Pharmaceutical giant Teva announced Thursday that starting soon and until the end of 2014, it will go through a comprehensive wave of layoffs in Israel and abroad. The downsizing will see some 5,000 employees laid off, with an estimated 800 to lose their jobs in Israel. The wave of layoffs is part of a program launched at the end of 2012 with the goal of maximizing the company's efficiency. Following the downsizing, Teva Pharmaceutical Industries is expected to achieve a yearly cut in expenditures of about $2 billion by the end of 2017. Teva currently employs some 50,000 workers around the world, and is in effect planning to trim its workforce by 10 percent. "The company will take steps to accelerate the reduction of costs and to optimize its structure and processes," Teva explained in a statement. "These steps are part of Teva's worldwide restructuring program, which was introduced in December 2012 and included actions to divest non-core assets, increase organization effectiveness, improve manufacturing efficiency and reduce excess capacity." Teva president and CEO Dr. Jeremy Levin said Thursday that "the accelerated cost reduction program will strengthen our organization while improving our competitive position in the global marketplace. We understand that this may be a difficult time for our employees and are committed to act with fairness, integrity and respect, and provide support during this time." Teva representatives spoke on the phone Thursday with Histadrut Trade Union Department Chairman Avi Nissenkorn about the layoffs. It was agreed upon that the restructuring process will be coordinated with the workers committee and the Histadrut. "We will act with utmost sensitivity" Teva employees are concerned about the news. "There's a sense of pressure. Not just among the employees -- the managers also feel it," said a Teva employee Thursday night. "It's not a good feeling, concern is thick in the air, but it seems like that's how multinational corporations function." According to him, conversations between managers and workers on the topic of layoffs have yet to take place. Speaking to Israel Hayom Thursday night, Teva Vice President Ika Abravanel, who coordinates the company's operations in Israel, said that layoffs are expected to begin in three months: "We will act with utmost sensitivity in Israel. We are not happy to be laying employees off, and we will conduct ourselves meticulously." Abravanel did not rule out the estimate of 800 lost jobs in Israel, but emphasized that it has not yet been decided how many layoffs there will be in the country. According to Abravanel, the increase in taxation on companies in Israel is not a major motivator in the decision to downsize because Teva's operations in Israel are small in comparison with international markets. What did impact the decision process, he said, is that the patent for Copaxone (the company's multiple sclerosis treatment, reportedly responsible for 30-35% of Teva's net profit) is set to expire in 2014, a year earlier than planned. "Enough with the distribution of benefits" Attempts to explain the move on the part of Teva's senior staff have not put a stop to the biting criticism against the pharmaceutical giant. Opposition Leader MK Shelly Yachimovich (Labor) was particularly unforgiving in her response: "Twelve billion shekels [about $3.4 million] -- that is the gift Teva received from the government in the last five years, while paying almost no taxes. Teva pocketed a pure profit of more than a billion dollars, so it is hard to believe that Teva was seemingly 'forced' to lay off employees due to financial difficulties. It's become clear that the myth that distributing tax benefits and giving grants to conglomerates will lead to the development of jobs for Israeli citizens -- is complete fiction." Yachimovich added: "Finance Minister [Yair] Lapid set up a friendly and polite meeting with the CEO of Teva and told him 'It's time to change the rules of the game,' and at the same time raised taxes for the middle class. The question must be asked: Is this change in the rules of the game mass layoffs in exchange for presents from the government-" The Economy and Trade Ministry said in a press release Thursday night that Teva is not obligated to return the benefits it received. According to details provided by the ministry, Teva received about 4.2 million shekels (about $1.2 million) for hiring purposes in the last few years, and it could have taken advantage of a broader gift of more than 18 million shekels (about $5.1 million). No reimbursement is required for these benefits packages. Meanwhile, the stock soars In the markets the reactions were less angry and more in favor of the investors who are expected to profit from the process. Despite the dramatic announcement, reactions in the Tel Aviv Stock Market were positive, and the company's stock climbed 1.64% following the prediction of a future growth in profits. Reactions on Wall Street were also favorable, leading the stock to jump 3.49%. "Finally investors see the restructuring plan has been implemented, and so the stock is reacting positively," said Nir Omid, vice president of the Tamir Fishman investment firm. Head of research at Clal Finance Jonathan Kreizman added: "We're talking about a positive announcement, the process illustrates to the market that the company is focused on an ambitious goal that is indeed feasible."
