Teva Cuts Another 500 Jobs, May Hire CEO Who Isn’t Israeli

Published: May 18, 2017

Teva Cuts Another 500 Jobs, May Hire CEO Who Isn’t Israeli May 18, 2017
By Alex Keown, Breaking News Staff

JERUSALEM – As Teva Pharmaceuticals narrows down its candidate for a new chief executive officer, the company is shuttering a plant in Hungary and laying off 500 employees, according to reports.

Teva will close down the Gödöllo manufacturing plant near Budapest over the course of the next year. The plant will be closed by the end for 2018. In the meantime the company will begin winding down operations there and laying off employees, In-pharmatechnologist reported this morning. The plant makes more than 200 sterile injectable products. Jason Otke, Teva’s corporate communications director, told In-pharmatechnologist that the plant is being closed as part of the company’s global operations strategy "which is intended to better align production capacity with market and patient demand globally.”

In March, the company announced its intention to close or sell a plant in Virginia, which will impact 300 employees. Also in March, the company corrected a report by an Israeli business publication that the company was going to terminate up to 6,000 employees as part of an effort to save $2 billion. Teva did not provide a number it was looking at terminating, but did say at the time that 6,000 eliminations was too high. The company employs approximately 57,000 people.

Teva has been in the process of reducing excess debt. It is reportedly considering the sale of a number of assets, including its branded generics business and its women’s health unit. Teva reported its debt at the end of 2016 was $35.8 billion, which was down nearly $10 billion from the previous year. In January, the company lowered its revenue forecast for the year.

Closing down the plant will also bring to an end some regulatory issues the company has experienced at the site over the past few years. In 2016, In-pharmatechnologist said the U.S. Food and Drug Administration identified several violations of current good manufacturing practice at the site. A follow-up report earned the plant an import alert from the FDA and then later in 2016 the plant was issued a warning letter over those violations, In-pharmatechnologist said.

While the company is forced to shutter the Hungary in plant, Teva is closer to naming a new CEO following the sudden February departure of Erez Vigodman who was forced out of the world’s largest generic drug manufacturer after serving only three years in the position. Teva is eyeing a non-Israeli as its new CEO, Reuters reported this morning, citing reports from Israeli financial news website Calcalist. For years Teva has insisted that its CEO be an Israeli citizen and live near Tel Aviv. The company has also sought leaders who are more frugal, which is in line with the lower salary Teva’s top executive earns in comparison to other pharma CEOs.

No information was provided about the candidate. In an earnings call last week, Sol Barer, chairman of Teva’s board of directors, said the company was “looking for a world-class individual with deep and broad pharmaceutical experience, an individual with experience dealing with global and complex companies, with a strong sense of corporate responsibility and proven strategic and operational capabilities,” Reuters said.

Barer confirmed to Reuters that Teva was casting a global net for its next CEO and was committed to doing all it could to bring its CEO candidate to Teva.

Not only is Teva in the process of finding a new CEO, the company is also interviewing candidates for chief financial officer. In April, CFO Eyal Desheh, 65, announced his intention to leave the company.

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