Israeli drugmaker Teva Pharmaceutical Industries Ltd. rejected a government request to keep its Jerusalem plants open, while pledging the firm will keep its global headquarters in the Jewish state and work closely with an Israeli team to help dismissed workers find alternative employment.
Prime Minister Benjamin Netanyahu, Finance Minister Moshe Kahlon and Economy Minister Eli Cohen met Tuesday afternoon with the CEO of Teva, Kare Schultz, to try to figure out how best to soften the blow of the Israeli drug-maker’s plans to cut its local workforce. A key request by Israeli leaders was to keep the Jerusalem production plants open.
One of the world’s largest generic makers of drugs and one of the nation’s largest employers, Teva had been until recently a symbol of Israel’s industrial success. The company’s shares were a staple in local savings plans, earning the nickname of “the people’s stock.”
Schultz was adamant that the Jerusalem plants be closed, telling Netanayhu that further debate about them is “a waste of all our time,” Channel 10 reported.
“The factories aren’t profitable,” Schultz told the prime minister. “The downsizing plan won’t change, because in such a case it would cause Teva heavier damage in the long term.”
Last week, however, the company, which is dogged by debt, announced a restructuring plan that envisages the firing of 14,000 Teva workers worldwide over the next two years — more than a quarter of Teva’s global workforce of over 55,000 — including some 1,750 in Israel.
“As the CEO of a company largely owned by global investors, we must ensure that all decisions we make are financially and economically sound,” Schultz said in a statement issued by the drug-maker after the meeting. “These measures are painful, but absolutely vital. They will be carried out in all of our global operations – the US, Europe, Growth Markets, and inevitably in Israel – in a fair and respectful manner.”
“Unfortunately, Teva is unable to consent to the request of the prime minister and ministers and avoid the closure of the plant in Jerusalem and the company will continue in the phased closure of the plant by the end of 2019. Teva will cooperate fully with the team established by the prime minister in order to assist the workers who will leave the company to find alternative employment, training and support,” Schultz said.
“In order for Teva to remain an Israeli company and continue to prosper in Israel, and to continue with our significant contribution to the Israeli economy we must first and foremost save our company. I have taken upon myself to maintain the global headquarters of Teva in Israel, including my own office. I am committed to maintaining a strong presence of R&D, as well as preserving most of our existing manufacturing in Israel in the future,” he added.
Teva’s business reality “requires immediate and significant action” to ensure the company’s future, the statement said. “Without taking drastic steps in the coming weeks and months, the company will be increasingly vulnerable to potential takeover.”
Employees of Teva Pharmaceutical Industries on Tuesday blocked the entrance to Har Hotzvim, one of the capital’s major industrial zones, over the threatened shuttering of the company’s two Jerusalem plants.
Protests have occurred nearly daily since Teva presented its restructuring plans, which include the layoffs and the shuttering of the plants in the capital. On Sunday, the public sector in Israel held a four-hour strike in solidarity with the company’s employees.
Teva has been saddled with debt after its $40 billion acquisition of the generics arm of rival Allergan was completed last year. That purchase was accompanied by low prices for generics, particularly in the United States, a major market.