Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA) announced a massive downsizing operation on Thursday. By the end of 2017, the company said it would eliminate 7,000 jobs, and that it will cease operations in 45 international markets and close 15 factories by the end of 2018.
The company’s share price plummeted following the announcement, falling 17.79 percent on the Tel Aviv Stock Exchange and 20.32 percent over the opening hours of Thursday trading on the New York Stock Exchange.
The move was announced on the heels of a disappointing second quarter for Teva in which the pharmaceutical giant reported a $6 billion GAAP loss ($5.94 per share) and a non-GAAP net profit of $1.02 per share on $5.7 billion in revenue.
Teva said in a statement, “We have lowered our outlook for 2017 non-GAAP results to revenues of $22.8 – $23.2 billion, from a previously expected range of $23.8 – $24.5 billion. Non-GAAP EPS for 2017 is now expected to be $4.30 – $4.50, based on a weighted average number of shares of 1,076 million, down from a previously expected range of $4.90 – $5.30.”
The company also announced a second quarter 2017 dividend of 8.5 cents, down 75 percent from 34 cents in the first quarter of 2017.
“Second quarter results were lower than we anticipated due to the performance of our U.S. generics business and the continued deterioration in Venezuela. These factors also led to a lowering of our outlook for the remainder of the year. All of us at Teva understand the frustration and disappointment of our shareholders in light of these results,” said Dr. Yitzhak Peterburg, interim president and CEO.
“In our U.S. generics business, we experienced accelerated price erosion and decreased volume mainly due to customer consolidation, greater competition as a result of an increase in generic drug approvals by the U.S. FDA, and some new product launches that were either delayed or subjected to more competition.”
Dr. Peterburg continued, “Given the current environment, we have had to take swift and decisive actions. We are focused on executing meaningful cost reductions, rationalizing our assets and maximizing their value, actively pursuing divestiture opportunities and strengthening our balance sheet. We will continue to take action to aggressively confront our challenges.”