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Teva Pharmaceuticals to cut 14,000 jobs

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Israeli pharmaceutical company Teva announced yesterday that 14,000 workers worldwide will be made redundant as part of a restructuring plan.

Following a late-night board meeting, the company decided to reduce its workforce in Israel by 1,750  – about 25 per cent of the company’s Israeli employees  – over the next two years. The reduction of Teva’s activity in Israel is part of a strategy to focus on generic pharmaceuticals, its most profitable operation, and move that out of Israel

Part of the plan involves the closure of the company’s two factories in Jerusalem, which employ about 820 workers. Other workers to lose their jobs include 560 based in the company’s headquarters in Petah Tikva and 185 research and development workers. The company is not expected to reduce the activity of its factory in Ramat Hovav, which employs about 1,100 workers, or the factory in Kfar Saba.

In response to the announcement, hundreds of Teva employees demonstrated at the entrances to company sites around the country. Israel’s main labour union announced that it would hold a general strike on Sunday until noon.

Teva CEO Kare Schultz explained yesterday that the company was facing several difficult challenges, the greatest of which is the US $35bn of debt, much of it taken on to fund the ill-fated acquisition of Allergan’s generics business in 2015. He said that the restructuring plan was expected to reduce Teva’s expenses by $3bn by 2019.

Schultz sent a letter to Israeli Prime Minister Benjamin Netanyahu yesterday apologising for the large-scale redundancies. Teva had received billions of shekels in tax breaks from the Israeli government in recent years to ensure its continued operations in Israel, a decision that figured prominently in public criticism of Teva’s announcement.  Netanyahu had requested that the company minimise the impact on Israeli workers.

Teva employs approximately 50,000 people around the world, including 1,300 people in four offices in the UK. The pharmaceutical giant is also the largest supplier of medicine packs to the NHS, and its generic medicines save the National Health Service approximately £2.9 bn every year. Teva has not announced any details about how the restructuring plan will affect UK employees.