3/7/2013 7:58:46 AM
Teva Pharmaceutical Industries Ltd. (TEVA) may be preparing to cut jobs in its home market of Israel even as local politicians criticize the company for paying too little in taxes. The world’s largest maker of generic drugs has pledged to cut costs by as much as $2 billion in the next five years as part of a new strategy to increase long-term profitability. Part of those savings will probably need to come from Israel, according to Ronny Gal, an analyst at Sanford C. Bernstein & Co. “I don’t see how they can meet their sizeable cost cut goals without cutting costs in Israel significantly,” Gal said at an annual conference organized by Tel Aviv-based health-care hedge fund Sphera Funds Management Ltd. “Cutting costs here in Israel is going to be a true test for them.” Laying off workers or closing down factories in its home market may be politically challenging for Petach Tikva, Israel- based Teva as it faces pressure over tax payments from Labor leader Shelly Yacimovich, who has called on the Finance Ministry to investigate the issue. Israeli newspapers including Globes and TheMarker criticized Teva’s tax contributions last month after an annual statement showed the company paid about $5 million, or less than 1 percent of annual income, in taxes for 2012. Teva, Israel’s largest company by market value, said its total contribution to the state is greater than that and its operations in Israel generate tax revenue of more than 3 billion shekels ($806 million). ‘Unbearable Situation:' It will now have to balance a desire to protect its public image with an obligation to keep investors happy as intensifying competition eats into sales of best-selling multiple sclerosis treatment Copaxone and weighs on profit.
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