* Most of 5,000 job cuts to take place in 2014
* 70 percent of annual cost savings seen by end of 2015
* Sees 2013 revenue near midpoint of $19.5-$20.5 bln
* Teva's NYSE shares rise 2.5 percent
By Steven Scheer
JERUSALEM, Oct 10 Teva Pharmaceutical Industries
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
said it would cut annual operating costs by $2.5 billion
and eliminate 8,500 jobs, or more than 10 percent of its global
Others including Pfizer, AstraZeneca and
Sanofi 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.
Omid said Teva still had problems in the medium and long
term, mainly how to reduce its dependence on its multiple
sclerosis Copaxone, which accounts for 20 percent of its sales
and 50 percent of profits. It may face competition from generic
rivals next year.
Chief Executive Jeremy Levin took over the reins of Teva in
May 2012 after the company had grown rapidly through large
acquisitions. He promised to reshape Teva by developing its own
medicines, amid increasing competition in the generics market,
and to divest businesses in non-core areas.
Teva's generic sales in the United States, its biggest
market by revenue, fell 8 percent in the second quarter of 2013,
year-on-year, after a 27 percent drop in the first quarter.
Teva's shares in New York are up just 7 percent in 2013. Its
peers have fared better, with India's Dr. Reddy Laboratories
up 31 percent, Forest Laboratories 21 percent
higher and Perrigo up 23 percent.
The weak stock performance has pressured Levin to explain
how Teva would deal with losing sales and profit from Copaxone.
The company plans to appeal a U.S. appeals court ruling in
August which invalidated some patents that could lead to generic
versions of Copaxone appearing from competitors in May 2014, a
year sooner than expected.
Teva said most of the 5,000 job losses would come by the end
of 2014 as the company looks to trim assets that no longer fit
its core business or are not critical to its future.
"The accelerated cost-reduction programme will strengthen
our organisation while improving our competitive position in the
global marketplace," Levin said.
Teva said it would scale down "oversized" parts of the
company, while growing its generics business and core research
and development programmes, expend its presence in emerging
markets and broaden its portfolio - especially in its speciality
medicines and over the counter business.
Teva aims to reinvest part of the initial savings in 2014
and 2015 in high-potential programmes including the development
of the company's complex generics and speciality pharmaceutical
pipeline, which includes more than 30 late-stage programmes.
Total pre-tax costs for the corporate restructuring are
estimated at $1.1 billion.
Teva reiterated it expects ending 2013 near the midpoint of
its target range of $19.5-$20.5 billion for revenue and diluted
earnings per share excluding one-off items of $4.85-$5.15.