Teva Said to Mull Cutting Up to 10,000 Jobs to Pare Expenses

(Bloomberg) —
Israeli drug company Teva Pharmaceutical Industries in Yerushalayim. (Yonatan Sindel/Flash90)

Teva Pharmaceutical Industries Ltd., the debt-ridden Israeli drugmaker, is considering cutting as many as 10,000 jobs as new Chief Executive Officer Kare Schultz seeks to pare costs, according to people with knowledge of the matter.

The company aims to reduce expenses by $1.5 billion to $2 billion over the next two years, with a little less than half of the cuts linked to research and development spending, the people said, asking not to be identified as the discussions are confidential. The drugmaker also doesn’t plan to proceed with an equity offering in the near term, they said.

No final decision has been taken, and the targets may be modified, with a range of 5,000 to 10,000 jobs being discussed, the people said. That would account for more than 15 percent of the total staff. A representative for the Petach Tikva, Israel-based company declined to comment.

The steps may aid Schultz, who last month took the helm at the world’s biggest maker of copycat drugs, in stemming a rout that has seen Teva’s stock plummet to its lowest in 17 years. The CEO, 56, shook up the management team within days of joining the firm and has said he’ll present a detailed strategy in mid-December for Teva’s recovery. But the company’s market value continues to languish at about $15.2 billion, or less than half of its debt burden, as competitors squeeze the profitability of its best-selling product and its generic drugs unit.

Seeking ways to pay back almost $35 billion in debt, Teva has been selling assets, closing factories and firing employees in recent quarters following an ill-timed $40.5 billion bet on the generics industry. Still, the company was forced on Nov. 2 to slash its 2017 profit forecast for a third time, pare its dividend, signal it may sell new shares, and reduce the goal for paying down debt this year. Teva’s stock plummeted 20 percent following the announcement, on Schultz’s second day on the job.

Teva has since ended efforts to divest its European oncology and pain divisions, Bloomberg News reported on Nov. 27. The company received lower-than-expected bids for the businesses, which could have yielded $1 billion, people familiar with the matter said, prompting Schultz to hold on to the assets.

The Israeli company employed almost 57,000 people globally at the end of last year, including more than 10,000 people in the U.S., 24,000 in Europe and over 6,800 in Israel.

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