Shifting production to lower-cost countries is one piece of the plan Teva Pharmaceutical Industries has laid out to cut $2 billion in costs in the next couple of years. Toward that goal, the Israeli company ($TEVA) has just opened a $100 million plant in Eastern Europe to make drugs for the U.S. and Europe.
The plant in Croatia will expand production at the Pliva subsidiary by 25% to 2 billion tablets and capsules a year as well as expanding the sterile manufacturing capacity, according to dalje. And Globes reports that Teva has hired 200 employees for the new facility, coming even as the company looks to trim about 5,000 jobs worldwide, 10% of its global workforce. It will start production as soon as Teva can get approvals for the plant from U.S. and EU regulators.
The generics giant this month said it needed to expedite its planned contraction, looking for $2 billion in costs, mostly by the end of next year. That news came after a U.S. court in July invalidated a key patent on Copaxone, the company's top-selling product, meaning it will lose that shield next May instead of in November 2015. Teva CEO Jeremy Levin has said most of the cost reductions will come by the end of next year and the majority will flow from making its production network and supply chain more efficient. Teva executives have said that will happen, in part, by shifting production to lower-cost locations in the East.
Teva picked up Pliva in its 2008, $7.5 billion buyout of Barr Pharmaceuticals. Barr had acquired Pliva, Croatia's largest drugmaker, in a 2006 deal for $2.2 billion that overbid an offer from Actavis ($ACT). Production at a Pliva plant in Zagreb was interrupted last year when an explosion and fire damaged some of a plant in Zagreb. The accident killed one worker and injured 8 others.
Croatia is not the only place the drugmaker is expanding production. Last year it opened a $110 million sterile injectables plant in Hungary. It also is reportedly investing more than $200 million to double capacity in Japan.