‘Substantial drop’ in value of Israeli drugs firm Teva may impact NHS
Experts express worry after major NHS supplier's share price falls by 46 percent in recent days, wiping almost £10 billion off its value
Experts this week expressed “worry” after a “substantial drop” in the value of the Israeli drugs company that supplies many of the NHS’s drugs.
The share price of Teva, a national economic champion, has fallen by 46 percent in recent days, wiping almost £10 billion ($13 billion) off its value and prompting big U.S. banks and international rating agencies to downgrade it.
The dramatic slide began late last week following a joint move by America’s main pharmacy chains to drive down prices of generic drugs. Teva immediately lost a third of its worth on the New York Stock Exchange, and on Sunday it lost another 18 percent in trading in Tel Aviv.
The company recently reported net losses of £4.6 billion ($6 billion) in the second quarter, and cut its dividend by three quarters, causing anxiety in Israel, where it makes up about seven percent of the stock exchange and features prominently in many pension portfolios.
Teva bosses say they are now planning to cut 7,000 jobs and have cancelled the construction of a new head office in Ra’anana, after buying the site for £153 million ($200 million) two years ago, as they seek to regain investor confidence.
Founded in 1901, the company earned the nickname “the nation’s share,” but last year it purchased Actavis, a rival, for £30 billion ($40 billion), loading itself up with £35 billion of debt. Investors now fret that this debt will prove to be unserviceable, posing the very real prospect that the company could go bust.
“Certainly it would have a confidence impact, but the economy itself it wouldn’t take much of a hit,” said the Daily Mail’s City Editor Alex Brummer, speaking to Jewish News.
“It over-stretched itself and is now paying the price. It is a worry. You need enough cash-flow to service the debt. Companies can borrow at a low interest rate, but there’s obviously lots of problems with the company it bought. Losing 46 percent of its value is a very substantial drop.”
Brummer said Teva’s vast size relative to the Israeli economy meant that “it does become more serious,” but that “Teva operates in generic drugs, when patents expire – it is not at the cutting edge of where Israel is”.
He added that if the company hit the rocks, “the most likely buyers would probably by American or Chinese, which would be a blow to national pride, but one of Israel’s rich oligarchs may be interested in recapitalising it”.
The NHS, which is understood to buy up to one in six of its drugs from the company, was asked about any potential impact in the UK, but declined to comment.
Thank you for helping to make Jewish News the leading source of news and opinion for the UK Jewish community. Today we're asking for your invaluable help to continue putting our community first in everything we do.
For as little as £5 a month you can help sustain the vital work we do in celebrating and standing up for Jewish life in Britain.
Jewish News holds our community together and keeps us connected. Like a synagogue, it’s where people turn to feel part of something bigger. It also proudly shows the rest of Britain the vibrancy and rich culture of modern Jewish life.
You can make a quick and easy one-off or monthly contribution of £5, £10, £20 or any other sum you’re comfortable with.
100% of your donation will help us continue celebrating our community, in all its dynamic diversity...
Engaging
Being a community platform means so much more than producing a newspaper and website. One of our proudest roles is media partnering with our invaluable charities to amplify the outstanding work they do to help us all.
Celebrating
There’s no shortage of oys in the world but Jewish News takes every opportunity to celebrate the joys too, through projects like Night of Heroes, 40 Under 40 and other compelling countdowns that make the community kvell with pride.
Pioneering
In the first collaboration between media outlets from different faiths, Jewish News worked with British Muslim TV and Church Times to produce a list of young activists leading the way on interfaith understanding.
Campaigning
Royal Mail issued a stamp honouring Holocaust hero Sir Nicholas Winton after a Jewish News campaign attracted more than 100,000 backers. Jewish Newsalso produces special editions of the paper highlighting pressing issues including mental health and Holocaust remembrance.
Easy access
In an age when news is readily accessible, Jewish News provides high-quality content free online and offline, removing any financial barriers to connecting people.
Voice of our community to wider society
The Jewish News team regularly appears on TV, radio and on the pages of the national press to comment on stories about the Jewish community. Easy access to the paper on the streets of London also means Jewish News provides an invaluable window into the community for the country at large.
We hope you agree all this is worth preserving.
