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Financial Education
Ofir Dor
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In one decision announced dramatic natural binns history, Israeli pharmaceutical giant, three weeks ago its intention to separate than 5,000 employees, about 10% of its workforce around the world. At the end of 2012 the company employed 45 948 employees worldwide, including 7,397 in Israel. So that although nature has not disclosed the extent of layoffs in Israel is estimated that in the end will have about 700-800 people in the country to find a new job.
The main question binns is why has huge natural state where proud and strong she is in a situation where she has no choice but to take such a drastic step. Copaxone is one explanation binns and the second is a series of acquisitions failed, when prominent of which is the acquisition of Cephalon two years ago.
Copaxone is responsible binns for half of the profit of the company. Nature watching that drug patents expire only in 2015, but the Federal Court of Appeals binns in New York ruled last July that four Copaxone patent protected until May 2014 patent was valid until September 2015 are not valid. However, the Court upheld the decision that four additional patents protecting the drug until 24 May 2014. This means that on this date might nature face generic competition drug most significant source of its product portfolio.
72% of Teva's binns revenue from Copaxone in 2012 were the U.S. and the scope was $ 2.9 billion. Included Copaxone sales in 2012 were $ 4 billion, about one-fifth of our revenue in 2012 stood at $ 20.3 billion. Copaxone drug is also profitable Most of the company and is responsible for about 50% of its profits, so that the interval of Nature in 2014 is expected to drop dramatically following the expiration of the patent.
If nature appeal will not succeed binns at trial, it may lose exclusivity for a period of 16 months. Under the assumption that nature will lose significant market share and the price of Copaxone will drop, it means a potential binns revenue loss of about $ 2 billion. However, no guarantee that the competition could catch such a large market share with the expiration of patents binns on Copaxone.
Outgoing CEO Jeremy Levin tried to break the company's dependence on Copaxone through a new strategic plan based on a focus on central nervous system, women's health, respiratory system and integrated medicine fixes several issues simultaneously. Millstone on the neck of another binns nature is significant binns debts that the company took to make purchases.
Assuming the volume of profits will drop from Copaxone, Teva will need to improve operational efficiency, as she tries to make the current cuts to serve the company's high debt. At the end of the third quarter had to Nature $ 17.5 billion in loans to banks and bondholders when the fund company at the end of the quarter were $ 1.4 billion only. Operating cash flow amounted to -875 million, binns and is expected to decrease next year without binns exclusivity binns on Copaxone. amount of the debt of nature grows hundreds of millions of dollars since due to loans taken from HSBC to pay compensation for the loss of Pfizer trial in June.
More than $ 30 billion spent on the acquisition of nature in the last decade to support the growth. Most of the purchases were for generic companies helping nature grow in areas that did not, increase its product portfolio and revenue. Nature swallowed companies made quick and effective integration and synergy Shea outline the dimensions of the wave envy dragged from its competitors.
In recent years, however, it turns out that companies do not supply the acquired goods, often because of errors made by the nature of the way. The contribution of the German Ratiopharm Although evident in reports, but all the activities of the concern in Europe recorded a slowdown. Well American Pharmaceuticals, which was acquired in 2008 for $ 7.4 billion, faces stiff competition from American Watson.
Cephalon, central acquisition completed two years ago for $ 6.8 billion, hard to meet expectations. Cephalon was supposed to be the one to provide the pipeline nature binns of the future, but until now most of the drugs proved to be a failure. Its main drug, Frubig'il (treat chronic sleepiness), which generated record revenues of $ 1.1 billion, about 40% from Cephalon prior to purchase, binns encountered generic competition, and in the second quarter of 2013 generated revenue of 14 million dollars. Cephalon drug developed for the treatment of cancer pain and was supposed to generate revenues of 500-300 million binns clinical trial failed final.
Jeremy binns Levin largely paid the price for the mistakes of his predecessor Shlomo Yanai. Melvin probably would not buy the little cup. In his previous position binns at the pharmaceutical company Bristol-Myers Squibb (BMS) Company examined the possibility binns to acquire Cephalon, but finally gave up thinking that its pharmaceutical portfolio potential justifies the asking price tag now. Cephalon acquisition also significantly narrowed the ability of nature to make significant purchases, and forced it to change its strategy - beyond small acquisitions and focusing on improving its existing products.
Now, not only from Levin pays the price inheritance received. Efficiency measures announced binns by nature allow it to service binns the debt and continue to provide binns dividends to its shareholders. Eventually die is cast. Scales which were placed on one side and employees on both shareholders and debt of nature, the employees are the ones who pay the price - a move calls into question the morality of nature.
Nature has no choice. It does exactly what the situation that a company should do. Its balance lies carrying huge debt and on the horizon binns the expected decline in revenues and profits from the sale of drugs to its source, it must adjust the cost structure. Cuts may be too strong, but ultimately decided that for her nature she prefers to reduce manpower on the termination of the dividend binns distribution.