Teva Pharmaceutical Industries Limited

Case Details

Class Period: February 6, 2014 - May 10, 2019
Date Filed: June 21, 2019
Case Number: 3:17-cv-0558
Jurisdiction: District of Connecticut
icon-casetype Case Type: Securities Case

Case Summary

This is a consolidated securities fraud litigation involving a class action, numerous individual actions, and a prominent plaintiff-intervenor arising out of an industry-wide price-fixing conspiracy and collusion in the U.S. generic drug market.

The operative class action complaint (the “Complaint”) asserts violations of the Securities Exchange Act of 1934 and the Securities Act of 1933 against Teva Pharmaceutical Industries, Ltd. (“Teva” or the “Company”) and certain of its current and former executives (collectively, “Defendants”) on behalf of all persons and entities that purchased Teva American Depositary Shares (“ADS”) and certain U.S. dollar-denominated debt securities during the period of February 6, 2014 – May 10, 2019 (the “Class Period”).

Teva is the world’s largest generic drug manufacturer. As alleged in the complaint, throughout the Class Period, Defendants falsely described the “intense competition” in the generic drug marketplace and consistently attributed Teva’s financial success and performance to the Company’s fundamental business strategies such as cost cutting and product management. Teva also staunchly denied engaging in any conduct that would give rise to antitrust liability or that its performance was driven by price increases. In truth, Teva’s success was the result of an undisclosed strategy to systematically hike the prices of generic drugs – in some cases by over 1,000% – across a large swath of Teva’s generic drug portfolio. Teva imposed price increases at least 76 times during the Class Period, reaping over $2.3 billion in profits. To effectuate this undisclosed price-hike strategy, Teva colluded and conspired with many of its “competitors” to fix prices and allocate market share.

The truth was gradually revealed to investors through a series of disclosures beginning in August 2016. These disclosures caused Teva’s ADS price to plummet by nearly 50%.

However, Teva’s central role in the price-fixing conspiracy was not more fully revealed to investors until May 2019, when a coalition of virtually every State Attorney General in the nation filed a 524-page complaint accusing Teva of being the ringleader of the price-fixing conspiracy, and included significant and previously undisclosed facts regarding Teva’s role as a central participant. The filing of the State AGs complaint and related disclosures caused Teva’s share price to decline by an additional 16%. Because these disclosures and Teva’s prior staunch denials of having engaged in unlawful anticompetitive conduct were not covered by the pending Teva securities class action, in June 2019, Saxena White filed a new class action against Teva on behalf of investors that purchased Teva ADSs from August 4, 2017 to May 10, 2019. See Emps.’ Ret. Sys. of the City of St. Petersburg, Florida v. Teva Pharm. Indus., Ltd., No. 3:19-cv-1768 (the “St. Petersburg Action”). The St. Petersburg Action was subsequently transferred to the Court presiding over the previously filed Teva securities class action.

In December 2019, the Lead Plaintiff filed its second amended consolidated complaint, which incorporated the claims and allegations in the St. Petersburg Action. As a result, the Class Period was expanded by nearly two years, thus protecting the full scope of investor losses and appreciably enhancing the Class’s recoverable damages. On March 10, 2020, the Court issued an order consolidating four putative Teva class actions, including the St. Petersburg action filed by Saxena White, and approximately fifteen related individual actions.

In June 2020, the Lead Plaintiff filed its motion to formally certify the case for class action treatment, which Defendants opposed, and on March 9, 2021, the Court granted class certification.

On August 11, 2020, Saxena White appeared in the case on behalf of plaintiff-intervenor the California State Teachers’ Retirement System (“CalSTRS”). Previously, the Court permitted CalSTRS to intervene in the Teva securities class action in order to protect the timeliness of its individual claims for recovery, including under the Exchange Act’s five-year statute of repose. On November 30, 2020, Saxena White filed a similar motion to intervene on behalf of TIAA and certain of its managed funds and accounts, which the Court granted the next day.

The cut-off for fact discovery in the class action was February 26, 2021. Summary judgment motions were due on December 2, 2021. However on the eve of the hearing, the parties reached an agreement to settle the case for $420 million in cash.

Lead plaintiffs filed a motion for preliminary approval of the settlement on January 18, 2022, and on January 27, 2022, the Court granted preliminary approval. On April 28, 2022, Lead Plaintiff filed a motion for final approval of settlement and for approval of attorneys’ fees and expenses, and on June 2, 2022, the Court granted final approval.