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Eye on Pharma: Teva to Cut 14,000 Jobs in Major Restructuring Move
Teva Pharmaceutical Industries, the world’s largest generic drug maker, based in Israel, unveiled its restructuring plan yesterday, which comes with big cuts to its research and development (R&D) department and staff.
Teva Pharmaceutical Industries, the world’s largest generic drug maker, based in Israel, unveiled its restructuring plan yesterday, which comes with big cuts to its research and development (R&D) department and staff.
President and CEO Kare Schultz said in a letter, “The plan will address a number of key areas, including the closure or divestment of a significant number of R&D facilities, headquarters, and office locations across all geographies.”
The plan is said to lead to 14,000 layoffs beginning in 2018, which accounts for about 25% of Teva’s total workforce. The company plans to begin notifying affected employees over the next 3 months. Schultz said that “all business and regions will be affected.” In addition to the layoffs, Teva plans to suspend its dividend on ordinary shares.
Shares in Teva were up 14.6% on news of the plan, though its shares overall are down 53% since January.
The 2-year restructuring plan aims to cut Teva’s costs by $3 billion by the end of 2019, from an estimated base of $16.1 billion, according to Fierce Biotech. However, the restructuring itself will end up costing the company at least $700 million in 2018, mainly related to severance costs, according to a statement.
“We will execute this plan in a timely and prudent manner, remaining focused on revenue and cash flow generation, in order to make sure Teva is ready to meet all of its financial commitments,” said Schultz in the letter.
Reuters reports that Teva needed to make a change in order to stay afloat, as it was saddled with about $35 billion of debt after acquiring Allergan’s Actavis generic drug business for $40.5 billion.
The company also expects to receive help next year from 2 new branded products — its migraine drug fremanezumab and austedo, which treats abnormal, involuntary movements associated with Huntington’s disease. Teva is also partnered with Celltrion in the development of 2 biosimilars: CT-P10, a proposed rituximab biosimilar, and CT-P6, a proposed trastuzumab biosimilars.
Teva is expected to provide its 2018 outlook in February, and will give a longer-term strategic plan for the company later that year.
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