Teva selling Irvine, CA, plant to cut costs
Teva Pharmaceutical Industries ($TEVA) CEO Jeremy Levin last year sketched out a long-term plan to cut $2 billion in costs, laying much of the burden for that on the company's manufacturing and supply chain.
Levin revealed one element of the plan today when he disclosed that a Teva plant in Irvine, CA, would be sold. Dow Jones Newswires reports that the buyer will continue to manufacture products for Teva until it can move production to other plants.
The company acquired the Irvine plant through its 2003 acquisition of generics maker Sicor. Later, the FDA criticized the factory for manufacturing violations, some of them tied to contamination of the anesthetic drug propofol, which Teva simply stopped making afterward. The company has spent $375 million to upgrade the plant but full production never resumed and the company has trimmed more than 200 jobs there in the last two years.
The disclosure of the sale came as the company reported that fourth-quarter profit fell 37%, and total revenue was down 7.5%, Dow Jones reports.
Levin told investors last year that he planned for Teva to cut annual costs by $2 billion through changes to its manufacturing network and sourcing strategy. The savings push will see Teva focus on bigger, more efficient plants--while shifting production to lower-cost locations. Moving from small facilities to larger, more efficient plants is expected to generate savings of up to $175 million a year, Levin has said. He said the shift would lead Teva to "reduce excess capacity."
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