After losing a battle in court with its rival, Teva, the maker of generic pharmaceuticals has announced that it is making significant jobs cuts to its U.S. workforce that could reach to as high as 7,000.
Teva will consolidate six of seven sites in the U.S. into a single location, as the maker of generic drugs slashes over 25% of its worldwide workforce.
Teva, based in Israel, said on Thursday it would be slashing as many as 14,000 jobs globally, over 25% of its entire workforce, including a significant number in the U.S., but the exact number, estimated to be 7,000, remains unknown.
The closures of sites in the U.S. are located in Cambridge, Massachusetts, Washington, D.C., New York City, and Horsham, Pennsylvania, said a spokesperson for the drug maker. Some of the sites might be sold to Teva competitors.
The site in Cambridge has been closed already and other closures are to occur over the next one to two years, said the spokesperson. The company has not made a decision as to where its main offices in the U.S. will be located.
The decision allows the maker of Copaxone, a drug for multiple sclerosis, to slash over $3 billion of its annual costs. However, it will need an upfront charge of $700 million for severance expenses, closings of facilities and other measures.
This announcement comes following a disclosure on Monday by Teva that is lost is legal fight with Mylan, another drug maker, over the recent introduction by its rival of a generic drug that could threaten sales of Copaxone.
This decision also reflects the strong push by the new CEO of the company Kare Schultz to boost the profitability of the company.
Teva is simplifying its business significantly and has a goal of substantial optimization of its lineup of generic drugs that is expected to include changes in prices and discontinuation of some products.
Along with the closures in the U.S., Teva plans divestments or closures of several of its manufacturing facilities in other markets.
Investors were happy with the announcement by Teva, as the stock closed higher rising by nearly 10% on Thursday.
One analyst said the move by Teva was highly anticipated yet exceeded the expectations of investors with a higher than expected cost-cutting goal.
The cuts come as well as Teva is fending off allegations that is conspired with other drug makers to fix prices.