The Israeli pharmaceutical company Teva, owner of the largest Croatian pharmaceutical producer Pliva, must soon repay 4 billion dollars of debt, which is currently 35.8 billion.
Teva’s debt crisis caused a blockade of airports, roads and banks in Israel on Sunday. Teva announced it would lay off a whopping 14.000 workers, a quarter of its workforce, around 1.750 of them in Israel. Croatia is currently not expecting any layoffs, on the contrary, experts are being hired, and the company is investing, Večernji List reported on December 19, 2017.
Pliva is stable, in control of the domestic market and exporting. The company stated that income from sales and exports was increased by 25 percent in the past year, and the generic Viagra produced in Croatia is collecting dozens of millions of dollars on the United States market. Pliva also increased its income last year to 4.6 billion kuna, with over 700 million in profit, a third of Teva’s total profit in 2016.
“We continued with capital investments with nearly 200 million kuna invested in 2017 alone, while research and development investments amounted to around 400 million kuna, all while launching ten new products in Croatia,” Pliva has reported. The 200 million kuna amount refers to investments in the Zagreb and Savski Marof plants, so there is no fear production will be reduced in Croatia.
Teva faced problems after taking over the Allergan business with generic medications, Actavis, for 40.5 billion dollars. The transaction increased the net debt to 35.8 billion dollars, so Teva is cutting labour costs to save 3 billion dollars annually. In the current year, they have fired seven thousand workers, with another seven waiting to be laid off. This is why the strike by Teva workers was joined by public sector unions, many workers from various sectors in the real economy and even some civil associations. Part of the workers protested on Sunday before the Knesset, Israeli parliament, and Teva’s head, Kare Schultz, publicly apologised to Prime Minister Benjamin Netanyahu for the state of the company.
“The changes did not affect business in Croatia, where Pliva hired 250 new experts in the last year. More information can be expected after a detailed plan for Teva’s restructuring,” Pliva noted in a statement. Although not in Croatia, the restructuring process did hurt Tihomir Orešković, who returned to the company after a rather brief Prime Minister tenure, to the position of senior deputy president for business efficiency.
Fate intended for Orešković to keep his last job just as long as he did at the heated position of Croatian Prime Minister. Two months ago, when the layoffs started, he was also fired, and after 26 years in the pharmaceutical industry, he found himself back in Zagreb with his family. His friends say he would like to continue his career in Croatia, but after several interviews, nothing has been arranged yet. He is currently in Canada for the holiday season.
Orešković was also the President of Pliva management, and during his return to Teva he stated “Pliva is a great company with an excellent team and is one of the largest private investors and exporters in Croatia.” He told his friends he does not expect for Pliva to be impacted by the Teva’s global troubles, and it remains Teva’s ”pearl”, doing great business and expanding.
Teva fell into the classic trap of over investing, which caused problems for many companies. Large debt coincided with the pressure to reduce the price of generic medicaments and lower mark-ups, pushing Teva into a crisis. After its credit rating was reduced to just a step above junk status, the company price share dropped 59 percent compared to the start of the year, collapsing the company value to just 15.2 billion dollars, not enough to cover even half of the debt.
Translated from Večernji List.