Teva to produce new complex drugs outside Israel

Teva's Kfar Saba site Photo: Alon Ron
Teva's Kfar Saba site Photo: Alon Ron

Management feels that labor disputes at Teva's Kfar Saba plant have made the site less attractive for production of new drugs.

One of the long-term growth engines mentioned by Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) CEO Kare Schultz is biosimilars - generic versions of complex biological drugs, which are becoming a platform in Teva's core research and development. After many years of stagnation in this sector, Teva recently obtained approval to market two biosimilar versions of best-selling drugs in the US. Teva's workers at the company's production site in Kfar Saba, however, may not be among the beneficiaries.

Sources inform "Globes" that workers on the site have been notified that Teva has decided that a new biosimilar product by the company, which could have been manufactured in Kfar Saba, will instead be produced at one of the Teva's overseas sites. The Kfar Saba site currently produces Copaxone, Teva's original drug for treatment of multiple sclerosis. Copaxone produced enormous profits for Teva in previous years, but profits have recently dropped off due to competition from generic drugs. It was thought that the Kfar Saba site would be able to maintain its status within Teva by producing biosimilars and other complex drugs.

It is feared that the Kfar Saba site will be hurt in the future by similar decisions by Teva's management about where to manufacture biosimilars. The Kfar Saba site may have acquired a reputation being prone to poor labor relations. The decision about where to manufacture each product includes factors such as know-how, technology, and meeting targets. It is possible that the frequent labor disputes in Kfar Saba in comparison with Teva's other sites will have a negative impact on decisions of this type. Teva is a global company headed by a Danish CEO and an Italian COO, who are not likely to have any special feelings about a specific site in Israel.

As of now, an active labor dispute was declared several days ago at the Kfar Saba site, due to what the workers there describe as "foot-dragging" by management concerning their pay. The employees were offered a 1.4% wage increase in 2019 (there was no pay increase in 2018). The workers assert that the disciplinary process is being misused at the site, and that they are being treatment improperly, aggressively, and abusively, with unilateral changes detracting from their employment security. Teva says that the salary increases offered to workers in Kfar Saba make their salaries higher than the prevailing market wages.

Teva Kfar Saba workers' committee chairperson Eliran Kozlik said today, "We have no desire to harm the company, but we will not allow the company to harm us. This site is more important to us than to managers who serve one or two terms. We will stay here; it is our home."

Published by Globes, Israel business news - - on January 9, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Teva's Kfar Saba site Photo: Alon Ron
Teva's Kfar Saba site Photo: Alon Ron
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