Drug maker Teva to cut quarter of global work force

Flash90Teva employees protest the layoffs outside the Kiryat Shmona facility. Dec. 14 2017

Israel-based Teva Pharmaceutical Industries - which has almost 100 employees in IL - announced plans Thursday to cut 14,000 jobs globally.

The company said 14,000 workers would be let go.

"I expect the company, which has for many years been a symbol of Israeli worldwide success, to a make particular effort to limit the damage to Israeli employees", Kahlon said in a statement.

At the end of 2016 Teva had 57,000 workers around the world.

As part of its restructuring plan, Teva plans to also adjust prices and/or discontinue some generic drugs in the USA and review its research and development programs. The company will also seek to sell off its global logistics center in Shoham and its plant in Kiryat Shmona.

Saddled with almost $35-billion in debt since acquiring Allergan's Actavis generic drug business for $40.5-billion, Teva made a series of changes after Kare Schultz joined as its new chief executive on November 1. "We are flattening our organization both top down and sideways, with fewer layers of management and increased accountability".

Teva has been saddled with debt after its $40 billion acquisition of the generics arm of rival Allergan was completed past year. It also has suffered from turnover and instability in senior management ranks.

Teva's stock has skidded almost 60 percent this year.

Shares in Teva were up 14.6 per cent at $18 in NY, but are down 53 per cent since January.

It plans to make changes to its generic drug production, including "adjusting" prices and stopping making some altogether.

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Teva also plans to immediately suspend paying its dividend on ordinary shares, while dividends on preferential shares will be evaluated by financial quarter. Affected employees are expected to be notified within 90 days. "However, there is no alternative to these drastic steps in the current situation".

Capital Markets analyst Randall Stanicky said in a note this week that major layoffs could call into question where new revenue would come from. "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".

Globally, the layoffs will amount to one-fourth of Teva's workforce and are part of an effort to reduce costs by $3 billion by the end of 2019.

Schultz said to expect "double-digit plant closures" in the next two years. "If we do well, then in five years, it's going to look great", Schultz said. It's aiming to cut $3 billion from its annual costs, a billion more than analysts had discussed. He said labour strife and political opposition in Israel presented possible roadblocks ahead.

Later on Thursday, Israel's national trade union, the Histadrut, announced plans for a nationwide strike on Sunday. It said air and seaports, public transportation, insurance companies, banks, government offices and health clinics would close throughout the morning in solidarity with the workers - which could bring the nation to a standstill.

Prime Minister Benjamin Netanyahu's office said in a statement he had spoken with Schultz and asked that Teva do what it could to diminish the damage to employees in Israel. Severance pay for the laid-off employees may be more than $700 million, the company estimated.

Netanyahu also spoke to Histadrut leader Avi Nissenkorn and also pledged to work to minimize the impact on local workers.

Industry insiders said that in wake of Schultz's reorganization, here in Israel, Teva will likely be cutting back 1,300 employees in Israel working in administration.

"While there are many politicians offering negative opinions of the company in response to these reports, we are not seeing any clear plan being offered to oppose or prevent layoffs", Divan said.

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