Teva's job-cut tally could touch 10K: report
It’s no secret that Teva’s about to unveil some major layoffs. And the tally could reportedly reach 10,000.
That’s the figure cited by Bloomberg, whose sources said the company is looking to pare down expenses by $1.5 billion to $2 billion over the next two years. A little less than half of the job cuts would be tied to R&D spending.
Plans could still change, though, the news service’s sources said; the final number is still up for debate as executives discuss eliminating 5,000 to 10,000 positions. Almost half of those cuts are expected to hit R&D, the sources said.
The architect of the cost-squeezing plan is new CEO Kåre Schultz, selected partly for his record as turnaround architect. Shortly after stepping in as CEO of his previous employer, Lundbeck, Schultz rolled out a restructuring plan—albeit a much smaller one, claiming 1,000 jobs—that within a year helped get revenue growing and profits beating expectations.
Teva, which is struggling under generics pricing pressure and a mountain of dealmaking debt, last month said it would have its restructuring blueprints ready by the middle of this December.
Wells Fargo’s David Maris wrote to clients at the time expressing disappointment that “the new CEO is approaching Teva with an ax in each hand, not hedge clippers or pruning shears.”
In a Monday note, RBC Capital Markets analyst Randall Stanicky pointed out that major layoffs could distract Teva from top-line growth and raise questions about where new revenue will come from. "That is especially true given that 'a little less than half' of the cuts are linked to R&D per Bloomberg," Stanicky wrote.
Investors, however, had a different reaction to Bloomberg’s report. They sent shares skyward Friday, a trajectory Teva hasn’t seen much of this year; the stock had declined by 59% for the year to that point, Bloomberg said.
Schultz, meanwhile, has already begun making his mark since taking Teva’s helm, merging its generics and specialty units under one commercial roof and both displacing and replacing key executives. Schultz also decided to hold onto Teva’s European oncology and pain businesses, which had both been tapped for divestment, after fielding lower-than-expected bids, Bloomberg said.
Dec 11, 2017
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