Dive Brief:

• Israeli generic maker Teva is pushing forward with a new effort to reduce manufacturing costs as it works to improve gross margins following a years-long restructuring that created $3 billion in savings but brought layoffs for about 13,000 employees. 
• More manufacturing sites can be consolidated, CEO Kåre Schultz told analysts and investors on a Feb. 12 conference call. But the company will also be looking at improvements at each site, ensuring equipment is fully utilized and streamlining its global supply chain, he said. 
• The drugmaker is aiming for a 28% operating margin by the end of 2023, which would mark an improvement over the 24.5% it recorded in 2019.

Dive Insight:

Teva is trying to climb out of what Schultz described as a "dramatic situation" in 2017, when debt totaled about $34 billion and the company's blockbuster Copaxone treatment for multiple sclerosis faced the loss of patent protection. 

Since then, Teva has shut down or divested 13 manufacturing sites, with another 10 in the process of being offloaded. It has closed 40 offices and laboratories, as well as laid off some 13,000 employees. 

Teva on Wednesday reported a fourth-quarter profit of 10 cents a share on revenue of $4.5 billion, and Schultz said net debt has been reduced by $9 billion. The company's shares fell by 4% to around $12.85 Thursday afternoon, after rising strongly by 9% Wednesday on the earnings news. 

But investors — and Teva — are looking for more. Manufacturing expenses make up the biggest cost element in Teva's business, making the area a natural target for improvement, Schultz said on the conference call.

He asked investors to remember how Teva was built: "The company was created out of 20 mergers — manufacturing sites all over the world, not really consolidated IT systems, not consolidated manufacturing planning," he said. "We're improving all that as we speak." 

Teva is also looking to grow revenue, relying heavily on two of its newest products, Ajovy and Austedo. Teva is studying Avjoy, approved to prevent migraines, for use in post-traumatic headache and fibromyalgia, Schultz said. 

Austedo, currently approved for tardive dyskinesia and chorea associated with Huntington's disease, is also being studied for new uses, including Tourette's syndrome. A Phase 3 trial in Tourette's is already completed and results are "very close to being reported," Schultz said.

Teva isn't out of the woods yet, facing price fixing lawsuits and sizable debt levels that still total more than $24 billion. Despite the stock bump on Wednesday, the company's $14 billion market value is much reduced from a 2015 peak of around $60 billion.