Teva has announced it will cut 14,000 jobs, trimming its global workforce by more than 25%. This is 4,000 more layoffs than in the scenario previously envisaged. The goal is to save $3 billion in annual costs, $1 billion more than analysts estimate.
Teva will hurry: Most of the job cuts will occur in 2018, and affected employees will receive advance notice in the next 90 days. Meanwhile, manufacturing plants, research and development facilities and offices around the world will be closed or sold. The cost-cutting plan was drawn up by new CEO Kåre Schultz who Teva recently hired to put things right.
The company is saddled with debt as its flagship drug Copaxone is struggling with the entry of generics. In addition, the company's program to launch generic drugs is slowing down. “Basically, the only thing we're really protecting is product flow,” Teva's CEO told investors on Thursday.
The drugmaker expects these moves to save $3 billion by the end of 2019. That's a large sum of money, considering its total cost estimate for this year is $16.1 billion. . Teva also expects to save $700 million from the company's restructuring.
other containment measures
Cutting jobs isn't the only measure Schultz is taking to cut costs. In fact, the company will also suspend its dividend and continue to look for opportunities to streamline the business, further reducing expenses.
But Teva won't phase out current pharmaceuticals, Schultz said; rather it will be dedicated to developing “everything that is not directly related to product sales”, such as, for example, distribution. The 2017 bonuses are also canceled "due to the company's financial results being significantly lower than expected for this year," he said.
Teva has lowered its estimates three times this year, twice by more than $1 billion. The new restructuring plan will deal a serious blow to generics. Teva intends to change prices and produce discontinuously. This will expedite the closures and divestments of "a significant number" of manufacturing plants in the United States, Europe, Israel and emerging markets.
Daily Health Industry – December 15, 2017
Related news: Staff cuts for Teva: expected layoffs in Israel and the USA
