Mass Layoffs Hit Teva Pharmaceutical
Pharma giant Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has revealed a massive restructuring plan following its disappointing earnings call. The pharmaceutical company is closing 15 of its manufacturing plants over a two-year period, and is on its way to lay off 7,000 employees as part of its downsizing plan. Most of those 7,000 workers have already been let go, starting in 2016.
Interim CEO Yitzhak Peterburg confirmed in the company’s latest quarterly earnings call that Teva will be closing six manufacturing plants this year and an additional nine plants in 2018.
The Israeli company has not revealed a breakdown of locations where the layoffs will be taking place. As of the end of 2016, Teva employed a global workforce of about 57,000, including roughly 7,000 employees in Israel and about 7,500 in the United States.
Teva Pharmaceutical, which is the largest manufacturer of generic drugs in the world, has been facing stiff competition in its core business of generic drugs within the United States. According to the company, the U.S. Food and Drug Administration (FDA) has increased approvals of generic drugs, which has resulted in a number of newer drug manufacturers entering the market. The increased competition has led to price wars, and has started cutting into Teva’s profits.
The layoffs and plant closures were announced after the company experienced a dismal second quarter. Not only did Teva’s revenue and earnings fall short of market expectations, but the company also lowered its guidance for future quarters. Consequently, the publicly-traded company saw a huge drop in its stock price.
The company’s troubles may have been exacerbated due to the fact that the pharma giant is currently operating without a permanent CEO or a stable, long-term corporate direction. Teva Pharmaceutical has been without a permanent CEO since February, when its former CEO stepped down. Since then, the former Chairman of the company has been acting as CEO while the company seeks someone to permanently fill the position.
Following the announcement of the restructuring plan, Peterburg said in a statement. “Given the current environment, we have had to take swift and decisive actions. We are focused on executing meaningful cost reductions, rationalizing our assets and maximizing their value, actively pursuing divestiture opportunities and strengthening our balance sheet.”
“As shares plunge, Teva sees 7,000 layoffs by year’s end,” The Times of Israel, August 3, 2017.
“Company Profile,” Teva Pharmaceutical Industries Ltd., last accessed August 3, 2017.