Teva Pharmaceutical will reveal a restructuring plan on Thursday which includes slashing about half of its Israeli workforce, as well as closing a research and development center in Netanya, Israel, according to people familiar with the matter.
In August, the company announced it would lay off 7,000 employees in manufacturing by the end of this year. And now it’s coming for R&D.
The plan would cut 3,300 jobs out of a total of 6,430 in Israel, Reuters reported. The reorg is just the latest in a string of changes made since new CEO Kåre Schultz took the reins in November.
Schultz, who has a reputation for turning companies around, is working to rescue Teva from a downward slide created by dealmaking debt and generics pricing pressure. The company grabbed Allergan’s generics unit last year in a $40.5 billion deal to revive generics sales, but it didn’t work. The company is carrying nearly $35 billion in debt since the Allergan deal, Reuters reported.
Last week, there were rumblings that the generics giant, which employs more than 56,000 people, could lay off up to 10,000 employees in a move to trim its expenses by $1.5 billion to $2 billion in the next couple of years. At the time, sources said about half of the cuts would affect R&D.
Capital Markets analyst Randall Stanicky said in a note this week that major layoffs could call into question where new revenue would 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.
The news comes after a series of R&D failures for Teva—in June, Teva and partner Xenon’s investigational pain drug TV-45070 failed in midstage trials to treat pain following shingles.
In May, Teva and Active Biotech’s laquinimod missed its primary endpoint in a phase 3 trial in relapsing-remitting multiple sclerosis. And if that wasn’t enough, Iaquinimod struck out yet again, this time in progressive MS.