Teva's restructuring plan causes furore in Israel, Apotex founder, wife found dead

Teva’s restructuring plan causes furore in Israel; Apotex founder, wife found dead

Teva dominated Phispers throughout 2017. In the penultimate week of the year, we report on how the generic giant’s restructuring plan has played havoc across Israel. Teva’s new CEO has added more fuel to fire this week by turning down the Israel PM’s request for not shutting down plants in its home country. In other major news, the founder of Canada’s Apotex was found dead under suspicious circumstances along with his wife in their Toronto home. Meanwhile, Perrigo has joined the race for Merck’s OTC business and Amneal-Impax got a new CEO ahead of its formal merger.

Teva’s announcement to cut workforce by 25 percent brings Israel to a halt

On December 14, Israeli generic drug giant Teva Pharmaceutical Industries announced a restructuring plan to improve its business and financial performance. The measures to be undertaken were — reduce cost base by US$ 3 billion by 2019-end, reduce workforce by 25 percent and suspend the dividend on ordinary shares and American Depository Shares (ADSs).

Kåre Schultz, Teva’s President and CEO, had said in a statement: “We will execute this plan in a timely and prudent manner, remaining focused on revenue and cash flow generation, in order to make sure Teva is ready to meet all of its financial commitments.”

These steps were expected to result in the reduction of 14,000 positions globally over the next two years. This excluded the impact of any future divestments. The job cuts included 1,750 jobs in Israel, where it plans to shut two manufacturing sites in Jerusalem.

According to the press statement issued, majority of the reductions are expected to occur in 2018, with most of the affected employees being notified within the next 90 days.

Some high profile exits coincided with this announcement. On December 13, former chairman and interim CEO Yitzhak Peterburg abruptly resigned with immediate effect. And if Wells Fargo’s David Marris is to be believed, Teva’s US chief Andy Boyer has resigned and is leaving the company at the end of Q1 next year.

What followed the restructuring plan was an intense backlash. The announcement’s ramifications were felt across Israel. Striking workers idled Israel’s international airport, government offices, banks and stock market for half a day, and demanded Teva reduce its plan to fire 25 percent of its workforce.

Protesting Teva workers held up morning rush-hour traffic on Sunday and burned tires outside a Jerusalem factory. A solidarity walkout was called by the Histadrut labor federation.

On Tuesday, Israel’s Prime Minister Benjamin Netanyahu, and a few senior ministers met Schultz, who flew into Israel to discuss the severe crisis at the company. They asked Schultz to reduce the number of people to be laid off in Israel and cancel the plan to close Teva's two plants in Jerusalem, one of which produces pills and the other inhalers.

According to news reports that quoted sources, Israeli government requested Schultz to close or cut back its pill manufacturing activity in Ireland in order to preserve pill production in Jerusalem.

“In Ireland, Teva is not a symbol, but in Israel it is a symbol, as shown by the fact that the whole country has been up in arms for days and the prime minister is dealing with the matter personally,” a Globes news report quoted a source as saying.

However, Schultz has rejected Netanyahu’s request to keep the company’s manufacturing plants in Jerusalem running.

Teva’s struggles began with its US$ 41 billion acquisition of Allergan’s generic business last year. It’s woes were compounded when it lost its monopoly on Copaxone, the multiple sclerosis injection that at one point generated half of Teva’s profits.

As per the restructuring plan, Teva has 80 manufacturing sites under review and there will be “double-digit plant closures” over the next two years. If the company was to wipe the slate clean and start over, it would have a total of only eight to 12 sites. According to Schultz, it’s not possible to do that now. But over the next 10 years, that’s the direction the company plans to take.

Apotex founder, wife found dead in Toronto house under suspicious circumstances

Barry Sherman (75), founder of the Canadian pharmaceutical company Apotex, and his wife Honey (70) were found dead in their Toronto home on Friday last week. According to the Canada police, their demise is being investigated as a possible homicide.

According to a CNBC report, the couple were found hanging from the railing of a lap swimming pool in their Toronto home, which had recently been put on the market for approximately US$ 7 million.

The police said they responded to a 911 call to the Sherman residence at 11:44 am on Friday from a real estate agent who was working for the couple.

Autopsies performed on the couple found strangulation with an object such as a rope as the cause of death. Homicide detectives have taken over the investigation.

Barry Sherman had formed the pharma giant Apotex in 1974 and was chairman at the time of his death. The Shermans had four children.

Apotex produces and exports generic drugs to more than 115 countries worldwide. Sherman’s fortune is estimated at US$ 4.77 billion, making him the 15th richest person in Canada.

Apotex’s India plant faces EU export ban: After the demise of its founder, there was more bad news for the Canadian drug maker. The UK regulator — Medicines and Healthcare products Regulatory Agency (MHRA) — has banned Apotex Research Private Limited from shipping drugs made at its plant in Bangalore to the EU after inspectors raised concerns about the potential for cross-contamination.

The MHRA said: “The inspection in November 2017 identified failures in the cross contamination controls applied by the manufacturer resulting in a risk of cross contamination above Permitted Daily Exposure (PDE) from some products.” The MHRA has also recommended withdrawal of the site’s good manufacturing practices (GMP) certificate.

Amneal-Impax lure Allergan’s Stewart as its CEO; Boehringer’s CFO quits

The Amneal-Impax combine has lured Allergan’s chief operating officer Robert Stewart, 50, to be its new CEO. The two companies expect their merger to be wrapped up in the first half of 2018, making Amneal-Impax the fifth-largest US generics company.

After the successful completion of the Amneal-Impax merger, Stewart will become president and CEO of the combined company, to be named Amneal Pharmaceuticals, Inc.

Paul Bisaro, president and CEO of Impax, will become its executive chairman, while Amneal’s co-CEOs and co-founders, Chirag and Chintu Patel, will serve as co-chairmen of the merged entity’s board of directors. Stewart has worked with Bisaro during his tenure at Actavis.

Boehringer Ingelheim CFO quits: Simone Menne, the chief financial officer of Boehringer Ingelheim, has decided to quit Germany’s second-largest drug company by the year-end.

Boehringer is a family-owned company, and Menne had been in office for just 16 months. The reason behind her stepping down is said to be differences with the family over strategy.

“In discussions on the family company’s strategy over the course of the year it became obvious that the assessments and the concepts could not always be reconciled. Simone Menne has therefore decided to pursue her career outside the company,” the company said in a statement.

EMA’s new headquarters in Amsterdam may not be ready in time

The European Medicines Agency (EMA) said last week its new headquarters in Amsterdam may not be ready by the time it has to leave London, as the Vivaldi building will not be complete.

The EMA has to shift its headquarters from London to Amsterdam due to the Brexit vote. Last month, it was decided that the EMA would move to Amsterdam as its headquarters needs to be in an EU country.

London has been home to the EMA and its 890 employees since 1995. Britain is due to leave the EU on March 29, 2019.

The Vivaldi building was planned for completion in November 2019. The Dutch government would offer temporary premises from January 1, 2019, or earlier if requested, until the new building is ready.

Last week, a spokeswoman for the city of Amsterdam said there had been no change in its plans for the EMA. She said, the building will be completed in two stages and should be ready to accommodate all employees at the beginning of 2020 as promised.

Perrigo joins the race for Merck’s consumer health unit

Generic drug manufacturer Perrigo plans to bid for Merck KGaA’s consumer health unit. According to a Reuters news report, it is preparing an indicative offer ahead of a deadline later this week.

Perrigo sees Merck’s vitamins and supplements as a good fit for its portfolio of generic and over-the-counter (OTC) drugs, the report added.

Others in the fray for the family-controlled German drugmaker are Swiss food giant Nestle and the private equity owners of German drug firm Stada. These companies are also lining up non-binding offers for Merck, which is famous for its Seven Seas vitamins and Bion nutritional supplements.

In September, Merck had said it is exploring options for its consumer health business, which generates about US$ 1 billion a year in sales of OTC medicines and vitamin supplements.

Proceeds from the deal, which is worth about US$ 4.7 billion, will help fund research into higher-margin prescription drugs.

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“ The article is based on the information available in public and which the author believes to be true. The author is not disseminating any information, which the author believes or knows, is confidential or in conflict with the privacy of any person. The views expressed or information supplied through this article is mere opinion and observation of the author. The author does not intend to defame, insult or, cause loss or damage to anyone, in any manner, through this article.”

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