would first invest in the incubator companies and Pontifax’s existing companies.

  Investments were to focus on the areas that were common to Roche and Pontifax, such as vaccines, biomarkers for advanced diagnostics, and drug development, for example, in the field of oncology. Eli saw the fact that a company like Roche (one of the world’s three largest pharmaceutical companies which, in 2009, was traded in Switzerland at a total value of $115 billion) signed this agreement with Pontifax as a “significant landmark not only for our venture capital fund, but for the life science industry in Israel.”

  As an investment company, Pontifax fit Eli like a glove. It was much more profitable than similar companies in the venture capital industry and consistent with his long-time strategic model of rapid growth. Furthermore, it combined daring and innovation, and dealt with pharmaceuticals, an area which he had grown to love, particularly the focus on its humane side – the preservation of human life.

  •••

  Unfortunately, Pontifax was not the only new development in Eli’s life during those years. Eli developed non-Hodgkin’s lymphoma.

  The cancerous cells that had spread throughout Eli’s body had become the “size of a fist,” as Eli described it. He could feel its presence but apparently denied its existence, refusing to believe he had contracted the lethal disease. He consulted with his close friend, Professor Moshe Many, who determined that what Eli was feeling was undoubtedly a cancerous tumor.

  “I thought it was a fatty gland,” Eli explained,

  but when the physicians started asking questions, I knew it was not a case of the flu…. A CEO of a pharmaceutical company is also a human being, with fears and insecurities, just like everyone else. In my case, the illness was a chance to learn firsthand, to gain greater understanding, and at times even to disagree and argue with some of the physicians.

  He fought the disease for a year and a half. He was concerned and scared, but believed he would overcome it. He always radiated optimism and he regarded his gradual recovery as evidence of the need to keep believing. From time to time, his spirits fell. The medications he was prescribed confused and depressed him; he sometimes refused to take them, as if they were the source of his troubles. His family supported him and tried to provide him with strength in whatever way it could. Dalia never left his side. She was there for him and helped him maintain his faith. His children and grandchildren also made an effort to be with him. Friday night family dinners now became increasingly meaningful, as it was evident that family togetherness infused Eli with the strength he needed to keep fighting the disease. And fight he did. At times, he even sought to comfort members of his family, sensing their concern and trying to alleviate it somewhat.

  •••

  Eli continued working, making the trip to Petah Tikva and attending meetings. He continued to take part in discussions and to maintain a presence, but people at Teva discerned his difficulties and the signs of the illness, which were observable. At a certain point, they started to take on external manifestations: he sometimes spoke at great length or rambled, ha
d difficulty concentrating, or jumped from subject to subject, which was not like Eli. The press was informed that he had taken a three-week vacation and he himself subsequently recognized that he could not continue serving as chairman of the board of directors and took leave. These were the toughest times of all. He had reached his breaking point, the point at which he had to leave Teva, which was his home, his entire world.

  “Eli Hurvitz is Teva and Teva is Eli Hurvitz,” Globes correspondent Eli Zipori proclaimed.

  No matter how you look at it (and even if you try to deny it), the chairman of Teva is closely bound to the Israeli generic giant, which for him serves as a second name. Hurvitz made Teva into a massive success and a source of pride for Israel. It should therefore come as no surprise that the financial media has not overlooked the company’s announcement that he has temporarily stepped down as chairman for health-related reasons.

  Eli agreed to step down on the condition that “when he gets well, he be allowed to return” – a promise made in writing by his replacement Philip Frost.

  “Teva’s board of directors will reinstate Eli Hurvitz as its chairman within 24 hours of his recovery,” Shlomo Yanai assured journalists attempting to make sense of his resignation.

  Heartbroken, with great emotion and difficulty, and with tears in their eyes, members of the board of directors were informed that Eli would henceforth cease to function as the group’s chairman.

  “During the discussion regarding the appointment of a successor, the directors sought a figure like Eli Hurvitz,” Zipori wrote in Globes. “His absence was conspicuous, completely filling the modest conference room … which was not exactly well suited for the management of the seventh-largest corporation on the NASDAQ, but which fit the taste and sensibilities of Hurvitz – Mr. Teva, but as of this week, the former Mr. Teva.”

  “This week,” a correspondent of The Marker wrote, attempting to convey the event’s significance to her readers, “Hurvitz, a man of vision and one of the most admired business leaders in Israel and the world, made another wise, brave decision when he announced his resignation from the chairmanship of Teva in order to focus his efforts on treating his illness.”

  •••

  Eli ultimately overcame the disease. After months of suffering, his doctors informed him unequivocally that the cancer was gone from his body. Slowly and with great persistence, he recovered and returned to work, to Teva, almost as before. His days were once again filled by company affairs and he once again sought involvement in charting its strategy. One issue that troubled him was the possibility of the R&D department being relocated abroad. He got involved in the issue, appealed to Yanai and members of the board of directors, and was angered by the corporate management.

  “It will destroy Teva,” he warned them, but never had the opportunity to resolve the issue.

  Eli took his return to Teva as a sign.

  “I have completely recovered,” he declared to a correspondent from the American-based Bloomberg economic network.

  He was overjoyed and filled with a sense of victory. At the wedding of his grandson Lior, Vered’s son, to Einat, no one could be happier.

  “Here before us stands the next generation,” Eli the family man proclaimed with great emotion.

  “Eli Hurvitz has returned to the stage,” a correspondent of Israel’s Channel 2 reported in a newscast on December 10, 2010. Indeed, he returned to many stages and continued to receive award after award, as he had in the past. His character had been strengthened by his struggle with cancer and his victory. At a ceremony in which he was awarded an honorary doctorate by Bar-Ilan University, the scroll specified that he had received the honor for “the demonstration of exceptional leadership and vision, for the winning connection between scientific research and business entrepreneurship that led Teva to unprecedented international achievements, and for his major contribution to the economy and society of Israel.” One year later at a ceremony held in May 2011, he was awarded a similar honor by the Ariel University Center of Samaria “for his years of service promoting knowledge-intensive industry, the economy, and society in Israel.” He was subsequently awarded the European Achievement Prize by the Go4Europe Conference “for his accomplishments at Teva and his contribution to the building of business relations between Israel and Europe by means of his work at Teva.”

  At the height of the protests over socioeconomic issues in Israel in the summer of 2011, Prime Minister Benjamin Netanyahu asked Eli to head a commission to recommend changes to government budgets that would satisfy the protesters. After considering the proposal for a few days, and in full agreement with his family, he ultimately declined the offer and recommended Prof. Manuel Trajtenberg for this important assignment.

  •••

  Some of the adverse effects of his illness never completely disappeared. Eli’s office director Adi Duanis and long-time faithful driver Zvika Daskal tried with all their might and ingenuity to protect him, to make his life easier, and to ease his suffering. Good friends who had remained close with him for many years (including businessman Kobi Even Ezra, the most loyal and dedicated of all, whom Eli regarded as a dear friend; Dov Lautman, who visited him frequently; and friends such as Dan Susskind, Menachem Tulchinsky, and Uzi Karniel from Teva) tried to imbue him with strength and raise his spirit. From time to time, he visited Teva plants. In March 2011, in the presence of president Shimon Peres, he inaugurated Teva’s new logistical center in Shoham, which was the largest of its kind and which Eli had helped initiate. It was clear to everyone that he wanted to return, to Teva in particular. That was his dream. He tried to fight, to prove that he was healthy, and to become himself once again. He continued to do so, with perseverance and determination. He promised he would recover and fully expected to do so. He never gave up.

  But this was one endeavor in which Eli would not succeed. A few weeks after returning from a trip to Paris with Dalia and good friends, during which they practiced their French and enjoyed the city he loved so much, Eli suddenly fell ill. He was rushed to the emergency room of the Sheba Medical Center at Tel Hashomer, was diagnosed with an inflammatory infection, and hospitalized. During his first critical days in the hospital, he received treatment that was inadequate by all standards and that was certainly not suitable for a person who had recently recovered from cancer. He was transferred to intensive care in critical condition, where, despite the dedicated care he received, he died on November 21, 2011.

  •••

  Eli’s death stunned those around him. Like him, they were all convinced that he would eventually overcome his health problems. He had major plans that he hid from no one and that had now been disrupted midway through. Reactions to the tragedy began arriving immediately.

  “While on the plane I received word that Eli Hurvitz, one of the most wonderful men Israel has ever known, has passed away,” president Shimon Peres said. “Hurvitz was an exceptional man. He was daring and he was not arrogant. He was a modest planner who always acted with an intended goal in mind. He established Israel’s largest plant and he and his enterprise together saved the lives of millions. For me, he was a personal friend who, like me, started out as a kibbutznik and ultimately reached the summit of economic achievement.”

  Peres’s statement was followed by that of Prime Minster Netanyahu: “Hurvitz was one of the greatest industrialists the State of Israel has ever known. He was noble, a patriot through and through, and completely dedicated to the development of Israel’s economy and Israeli society. I learned much from him. I admired his wisdom and his achievements and loved his warm personality. There was no better ambassador for Israeli entrepreneurship and the Israeli spirit. I will miss him.”

  The shock could be clearly felt at his funeral and in the eulogies.

  “I say goodbye in the name of the 7,000 employees of Teva Israel and Teva’s 38,000 employees abroad,” Teva CEO Shlomo Yanai declared in his eulogy. “You are one of the few p
eople who had a vision and got to see it fulfilled while you were still alive. For us, you were a guide and a personal compass for modest living and prudent behavior. If there is such a thing as Israeliness at its best, it was you.”

  Adi Duanis, Eli’s office director, wrote the following to him in a letter after his death:

  You are an outstanding person. If there is anyone whom we can say was touched by God, it was you. You possessed the heavenly mixture of inner and external beauty, sublime wisdom, an abundance of personal magnetism, and captivating charisma that opened every door. How beautifully your modesty and simplicity coexisted in your personality together with your prominence and your personal gallantry. You were always guided by fairness and integrity, and arrogance and conceit were the furthest things from your mind.

  Friends, family, acquaintances, admirers, Teva personnel, industrialists, bank directors, the governor of the Bank of Israel, and leaders and ministers of the State of Israel all made their way to the modest cemetery at Kibbutz Givat Hashlosha where he was buried.

  “You were a modest man, a plasterer’s son, a teenager from the Scouts. You loved your country deeply and had no other passport,” his daughter Vered eulogized him. “His characteristic thoroughness and extreme optimism were part of his very being and the reason for his extraordinary success. For this reason, Dad was a source of pride for me, Chaim, and Dafna. Walking with Dad meant a path of smiling people, strangers wishing him well, and, more recently, asking how he was doing and whether he had recovered yet from cancer. They were always happy to hear that he had. Dad was a sworn optimist and that is how he approached the illness that attacked him. We too were infected with his optimism and were sure he would prevail. The moment he was able to do so, he refocused all his energies on public work and his family, although this took him longer than he had planned. During the past two years, he was most engaged by the state, working on finding and developing original Israeli ideas – smart startups about which he was so enthusiastic – and on establishing a medical school in the Galilee.”