Teva could halve its manufacturing network as part of its $2bn-a-year efficiency programme says CFO Eyal Desheh, with most cuts hitting its core generics business.
The firm has made no secret of its plan to slash its annual spending by $2bn (€1.5bn) by 2017, but at the Goldman Sachs Healthcare Conference Tuesday, Chief Financial Officer Eyal Desheh said further dramatic network cuts were likely.
He told investors Teva was formed through a number of mergers and acquisitions which had left the company with 75 manufacturing facilities, before adding: “We can reduce this number to half of what we have today, and the remaining facilities will be efficient, productive and of course of the highest quality, which is very important.”
He said this would take more than three or four years, but already Teva has begun reducing its network, announcing last month that plans to close or divest eleven manufacturing sites worldwide – including facilities in Sellersville, Pennsylvania , and Irvine, California - were already underway.
“Most of our cost reduction program is designed to hit the generic business,” Desheh said, but continued to tell stakeholders generics were still Teva’s core business and “there is plenty of room to grow.”
He also said the firm was building up its specialty business in areas such as pain treatment, which saw it acquire Labrys Biologics for $825m last week, as well as having room to grow in emerging markets such as Brazil, Mexico (where Teva already has a presence), Southeast Asia and Russia , where the firm is constructing a plant.
However, Teva’s growth strategy is not at odds with its cost-cutting programme, spokesperson Denise Bradley told in-Pharmatechnologist.com. Instead the plan to reshape operations “includes moving some production to eastern European countries, gaining greater efficiencies from our present operations and expanding other parts of the network.”
As of the end of 2013, Teva’s manufacturing network consists of 50 finished dosage manufacturing sites with two additional sites currently under construction, 21 API sites, as well as 20 pharmaceutical R&D centres, Bradley told us.
The map below allows you to see the locations of Teva’s manufacturing network, labelled by the site’s main manufacturing operations - red = APIs, blue = finished pharmaceuticals, brown = packaging, pink = manufacturing & packaging, yellow = mixed use, white = OTCs. All data has been taken from Teva’s 2013 annual report and some sites have several facilities attached.