Israeli Drug Giant Teva to Cut 10 Of Staff

Israeli Drug Giant Teva to Cut 10% Of Staff

"Teva is managing its operations to achieve high levels of effectiveness in the short term, while pursuing opportunities for the long term," CEO Jeremy Levin said. "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."

JERUSALEM, Israel -- Israeli pharmaceutical giant Teva (IW 1000/225) said today it will slash its global workforce by 10% by the end of 2014 as part of a mammoth cost-cutting plan.

A statement on the website of Teva Pharmaceutical Industries Ltd. said the world's largest generic drug maker would trim about 5,000 of its 46,000 jobs worldwide. It did not give a breakdown by country.

"Teva is managing its operations to achieve high levels of effectiveness in the short term, while pursuing opportunities for the long term," CEO Jeremy 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."

The company said it aimed to achieve "$2.0 billion in annual cost savings by the end of 2017 including $1.0 billion by the end of 2014."

Israeli business daily Globes quoted Levin as saying it was not yet clear how many of the company's 7,500 staff in Israel would lose their jobs.

"Most of the layoffs will be outside Israel," he said. "Later this year, we will specify which programs we'll invest in. We'll give many more details about what we're doing at the end of the year. This year, we've saved $300 million."

Israel's Histadrut trade unions federation, of which most local Teva employees are members, said its representatives had spoken by phone to company executives on Thursday afternoon.

"It was agreed that efficiency steps would be undertaken in coordination with the workers' committees and with the Histadrut," the federation said in a statement.

Review Will Determine Cuts

Teva Vice President Ika Abravanel said the corporation was at the beginning of a top-to-bottom spending review that would determine where cuts were required.

"It is a comprehensive global process in 70 countries and 74 production sites in which we are checking everything; procurement, property, travel, everything," he told public radio. "Part of the program is rationalization of manpower because there are certain places where there is a surplus."

"Now we are entering the planning stage at every site and in every country and at the end of the process there will be an average (staff reduction) of 10 percent," he said. "But in some of the sites it will be a little more and in some a little less and there will be a few locations where we shall add staff."

The company's share price on the Tel Aviv stock exchange closed up 1.64%, according to the exchange's website.

Levin told Globes that the cost-cutting was a response to worldwide market conditions.

"This was a decision made with the board of directors to deal with global challenges," he said. "We're a global company that is facing price pressures and the risk of losing revenue from specialized products."

Abravanel singled out the challenge posed by litigation over patents on its multiple sclerosis treatment Copaxone, which reportedly accounts for 30% to 35% of Teva's net profit.

"There is a threat of the expiry of the Copaxone patent in May 2014, instead of September 2015," he said. "We have to prepare for that. If Teva wants to be successful and to continue to be a market-leader, we have to prepare for the changing conditions of the market."

From starting out as a small pharmacy in Jerusalem in 1901, Teva posted $20.3 billion in net revenues in 2012.

After Thursday's announcement, Teva stock climbed 2.09% to $40.02 on Wall Street.

In its statement, Teva said it expected 2013 revenues to fall within its target of $19.5 billion to 20.5 billion.

"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."

Copyright Agence France-Presse, 2013

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