Teva Pharmaceutical to cut 14,000 jobs, close 'significant' factories

By Allen Cone  |  Dec. 14, 2017 at 3:43 PM
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Dec. 14 (UPI) -- Teva Pharmaceutical Industries announced Thursday plans to eliminate more than one-quarter of its workforce -- 14,000 positions worldwide -- over two years as part of a restructuring plan.

The company, based in Israel, announced a yearly savings of $3 billion by the end of 2019 and about half that number by the end of next year. Teva's estimated cost base is $16.1 billion this year.

Teva said it will continue to review the "potential for additional divestment of non-core assets."

And it plans to close "a significant number of manufacturing plants in the United States, Europe, Israel, and growth market," along with research & development facilities, headquarters and other office locations, it said in a statement.

The drugmaker defines growth markets as Latin America, Eastern Europe, the Middle East, Israel, Africa and Asia-Pacific, including China and India.

About 1,750 jobs will be cut in Israel, Haaretz reported, citing a source with the Histadrut labor federation. The federation has called for a general strike within Israel on Sunday to protest the job cuts and the closing of two plants in Jerusalem and other buildings.

Plants in the Negev and in the Tel Aviv suburb of Kfar Sava won't be closed, but each have already faced heavy downsizing.

Teva concentrates 12 percent of its labor force in Israel -- compared with 42 percent in Europe and 18 percent in the United States.

"We are launching a comprehensive restructuring plan, crucial to restoring our financial security and stabilizing our business," Kare Schultz, Teva's president and CEO, said in a statement. "We are taking immediate and decisive actions to reduce our cost base across our global business and become a more efficient and profitable company.

"Teva will optimize its cost base while ensuring that we protect our revenues and preserve our core capabilities in generics and in select specialty assets, in order to secure long-term growth."

Schultz became chief executive after Erez Vigodman stepped down in February.

In making the cuts, Teva plans to take a restructuring charge of at least $700 million next year. It also will immediately suspend dividends on ordinary shares and not pay bonuses this year.

Teva's stock, which is traded on Nasdaq, has declined nearly 60 percent this year as it has racked up $35 billion in debt, mainly in acquisitions in recent years. The stock declined on New York Stock Exchange after the announcement but it was above Wednesday's prices later in trading.

Last year, Teva's net revenues were $21.9 billion. Also in 2016, it completed acquisition of Allergan's generic drug business for $40.5 billion.

"These are decisions I don't take lightly but they are necessary to secure Teva's future," Schultz said. "We will implement these changes with fairness and the utmost respect for our colleagues worldwide. Today's announcement is about positioning Teva for a sustainable future which we will achieve with our talented people. We will ensure that we continue to provide high quality medicines to the many patients we serve every day, while adhering to the highest standards of GMP compliance."

Eli Lilly, based in Indianapolis, Ind., announced in September it is cutting 8 percent of its workforce -- 3,500 jobs -- in an effort to streamline operations and focus on developing new drugs to improve its financial situation.

Teva is the world's biggest maker of generic drugs but its leading brand-name drug, the multiple-sclerosis treatment Copaxone, now has generic competition. Prices for generic drugs have been falling as major pharmacy chains, wholesalers and pharmacy benefit managers have united to bring down costs.

Earlier this month, CVS Health announced it will buy insurer Aetna for about $69 billion.

Teva has 1,800 molecules "to produce a wide range of generic products in nearly every therapeutic area" by 200 million patients a day," according to a release.

Topics: Eli Lilly
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