Teva swings huge axe, suspends dividend, no bonuses. Tough year for Israeli drugmaker

According to the press release from Thursday, Teva said it needs to reduce total cost base by $3 billion by the end of 2019.  The company said it would reduce workforce by 25%.

Kåre Schultz, Teva’s President and CEO, said that the restructuring plan is crucial to restoring the company’s financial security and stabilizing its business. In addition, he said that in 2018, the company expects to secure the successful launches of Austedo and fremanezumab.

According to the new plan, the company will be reducing layers of management, and simplifying business structures and processes across the company’s global operations.

Furthermore, it plans on closures or divestments of a significant number of manufacturing plants in the United States, Europe, Israel.

All that will result, according to the company, in cutting 14,000 jobs – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.

This will mostly happen in 2018, with most of the cuts taking place in the next three months, the company said.

In addition to the restructuring plan, Teva will immediately suspend dividends on ordinary shares and ADSs, while dividends on mandatory convertible preferred shares will be evaluated on a quarterly basis per current practice.

Teva also said it won’t pay its annual bonus for 2017 will not be paid due to the fact that the company’s financial results are significantly below its original guidance for the year.
The company will continue to review the potential for additional divestment of non-core assets.

Schultz concluded: “These are decisions I don’t take lightly but they are necessary to secure Teva’s future. We will implement these changes with fairness and the utmost respect for our colleagues worldwide. Today’s announcement is about positioning Teva for a sustainable future which we will achieve with our talented people. We will ensure that we continue to provide high quality medicines to the many patients we serve every day, while adhering to the highest standards of GMP compliance.”

Last period was also difficult for Teva as it lost several court cases in the USA. It had struggled with patent cases, and some corruption as well. The company has earlier this year announced firing 6000 workers in Israel.

Image: A building belonging to Teva Pharmaceutical Industries, the world’s biggest generic drugmaker and Israel’s largest company, is seen in Jerusalem February 8, 2017. REUTERS/Ronen Zvulun