Teva In Focus Ahead Of Restructuring As Former Interim CEO Exits Board

Shares of Teva Pharmaceutical (TEVA) are in focus in morning trading following reports that the company will unveil a new restructuring plan that will include layoffs as part of the company’s plans to reduce debt and improve its performance. Separately, the pharmaceutical company said that its former interim chief executive officer has resigned from the board, effective immediately.

RESTRUCTURING PLAN DETAILS: Teva is planning to announce a new restructuring plan on Thursday, Reuters reported, citing the Calcalist financial news website. According to Reuters, citing Calcalist, the program will involve closing its research and development center in Netanya and selling its logistics center in Shoham. The plan will also include laying off a third of its workforce in Israel, where it currently employs 6,800 workers. Last week, Bloomberg said that Teva was considering cutting its global workforce by up to 10,000 as new CEO Kare Schultz looks to cut costs. Teva is looking to lower expenses by $1.5B-$2B in the next two years, sources said at the time. In November, Bloomberg said Teva was planning to cut up to 25% of its Israeli workforce and more than 10% of its U.S.-based workers and some in Europe.

PETERBURG RESIGNATION: Separately, Teva said in a regulatory filing on Tuesday that former interim chairman and CEO Yitzhak Peterburg was stepping down from its board, effective immediately. Peterburg served as chairman at the time of Teva’s decision to buy Actavis Generics (AGN). In a statement, Teva said Peterburg’s decision to resign “is solely for personal reasons and does not involve any disagreement with the company.”

WHAT’S NOTABLE: Kare Schultz officially joined Teva as CEO on November 1 and is looking to take steps to deal with the company’s massive debt load. After Teva lowered its fiscal 2017 guidance on November 2, Schultz said he will do “whatever is needed” to improve Teva’s performance. On November 27, Teva ousted three top division heads in an effort to streamline operations. Schultz announced plans to combine the company’s generic and specialty drugs business, as well as the research and development groups for those units. “Teva is taking decisive and immediate action to address external pressures and internal inefficiencies,” Schultz said. Teva also said Michael Hayden, the chief scientific officer, Rob Koremans, head of global specialty medicines, and Dipankar Bhattacharjee, head of the global generic medicines group, would step down at the end of the year. Interim CFO Michael McClellan was named as executive vice president and chief financial officer. At the time, Wells Fargo analyst David Maris said that it seems Schultz is approaching Teva “with an ax in each hand, not hedge clippers or pruning shears.” Maris added that “We think the market will like this in the short run, but will eventually have serious questions as to whether this approach is cutting fat or muscle.”