More uncertainty has roiled Teva, as the company, which has been reported to be plotting substantial job cuts in Israel, indicated it would eliminate hundreds of production workers in the country.
Teva is expected to cut 300 to 350 workers and managers at production sites in Histadrut and Ramat Hovav and has started negotiations with labor groups there, Globes reports.
In a lengthy emailed statement today, interim CEO Yitzhak Peterburg discussed the importance of Israel as a production center for the company’s most advanced new meds, and pointed out it has been making investments to keep plants in Israel competitive. "Teva will continue to invest in Israel—and in production sites in particular—in activities that strengthen our competitiveness globally," Peterburg said.
However, in "view of the difficult business situation facing the entire pharma industry, including Teva,” the company needs to complete a “global restructuring” that he said had already affected operations in many other countries.
After the announcement Sunday, workers vowed to resist “any unilateral measure in which workers are laid off at Teva" Globes reports. One of the labor groups has authorized a strike of up to two weeks.
Cutting jobs in the home country has proven difficult in the past. When former CEO Jeremy Levin planned to make big production cuts there four years ago, the board balked and the dispute led to him losing his job.
Since then, Teva’s troubles have continued to mount, and Levin’s replacement, CEO Erez Vigodman, has also departed amid mounting dissatisfaction after he made a number of strategic moves intended to offset the impending loss of patent protection to its top-selling Copaxone. Those included the company’s $40.5 billion pickup of Allergan’s generics unit, which investors had cooled on by the time Teva finally managed to close the deal last year.
A month after he was gone, it was reported that Teva was considering thousands of layoffs. But that report, which has so far proven wrong, came from the same source, Calcalist, which more recently said Teva would hire AstraZeneca CEO Pascal Soriot to run the company. Neither Teva nor AstraZeneca has commented on the report, but last week Soriot assured employees that he will be working with them to power the company toward success.
In a note today, Bernstein analyst Ronny Gal and his colleagues told investors they are “reasonably confident Soriot will not join Teva.” They said the whole episode is likely to make it more difficult for the generics specialist to recruit a new CEO and may even lead to an investigation, given what the rumors did to the prices of both stocks.