"We are facing a very difficult and challenging business situation. In the past three months, there has been a downturn in the US generics market, and that is what led us to the numbers we reported for the quarter. Actually, Teva's other business is going as expected," acting Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Prof. Yitzhak Peterburg told "Globes" today.
According to Peterburg, Teva today presented "A well-organized and detailed plan for handling this crisis, including additional cutbacks, reducing the number of our factories, and exiting markets that are less important to us. The aim is more efficiency in the system. We're examining all of our R&D tracks in order to generate a clear focus on priorities in the company's products, and to assure a long-term return on investment program."
Peterburg added that Teva would sell $2 billion of assets that were not part of its core business, compared with a previous estimate of $1 billion. "Management and the board of directors have realized what has to happen, and are not waiting for anything," Peterburg emphasizes. "The good part is the recognition of the situation, all the existing challenges, and the goal now is to move with the plan we presented. We'll leave no stone unturned in the company."
The plan includes a 7,000 reduction in the number of employees that Teva had when the Actavis deal was completed a year ago. "Actually, after a deal like this, some of the employees leave. There is a natural process of synergy; it's not all layoffs," Peterburg says. "In the past, we spoke of 5,000 people leaving. Today, 6,000 have already left, and we expect to reach 7,000 by the end of the year."
"Globes": Does this number include the 350 employees you're planning to lay off in Kfar Saba and Ramat Hovav?
Peterburg: "We didn't mention the number 350, but it does not include those employees."
Teva published poor results today, including a huge $6.1 billion write-down in goodwill on its generics business in the US. Teva acquired Actavis, a generics company that also operates in the US, a year ago, but Peterburg says, "It's not possible to separate Teva and Actavis now. The reduction in goodwill comes from two places - the original Teva and the assets of Actavis." Peterburg noted that the write-down results from what is happening in the US generics market, including what he calls "pressure resulting from more competition, because the FDA (US Food and Drug Administration, S. H.-V.) is issuing more approvals, and there is consolidation that is dragging the market towards lower prices. There were also launches of new drugs that went off the radar, because there was either another competitor, or we had a delay in preparations."
The share price is now down 18% to a 14-year low
"I think that the company is trying to do the best thing for its shareholders, and will continue to do it. I manage the company, not the share."
Published by Globes [online], Israel Business News - www.globes-online.com - on August 3, 2017
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