Israel drug giant Teva to slash 14,000 jobs globally

Yahoo – AFP, Mike Smith, December 14, 2017

Staff of Israeli pharmaceutical giant Teva gather outside its plant in Ne'ot Hovav,
near Beersheba, on December 14, 2017, as management prepares to announce
massive job cuts (AFP Photo/MENAHEM KAHANA)

Jerusalem (AFP) - Israeli pharmaceutical giant Teva announced Thursday it plans 14,000 job cuts globally over two years as the ailing firm unveiled sweeping restructuring plans while facing low prices for generic drugs and heavy debt.

Teva Pharmaceutical Industries, the world's largest producer of generic drugs, said its reductions would be across-the-board and in all its locations.

Its job cuts would amount to more than one quarter of Teva's global workforce of over 55,000.

Closures or divestments of manufacturing plants were planned for the United States, Europe, Israel and elsewhere.

"There's not any function where we don't have a reduction," Kare Schultz, who took over as Teva president and chief executive in November, said during a conference call to discuss the restructuring.

"Geographically, it's everywhere. So it's a very broad set of actions we're taking."

Teva also said it was suspending dividends on ordinary shares and its annual bonus for 2017 will not be paid "due to the fact that the company's financial results are significantly below our original guidance for the year."

Teva has been saddled with debt after its $40 billion acquisition of the generics arm of rival Allergan was completed last year.

The acquisition has been accompanied by low prices for generics, particularly in the United States, a major market.

Teva expects to save $3 billion by the end of 2019 with the two-year restructuring plan.

There has been deep concern over job cuts in Israel, where the company employs some 7,000 people and receives generous tax breaks.

On Wednesday, Israel's powerful Histadrut trade union confederation called a nationwide strike for Sunday following reports of the job cuts.

Teva factory workers on Thursday walked off the job and protested, including by blocking roads.

'Pay the price'

According to Histadrut head Avi Nissenkorn, some 1,750 workers will be laid off in Israel.

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.

Netanyahu also told Schultz he must do whatever possible to retain Teva's identity as an Israeli company, and Schultz said he would, a statement from Netanyahu's office read.

According to Nissenkorn, Teva has received $6.2 billion in tax reductions since 2006.

"I think their plan is exaggerated," he said.

"The number of workers set to be sent home should be reduced, and not less importantly, all the factories in Israel should be saved."

Teva has faced a convergence of factors that have put it in difficulty.

Beyond low prices for generics in the United States, its multiple sclerosis drug Copaxone is facing competition after US regulators approved a generic version of it.

While Teva has focused on generics, it also produces speciality drugs.

Its restructuring will include evaluating products to determine whether they should be discontinued, the firm said.

Schultz, who is Danish, has sought to turn around the fortunes of a company that in the past represented more than one percent of Israel's gross domestic product.

In late November, the company announced a new organisational and leadership structure, including combining its speciality and generics commercial businesses into one.

But the cutbacks have led to strong criticism in Israel.

"Teva is giving us a painful lesson in ingratitude and rudeness," Israeli Labour party lawmaker Itzik Shmuli said.

"After having benefited from billions in tax breaks, they are laying off. The crisis is real, and it is mostly due to mindless management. Now they want workers to pay the price."