TEL AVIV: Teva Pharmaceutical Industries Ltd’s new chief executive officer ousted the company’s three top division heads on Monday as he works to turn around and streamline the operations of the debt-laden drugmaker.
CEO Kare Schultz, who joined Teva on Nov. 1, said he will combine the Israeli company’s generic and specialty drugs business, as well as the research and development groups for those units.
Various media had reported last week that Teva planned to cut up to one-quarter of its 6,860-strong workforce in Israel, and a few thousand more staff in the United States.
“Teva is taking decisive and immediate action to address external pressures and internal inefficiencies,” Schultz said, adding that the company is working on a detailed restructuring plan to be unveiled in mid-December.
Teva said Michael Hayden, the chief scientific officer, Rob Koremans, head of global specialty medicines, and Dipankar Bhattacharjee, head of the global generic medicines group, would step down at the end of the year.
The company is saddled with nearly $35 billion in debt after its $40.5 billion acquisition of Allergan Plc’s generic drug business Actavis last year. Profits from generics have slumped since that deal closed, and the CEO who engineered the purchase was forced to step down earlier this year.
The company also appointed Michael McClellan as the permanent chief financial officer, after he held the role on an interim basis since July, and made five other executive changes at the top of the company.
“It appears to us that the new CEO is approaching Teva with an ax in each hand, not hedge clippers or pruning shears,” Wells Fargo analyst David Maris said in a research note. “We think the market will like this in the short run, but will eventually have serious questions as to whether this approach is cutting fat or muscle.”
Earlier on Monday, the Israeli Knesset’s State Control Committee called an emergency meeting to discuss the reports of upcoming job cuts. Teva responded with a letter to parliament, saying it needs to take significant and comprehensive actions in order to secure its future.
Teva, which has been selling off assets to help meet its debt payments, said in the letter it needed “deep, meaningful steps around the world,” but did not give details.
U.S.-traded shares rose 6.1 percent to $14.44 in mid-day trading and were up 3.6 percent to 5,042 Israeli shekels in Tel Aviv trading.
(Reporting by Tova Cohen and Ari Rabinovitch; Additional reporting by Michael Erman in New York; Editing by Mark Potter and Jeffrey Benkoe)