Less than a month after taking over at Teva Pharmaceutical Industries, CEO Kare Schultz has unveiled a company reorganization and said three top executives would leave by the end of the year.
Israel’s biggest company said Monday it was merging its generic and specialty medicine groups into one segment and would do the same for its research and development operations.
The new business will operate via three regions – North America, Europe and emerging markets – with each region managing the company’s portfolio of generic, specialty and nonprescription drugs.
“Our new company structure will enable stronger alignment and integration between R&D, operations and the commercial regions, allowing us to become a more agile, lean and profitable company,” said Schultz, who joined the company on November 1.
Teva also rescinded plans to sell off its oncology division, its spokeswoman Denise Bradley said, confirming a Bloomberg news report. The company is believed to have reversed its decision after failing to win offers at the $1 billion price it was asking. The moves come as the Danish-born Schultz tries to reverse years of setbacks for the drugmaker. In recent months, Teva’s woes have mounted as it lost exclusivity for its best-selling Copaxone multiple sclerosis treatment and suffered falling prices for its generic drugs in the United States. It has also strained to repay some $35 billion in debt taken on when it bought Allergan’s generic drug business Actavis last year.
Shares in Teva, the world’s largest generic drug maker, climbed on Monday’s news, ending 3.6% higher at 50.42 shekels ($14.40) in Tel Aviv, its highest close in a month. After a long decline, Teva stock has seen some gains in recent weeks on expectations that Schultz would give the company a badly needed shake-up. In New York, the stock was up 6.6% at $14.51 late morning local time.
Earlier this week, reports circulated that Teva would cut thousands more jobs to help contain costs. Those reports included the laying-off of a quarter of the Israeli workforce.
For its part, Teva said in a letter to the Knesset on Monday that it needed to take “deep, meaningful steps around the world” to secure its future.
The State Control Committee had called an emergency meeting to discuss reports that Teva planned to cut up to a quarter of its 6,860-strong workforce in Israel, and a few thousand more staff in the United States.
No one from Teva attended the meeting, but its senior vice president for Israel operations, David Lustig, sent a letter to the committee saying no plans had been finalized and parliamentary debate was premature.
“Teva’s current business position obligates us to act responsibly and take deep, meaningful steps around the world and in Israel to secure the company’s future,” Lustig wrote in the letter, which was seen by Reuters. He did not specific measures.
The layoffs are part of a drive Teva began even before Schultz took over as CEO to raise cash by selling assets, cutting costs and trimming its dividend.
The company must repay $5.5 billion of debt in 2018, and a further $4 billion every year between 2019 and 2021, at a time when its revenues, profits and cash flow are under severe pressure. Its decision to keep the oncology unit will complicate its efforts to repay debt.
“Teva is taking decisive and immediate action to address external pressures and internal inefficiencies,” Schultz said, adding that the company was working on a detailed restructuring plan to be unveiled in mid-December.
Teva said Chief Scientific Officer Michael Hayden, head of specialty medicines Rob Koremans and generics chief Dipankar Bhattacharjee would retire at the end of the year.
The company also appointed Michael McClellan permanent chief financial officer after he held the role on an interim basis since July. It made five other executive changes at the top of the company.
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