Teva, the world's biggest seller of generic drugs, has suffered from declines in prices for its products in the USA and increased competition for its blockbuster multiple-sclerosis drug.
The company plans to unveil a full 2018 forecast in February, hinting that it was considering divesting further of non-core assets, including other manufacturing plants, R&D sites and offices.
The two-year restructuring plan is meant to reduce Teva's cost base by $3 billion by the end of 2019, out of an estimated cost base for 2017 of $16.1 billion. Today we are launching a comprehensive restructuring plan, crucial to restoring our financial security and stabilising our business.
"I am aware that we will be parting with people who have dedicated years and contributed a great deal to this company", Schultz says in a note to staffers, "and I deeply appreciate their commitment".
Teva and other generic-drug makers are facing declining prices for generic drugs and lower profits as well as a lag in new generic launches.
In 2018 it will look to the launch of two new innovative drugs - Huntington's disease treatment Austedo (approved by the FDA in August) and chronic migraine treatment fremanezumab, which was submitted to the U.S. regulator in October.
"The entire economy - from the airport to the banks to the seaports to the municipalities to the government service to the health clinics - will stand until noon on Sunday in solidarity with Teva's employees", Avi Nissenkorn, chairman of Histadrut, told reporters on Wednesday.
Teva's shares rallied on Thursday in response to the proposed cutbacks, rising more than 15% in one day on the Tel Aviv stock exchange, as of 4pm Israel time.
Israeli Prime Minister Benjamin Netanyahu's office said he called Schultz and urged him to do his utmost to protect Israeli jobs, especially in poorer outlying areas, and to maintain the company's Israeli identity. It plans to scrap some development projects immediately, it said.
"The number of workers set to be sent home should be reduced, and not less importantly, all the factories in Israel should be saved".
Beyond low prices for generics in the United States, its multiple sclerosis drug Copaxone is facing competition after U.S. regulators approved a generic version of it. It produces raw materials for the pharmaceutical industry and employs 870 workers, according to Teva's website.
On Thursday, he announced a two-year restructuring plan that he said would "reduce our cost base across our global business and become a more efficient and profitable company".
Late last month, in the first steps of the restructuring process, the company said it would combine its commercial generic and specialty drugs businesses.
But the cutbacks have led to strong criticism in Israel.
In an email to employees, Schultz said, "Making workforce reductions of this magnitude is hard, and we do not take them lightly".
"After having benefited from billions in tax breaks, they are laying off. Now they want workers to pay the price".