Teva Pharmaceutical announces major global restructuring with 14,000 job cuts

Teva Pharmaceutical Industries, the Israel-based generic drug manufacturer, has unveiled a drastic two-year restructuring plan aimed at rejuvenating its business and enhancing financial performance. The plan includes the elimination of 14,000 positions, representing over a quarter of its global workforce. This move is part of a broader strategy to reduce the company’s overall cost base by $3 billion by the end of 2019 from an estimated $16.1 billion in 2017.

Immediate Steps and Financial Projections

Teva Pharmaceutical is set to terminate more than 7,000 employees by the end of 2018 as part of the initial phase of its restructuring. The company anticipates a restructuring charge of $700 million, predominantly allocated for severance costs associated with the job cuts. Additional financial burdens are expected as the company prepares for the closures or sales of its manufacturing facilities, research and development centers, and administrative offices globally.

Leadership’s Commitment to Strategic Overhaul

Kåre Schultz, President of Teva Pharmaceutical, emphasized the company’s commitment to careful and prompt execution of the restructuring plan. “We will execute this plan in a timely and prudent manner, remaining focused on revenue and cash flow generation, in order to make sure Teva is ready to meet all of its financial commitments,” Schultz stated. He further highlighted the focus on optimizing cost efficiency while protecting core business segments to secure long-term growth. Key product launches slated for 2018, including Austedo and fremanezumab, are expected to play a pivotal role in the company’s recovery strategy.

Streamlining Operations and Product Portfolio

As part of the restructuring, Teva aims to significantly streamline its global generics portfolio, particularly in the United States, through price adjustments and potential discontinuations of certain products. These steps are intended to refine the company’s manufacturing and supply network, involving shutdowns or divestitures of several drug manufacturing plants across the United States, Israel, Europe, and other regions.

Government Intervention to Mitigate Impact

Following the announcement, there has been significant concern within Israel about the socio-economic impact of the layoffs. The Israeli government, led by Prime Minister Benjamin Netanyahu, has intervened, seeking to mitigate the number of job cuts in Israel and to keep the Jerusalem factory operational. Approximately 1,700 Israeli employees are expected to be affected by the end of 2019.

Outlook and Industry Impact

The extensive restructuring of Teva Pharmaceutical is a critical step in addressing its financial challenges and positioning the company for future stability and growth. The scale of the job cuts underscores the severity of Teva’s current economic pressures but also highlights the company’s proactive measures to ensure its sustainability in the competitive generic drug market.