Teva Pharmaceutical to cut 5,000 jobs, save $2 bn annually

Israel's Teva Pharmaceutical Industries, the world's largest generic drugmaker, today said that it will cut 5,000 jobs by the end of next year and save $2 billion a year by the end of 2017 as part of its worldwide restructuring program of slimming its business and make it more efficient.

The Tel-Aviv-based company said that the cuts amount to 10 per cent its global workforce and will complete the majority of the reduction by the end of 2014.

Teva also plans to continue to selectively trim assets that no longer fit with its core business or are not critical to its future.

Teva will scale down oversized parts of the company, while growing its generics business and core R&D programs – including high-value complex generics, expanding its presence in emerging markets and broadening its portfolio, especially in its specialty medicines and OTC businesses.

The company said that it now expects to realise approximately $2 billion in annual cost savings by the end of 2017, compared to the previously guided range of $1.5 to $2 billion.

It estimates that $1 billion, or 50 per cent of the annual cost savings, will come by the end of 2014, and 70 per cent by the end of 2015.

The majority of the savings are expected to come from a reduction in the company's cost of goods. Teva expects to reinvest part of the initial savings accumulated in 2014 and 2015, in high-potential programs.

These investments will include the development of the company's complex generics and specialty pharmaceutical pipeline, which includes more than 30 late-stage programs.

Total pre-tax costs for the corporate restructuring programme are estimated to be approximately $1.1 billion, to be incurred as savings are achieved through 2017, about 75 per cent in cash and about 25 per cent in non-cash accelerated depreciation and impairment of assets.

Dr. Jeremy Levin, president and CEO of Teva, said, ''Teva is managing its operations to achieve high levels of effectiveness in the short term, while pursuing opportunities for the long term. The accelerated cost reduction program will strengthen our organization while improving our competitive position in the global marketplace. We understand that this may be a difficult time for our employees and are committed to act with fairness, integrity and respect, and provide support during this time."