Teva Pharmaceutical Industries Ltd (ADR) ADR (NYSE:TEVA) has announced that it plans to close its facility in Ashdod City, Israel after failing to find an interested buyer.
The company’s decision to shut down the firm is due to the fact that the Ashdod plant has remained unprofitable thus the lack of incentive to maintain operations. Teva has been looking for an interested buyer for some time but to no avail, thus the eventual decision to shut it down. The Israeli firm revealed in a statement that it will shut down the plant in March 2019 and that the shutdown would affect workers. Roughly 175 workers will lose their jobs over the next few months while the remaining workers will continue to hold down the fort until its eventual closure next year.
Teva which is the largest generic drug manufacturer in the world has been having some shake-ups over the past few months due to high levels of debt. This forced the company to take action such as restructuring which led to the announcement that it planned to slash 25 percent of its global workforce. This meant that it would send 14,000 workers home and this led to massive protests, thus making the situation even more difficult for the company.
The Ashdod facility is where Teva makes its medical infusion bags and this accounts for roughly half of the company’s activities. The failure of the facility to turn in profit further adds to the company’s woes including a massive debt portfolio at $34 billion. The closure of the Ashdod facility is part of Teva’s plan of action which involves a reorganization of its global businesses to reduce costs.
Kåre Schultz, the CEO of Teva recently told analysts that the company will most likely sell about 40 of its manufacturing sites so that it can achieve sustainable profitability levels. Teva’s massive debt of $34 billion was the result of the company’s decision to acquire the Actavis generic drug business from Allergan plc (NYSE:AGN) for $40.5 billion in 2016.
Teva stock closed the latest trading session on Monday at $17.13 after a 1.39 percent gain from the previous close.