By Yaacov Benmeleh
Israel’s national labor union is threatening a nationwide strike in response to reportedly imminent job cuts at Teva Pharmaceutical Industries Ltd.
Teva, one of Israel’s largest employers, is struggling to pay back a debt pile more than twice the company’s market capitalization and will announce the measures it will take to pare expenses on Thursday. The Israeli newspaper Calcalist reported Wednesday that Teva plans to fire more than half its Israeli workforce.
“First of all, we’re going on strike across all of Teva, all its plants on Sunday,” Avi Nissenkorn, chairman of the union, said in a Tel Aviv press conference. “Second of all, the entire economy will stand in unison until the afternoon. All of it. From the airport, to the banks, to the ports, to municipalities, to government services, to” health services.
The labor union, known as Histadrut, says it has about 750,000 members. While its power has diminished in recent years, it still wields power over major swathes of the economy and is capable of bringing work to a standstill if it carries out its promise.
Teva is scrambling to pay back nearly $35 billion of debt accumulated from its about $40 billion acquisition of Allergan Plc’s generics portfolio last year, a deal that was supposed to cover the loss of the company’s monopoly on its top-selling product. Instead, Teva has cut its profit forecast and slashed its dividend as prices for generic drugs have collapsed in the U.S., its biggest market.
Teva didn’t immediately respond to a request for comment.
Stock Suffers
Its American depositary receipts are down 60 percent this year as investors have fled. On Wednesday, they fell as much as 7.2 percent, the biggest intraday loss in more than a month.
The planned work stoppage reflects the depth of the crisis facing Teva, once known in Israel as “the people’s share” because of how ubiquitous its stock was in public pension funds. Investors and analysts expect the drugmaker to drastically cut costs and over the years have pointed to Israel as a natural place to start.
Teva has been hesitant to do so for fear of risking the tax breaks it gets from the government. The company received 22 billion shekels ($6.2 billion) in breaks since 2006, Nissenkorn said.
Nissenkorn blasted Teva’s board for treating the company’s workers as “numbers,” said management was at fault for the company’s troubles, and said the company planned to leave Israel. He called on Prime Minister Benjamin Netanyahu to intervene and help minimize the layoffs in Israel.