Published: Fri, December 15, 2017
World | By Paul Elliott

Fears of Israeli job cuts at Teva sparks call for general strike

Fears of Israeli job cuts at Teva sparks call for general strike

Today we are launching a comprehensive restructuring plan, crucial to restoring our financial security and stabilizing our business.

The plan would cut 3,300 jobs out of a total of 6,430 in Israel, Reuters reported. He praised the company's decision to focus on its two new drugs, and also said that spreading the restructuring across the company could make it easier to execute. Most of the reductions are expected to happen before the end of this year, and employees will be notified within the next 90 days. Further pressure came with the expiration of Teva's patents for its $40 billion drug Copaxone, which saw general rivals launch in the US and Europe this October.

Prime Minister Benjamin Netanyahu's office said in a statement he had spoken with Schultz and asked that Teva do what it could to diminish the damage to employees in Israel.

Later on Thursday, Israel's national trade union, the Histadrut, announced plans for a nationwide strike on Sunday. At the same time, it should be kept in mind that the Teva's cutbacks affect mainly outlying areas, such as Kiryat Shmona, and also Jerusalem to some extent, and these places are liable to suffer irreparable harm because of the poor state of industry in them.

The Israeli business media, including Calcalist, the Marker, and Globes, have all reported that Teva will close most of its production operations in Israel.

The aftershocks from the Teva quake should also be taken into account.

Teva is struggling with $35bn debt from an acquisition and rising competition.

The once industry giant, yet now debt-laden colossus, faces steadily dropping generic drug prices in the United States, as Food and Drug Administration regulators are making it easier for competitors to enter the market.

Teva will also set the stage for a planned launch of Austedo and fremanezumab.

The changes "are all in line with what Teva had to do", Bernstein's Ronny Gal said.

In August, Teva lost about a quarter of its market value in one day on mounting concerns about the future of the company after it cut its full-year outlook and slashed its dividend, blaming the rapid deterioration of the US generic-drug business. Mr. Schultz stepped in as Teva's CEO on November 1 after relocating to Israel.

Rumblings about these cuts have already inspired a string of protest plans on the part of Israeli unions, which hold a powerful position at Teva. Some reports have put Schultz's potential compensation package as high as $52 million.

Teva said on Tuesday that Yitzhak Peterburg, who previously served as its chairman and interim CEO, had resigned from its board with immediate effect. Over the past year, though, Teva has been in a financial tailspin. "This will ensure better integration, improve productivity and efficiencies, and reduce our cost base". Teva took a $6.1 billion write-down on that unit and posted a quarterly net loss of $6.04 billion. "Refinancing these bonds would free up near term cash for other uses, but any benefit would need to be weighed against the new, likely higher refinanced rate".

Late last month, in the first steps of the restructuring process, the company said it would combine its commercial generic and specialty drugs businesses. "You can expect a simpler, leaner, and more agile organization", he said Thursday.

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