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Drug maker Teva to fire 350 workers in efficiency bid for southern Israeli plant

Accord reached with labor unions on firing half of the employees at Teva-Tech facility in Neot Hovav in the first quarter of 2022, as competition erodes profitability

Shoshanna Solomon is The Times of Israel's Startups and Business reporter

Teva CEO Kare Schultz at a press conference in Tel Aviv, February 19, 2019 (Shoshanna Solomon/Times of Israel)
Teva CEO Kare Schultz at a press conference in Tel Aviv, February 19, 2019 (Shoshanna Solomon/Times of Israel)

Israeli drug maker Teva Pharmaceutical Industries Ltd. said Sunday it will be firing some 350 workers from its Teva-Tech factory in Neot Hovav in southern Israel as part of a “significant” efficiency program that will take place at the unit.

The program, which will be implemented in the first quarter of 2022, will also see a change to the mix of products and the scope of activity at the plant, which produces active pharmaceutical ingredients for Teva and other pharma firms globally, the company said in a statement.

The efficiency program is part of a global optimization plan that Kåre Schultz, Teva’s president and CEO, announced in February, in addition to a two-year global reorganization plan implemented in 2019 that led to $3 billion in savings at the firm, the statement said. That plan led to the firing of thousands of workers in Israel.

Until now, the Teva-Tech plant, which employs some 700 workers, had not been affected by the firm’s larger reorganization, which saw the closing or sale of Teva plants around the world and cuts to a quarter of Teva’s global workforce, the statement said.

Because of “local considerations” the company tried to spare the local plant and get the unit back on track regarding efficiency and profitability, which “unfortunately” didn’t happen, the statement said.

Increased global competition, especially from the Far East, along with high production costs in Israel have make the Teva-Tech plant expensive and non-competitive, both vis a vis other Teva plants and compared to other pharma producers. In the past decade Teva has invested in Teva-Tech an aggregate $300 million in a bid to rehabilitate it, but to no avail, the statement said.

Teva still has to meet “significant” debt payments and at the height of the coronavirus pandemic, this  has become more challenging as uncertainty has risen, the statement said. At of June 30, 2020, the firm’s debt was $26.3 billion.

The drug maker plans to consult with the local labor unions regarding the program but in practice the parties have reached an agreement, which envisages that the cuts will not take place until the first quarter of 2022, the statement said.

Workers who don’t find employment at other Teva sites or in other jobs at the Teva-Tech plant will get a package of benefits above that required by law, along with counseling during the termination process, workshops and professional training, as well as placement services, the statement said.

“Any process involving change, and in particular streamlining and downsizing, is painful. However, it is necessary to ensure the future of the site and the employees who will continue to be employed on it,” said John Nason, president of Teva Active Pharmaceutical Ingredients (TAPI) and Biologics Operations, in the statement. “We believe that the process will return the Teva-Tech plant to being competitive and will allow us to continue to promote Israel as a central strategic focus for the global company’s activities.”

Teva has thus far fired 1,750 of its employees in Israel.

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