Teva has announced that it will lay off 14,000 thousand employees worldwide, amounting to 25% of its workforce. This is expected to save $3 billion over two years. The company says that it expects to record a restructuring charge as a result of the implementation of the plan in 2018 of at least $700 million. It has also announced the immediate suspension of dividend distributions.
In response to today's announcement, Teva's share price rose 13.48% on the Tel Aviv Stock Exchange. The share price is up nearly 13% in New York.
Teva's statement does not specify how many employees will be laid off in Israel, but the number is expected to be around 1,750, 1,200 of them in 2018. Teva's two production plants in Jerusalem are expected to be closed, while two additional plants employing 700 people, one of which is the plant in Kiryat Shmona, will be offered for sale. 560 employees are being laid off at the company's Petah Tikva head office.
Employee bonuses for 2017 have been cancelled. The company's announcement said this was "due to the fact that the company's financial results are significantly below our original guidance for the year." Teva says it will continue to review the potential for additional divestment of non-core assets.
Other key points of the restructuring pan are optimization of the generics portfolio globally, and most specifically in the United States, and a thorough review of all R&D programs across the entire company, in generics and specialty, to prioritize core projects and terminate others immediately, while maintaining a substantial pipeline.
Teva CEO Kare Schultz said, "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. Teva will optimize its cost base while ensuring that we protect our revenues and preserve our core capabilities in generics and in select specialty assets, in order to secure long-term growth. In 2018, we expect to secure the successful launches of Austedo and fremanezumab.
"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."
Published by Globes [online], Israel business news - www.globes-online.com - on December 14, 2017
© Copyright of Globes Publisher Itonut (1983) Ltd. 2017