Teva CEO says job cuts will play a 'small role' in cost reductions

Posted: January 10, 2013

Jeremy Levin did not give a pass to all 46,000 employees of Teva Pharmaceuticals Ltd., but some might be happy to hear that the chief executive officer said Tuesday that reducing "head count" will play only a "small role" in the company's plans to cut $1.5 billion to $2 billion in costs in the next five years.

Teva is based in Israel but has its Americas headquarters in North Wales, as well as facilities in Horsham, Frazer, Sellersville, and several New Jersey locations.

Indeed, part of Levin's concern since taking over as CEO on May 9 has been that the company has 74 locations in 120 countries and that its efforts were not properly focused.

"Not in any way will this be spreading the peanut butter," Levin said in a discussion with stock market analysts Tuesday at the J.P. Morgan Chase Healthcare Conference in San Francisco.

Levin was named to his position on Jan. 1, 2012, in part because the Teva stock had languished in recent years. It closed Tuesday up 0.19, at 38.25.

Among the projects for which planning "ceased" was a $300 million facility in Northeast Philadelphia that was to serve distribution, warehousing and computer functions.

Levin tried again Tuesday to encourage analysts to recommend the stock to clients, though several have said they were lukewarm about the company's generic- and branded-pharmaceuticals pipeline and had no clear indication that the billions in savings would translate into profits.

The $6.8 billion purchase of Frazer-based Cephalon in 2011 was one of the larger of the acquisitions that form today's Teva. Though Teva laid off about 1,500 Cephalon employees in Europe almost immediately, acquisitions can add other redundant costs.

For example, Levin said Tuesday, Teva has more than 100,000 outside vendors, so streamlining "procurement represents significant opportunity" for savings "more than head count, though head count plays a small role in this."

Last week, Teva completed the sale of its animal-health division to Bayer Healthcare, a deal that sends a Missouri factory and 300 employees to Bayer and returns up to $145 million to Teva.

That deal was an example of Levin's emphasis on discipline, focusing the company on what Teva can do really well to generate better returns on spending, and leaving the rest to others.

"I like the business," Levin said of selling drugs for dogs and cats, pigs and cows, "but others do it better than us. I want to focus on where we can really power in and make a difference."


Contact David Sell at dsell@ phillynews.com or 215-854-4506. Read his blog at www.philly.com/phillypharma and on Twitter @phillypharma.

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