About-Face at Teva: Yerushalayim Facility to Remain Open

Teva Pharmaceutical Industries building in Yerushalayim. (Yonatan Sindel/Flash90)

Workers at Teva’s Yerushalayim facility received good news Sunday, as management announced that workers who were to be laid off would remain on the job for at least a year. The workers had been set to be fired as part of Teva’s plan to rein in losses after several devastating financial quarters and its failure to replace its flagship drug Copaxone with another moneymaker, after the company lost a long bid to preserve its patents on the drug.

The announcement came despite what appeared to be a failed meeting several weeks ago between Prime Minister Binyamin Netanyahu and Teva CEO Kare Schultz. Netanyahu had demanded that, in recognition of the many years of support the state had invested in Teva, the company lay off workers at its facilities in countries other than Israel, and that the Yerushalayim facility remain open. Schultz told Netanyahu in that meeting that as much as he would like to accommodate the prime minister, the company was not changing its decision; some 1,700 workers, many of them at the Yerushalayim plant, would be sent home as part of the company’s plan to restore profits.

Over the past decade, Teva has gotten as much as NIS 22 billion ($6 billion) in subsidies, tax breaks, grants and other benefits from the government, much of it for building factories and facilities in peripheral areas. While those grants did not come with a quid pro quo requiring Teva to make a specific commitment to employing people or keeping the facilities open, Netanyahu told Schultz that Teva has a “moral obligation” to keep operations open in Israel.

In a statement after the meeting, the Prime Minister’s Office said that “the Teva CEO did not acquiesce to our demands, but he did agree to work with the government to provide training for workers to help them find other jobs.” Teva management said that “the current situation in the company demands immediate and substantial action in order to ensure the future of the company.”

Teva gave no reason for its about-face Sunday, but Israeli officials welcomed the move. “I congratulate Teva management for its decision not to close the Yerushalayim plant. This is the right thing to do, economically and morally,” Labor and Welfare Minister Chaim Katz said in response to the announcement. The Teva Workers’ Committee for the Yerushalayim plant also expressed approval, saying that “this is a victory for reasonable-minded people. We are happy that Teva’s most profitable factory in the world will remain open, and that hundreds of workers will return to their jobs.”