Teva Pharmaceutical Industries Ltd. (TEVA) is probably preparing to cut jobs in its home market of Israel, according to Bloomberg, at a time when Israeli politicians are criticizing the company for paying less than its fair share in taxes.
Teva, the world’s biggest manufacturer of generic drugs, is determined to cut costs by $2 billion over five years, to increase profitability. Ronny Gal, an analyst at Sanford C. Bernstein & Co, expects those savings will have to come, at least partially, at the expense of Israel’s job market.
“I don’t see how they can meet their sizeable cost cut goals without cutting costs in Israel significantly,” Gal said at an annual conference organized by Tel Aviv-based health-care hedge fund Sphera Funds Management Ltd. “Cutting costs here in Israel is going to be a true test for them.”
Firing workers or closing down factories in Israeli would prove politically troublesome for Teva—based in Petach Tikva—because it is already the subject of intense criticism from Labor leader Shelly Yacimovich, over its lower than usual tax payments.
Yachimovich has called on the Finance Ministry to investigate Teva’s tax reports. Israeli newspapers Globes and TheMarker criticized Teva after an annual statement showed the company paid about $5 million, or less than 1 percent of its annual income, in taxes for 2012.
Teva argued that its operations in Israel generate tax revenue of more than 3 billion shekels ($806 million).