Teva Pharmaceutical Industries Ltd (NYSE: TEVA) rose Thursday afternoon after the company announced plans to reduce workforce by 25%.
The two-year restructuring plan announced today by the Israeli-based drug maker is intended to reduce Teva's total cost base by $3 billion by the end of 2019, out of an estimated cost base for 2017 of $16.1 billion. More than half of the reduction is expected to be achieved by the end of 2018.
The company expects to record a restructuring charge as a result of the implementation of the plan in 2018 of at least $700 million, mainly related to severance costs, with additional charges possible following decisions on closures or divestments of manufacturing plants, R&D facilities, headquarters and other office locations.
These steps are expected to result in the reduction of 14,000 positions globally – excluding the impact of any future divestments – over 25% of Teva’s total workforce – over the next two years.
The majority of the reductions are expected to occur in 2018, with most of the affected employees being notified within the next 90 days. Restructuring efforts will be done in accordance with applicable local requirements.
Consultations with the relevant employee representatives will begin in the near term.
Said CEO Kåre Schultz,"Two weeks ago, we announced a new organizational structure and executive management team. Today, we are launching a comprehensive restructuring plan, crucial to restoring our financial security and stabilizing our business.
"We are taking immediate and decisive actions to reduce our cost base across our global business and become a more efficient and profitable company.”
Shares in TEVA gained $2.13, or 13.6%, to $17.83.
