Another US Plant Closure in Cost-Saving Plan as Teva Eyes Head 'East'

By Dan Stanton

- Last updated on GMT

Related tags Generic drug

Falling income as Teva shutters another US Plant
Falling income as Teva shutters another US Plant
Teva will close a second US plant and shift manufacture to more cost effective facilities as part of its company-wide restructuring programme.

CEO Dr. Jeremy Levin unveiled the intention to close the plant in Sellersville, Pennsylvania last week during a first quarter conference call in which Teva also reported a 4% decline in revenue to $4.9bn, a 6% fall in operating income to $626m and a 27% slump in profit to $630m.

Teva spokesperson Denise Bradley told that the firm decided “to close the Sellersville facility in 2017 after it has transferred the products manufactured there to other sites in the network.

She confirmed this was “an ongoing review of worldwide operations”​ as part of “the strategic reshaping of the company”​ as Teva looks to save up to $2bn in the next few years.

The news will come as a blow to the 450 workers at Sellersville who will either be encouraged to apply for jobs at other Teva facilities or receive a severance package.

Three months ago, Teva pharmaceuticals announced it would be selling its Irvine, California​ plant as part of a restructure which was to save the Israeli company $2bn (€1.5bn) over the next few years.

East is East

The Sellersville​ facility currently produces generic drugs with a portfolio of over 50 products manufactured as solid dose forms (tablets and capsules), liquids, creams and ointments. According to Bradley, manufacture of these products will be transferred “to more cost-effective facilities in our network.”

Her words echo those of Allan Oberman - President and CEO of Teva Americas Generics – who said in the conference call that the company would be moving “manufacturing East from higher cost of manufacturing locations to lower-cost manufacturing locations.”

When asked for clarification on which facilities ‘East’ was referring to, Bradley said: “for Allan, everything from EU on is east of us, so that’s really what he’s referencing. Not India or China specifically.”

According to an SEC filing​, detailing the company’s end of 2012 activity, Teva’s principle manufacturing sites serving the US market are in Eastern Europe and Israel.

As for US facilities, Teva currently has 16 though this includes Sellersville and Irvine. The Californian plant has been a source of problems for Teva for a number of years, with manufacturing violations leading to a stop in production, a number of lay-offs​ and costs to the company upwards of $230m​.

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