"It is difficult to assess the effect of the layoffs on Teva's profit margin, because we do not yet know which employees will leave, and whether entire activities are being closed down, or whether a number employees are being cut from activities that will continue," IBI investment house pharmaceutical and biotech analyst Steven Tepper said today. He was responding to media reports that Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) was planning to lay off thousands of employees worldwide, including in Israel.
"In any case, it appears that the measure is designed not only to generate an immediate saving in operating profit, but also to provide a gift for investors ahead of a possible offering in the near future. This is probably also the reason why the measure is being taken so quickly -such measures require time, and the offering is an urgent matter," Tepper added.
Concerning Michael Hayden, Teva's president of global R&D and chief science officer, leaving the company, Tepper commented, "Hayden was appreciated by the market, because he brought the company the drug for migraines and the drug for movement disorder, which are considered relatively promising, and are likely to enable Teva to survive the crisis. It is possible, however, that his leaving indicates that Schultz is preparing to act aggressively on internal innovative R&D, which has in any case been hard hit in recent years. They may be planning to downplay R&D for two three years and rely on just those drugs until the company's situation stabilizes and it can resume making acquisitions. If this is the case, Hayden has no reason to stay in the company."
A source close to the company today confirmed Tepper's hypothesis about Hayden's leaving the company, saying, "Hayden is a scientist, and he wanted to develop unique original drugs for rare diseases and to gain complete control of niches. Teva is going into a different era of product innovation that may be less trailblazing, but is also less expensive and risky, at least in the next few years. It is necessary to concentrate on existing products for which marketing is about to begin, such as the product for migraines, which can be as big as Copaxone, and the product for movement disorders."
"Globes": Isn't that neglecting Teva's future a little?
Source: Teva's future depends on the here and now. Without creating stable cash flow, it will have no future."
Published by Globes [online], Israel Business News - www.globes-online.com - on November 23, 2017
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