Teva timeline: CEO says 20-25 manufacturing plants to close in next two years
CEO Kåre Schultz outlined the plan during his presentation at the JP Morgan Healthcare Conference (JPM18) on Tuesday, telling investors the closures are part of a move to reduce Teva’s 80-strong network of manufacturing facilities.
“We will be moving from these 80 towards a more sustainable level that will probably around half the number of sites in longer term. And in the short term, in the next two years, we will see a reduction probably between 20 and 25 sites around the world” Schultz said.
“I've said before that with the size we have, serving more than 200 million patients every day, we need a substantial manufacturing footprint.
“But had we done it organically bottom up, we would probably have two to four API sites and maybe eight to 12 finished pharmaceutical manufacturing sites,” he said.
The comments give a timeline for the restructuring and cost cutting plan Schultz outlined in December.
Workforce plan
Schultz also used his presentation to provide more details of job cuts the firm announced last month. He told attendees Teva’s manufacturing and sales teams would see the fewest layoffs.
“The two areas where you'll see the least reductions is on the actual manufacturing shop floor and in the sales force because we want to keep the whole product flow going so that we keep the revenue base, but we reduce the cost base, thereby securing our operating profit.”
He did not go into specifics of the job cuts, but did say, "This month, the majority of the people who will be let go will be notified."
According to its most recent financial report, Teva is $32bn (€26.7bn) in debt.
Schultz confirmed this, explaining the facility closures and job cuts would help Teva reduce costs and start paying off its debts.
"Our total cost last year is roughly $16 billion. That's everything, including manufacturing, sales, marketing, staff, everything. So we've roughly taken those $16 billions and over two years, we are reducing it to $13 billions. We do that by cutting costs everywhere where we can and where it does not affect revenue generation, basically."
