Though Teva Pharmaceutical Industries Ltd (ADR) (NYSE:TEVA) has indicated that it plans to freeze recruitment and end all unprofitable activities, the Israeli firm has denied reports that appeared in the media that indicated the pharmaceutical company intended to lay off close to 6,000 employees. The reports had appeared in two Israeli news websites that concentrate on financial news.
Inaccurate reporting
With Teva employing approximately 57,000 people across the globe, the figure would have meant the company was slashing 11% of its workforce. After initially refusing to comment, a spokesperson for Teva issued a statement slamming the media reports as inaccurate.
“These processes [the efficiency program] are conducted through a continuous open dialogue with the employees. This will be the practice, including in Israel, as necessary. We would like to stress that the numbers which were published in the media are incorrect,” the statement from the company spokesperson said.
The reason the news of the layoffs had seemed plausible before they were denied was because Teva has recently been experiencing problems. Israel’s biggest corporation and the biggest maker of generic drugs in the world has seen its stock price decline by about 40% in the last one year on the back of delayed drug launches and a couple of expensive acquisitions.
Bad timing
Last year, for instance, the generic drugs giant acquired the generics business of Allergan plc Ordinary Shares (NYSE:AGN) for a whopping $40.5 billion. Teva also acquired Mexican Rimsa at a price of $2.3 billion. The acquisitions have consequently led to an increasing debt burden for Teva. At the close of 2016, the total debt was $35.4 billion. Teva has also had to lower revenue guidance by over a $1 billion owing to lack of new product revenue.
There have also been executive departures at Teva. This includes the ousting of the chief executive officer, Erez Vigodman. The CEO position is yet to be filled substantively as the current holder, Yitzhak Peterburg, is holding it in a temporary capacity as a headhunting exercise continues. Peterburg is also the pharmaceutical company’s chairman.
On Thursday shares of Teva Pharmaceutical Industries Ltd edged up by 0.37% to close the day at $32.73.
