Teva shares jump in Tel Aviv after report of up to 10,000 job cuts

Teva shares jump in Tel Aviv after report of up to 10,000 job cuts

Pharmaceutical firm’s new CEO aims to cut expenses by $1.5 billion-$2 billion over the next two years, Bloomberg says

Kåre Schultz, CEO and president of Teva. (Courtesy)
Kåre Schultz, CEO and president of Teva. (Courtesy)

Shares of Teva Pharmaceutical Industries Ltd. jumped on Sunday in Tel Aviv, following the rise of the drug-maker’s stock in the US on Friday, after a report said the company is considering cutting as many as 10,000 jobs to curb costs.

On Friday, Bloomberg reported that Teva’s new CEO Kåre Schultz aims to reduce expenses by $1.5 billion to $2 billion over the next two years, citing people familiar with the matter. A little less than half of the cuts will be linked to research and development spending, the people said.

Allaying investor concerns, Bloomberg’s sources also said that the drug-maker doesn’t plan to hold an equity offering in the near term. The stock jumped to its highest in almost two months on Friday in New York after the report.

Even so, Bloomberg was told that no final decision has been taken, and the layoff targets may vary, with a range of 5,000 to 10,000 jobs being mulled. The job cuts could account for more than 15 percent of Teva’s workforce, Bloomberg said.

Teva does not comment on rumors, a spokeswoman in Tel Aviv said in a text message.

Schultz, who last month took the reins of the world’s biggest maker of copycat drugs, has been tasked with setting out the Israeli firm’s strategy by cutting costs and divesting assets in a bid to repay debt and restore investor confidence.

After just a few weeks at the post, he made his first changes at the Jerusalem-based firm, announcing last month a new organization and leadership structure aimed at giving the company “more commercial focus.” One of the aims is to create greater value for investors, who have seen the share price spiraling to their lowest levels in 17 years.

Schultz, who was appointed in September and took his post on November 1,  also said Teva is working on a detailed restructuring plan that will be shared in mid-December.

One of Schultz’s first and key missions will be to oversee and implement the drug-maker’s merger with Actavis Generics, a $40 billion deal which has turned out to be expensive for the company. Generics drugs have suffered from price cuts, due to increased competition and to the US Food and Drug Administration implementing a policy of approving more generic versions of medications. Teva’s blockbuster medication for multiple sclerosis, Copaxone, is also is witnessing competition from copycat versions.

As of September 30, 2017, Teva’s debt was $34.7 billion, more than double the market value of the firm, which was $16.3 billion on Friday.

Teva shares, which have tumbled some 60 percent in the past year, were trading 7.7 percent higher at 11:31 a.m. in Tel Aviv. The New York-traded shares closed up 7.1 percent on Friday.

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