Israeli Pharmaceutical Giant Teva to Lay Off Quarter of Workforce
Teva Pharmaceutical Industries will cut its workforce by more than a quarter, give up many of its manufacturing plants and suspend its dividend on ordinary shares in a much-anticipated overhaul to help pay back its massive debt.
Israel-based Teva, the world’s largest generic drugmaker, said on Thursday these measures will result in the reduction of 14,000 positions globally, with the majority of the cuts expected in 2018.
The two-year restructuring plan is intended to reduce Teva’s cost base by $3 billion by the end of 2019, out of an estimated cost base for 2017 of $16.1 billion.
Israel’s main labor federation has threatened to hold a half-day general strike on Sunday, the start of the Israeli work week, in protest at the layoffs.
Saddled with nearly $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 Nov. 1.
Teva expects a restructuring charge from the plan in 2018 of at least $700 million, mainly related to severance costs, with additional charges possible following decisions on closures or divestment of plants, R&D facilities and office locations.
“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,” Schultz said in a statement.
He said Teva would preserve its core capabilities in generic drugs and in select specialty products.
“In 2018, we expect to secure the successful launches of Austedo and fremanezumab,” he said, referring to the company’s treatments for complications arising from Huntington’s disease and migraines.
The company said dividends on convertible preferred shares would be evaluated on a quarterly basis.
Teva will provide its 2018 outlook in February and a longer-term strategic direction for the company later that year.