Generic drugs giant Teva to cut workforce by more than 25%
No decision on future of Irish plants which employ about 580
Teva employs about 580 people in Ireland, where it has a manufacturing plant in Waterford and a commercial operation in Dundalk. Photograph: Chris Ratcliffe/Bloomberg
Troubled generics drug giant Teva Pharmaceutical Industries is to cut its workforce by more than a quarter, give up many of its manufacturing plants and suspend its dividend on ordinary shares in a much-anticipated overhaul to help pay back its massive debt.
Israel-based Teva, the world’s largest generic drugmaker, said on Thursday these measures would result in the reduction of 14,000 positions globally, with the majority of the cuts expected in 2018.
It is understood the Irish plants have performed very strongly in recent years. Teva is now the leading supplier of prescription drugs in the Irish market. However, the scale of the cutbacks means a cloud will hang over all Teva operations pending detailed announcements.
The company said on Thursday that no decisions had yet been made on which individual plants will be affected.
The two-year restructuring plan is intended to reduce Teva’s cost base by $3 billion by the end of 2019, out of an estimated cost base for 2017 of $16.1 billion.
Israel’s main labour federation has threatened to hold a half-day general strike on Sunday, the start of the Israeli work week, in protest at the layoffs.
Saddled with nearly $35 billion in debt since acquiring Allergan’s Actavis generic drug business for $40.5 billion, Teva has made a series of changes after Kare Schultz joined as its new chief executive on November 1st.
Teva expects a restructuring charge from the plan in 2018 of at least $700 million, mainly related to severance costs, with additional charges possible following decisions on closures or divestment of plants, R&D facilities and office locations.
“We will execute this plan in a timely and prudent manner, remaining focused on revenue and cash flow generation, in order to make sure Teva is ready to meet all of its financial commitments,” Mr Schultz said in a statement.
He said Teva would preserve its core capabilities in generic drugs and in select specialty products.
“In 2018, we expect to secure the successful launches of Austedo and Fremanezumab,” he said, referring to the company’s treatments for complications arising from Huntington’s disease and migraines.
The company said dividends on convertible preferred shares would be evaluated on a quarterly basis.
Teva will provide its 2018 outlook in February and a longer-term strategic direction for the company later next year. – Reuters