The job-cutting news out of Teva Pharmaceutical Industries has spawned some protest--on both sides of the issue. Israeli unions promise to strike if layoffs hit home--and, as if to pre-empt that talk, one Teva ($TEVA) executive claims the cuts aren't nearly so bad as the media suggests.
"We'll eat only bread and we'll drink only water, and we won't let anyone break us," Teva Tech workers committee chairman Eli Zohar told Globes, the Israeli news service, adding, "We'll protect our workers like a lioness protecting her cubs. ... If necessary, we'll jump into the flames."
Meanwhile, Chaim Hurvitz, son of Teva's late founder Eli Hurvitz, was trying to put a damper on such talk. He blamed the job cuts on a popular scapegoat--higher taxes--rather than on earlier-than-expected competition for Teva's top-selling drug Copaxone. "I think that the drama will be less than depicted," he said, adding that about 400 employees retire in Israel every year. "It's enough for us not to hire in one year, and we've solved the matter. ... I think that this will be the first and last big wave of layoffs."
The basics are these: Teva said last week that it would shed 5,000 jobs worldwide to amp up its cost-cutting target to $2 billion. That's about 10% of its workforce, the company said. The cuts will hit worldwide, mostly in manufacturing and sales. And they follow previous cost-cutting announcements undertaken by CEO Jeremy Levin, who's under investor pressure to get revenues growing and the stock price moving upward.
Teva's worker representatives, notoriously fractious in normal times, rallied in response to the layoffs news. Tipped off ahead of time to new cost cuts, they showed up at the company's HQ in Petah Tikva. Security guards were already on duty, Zohar said. "[S]omething like 30 security guards were waiting to prevent us, heaven forbid, from going up to CEO Jeremy Levin's office," he said. Some management reps come down to quell the workers' fears, saying that the layoffs would only be in Europe and the U.S., "but then we learned that they were beginning to talk about 700-800 layoffs in Israel," Zohar said.
Hurvitz acknowledges that layoffs will hit production sites in Israel and admitted worries about Copaxone, which could get generic competition next May, rather than in November 2015 as previously anticipated. A U.S. appeals court invalidated a key patent on the drug in July. But to Hurvitz, the generic threat isn't immediate--"I don't see a generics version coming so fast. It's a complex product," he said. He also tried to downplay the threat from new competitors for Copaxone market share, including Biogen Idec's ($BIIB) new Tecfidera pill--but apparently confused the novel treatment with Sanofi's ($SNY) Lemtrada, a repurposed version of the leukemia drug Campath. "So what if Tecfidera's indication has been changed for multiple sclerosis?" he said.
Perhaps he was flustered by Globes' questions about possible cuts in executive pay; Zohar said he's already demanded that "huge" executive salaries should be cut before workers are touched. Hurvitz dissembled at the idea, saying, "I don't know what executive pay is. ... Our pay package is smaller in comparison with our foreign brothers. All the furor against our pay--it doesn't work that way." For the record, Levin's pay went public in legal documents earlier this year; he collected $4.1 million for 2012 after taking over as CEO in May.
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