Shares of Teva Pharmaceutical (TEVA) are sliding after the company announced that CEO Erez Vigodman will be stepping down, with its current chairman Yitzhak Peterburg taking over as interim chief executive. Commenting on the news, Oppenheimer analyst Derek Archila said the CEO exit will likely create near-term uncertainty, while his peer at Credit Suisse told investors the change may allow for a "fresh start." Meanwhile, generic drug industry peer Perrigo (PRGO) conceded to pressure from an activist investor and added him, and some other directors, to the company's board.

NEAR-TERM UNCERTAINTY: In a research note to investors, Oppenheimer's Archila said he believes the CEO change comes at a "critical juncture" for Teva and creates another degree of uncertainty as to whether the company can execute in the near-term. Vigodman's tenure saw Teva expand the company's global generics business through the acquisition of Actavis, making it the largest generic company in the world, the analyst noted. However, Archila pointed out that the deal was expensive, leaving it saddled with about $37B in debt. The recent headwinds to its generic business that required Teva to lower previous 2017 guidance and recent invalidation of the Copaxone 40mg patents have left some investors questioning management's execution, the analyst said. Still, he continues to see Teva as well positioned longer-term given the company's deep pipeline, diversified generic portfolio and integrated generics business. He reiterated an Outperform rating and $43 price target on the shares. Citi analyst Liav Abraham voiced a similar opinion, saying he believes the departure of the CEO exacerbates the near-term uncertainty at Teva. While the analyst acknowledged that the reasons for Vigodman's abrupt departure remain unclear, the timing of the announcement, one week prior to fourth quarter earnings release, will likely increase concern that yet another guidance downgrade is imminent, either due to the inclusion of generic Copaxone 40mg competition in the company's base case guidance, and/or due to the changing dynamics in the generics business. He reiterated a Buy rating and $47 price target on Teva shares.

FRESH FACES: Less bearish, Credit Suisse analyst Vamil Divan noted that the CEO change comes only a few months after the announcement that Siggi Olafsson was stepping down as President and CEO of Teva's Global Generic Medicines Group, to be replaced by Dipankar Bhattacharjee. The analyst told investors that he believes the changes underscore the difficulties Teva has faced over the past 18 months and may be "well received" as investors look for "fresh faces" to lead a potential turnaround at the company. He reiterated an Outperform rating and $41 price target on the shares.

GENERIC COMPETITION: The announcement of Teva's CEO departure comes as the company faces challenges in the generic pharma market, with a judge recently invalidating four patents for its Copaxone drug. Several Wall Street analysts believe the patents loss is another step toward generic competition.

WHAT'S NOTABLE: Today, Teva competitor Perrigo announced that it has entered into an agreement with Starboard Value, which owns approximately 6.7% of the company's shares, regarding the membership and composition of the Perrigo board of directors. Under the terms of the agreement, Jeffrey Smith, Starboard's CEO and Chief Investment Officer, Bradley Alford and Jeffrey Kindler have been appointed to the Perrigo Board, with Starboard also recommending two additional independent directors to be added.

PRICE ACTION: In morning trading, shares of Teva have dropped 3.5% to $33.13, while Perrigo's stock has gained nearly 1% to $78.60.