Teva Pharmaceutical Industries chief Kare Schultz rebuffed Israeli Prime Minister Benjamin Netanyahu’s personal plea to spare hundreds of local employees from job cuts, saying “painful” steps were necessary to keep the troubled homegrown drug giant from becoming a takeover target.
Schultz stood fast by plans to close a Jerusalem factory that employs about 800 people by the end of 2019, over the objections of Netanyahu, Finance Minister Moshe Kahlon and Economy Minister Eli Cohen, who met with him on Tuesday, according to an emailed statement from the company. Teva, the world’s largest generic drugmaker, said it will work with the government to train fired workers for new jobs.
“The measures included in the restructuring plan are aimed to achieve our shared aspiration to sustain Teva as a strong global company, managed out of and based in Israel,” Schultz said in the statement. “These measures are painful, but absolutely vital.”
Without “drastic” steps, Teva “will be increasingly vulnerable to potential takeover,” the statement added.
With 1,700 Israelis in facilities across the country seeing their jobs on the line, Schultz’s rebuff was likely to provoke continued labor unrest. Teva is one of the country’s largest employers, and the planned cuts affect workers in some of Israel’s poorest cities and towns.
Teva’s U.S.-listed shares fell 4.1 percent to $17.76 percent as of 9:57 a.m. in New York.To put pressure on Israeli politicians to intervene, Israel’s Histadrut labor federation shut down a large part of the economy in a half-day strike on Sunday. Teva workers idled all operations in Israel again on Tuesday. The Histadrut didn’t immediately reply for a request for comment on its next steps.
Struggling to pay back $35 billion of debt, Teva announced this week that it would pare expenses by $3 billion over the next two years. A total of 14,000 employees — one quarter of the work force — are to lose their jobs in the company’s dozens of facilities across the world.
Teva’s downfall has hit Israelis hard because the drugmaker once held a legendary status as the tiny country’s first world-class corporate player and a symbol of its entrepreneurial spirit. Its commitment to remaining an Israeli-run operation, and seemingly unassailable position as the country’s biggest player on the stock market made it the darling of local investors. Its stock, which has lost more than half of its value since the beginning of the year, was once known as “the people’s share” because of its prominence in pension funds.
(c) 2017, Bloomberg · Yaacov Benmeleh