Struggling Teva said to plan thousands of job cuts as it hunts for CEO

Teva
Teva is going through layoffs and a recruitment freeze.

Changes are afoot at foundering Teva—and they include job cuts and a recruitment freeze.

Local media reports said Thursday that the Tel Aviv, Israel-based generics giant is looking at cutting up to 6,000 jobs. A company spokeswoman confirmed plans to reduce costs, but said Teva "does not have a headcount target" because the number of job cuts would depend on the "right-sizing of each individual area of our business."

"As the company previously stated, we are looking to reduce costs in our business in every area, including, among other things, ending unprofitable activities and streamlining some activities and functions throughout the organization," spokeswoman Denise Bradley said via email.

Israeli newspaper Calcalist had reported that the company already laid off 100 workers and was planning to pink-slip between 5,000 to 6,000 worldwide beginning after Passover in mid-April. In a statement seen by Reuters, Teva said it would be "freezing recruitment" and allowing attrition to reduce employment numbers.

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The moves follow a vow from interim CEO Yitzhak Peterburg to “do what it takes” to protect the struggling company’s revenue guidance, “including additional cost reduction if necessary." The expected revenue range of $23.8 billion to $24.5 billion has already been walked back once—by more than $1 billion—thanks, in part, to a massive slowdown in new product revenue.

Peterburg, who took the helm after former skipper Erez Vigodman’s abrupt February departure, has also pledged a review of Teva’s businesses, prompting split-up speculation from slim down-happy analysts.

“We will leave no stone unturned,” he told investors on a recent conference call, noting that “we are here to fix what is not working."

These days at Teva, that’s a lot. The company has been suffering from pricing pressure that’s pummeled the generics industry across the board, but it has some unique problems, too.

For one, shareholders have maligned its recent dealmaking efforts—including an arguably too-expensive pickup of Allergan’s generics unit and a Mexican generics buy that went very, very sour. For another, the company has billions in sales at stake if copies of leading multiple sclerosis med Copaxone hit, and a judge’s January tossing of four key patents on the med only improved the likelihood of that scenario.

Those issues and others have taken a heavy toll on the company’s stock, which has sunk by more than 70% in the last 12 months.

The company said that any job cuts would be decided in concert with its workers.

"These processes are conducted through a continuous open dialogue with the employees,” a spokesperson said in a statement, noting that “this will be the practice” even in its home country of Israel, where workers in the past have promised to strike if layoffs hit.