Face it, Israel. Teva is all grown up. Teva Pharmaceutical Industries ($TEVA) Chairman Philip Frost is warning that the drugmaker can no longer operate as it did in the "good old days."
Sure, Teva is "an Israeli company with strong Israeli roots," Frost told Bloomberg Markets magazine (as quoted by the Philadelphia Inquirer). But Teva isn't a niche player anymore, but a global pharma company with even bigger ambitions. And it has to act like one.
Even when those ambitions include possible job cuts, apparently. The generics giant--Israel's largest company by market value, as Bloomberg notes--has promised to cut up to $2 billion from its cost structure. That's a lot of money. Reaching that target will take thousands of layoffs worldwide, some analysts figure.
And with some 16% of its employees based in Israel, it stands to reason that Teva would have to slice its payroll in Israel, too, Sanford C. Bernstein analyst Ronny Gal told the news service. "I don't see how they can meet their sizeable cost cut goals without cutting costs in Israel significantly," Gal said.
"The new management has definitely shown they are trying to make the company more global," Clal Finance Batucha Brokerage analyst Jonathan Kreizman told Bloomberg. "I don't think the type of presence the company has here can completely be taken for granted."
But as Gal points out, cutting costs in Israel "is going to be a true test for them." Teva is already in hot water with Israeli media and politicians. They've been railing at the paltry size of Teva's recent tax bills, about $5 million for 2012, the papers say, or less than 1% of net income. (The company says its total tax payments are much higher.)
The company was noncommittal about its plans, saying that it's analyzing all its operations for cost savings. Manufacturing plants appear to be in for consolidation; CEO Jeremy Levin has tasked his cost-cutting czar with making Teva's 74 plants more cost-effective.
- read the Bloomberg piece
- get more from the Philadelphia Inquirer
- here's FiercePharmaManufacturing's take