Market sources report that Teva Pharmaceutical Industries Ltd. (Nasdaq: TEVA; TASE: TEVA) is firing 1,000 employees, less than a month after it completed the acquisition of Cephalon. Teva expects at least $500 million in synergies from the acquisition - and they will come from layoffs.
The firings account for 27% of Cephalon's workforce before its acquisition - a very high proportion. For the sake of comparison, Teva fired fewer than 10% of Barr's employees following its acquisition in 2008. Teva is not firing employees in Israel; most of the layoffs will be in Europe and the US.
At $6.8 billion, Cephalon is Teva's biggest acquisition of a brand pharmaceuticals company, and adds several brand drugs that are already on the market to the company's products line. Most of the layoffs at Cephalon are in its generics business which became redundant.
In 2010, Cephalon acquired Swiss generics company Mepha AG for CHF 622.5 million ($590 million). Mepha also develops improved versions of brand drugs that are already on the market by improving the delivery technologies or dosages. Mepha had 620 employees, mostly in Switzerland, when it was acquired by Cephalon.
Market sources thought that the merging of Cephalon and Teva's R&D operations might affect Teva's innovative operations in Israel. These suspicions were highlighted by the departure of Teva VP global branded products Dr. Yitzhak Peterburg and his replacement by Cephalon CEO Kevin Buchi. Teva denied the reports, saying that it would expand its Israeli R&D operations, which include 800 employees, 300 of whom develop innovative drugs.
Teva executives including president and CEO Shlomo Yanai and CFO Eyal Desheh are currently in the US, overseeing in person the integration of Cephalon and to prepare its work plan for 2012.
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2011
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