Teva's new CEO to slash 25 percent of jobs to salvage ailing drugmaker

Kare Schultz, Teva Pharmaceutical Industries Ltd.'s new chief executive officer, announced plans to slash a quarter of the embattled drugmaker's workforce and suspend its dividend to pare costs, pacify lenders and ease its debt burden.

The goal is to reduce expenses by $3 billion by the end of 2019, the company said in a statement on Thursday. The drugmaker will eliminate 14,000 jobs globally, and close a number of research facilities. The workforce could shrink further as the world's largest manufacturer of generic medicines considers more divestments, it said.

It was not stated if Illinois employees, who work at a distribution center in Gurnee, will face layoffs. The Lake County distribution center was formerly Actavis, which Teva bought last year.

Schultz shook up the management team within days of joining last month, but now the 56-year-old Dane must move swiftly to prop up a company whose debt has ballooned to more than twice its market value. Retrenching too much may clip growth, while too little will discourage lenders' flexibility and weigh on the stock, which trades close to a 17-year low.

"We are taking immediate and decisive actions to reduce our cost base across our global business and become a more efficient and profitable company," said Schultz, who took the helm in early November.

The company is working with advisory firm Evercore Inc. to review options for outstanding debt that include shrinking a revolving credit facility and extending the repayment period for some loans, according to people familiar with the matter. Teva may also seek to reset some debt covenants and extend bond maturities, said the people, asking not to be identified because the deliberations are private.

Teva, an acquisitive company by tradition, paid $40.5 billion last year to beef up its copycat medicines business and bolster growth. The deal proved to be ill timed when profit margins for knockoff drugs in the U.S. began rapidly shrinking. Compounding the problem is the loss of its monopoly on Copaxone, the blockbuster multiple sclerosis injection that at one point generated half of Teva's profits.

• Daily Herald Business Writer Kim Mikus contributed to this report.