Fallout from Teva plant closings, global layoffs continues in Israel

Protests over massive Teva cost cutting and layoffs disrupted parts of Israel.

Teva Pharmaceutical is facing ongoing protests at its operations in Israel after it announced plant and office closings or sales and global layoffs that are expected to reach some 14,000 employees over the next year.

Monday, hundreds of Teva employees gathered outside the Finance Ministry in Jerusalem, disrupting traffic and preventing entrance to the building, Reuters reported. Avi Nissenkorn, head of Histadrut, which represents public sector unions and workers at some companies like Teva, ordered a suspension of activity at all Teva sites in Israel starting Tuesday, the news agency said.

Teva has been burdened by $35 billion in debt while struggling to remain competitive as its lead drug Copaxone battles industrywide generics price erosion; it announced the bigger-than-expected cuts Thursday.

On Sunday, Israeli Prime Minister Benjamin Netanyahu said he would meet with Kare Schultz, Teva’s chief executive this week.

The strike, which began Sunday, briefly closed Ben-Gurion airport, banks, the Tel Aviv Stock Exchange and government ministries. About 1,700 Teva employees in Israel are expected to lose their jobs as part of the plan and the firm’s Jerusalem manufacturing plant is to be shuttered by the end of 2019.

On Monday, workers blocked the entrance to Teva Medical located in Ashdod as well as Teva’s headquarters. Two manufacturing facilities were reportedly shut down and hundreds of workers prevented the plant in Jerusalem from operating.

The company declined to comment on the situation in Israel; however, Kaelan Hollon, Teva’s senior director of communications based in Washington, D.C., told FiercePharmaManufacturing in an email that “Over the next 12 to 24 months we plan to consolidate our offices in the U.S. from the current 7 locations into one main campus.” The final location for that main campus hasn’t been decided. Hollon said the company has already closed its office in Cambridge, Massachusetts, and is the process of shuttering its offices in Washington, D.C., Horsham, Pennsylvania, and New York City.

There were initial reports that the Teva Tech plant in Israel’s southern Negev desert was slated for sale. It produces raw materials for the pharmaceutical industry and employs 870 workers, according to Teva’s website.

However, Schultz recently told Israel’s Globes news that “we have sites like Kfar Saba and Teva Tech where there is no intention of reducing manpower.” Yet, he added, “when a plant is not profitable and does not fit in to the big picture, the change has to be made.”

The drugmaker said in a call to analysts last week that it expects to save $3 billion by the end of 2019. It estimates its total cost base for this year will check in at $16.1 billion. Teva also expects a restructuring charge of $700 million, mainly related to severance costs.