Teva to slash 25% of global workforce
Pharma says ‘significant’ reductions planned in U.S.
After losing a court fight with a rival, a major maker of generic pharmaceuticals announced a retrenchment Thursday that will result in “significant” cuts to its workforce of 7,000 in the U.S.
Teva Pharmaceutical Industries will consolidate six of its seven U.S. sites into one location as the generic-drug manufacturer slashes more than 25% of its global workforce.
Israel-based Teva said Thursday that it would cut 14,000 jobs worldwide, more than a quarter of its workforce, including “significant” reductions in the U.S. The exact number of U.S. job cuts was not immediately available.
U.S. closures include sites in Cambridge, Mass.; Washington, D.C.; Horsham, Pa.; and New York City, Teva spokesperson Kaelan Hollon said in an email. Some sites could be sold to competitors. The Cambridge site has been shuttered, and the other closures will occur over the next 12 to 24 months, Hollon said. Teva has not decided where its main campus will be located.
The decision will allow the maker of multiple sclerosis drug Copaxone to slash $3 billion in annual costs. But it will require a $700 million upfront charge in connection with severance expenses, facility closures and other measures.
The announcement comes after Teva acknowledged Monday that it had lost a legal fight with drugmaker Mylan over its rival’s recent introduction of a generic threat to Copaxone.
It also reflects a significant push by the company’s new CEO, Kåre Schultz, to bolster the company’s profitability.
The company is dramatically simplifying its business and is aiming for a “substantial optimization” of its generic drugs, which is expected to include price changes and the discontinuation of certain products. In addition to the U.S. closures, the company is planning “closures or divestments of a significant number of manufacturing plants” in other markets.
Investors were thrilled about the Teva announcement. The company’s stock closed up $1.55 to $17.25, rising almost 10% Thursday.
Mizuho Securities analyst Irina Koffler said in a research note that the move was “highly anticipated” but exceeded investors’ expectations with a higher cost-cutting target than expected. The cuts also come as the company is fending off accusations that it conspired with other pharmaceutical giants to fix prices on certain critical treatments.
A group of attorneys general representing most states has made the allegations in an antitrust lawsuit. Teva has denied any wrongdoing.