On Thursday, Teva Pharmaceutical will disclose a restructuring plan that includes cutting nearly half of its Israeli workforce, as well as closing a research and development (R&D) center in Netanya, Israel.
In August, the biotech had announced its intention of laying off 7,000 employees in its manufacturing department before years end. The cuts are making it was to R&D as well. The plan would eliminate 3,300 jobs out of the total of 6,430 in Israel. The restructuring is the most recent in a series of changes made since the new CEO Kåre Schultz took control in November.
Schultz, who boasts the reputation for turning companies around, is working to save Teva from falling any further, which originated by deal making debt and generics pricing pressure. Last year, the biotech acquired Allergan’s generics unit for $40.5 billion with the goal to revitalize its generics sales, but things did not go as planned. Teva has generated $35 billion in debt since the deal.
Rumors were going around last week that the company, which employs over 56,000 people, may lay off around 10,000 employees to cut its expenses by almost $2 billion over the next few years. According to sources, at that time nearly half of the cuts would affect R&D.
Analyst Randall Stanicky said that major layoffs could contest where new revenue would be generated from. “That is especially true given that ‘a little less than half’ of the cuts are linked to R&D per Bloomberg,” Stanicky said.
This news follows a sequence of R&D failures for the biotech. In May, Teva and Active Biotech’s laquinimod had missed its primary endpoint in a phase 3 trial in relapsing-remitting multiple sclerosis and then missed it again. Then in June, Teva and partner Xenon’s investigational pain drug TV-45070 had failed midstage trials to treat pain following shingles.