Tags: Teva | jobs | pharma | costs

Teva to Cut 5,000 Jobs to Speed Up $2 Billion Cost-Cut Plan

Thursday, 10 October 2013 09:54 AM

Teva Pharmaceutical Industries Ltd., the world’s largest maker of generic drugs, plans to eliminate about 5,000 jobs as it accelerates cost reductions amid growing competition for the company’s best-selling product.

The restructuring program will lead to expenses of $1.1 billion through 2017, the Petach Tikva, Israel-based company said in a statement. Cutbacks, which equal about 10 percent of the workforce, will yield annual cost savings of about $2 billion by the end of that year, the company said. Teva reaffirmed its 2013 sales and profit forecast.

The announcement answers one question posed by some analysts and investors: how Chief Executive Officer Jeremy Levin planned to achieve the cost savings target he laid out last year. Levin is under pressure to boost profitability because the multiple sclerosis drug Copaxone may face lower-priced, generic rivals as soon as next year. The injection already faces competition from new oral treatments.

“The strategic plan now looks more credible,” Jonathan Kreizman, an analyst at Clal Finance Batucha Brokerage Ltd., said by phone. “This puts some meat on the bones in their attempt to significantly cut down costs.”

Levin, who joined Teva last year, is focusing the company’s efforts to develop branded drugs in areas such as respiratory and central nervous system illnesses. In December, he said Teva would pare back some programs, such as StemEx, a stem-cell technology it was working on with Israeli partner Gamida Cell Ltd.

Shares Gain

He set a goal then of $1.5 billion to $2 billion in annual cost savings, without saying how many jobs would be cut. Today Teva said the savings will be about $2 billion.

Teva rose 2.6 percent to 143.70 shekels at 3:35 p.m. in Tel Aviv. The shares gained as much as 2.8 percent, the biggest intraday advance in two months. Teva’s more actively traded American depositary receipts have returned 7.5 percent in the past five years, trailing the 109 percent return for the Bloomberg Europe Pharmaceutical Index.

While Teva is the world’s biggest maker of generic drugs, its future hinges on finding new revenue to replace what it earns from the branded product Copaxone. The drug accounts for about 50 percent to 65 percent of Teva’s profit, according to Sabina Podval, an analyst at Leader & Co.

“The accelerated cost reduction program will strengthen our organization while improving our competitive position in the global marketplace,” Levin said in the statement. “We understand that this may be a difficult time for our employees and are committed to act with fairness, integrity and respect, and provide support during this time.”

Teva didn’t disclose in the statement where the cuts would occur.

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Teva Pharmaceutical Industries Ltd., the world's largest maker of generic drugs, plans to eliminate about 5,000 jobs as it accelerates cost reductions amid growing competition for the company's best-selling product.
Thursday, 10 October 2013 09:54 AM
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