Teva reportedly to present job cuts plan on Thursday
Yitzhak Peterburg, who served as interim chief executive, has resigned from the board effective immediately, troubled drug-maker says
Shoshanna Solomon was The Times of Israel's Startups and Business reporter
Israel’s Teva Pharmaceutical Industries Ltd. will present a plan of cost-cutting measures on Thursday in what the Israeli financial website Calcalist called the most dramatic efficiency plan in the company’s history.
The troubled drugmaker said on Tuesday that Yitzhak Peterburg, who served as the interim chief executive, has resigned from the board, effective immediately.
Teva’s new CEO, Kare Schultz, is expected to announce this week a roadmap detailing how he plans to lead the recovery of the ailing Israeli drug-maker, which has been suffering from price cuts in its generics business and sooner-than-expected competition to its flagship branded drug, Copaxone, for multiple sclerosis
Rather than setting out a grand plan forward for company growth, analysts expect Schultz, just weeks into his new job, to hunker down and outline a treatment that will ensure bare survival, as the drugmaker needs to repay debt of some $10 billion over the next 12 months.
As part of the cuts, Calcalist said Wednesday, Teva’s R&D center in Netanya will be shut down, the factory in Neot Hovav will fire most of its workers and the plant in Kiryat Shmona will be sold or shut down. Some 500 workers from the company’s Petah Tikva headquarters will be fired, Calcalist said, citing people familiar with the matter.
All in all, one third of Teva’s 6,800 workers in Israel will be laid off, in what Calcalist called the biggest wave of redundancies in Israel in the past few years.
Teva, the world’s largest generic drug-maker, employs more than 56,000 workers globally.
The cost-cutting steps are part of a global reorganization Teva’s Shultz is overseeing. Bloomberg reported on Friday that the company plans to fire a total of 10,000 workers globally as part of the plan.
In addition, geographical divisions will be unified and the number of managers at the firm will be cut, Calcalist said, with the aim of saving the company some $1.5 billion-$2 billion in costs to help repay Teva’s massive debt load of $34 billion.
The restructuring plan is already generating opposition. Former Labor Party leader Shelly Yachimovich called on Finance Minister Moshe Kahlon and Histadrut labor union chairman Avi Nissenkorn on Wednesday to not to stand “idly by” as thousands of workers are sent home, calling on them to take a hard stance on Teva’s management and to make it clear that massive layoffs will not save money for the company but instead cost it even more.
The Knesset’s State Control Committee, headed by Yachimovich, will hold a discussion on Teva’s layoffs, Calcalist reported.
Meretz MK Ilan Gilon called for Teva’s CEOs to return their bonuses to the firm before any layoffs are implemented. “Dedicated workers should not be thrown into the street as if they were crumbs on a tablecloth,” he said, according to Calcalist.
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