Shares of Teva Pharmaceutical ( TEVA ) dropped Tuesday after the generic drug giant rebuffed a request from Israeli Prime Minister Benjamin Netanyahu to spare hundreds of jobs tied to a Jerusalem facility.
[ibd-display-video id=3033048 width=50 float=left autostart=true] By the closing bell on the stock market today , Teva fell 3.4% to close at 17.90, though it fell as much as 4.8%. Shares have lost about half their value since the beginning of the year amid competition for Teva's multiple sclerosis drug Copaxone.
New Chief Executive Kare Schultz called the cuts - about 1,700 in Israel and 800 at the Jerusalem facility - "painful" steps to help the firm reduce some $35 billion in debt as of the end of the third quarter, according to a Bloomberg report.
"The measures included in the restructuring plan are aimed to achieve our shared aspiration to sustain Teva as a strong global company, managed out of and based in Israel," Schultz reportedly said in a prepared statement.
Without taking these steps, it's possible Teva could become a takeover candidate, the firm said. Teva didn't immediately return a request from Investor's Business Daily for comment.
IBD'S TAKE: Teva has an IBD Composite Rating of 16 out of a best-possible 99, meaning it underperforms more than eight in 10 stocks in terms of key growth metrics. Head to IBD Stock Checkup for a look at better-rated generic drug stocks.
In total, Teva expects to eliminate 14,000 positions globally and to close a number of manufacturing facilities by the end of 2019 to contend with its debt. The debt stems from Teva's $40.5 billion spend in 2016 to acquire Allergan 's ( AGN ) generic unit.
Analysts have applauded Teva for taking steps to cut $3 billion in costs by the end of 2019. Israeli officials, on the other hand, had hoped to work with Teva to reduce the number of dismissals by offering government help, according to a Bloomberg report.
Others are reportedly calling on the government to rescind about $6.3 billion in tax breaks the generic drugmaker has received since 2006. A large labor group went on a half-day strike on Sunday and again on Tuesday.
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