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Teva Pharmaceutical’s US-listed shares received a shot in the arm on Friday following a report that the struggling Israeli drugmaker could be looking to cut up to 10,000 jobs in a bid to reduce costs and pay down its debt pile.
The stock gained 7.7 per cent to $16.16 after Bloomberg said the generic drugmaker is targeting between 5,000-10,000 job cuts — or as much as 17.5 per cent of its 57,000 strong workforce.
The report also added the company is aiming to cut operating costs by $1.5bn to $2bn over the next two years and is not planning to move ahead with an equity offering in the near term.
The world’s largest maker of copycat drugs, Teva has seen its shares shed more than 55 per cent of their value over the past 12 months amid rising competition from rival drugmaker and growing price pressure from buyers who are demanding larger discounts.
The challenges facing the company were underscored in its most recent set of results. While overall revenue for the third quarter rose 1 per cent year-on-year, sales at Teva’s generics business suffered an 8 per cent drop. More worryingly, profits in the division fell 27 per cent from a year ago to $1.2bn as gross profit margin dropped to 38.5 per cent, down from 48.8 per cent in the year ago quarter.
Meanwhile, gross debt amassed during a borrowing-fuelled acquisition spree that saw the company double down on generic drugs just as prices for copycat medicines started to crumble, stood at $34.7bn at the end of September.
The company suffered another blow last month after Fitch stripped it of its investment grade rating and signaled further downgrades could be possible.