Teva Pharmaceutical Industries announced today that it is cutting 7,000 jobs in 45 countries and will close 15 factories by the end of 2018, following the publication of the financial results of the company for the second quarter of 2017, Israeli media report.
The company’s share price is currently down 17% on the Tel Aviv Stock Exchange, and in the pre-Wall Street trading.
Dr. Yitzhak Peterburg, the company’s interim CEO, said in a conference call that the steps come following the accelerated price erosion in the US generics market, the company is forced to act fast.
The Israeli pharmaceutical company reported a loss of $6 billion and a net profit of $5.7 billion in revenue in second quarter. Market analysts in Wall Street predicted that Teva will earn in 2017 $23.4 billion in revenue.
According to Teva’s CEO, the company will complete the reduction of the number of employees by 7,000 by the end of 2017.
In Israel, the company plans to lay off 350 workers, and will close or sell 6 factories by the end of 2017 and 9 more factories in 2018. The company decided to leave 45 countries by the end of 2017.
Peterburg explained that the downward revision of the company’s sales and profit forecast for 2017 is due to recent agreements with its major US customers: WalMart and McKexen, and the worsening of the situation in Venezuela, which is causing the company to withdraw from its previous forecast of 11 cents a share from its Venezuelan operations.
Peterburg added the deterioration in the US in the mergers and acquisitions of the company’s customers, which increase their ability to demand higher discounts from the company, as well as the acceleration of the number of approvals for new generic drugs,and delays in the launch of new generic drugs.
The new forecast for 2017 for a adjusted profit of $4.5-4.3 per share compared to the previous forecast of adjusted earnings of $ 5.30-4.90 per share assumes there will be no generic competition for Copaxone in 40 milligrams in 2017. Peterburg said a generic competition for one quarter would reduce the adjusted earnings per share by 20-25 cents.
Peterburg said although he is a temporary CEO, he forced to make long-term strategic decisions due to worsening situation in the US.
The company hired a consulting firm to optimize the company’s product pipeline.
Teva CEO noted that the company is progressing in the sale of the women’s health products division and the products of the company’s oncology division in Europe. He said the company expects to receive $2.0 billion from the sale of these two businesses – significantly higher than the company had expected. He explained the company is considering selling additional businesses that are not core to the company in 2018.
Peterburg noted that the company is moving beyond its early expectations of maximizing synergies and savings in the company’s expenses from implementing the business of Actives Genrex. He said the company had saved $ 800 million in expenses from the deal and expects to achieve $1.6 billion synergies and savings by the end of 2017, which is $100 million higher than the company’s previous forecasts.