Teva said to plan cuts of as many as 6,000 jobs globally

Israel’s Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, has reportedly started a process of worker layoffs at its plants and HQ in Israel and is planning a second wave of even deeper cuts after the Passover holidays in April.

The drugmaker is also planning to fire thousands of workers around the world, with estimates putting the figure at 5,000-6,000 global layoffs, as part of an efficiency plan that will spread over a number of years, the financial news website Calcalist reported without saying where it got the information.

Teva has already fired some 100 workers in Israel, the website reported. Yitzhak Peterburg, who served as chairman of the Teva board of directors until February and is now interim CEO of the firm, is leading the cost-cutting steps, Calcalist said.

As of end 2016, the company employed 57,000 full-time-equivalent employees, according to the company’s financial statements, with some 7,000 workers in Israel. A cut of 5,000 workers would lead to savings of some $2 billion for the company, Calcalist said, adding that the plans were still being formulated.

The cuts come as a response to a drop in earnings and as the company deals with a huge debt of $36 billion, mainly due to the $40 billion acquisition of drug company Actavis Generics, the generics arm of Allergan, Calcalist said.

Teva on Thursday confirmed an efficiency program was underway, writing in a text message: “As the company has previously stated, the efficiency program is an integral part of Teva’s business reality. The program includes, among other things, ending unprofitable activities and consolidating functions, in addition to 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. We would like to stress that the numbers which were published in the media are incorrect.”

“I read the article about Teva and the news came as a surprise to me,” said Eliran Kozlik, the chairman of Teva’s workers union. “We work closely with management and they were also surprised by the [Calcalist] article. We will check the issue. The union will not cooperate with layoffs. If there will be such a process in future we will know how to protect the workers’ rights and if needed we will fight for them.”

Kozlik said he hadn’t heard about the 100 redundancies made in Israel already, as reported by Calcalist. He said they were probably workers employed via personal contracts and not represented by the union.

“We have always had a good working relationship with management and negotiations are the best way forward,” he said.

Peterburg replaced outgoing CEO Erez Vigodman as interim head of the drugmaker after the latter stepped down in February, three years after he took his post in an effort to turn around the fortunes of the drugmaker.

Vigodman’s departure came after the Israeli company, which has been a source of national pride and a fixture of local investment plans, became dogged by a series of missteps, including a $40 billion acquisition of drug company Actavis Generics and an inability to fend off competition for its blockbuster medication for multiple sclerosis, Copaxone. At the end of January Teva lost a court case in which it sought to block generic versions of the drug from entering the market. Now the company faces debt of $36 billion, and its market cap stands at $33 billion, after its share has dropped some 40 percent in the past 12 months.

The last wave of layoffs at the company was under former CEO Jeremy Levin, who was ousted in October 2013 because of differences with the board regarding how to lead the firm. Levin, Teva’s first non-Israeli CEO, faced strong opposition to the layoffs, both from local politicians and the unions. The plan then was to fire some 5,000 workers, Calcalist said, but in the end a smaller number of workers were cut.