Teva Earnings Drop, Share Price Tumbles

After registering dismal second-quarter results, Teva Pharmaceutical Industries announced a global belt-tightening on Thursday that will see thousands of layoffs and factory closings in 45 countries, Globes reported.

News that the Israeli-based drug giant plans to shrink by 7,000 jobs and shutter 15 factories sent its share price plunging 16.7 percent on the Tel Aviv Stock Exchange.

The company reported an 18.4 percent drop in second-quarter earnings on Thursday, with earnings per share falling from $1.25 in the second quarter of 2016 to $1.02 in the second quarter of 2017. Teva also cut its interim dividend by 75 percent, due to market sluggishness in the U.S., according to Reuters. Revenue rose 13 percent to $5.7 billion.

“Second quarter results were lower than we anticipated due to the performance of our U.S. Generics business and the continued deterioration in Venezuela,” said Yitzhak Peterburg, interim president and CEO of Teva, in the second quarter report. “These factors also led to a lowering of our outlook for the remainder of the year. All of us at Teva understand the frustration and disappointment of our shareholders in light of these results.”

“Given the current environment, we have had to take swift and decisive actions,” Peterburg said in the quarterly report. “We are focused on executing meaningful cost reductions, rationalizing our assets and maximizing their value, actively pursuing divestiture opportunities and strengthening our balance sheet. We will continue to take action to aggressively confront our challenges.”

The layoffs announced on Thursday will be in addition to the shedding of about 350 workers at its Kfar Saba and Ramat Hovav-based facilities announced last week.

Teva suffered another major blow on Thursday as the New York Supreme Court threw out the company’s claim that it had been defrauded in the acquisition of Mexican company Rimsa Pharmaceuticals for $2.3 billion in 2015.

The court ruled that the Espinosa brothers were not guilty of fraud but did not clear them of allegations of breach of contract connected to the same deal.

In a statement emailed to Reuters, Teva said, “The decision does not dismiss all the claims in the suit. Teva’s suit against the Espinosa brothers regarding breach of contract stemming from their false representations will move forward based on the legal documents disclosed.”

Last year the Espinosa brothers sued Teva on grounds that the Israeli company was making false claims of fraud to extricate itself from the deal.

Teva then countersued, alleging fraud and breach of contract and claimed that the, “defendants lied and concealed exceptional legal violations in order to receive $2.3 billion for the sale of the company and its IP. The plaintiff (Teva) suffered substantial loses as a result of this.”