Teva set to shed 11 manufacturing sites in 2019
- Generic giant Teva plans to close or divest 11 manufacturing sites this year, four more than the drugmaker shuttered in 2018 as its cost-cutting drive gathers momentum.
- A year ago at the 2018 J.P. Morgan Healthcare Conference, then newly appointed Teva CEO Kåre Schultz announced plans to close or divest between 20 and 25 plants in 2018 and 2019 as the company works to significantly reduce its manufacturing footprint.
- With 11 closures on tap for 2019, Teva looks to be slightly behind that pace, although the company's broader restructuring efforts are progressing quickly. In 2018, the company reduced its expenses by $2.2 billion and predicts it will cut another $3 billion from its spend base this year.
Teva's Schultz took over as CEO in late 2017 with a mission to revitalize a drugmaker battered by a tightening generic market in North America and increasing competition to its top-selling specialty drug. A 2015 deal to buy Allergan's Actavis unit proved mis-timed, increasing Teva's presence in generics just as the market turned south.
Since then, Teva has launched a major restructuring that's trimmed more than 10,000 jobs from the company's workforce and cut back Teva's spending on production of its medicines and on operations.
Part of that has come through reducing the number of manufacturing plants Teva operates. When Schultz started, the company operated around 80. By the time the restructuring wraps, Teva expects that number to be closer to 60, although closures and divestments could continue.
"It's very complex when you close down existing facilities because you have all the regulatory approvals, have all the validations, sometimes you have specific equipment," said Teva's Schultz on a Feb. 13 earnings call.
"It takes time, but we will continue to consolidate and improve efficiencies in our manufacturing for the next many, many years."
Reducing what Teva spends to produce its generic drugs should help the company achieve its operating profit margin goals — an ambition also supported by a growing emphasis on higher-margin specialty medicines like its migraine drug Ajovy (fremanezumab).
But the process is far from complete, as evidenced by a 2019 outlook that looks bleaker than some on Wall Street had expected.
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