Teva to cut 10% of workforce by late 2014
Israeli pharmaceutical giant to dismiss some 5,000 workers worldwide as part of biggest wave of layoffs in its history. 'We are committed to providing support to our employees during this time,' says CEO
In Israel the company is expected to fire 700 to 800 workers.
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The layoffs are part of the restructuring plan announced by Teva a year ago as its goal until 2017, which includes saving $1.5-2 billion. Following the announcement, Teva shares went up 1% in early trading on Wall Street.
"Teva will scale down oversized parts of the company, while growing its generics business and core R&D programs – including high-value complex generics, expanding its presence in emerging markets and broadening its portfolio, especially in its specialty medicines and OTC businesses.
'Difficult time for our employees'
Teva President and CEO Jeremy Levin commented, “Teva is managing its operations to achieve high levels of effectiveness in the short term, while pursuing opportunities for the long term. The accelerated cost reduction program will strengthen our organization while improving our competitive position in the global marketplace."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."
The company said in the statement that it expects to realize approximately $2 billion in annual cost savings by the end of 2017, compared to the previously guided range of $1.5 to $2.0 billion. The company estimates that $1.0 billion, or 50% of the annual cost savings, will be realized by the end of 2014, and 70% by the end of 2015.
"The majority of the savings are expected to come from a reduction in the company’s cost of goods. Teva expects to reinvest part of the initial savings accumulated in 2014 and 2015, in high-potential programs. These investments will include the development of the company's complex generics and specialty pharmaceutical pipeline, which includes more than 30 late-stage programs.
"Total pre-tax costs for the corporate restructuring program are estimated to be approximately $1.1 billion, to be incurred as savings are achieved through 2017, about 75% in cash and about 25% in non-cash accelerated depreciation and impairment of assets.
"Teva reiterates its full-year 2013 Non-GAAP financial outlook and anticipates ending the year near the midpoint of its original 2013 ranges for revenue of $19.5-$20.5 billion, and non-GAAP diluted earnings per share of $4.85 to $5.15.
"The company is in the process of completing its annual planning and expects to provide its full-year 2014 financial outlook in December, which will also include additional details on its cost reduction program."
Largest commercial company in Israel
Teva is one of the biggest pharmaceutical companies in the world, the leading company in the genetic field and the largest commercial company in Israel. The company has production, research and marketing facilities in Israel, North America and Europe.
The company's greatest achievement was receiving the Food and Drug Administration's approval for its Copaxone drug in 1996. The medication was developed by a team of researchers at the Weizmann Institute of Science to treat to treat multiple sclerosis. That was when Teva went from being a company producing generic drugs to a company making drugs of its own.
The company's market value in January 2011 was NIS 186 billion (about $52 billion). By the end of 2012 Teva had 45,948 workers, 7,397 of them in Israel. Most of the company's employees are located in Europe – 19,749 workers. In North America the company employs 9,483 workers, in Latin America 4,374 workers, in Asia 4,893 workers, and in other countries – 52 workers.
The chairman of the company's board is Dr. Phillip Frost, who was appointed in 2010. Teva CEO and President Jeremy Levin was appointed in 2012. Eli Hurvitz served as CEO from 1975 to 2001, Israel Makov from 2001 to 2007, and Shlomo Yanai from 2007 to 2012.
Calcalist reporter Nir Zalik contributed to this report
