Pharma giant Teva to slash 1,700 jobs, dumping quarter of its Israeli workforce
Lionel Bonaventure (AFP/File)
Israeli pharma giant Teva is reportedly expected to slash some 1,700 jobs, cutting 20 percent of its 10,000-person global workforce and about 25 percent of its nearly 7,000 Israeli employees.
The new CEO Kare Shultz, appointed in September, has architected a streamlining plan that includes the departure of Teva's President of Global R&D and Chief Scientific Officer, Dr. Michael R. Hayden, the Calcalist business newspaper reported Thursday, with sources saying that that letters summoning employees for layoff hearings will be circulated over the coming weeks.
The plan comes a few weeks after sales and profit forecasts dropped significantly for 2017, largely attributed to the growing competition in its generics business and leading drug for multiple sclerosis, Copaxone.
“It will be an absolute priority for me that we stabilize the company’s operating profit and cash flow in order to improve our financial profile,” Schultz said
Teva did not expect competition for Copaxone this year, but a UK court approved a challenge to the drug's patent and the FDA approved a new generic version.
Kare Shultz, who recently replaced the former CEO Dr. Yitzhak Peterburg after just three years, elaborated on a conference call with analysts:
“We need on the company’s ongoing efforts to strengthen operations, improve financial performance, reposition Teva operationally and financially. I recognize the significant debt burden that Teva is currently under and it will be an absolute priority for me that we stabilize the company’s operating profit and cash flow in order to improve our financial profile.”
The company has nearly $35 billion in debt following its $40 billion acquisition of Allergan's generic drug business Activis last year. It has been selling off assets to help meet its debt payments.
Teva has also been named with 18 other companies as a defendant in a collusion for price-fixing lawsuit brought by nearly all 50 states' attorney generals. The lawsuit has contributed to the decline in its stock price, which has plummeted by nearly 70% over the last year.
Fitch Ratings this month downgraded Teva’s debt to junk.
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