Debt-Ridden Teva Considers Cutting Up to 10,000 Jobs
Beleaguered Teva Pharmaceuticals may be passing out more pink slips as the company looks to cut up to 10,000 jobs in order to save up to $2 billion in costs over the next two years.
Teva has been battling a debt burden of nearly $35 billion. Citing Israel business publication Calcalist, Bloomberg reported that the job cuts could come in as short a time as a few days. The job cuts could be as much as 25 percent of its workforce in Israel, Bloomberg reported. Bloomberg was quick to note that the information about the number of cuts is speculative. A Teva spokesperson did not provide comment on the alleged cuts. A spokesman for Israel’s labor union told Bloomberg “that there is no plan or numbers at this stage.” The union spokesman added that if Teva takes any action it will be done through discussion with the union.
Teva employs about 57,000 people worldwide.
Shares of Teva are up slightly to $16.15 in pre-market trading. Over the past month, Teva share prices have been on the rise, climbing from $11.23 on Nov. 2. Teva’s stock still has a ways to go to return to $31 per share, which is where it was in August when prices plunged.
Since taking over the reins of the company earlier this fall, Chief Executive Officer Kåre Schultz has taken a number of actions to shore up the bottom line, including reported plans to terminate up to 1,700 employees in Israel and the United States, as well as a shakeup of the leadership team. Among those gone from the leadership team is Michael Hayden, head of Teva’s research and development division. Hayden, reports say, is out due to an underwhelming pipeline since he took over in that role five years ago.
Teva has been struggling with its debt, which was largely created from Teva’s 2015 $40.5 billion acquisition of Actavis, Allergan’s generics division. Many industry analysts have suggested that Teva paid too much for Actavis.
Earlier this month, Teva’s credit rating was cut to junk status by Fitch Rating. The credit rating cut followed news that the company once-again lowered its 2017 financial outlook due to increased competition to its lead branded drug Copaxone and lower than expected generic sales in the United States.
Teva has sold a number of its assets to pay down its debt. On Nov. 3, Teva announced it completed the $675 million sale of Plan B One-Step to Foundation Consumer Healthcare. Teva sold its branded contraceptive line Paragard, a product within its global Women’s Health business, to CooperSurgical for $1.1 billion. The company has also been looking to unload several non-core businesses, including its Medis and respiratory units to help pay down short-term and long-term debt.
When Schultz initiated the restructuring of his leadership team, he said the change is expected to address both external pressures as well as internal inefficiencies. In outlining the plan, Schultz said the leadership structure will allow a stronger alignment and integration between its R&D division and commercial teams. He said it will allow the company to become more agile and lean.
Schultz said the new management team is aimed at positioning Teva for a “turnaround in the short to medium term.”
“It remains our absolute priority to stabilize the company’s operating profit and cash flow in order to improve our financial situation, while being focused on short-term revenue and cash generation, and at the same time, ensure we deliver on our commitment to supply high-quality medicines to patients around the world,” Schultz said in a statement earlier this month.