Teva to Cut Undisclosed Number of Jobs as It Seeks to Pare CostsBy
Drugmaker says report that 11% of staff will be fired is wrong
Firm to exit unprofitable businesses, consolidate operations
Teva Pharmaceutical Industries Ltd. signaled plans to cut an unspecified number of jobs as the world’s largest maker of cheap copycat drugs seeks to exit unprofitable operations and reduce expenses in an effort to pare its debt and revive growth.
The drugmaker is freezing recruitment plans and opting not to fill jobs as employees leave, among other steps, the Petach Tikva, Israel-based company’s spokesman said in a text message on Thursday. An earlier media report that it plans to cut as many as 6,000 jobs, or about 11 percent of its global workforce, is inaccurate, it said.
The Israeli drugmaker is looking for a new chief executive to turn around the business after its $40.5 billion acquisition of Allergan Plc’s generic business saddled the drugmaker with debt. The transaction came just as prices of cheap copycat drugs began to fall and the threat of competition for Teva’s best-selling branded medicine mounted. The company’s U.S.-traded shares have plummeted in recent months to near a 10-year low.
“The efficiency program is an integral part of Teva’s business reality,” the spokesman said in the message. The reduction in jobs will be “conducted through a continuous open dialogue with the employees.”
Teva has already laid off about 100 employees in Israel and is seeking to cut hundreds more jobs in the coming weeks, Calcalist, the local daily that first reported the planned job cuts, said on Thursday.
Firing workers at home, where the company gets tax breaks from the government, has backfired before. Former Chief Executive Officer Jeremy Levin faced fierce resistance to his cost-cutting plans about four years ago from local politicians and unions, and was ultimately ousted in October 2013 following a clash with Teva’s board members over his plans to restructure the company.
“A few years ago, we were in a similar situation and we went to the battle,” Eliran Kozlick, the head of the workers’ committee at the company, wrote in a Facebook post early on Thursday. “If the management wants to do this again, we will all work together and win as we did in the previous struggle.”
The Israeli drugmaker employed nearly 57,000 people at the end of last year, according to its annual report.
Teva’s debt pile ballooned after a series of acquisitions, including the purchase of Allergan’s generics division and a $2.3 billion acquisition of Mexican drugmaker Representaciones e Investigaciones Medicas SA, known as Rimsa. The company’s debt was $35.8 billion as of Dec. 31. Erez Vigodman resigned as chief executive officer last month.
— With assistance by Marthe Fourcade