Teva to axe 5,000 jobs in savings drive
pharmafile | October 11, 2013 | News story | Manufacturing and Production, Research and Development, Sales and Marketing | Copaxone, FDA, Teva, cuts
The world’s largest generic drugmaker Teva will cut around 5,000 jobs from its global workforce as it looks to speed-up its savings programme.
The Israeli company now expects to make around $2 billion in annual cost savings by the end of 2017, compared to what it initially sought to save which was around $1.5 to $2 billion.
The company estimates that $1 billion, or 50% of the annual cost savings, will be realised by the end of 2014, and 70% by the end of 2015. The majority of the savings are expected to come from a reduction in the company’s cost of goods, as well as the cuts to staff.
Teva said in a statement that it expects to “reinvest part of the initial savings accumulated in 2014 and 2015, in high-potential programmes”.
These investments will include the development of the company’s generics and its pharmaceutical pipeline, which includes around 30 late-stage programmes.
These steps are part of Teva’s global restructuring programme announced in December, which also includes plans to strip non-core assets, increase organisation effectiveness, improve manufacturing efficiency and reduce excess capacity.
Despite being known as a generic drugmaker, the strength of Teva’s revenue comes from the patented multiple sclerosis drug Copaxone, which accounts for about 50% to 65% of Teva’s profit, according to analysts.
But a number of other generic drugmakers, including Momenta Pharmaceuticals, are seeking to market copies of Copaxone as early as next year. The drug brought in around $4 billion worth of sales last year, making it the biggest-selling MS treatment in the world.
The firm had a patent on the medicine until 2015 but the FDA dismissed this in July, moving its expiry to 2014. This means Teva will struggle in the short-term to shore up the loss revenue, and explains why it is making the accelerated cuts.
But there may be some respite as Teva says the FDA should require clinical trials for a generic Copaxone as it’s a complex molecule, which could make a 2014 generic competitor unlikely.
Chief executive Jeremy Levin 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 programme will strengthen our organisation while improving our competitive position in the global marketplace.”
“The strategic plan now looks more credible,” Jonathan Kreizman, an analyst at Clal Finance Batucha Brokerage told Bloomberg. “This puts some meat on the bones in their attempt to significantly cut down costs.”
Teva hasn’t yet decided which businesses will see job reductions.
Ben Adams
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