The largest generic drug maker in the world, Teva Pharmaceuticals has announced that they will be cutting 7,000 jobs worldwide, shutting 15 plants, and remove operations from 45 countries in 2017-18. Declining prices of generics, increased competition, mounting debt from acquisitions, loss of patent protection on a key drug, and a series of ill-timed events add to Wall Street’s demand to perform or be revalued has led Teva to reevaluate its global operations. Teva is continuing their search for a new CEO after the resignation of former CEO Erez Vigodman in February 2017.
I cannot help but wonder if this restructuring has been brought on by structural problems or because Wall Street pundits have indicated their lack of confidence in Teva’s future performance. Especially since there are few large acquisition targets that would make a difference in Teva’s bottom line.
Among the many setbacks were the settlement of criminal and civil charges that Teva bribed drug purchasing officials in Mexico, Russian, Ukraine, and elsewhere to promote its drugs. This resulted in substantial legal costs and a $238 million penalty to the United States Department of Justice to settle allegations of violation of the Foreign Corrupt Practices Act and another $236 million in profits (plus interests) to end a civil complaint by the Securities and Exchange Commission. Of course, the company does not actually pay these fines – they are paid by the shareholders, the customers, and the company’s employees. And, it should be noted that bribery in many countries is a regular business practice that is simply another cost of doing business with corrupt politicians and others in positions of authority.
Again we see good people being laid off through no fault of their own.