Teva Pharmaceutical Industries Ltd (NYSE: TEVA), based in Israel, is one of the world’s largest makers of generic drugs. The pharmaceutical giant has had a rough year, facing declining prices for generic drugs and the loss of a major branded drug patent has caused the company a loss of more than $20 billion in market capitalization since the start of 2017, dropping Teva’s value by roughly 50 percent.
Kare Schultz, the company’s new chief executive, said that some facilities and offices would be closed. "Making workforce reductions of this magnitude is difficult, and we do not take them lightly," he wrote in a letter to employees. "However, there is no alternative to these drastic steps in the current situation."
Everyone expected layoffs and plant closings, but no one anticipated the severity of the restructuring plan. Teva announced on December 14 that roughly 14,000 jobs will be cut off, or about 25% of its global workforce. Of those 14,000 jobs, 1,700 will be cut from Israel.
Despite the major layoffs introduced in the cost-cutting plan, Teva shares went up about 14 percent. The plan is intended to save $3 billion by 2019.
Teva currently holds a $35 billion debt as of September, a slight reduction from June. The company is extremely squeezed for cash and may have to try to renegotiate deals with banks and bond holders, says Sabina Levy, the head of research at the Israeli brokerage Leader Capital Markets.