Teva Pharmaceutical Industries said it will shrink its workforce through a restructuring of operations—but did not say how many jobs would go, and denied a news report that it will lay off up to 6,000 employees, 11% of the company’s total workforce.
The report surfaced in the Israeli newspaper Calcalist, which said Teva had quietly axed 100 employees, and would carry out the remainder of the job cuts beginning after Passover, at a savings of $2 billion.
“The estimates are about 5,000-6,000 employees, in an efficiency program that will run over several years,” Calcalist reported, according to an English translation via Google Translate.
Not so, Teva insisted in a company statement furnished to Reuters: “We would like to stress that the numbers which were published in the media are incorrect.”
In a statement to GEN this afternoon, Teva offered no specifics on numbers of jobs to be affected: “The company does not have a headcount target, as these activities are based on the right sizing of each individual area of our business. We won’t comment on media speculation on upcoming headcount reduction numbers.”
“As the company previously stated, we are looking to reduce costs in our business in every area, including, among other things, ending unprofitable activities and streamlining some activities and functions throughout the organization.”
In its statement to Reuters, Teva added that its restructuring would include “freezing recruitment and natural employee turnover.”
“These processes are conducted through a continuous open dialogue with the employees. This will be the practice, including in Israel, as necessary,” the company added.
The restructuring reflects Teva’s desire to cut expenses after piling up $35.8 billion in debt as of December 31, 2016, through a series of acquisitions, the largest being its purchase of Allergan’s generic drugs business, a $39 billion deal completed last year.
Teva faces another key challenge: Its best-selling branded drug, the multiple sclerosis treatment Copaxone®, faces potential generic competition after a federal court in January invalidated four patents. Copaxone racked up $4.223 billion in sales last year, up 5% from 2015.
The specter of Copaxone competition, the company’s debt, plus 2017 revenue and profit forecasts that fell below analyst expectations, have helped sink Teva’s share price; shares have fallen 40% over the past year, to $32.61 at yesterday’s close—and have been cited by analysts as reasons explaining why Teva CEO Erez Vigodman stepped down last month. The company has only said it was by “mutual agreement” with the board, whose Chairman Yitzhak Peterburg, M.D., Dr.P.H., now serves as interim president and CEO.
Whoever Teva picks as its next permanent CEO should split the company into separate businesses focused on generic drugs and branded treatments, an activist shareholder in the company, digital printing entrepreneur/inventor Benny Landa, told the Israeli newspaper Globes last month.
Vigodman is Teva’s third CEO to resign during this decade.
Israeli employees will resist future job cuts as they did the 5,000 layoffs planned by former CEO Jeremy Levin, D.Phil., in 2013, according to a Facebook post written by Eliran Kozlick, who heads Teva’s workers’ committee, and reported by Bloomberg: “A few years ago, we were in a similar situation and we went to the battle. If the management wants to do this again, we will all work together and win as we did in the previous struggle.”
Dr. Levin resigned in October 2013, less than a month after unveiling a cost-cutting plan that included the elimination of 5000 jobs worldwide, but which touched off a political uproar in Israel, where the company is headquartered.
[This report has been updated to inlcude a statement furnished by Teva to GEN.]