- Embattled generics maker Teva Pharmaceutical Industries Ltd. will restructure its commercial organization and combine its specialty and generic drug R&D operations under one global group in a major shift aimed at stabilizing a business hit by new competition and patent expiries.
- "Teva is taking decisive and immediate action to address external pressures and internal inefficiencies," said newly minted company CEO Kåre Schultz in a Nov. 27 statement. "Our new company structure will enable stronger alignment and integration between R&D, operations and the commercial regions."
- The restructuring follows a report over the Thanksgiving holiday from the Israeli news website Calcalist that Teva would lay off 20% to 25% of its staff in Israeli, as well as several thousand in the U.S. Teva declined to comment to BioPharma Dive on the potential layoffs.
Monday's changes look to be the first major step to turn around Teva under newly installed CEO Kåre Schultz, formerly head of Lundbeck A/S. Schultz, the fifth CEO since 2012, faces an uphill battle to right the ship of a company facing new competition, heightened pricing pressure in generics markets and patent expiry to its biggest seller.
Under the new plan, Teva will merge its generics and specialty medicines business, organizing instead around three regions: North America, Europe and Growth Markets. In addition, generic and specialty R&D will be housed together under one umbrella.
As part of the changes, Michael Hayden, the current head of R&D, and Dipankar Bhattacharjee, CEO of Teva's generic medicines unit, will depart December 31. Hafrun Fridriksdottir, former president of global generics R&D, will head the new R&D organization — among other new faces in Teva's corporate leadership.
Recent quarters have been traumatic for Teva. Invalidation of four patents covering Copaxone (glatiramer acetate) have opened up the multiple sclerosis drug to new competition, most notably the newly approved generic version from Mylan N.V.
Pricing pressures have increased in the generics market as new competition enters, and Teva has been named in a federal lawsuit over generic price fixing. On top of those challenges, Teva's debt remains high after the company bought Allergan plc's generics unit for just over $40 billion.
Teva has previously said it will have cut 7,000 jobs by the end of 2017, counting from the closing of that deal. The company also plans to divest or close a total of 15 manufacturing facilities by the end of 2018. It's not clear how the job cuts reported by Calcalist would relate to those already-reported layoffs. Even so, it's clear that Teva is tightening its belt.
In the third quarter, Teva said it would miss its 2017 profit forecast because of falling generics prices, as well as generic competition to Copaxone.
"It remains our absolute priority to stabilize the company’s operating profit and cash flow in order to improve our financial situation, while being focused on short-term revenue and cash generation," Schultz said.
The company plans to share a more detailed restructuring plan in mid-December. Shares in the company rose by more than 6% Monday morning as investors digested news of the restructuring.