Teva Pharmaceutical Industries shares rose Monday after the drugmaker said it was shaking up its top leadership to address pricing challenges and large debt from the $40.5 billion acquisition of Allergan's generics business last year.
The changes were announced by Teva's new chief executive officer, Kare Schultz, to take "decisive and immediate action to address external pressures and internal inefficiencies." Israel-based Teva, the world's largest maker of generic pharmaceuticals, has its North America headquarters in North Wales, Montgomery County, and employs more than 2,000 at five locations in Pennsylvania.
"The Street is viewing this as good news, and the first step in additional cost cuts to come," analyst Louise Chen at Cantor Fitzgerald said in a client update. "It is also positive that new president and CEO Kare just started at Teva, and he is already implementing changes that will help ease the debt load."
Schultz reduced headcount by 25 percent at his former pharmaceutical firm Lundbeck A/S in Denmark. "This was followed by markedly improved profitability at Lundbeck," Chen said.
The Israel financial news website Calcalist reported last week that Teva plans to fire up to 25 percent of its Israeli workforce, more than 10 percent of its U.S. workers, and some in Europe amid a decline in profits linked to falling prices for generic drugs. Teva accrued $34.7 billion in debt due to its acquisition of Allergan's generic drug business Actavis in 2016.
In August, Teva announced it would cut 7,000 jobs by year's end, close or sell 15 factories, and quit operations in 45 countries. None of the scheduled plants to be shut or sold are in Pennsylvania or New Jersey. The bulk of the job cuts are not here, either.
Teva's best-selling branded multiple sclerosis medicine, Copaxone, now faces generic competition from Mylan Labs, based in Canonsburg near Pittsburgh, after Teva lost a patent-infringement case in February to protect Copaxone from lower-cost generic competition.
Mylan began selling its generic version of Copaxone in early October after the Food and Drug Administration approved Mylan's generic version in 40 milligram and 20 milligram doses. Multiple sclerosis is a chronic inflammatory disease of the central nervous system and affects about 400,000 Americans.
Copaxone accounted for $1.02 billion of Teva's total $5.63 billion global sales in the second quarter this year.
Teva said Monday that it will combine its global generics and specialty drug businesses into one commercial organization. The former generic research and development (R&D) and specialty R&D groups will also be combined into one global group.
Three top executives will retire at the end of the year: Michael Hayden, Rob Koremans, and Dipankar Bhattacharjee, who are based in Europe. Teva named Israel-based Michael McClellan as permanent chief financial officer.
"The new management team will position Teva for turnaround in the short to medium term," Schultz said in a statement. "We are already working on a detailed restructuring plan for Teva and will share it in mid-December."