In order to reduce costs, Israeli drugmaker, Teva Pharmaceuticals has announced it will reduce its workforce by 25 percent over the next two years. The restructuring plan is set to save the company $3 billion by the end of 2019.
“Two weeks ago, we announced a new organizational structure and executive management team. Today we are launching a comprehensive restructuring plan, crucial to restoring our financial security and stabilizing our business,” said Kåre Schultz, Teva’s President and CEO. “We are taking immediate and decisive actions to reduce our cost base across our global business and become a more efficient and profitable company.”
On the flip side of these efforts is the fact that the company will likely incur a restructuring charge to the tune of $700 million in 2018. The bulk of this estimate will come from severance payouts and closures of manufacturing facilities, R&D centers and offices.
“We will execute this plan in a timely and prudent manner, remaining focused on revenue and cash flow generation, in order to make sure Teva is ready to meet all of its financial commitments,” said Schultz. “Teva will optimize its cost base while ensuring that we protect our revenues and preserve our core capabilities in generics and in select specialty assets, in order to secure long-term growth. In 2018, we expect to secure the successful launches of Austedo and fremanezumab.”
In addition, Teva won’t be paying out their annual bonus for this year in light of their current financial situation. More strategies, including divesting some non-core assets, will also be considered in the coming year.
“These are decisions I don’t take lightly but they are necessary to secure Teva’s future,” said Schultz. “We will implement these changes with fairness and the utmost respect for our colleagues worldwide. Today’s announcement is about positioning Teva for a sustainable future which we will achieve with our talented people. We will ensure that we continue to provide high quality medicines to the many patients we serve every day, while adhering to the highest standards of GMP compliance.”