Drug company Teva to cut 5,000 jobs, save $2 billion a year

Thu Oct 10, 2013 2:10pm EDT
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By Steven Scheer

JERUSALEM (Reuters) - Teva Pharmaceutical Industries (TEVA.N: Quote) will cut about 5,000 jobs, 10 percent of its workforce, accelerating a cost-cutting plan as it prepares for lower-priced competition for its best-selling drug.

The world's largest maker of generic drugs by sales said it expects its overall cost-cutting programme to save about $2 billion a year by the end of 2017.

The Israel-based company is the latest in a string of big drugmakers to take an axe to costs. Last week, Merck & Co (MRK.N: Quote) said it would cut annual operating costs by $2.5 billion and eliminate 8,500 jobs, or more than 10 percent of its global workforce.

Others including Pfizer (PFE.N: Quote), AstraZeneca (AZN.N: Quote) and Sanofi (SASY.PA: Quote) have also slashed staff numbers in recent years due to slowing sales growth, often due to competition from cheaper generic medicines - many of which are made by Teva.

When Teva announced the cost-cutting plan in December, it said savings of $1.5-$2 billion would take place over five years and it was unclear how many jobs would be lost.

On Thursday it said the savings would be at the top of that range. It said $1 billion would come by the end of 2014 and 70 percent by the end of 2015. The majority of the savings will come from a reduction in the company's cost of goods, it said.

Teva's New York-listed shares rose 2.5 percent to $40.22 after closing 1.6 percent higher in Tel Aviv.

"Investors finally see that the plan is being implemented and how it will be implemented and therefore the share price has responded positively in the short term," said Nir Omid, chief investment officer at the Tamir Fishman brokerage.   Continued...

An employee of Teva Pharmaceutical Industries stands in its Jerusalem oral solid dosage plant (OSD) December 21, 2011. REUTERS/Ronen Zvulun