Teva Pharmaceutical Industries building in Jerusalem..
(photo credit: MARC ISRAEL SELLEM/THE JERUSALEM POST)
Teva Pharmaceutical Industries on Sunday announced intentions to lay off employees at two Israeli production facilities as part of a company- wide reorganization and effort to strengthen the firm’s global brand.
With plans to fire both managers and employees at both the Kfar Saba and Ramat Hovav-based Teva Tech facilities over the coming months, the company said it has begun to consult with the Histadrut labor federation and worker committees at the plants. While Teva did not reveal how many of the company’s 7,000 Israeli employees would be affected, Israeli media estimated that some 300 to 350 layoffs would occur.
“Israel, and the Negev in particular, are important to Teva, and our activity here will continue to be a significant part of the company and the future,” said Teva interim president and CEO Yitzhak Peterburg. “Nonetheless, we are committed to doing everything necessary in order to ensure that our sites in Israel remain competitive, efficient and have a sustainable business horizon. Teva will continue to invest in Israel – in its production sites in particular – in activities that strengthen our competitiveness on a global level.”
Peterburg became interim president and CEO after Erez Vigodman stepped down in February, followed by the resignation of former chief financial offer Eyal Desheh in June, according to a Reuters report. Teva’s stock price has also been suffering since the company acquired the Actavis generics drug company Allergan last year for $40.5 billion, the Reuters report said.
In March, Israeli media outlets reported that Teva would be laying off up to 6,000 of its 57,000 global employees, but the company denied those reports as incorrect.
The latest layoffs are part of Teva’s international reorganization plan, aimed at tackling what the company described as “the complex business reality faced by the pharmaceutical industry as a whole, and by Teva in particular, in recent years.”
Prior to Sunday’s announcement, the company said it had already taken a number of other steps to help fulfill this strategy in Israel.
Among the changes that have already occurred has been a shift of focus on complex products with a high technological threshold, for which Israeli sites have a competitive advantage over sites in other markets, a statement from Teva said. In addition, the company has invested heavily in infrastructure to enable its Israeli plants to play a significant role in the production of the firm’s future flagship products, the statement added.
Teva has also taken steps to “consolidate functions and reduce redundancies,” including at the executive level in its Petah Tikva headquarters, the company said. The firm said it has also offered attractive voluntary retirement plants at a number of Israeli locations.
David Lustig, senior vice president of Teva Israel operations, stressed that Teva’s largest production center globally is located in Israel, and that the company has invested considerable resources in both the Kfar Saba and Teva Tech sites.
About 350 new product launches are slated to occur at the Kfar Saba factory over the next five years, according to Lustig.
“Teva Tech will continue to be a center of excellence among all our chemical plants around the world, for the production of active raw ingredients,” he added.
The company emphasized that the restructuring process would continue to occur in an open and transparent manner, by means of consultations with the Histadrut and the relevant worker committees.
In response to Teva’s announcement, Histadrut spokesman Yaniv Levy stressed on Sunday that the labor federation would not accept any one-sided moves to fire the employees.
“We will not agree to any unilateral move in which employees at Teva will be fired,” Levy said. “We expect the company’s management to act responsibly and to not put Teva’s factories in Israel in a series of struggles that will lead to a spiral in the labor relations system.”