Health and Healthcare
Teva Pharmaceuticals: Happy Holidays, You're Fired
Published:
Last Updated:
Another company has decided that the best time to fire a large number of people is just before the holidays. While there are some concrete reasons to do so, the action seems unusually cruel.
As Generic drug firm Teva Pharmaceuticals Ltd. (NASDAQ: TEVA) announced a way to improve its financial performance, management disclosed:
These steps are expected to result in the reduction of 14,000 positions globally – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.
[in-text-ad]
These steps include a restructuring of research and development, which usually means a cut in investment, and consolidation of manufacturing. By management’s calculations, the entire program will save $3 billion a year on an expense base of $16.1 billion, a handy improvement in margins most likely.
Kare Schultz, who was made chief executive officer in September, needed to prove he could do something dramatic to salvage a company that faces more competition that it has in years, both from other generic manufacturers and the traditional pharmaceutical giants. Teva’s shares have dropped 73% in two years to $50. The S&P 500 is up 28% over the same period.
Year-end expense cuts are often convenient because they mean a company can start a new year with the costs of restructuring announced and the financial ramifications. One or two write-offs and the CEO has a new slate. If Schultz can revive the share price, it is to some extent because the company’s legacy costs have been buried.
That legacy is not entirely ugly, but it is a challenge for any firm that presents itself as a growth company, as Teva always has. Revenue moved up very slightly in the third quarter to $5.61 billion, compared to $5.56 billion in the same period a year ago. Net income of $595 million compared to $412 million. However, the company’s forecast was lackluster.
For 14,000 people who work at Teva, the holidays will be far less than bright.
Take This Retirement Quiz To Get Matched With A Financial Advisor (Sponsored)
Take the quiz below to get matched with a financial advisor today.
Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests.
Here’s how it works:
1. Answer SmartAsset advisor match quiz
2. Review your pre-screened matches at your leisure. Check out the
advisors’ profiles.
3. Speak with advisors at no cost to you. Have an introductory call on the phone or introduction in person and choose whom to work with in the future
Take the retirement quiz right here.
Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.
Editors' Picks
