Teva Pharmaceutical Industries Ltd, the world's biggest maker of generic drugs, announced an ambitious plan to reshape the company on Friday aimed at streamlining operations, cutting costs and improving profitability. The Israel-based company also forecast 2013 sales and earnings below Wall Street expectations, and its shares fell 2 percent in early trading.
Teva said it plans to discontinue certain research programs, make targeted acquisitions to complement its core areas of expertise, and streamline functions ranging from ordering to inventory control. It plans to cut $1.5 billion to $2 billion in costs, with most of those savings coming over the next three years and the rest over the following two years. The savings will come from every aspect of its business, Teva said on a conference call with investors, from the way it procures raw materials, to the amount of real estate it owns, to how it invests in information technology.
"Teva will look like a very different company going forward," said Jeremy Levin, who took over as chief executive in May. He was previously a senior executive at Bristol-Myers Squibb Co Teva, which posted a higher-than-expected quarterly profit earlier this month, forecast an adjusted profit of $4.85 to $5.15 per share in 2013 on revenue of $19.5 billion to $20.5 billion. .
Analysts' average forecast is $5.71 per share on revenue of $20.85 billion, according to Thomson Reuters I/B/E/S. Teva expects revenue from its generic drugs of $10.3 billion to $10.7 billion in 2013, and sales of branded medications of $7.6 billion to $8 billion. The company expects sales of its drug Copaxone, for multiple sclerosis, to range between $3.7 billion and $3.9 billion. For nearly two decades Teva has grown through acquisitions, including its $6.5 billion buy of US specialty drugmaker Cephalon, which makes the sleep disorder drug Provigil.
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