Despite announcing a major restructuring and laying off thousands of employees, Teva Pharmaceutical Industries Ltd. (TEVA) still needs to do more to address its massive debt load, analysts say. 

Specifically, the struggling drug company should convert at least a portion of its $35 billion in debt into equity, argues Jason Kolbert, an analyst at Maxim Group LLC.

Kolbert told TheStreet that while he is encouraged to see new CEO Kare Schultz at the helm of Teva, "How do you change the fundamental equation that the company has $35 billion in debt? To me, there's only one answer."

By converting at least part of the debt into equity, "you'll end up with a company with a sustainable capital structure," according to Kolbert, adding that he thinks it's unlikely that the board would decide to do so due because such a move would dilute existing shareholders.

A representative for Teva declined to comment for this story.

Bloomberg reported on Dec. 12 that Petach Tikva, Israel-based Teva was working with Evercore Inc. to analyze its options for handling its debt. These include reducing a revolving credit facility and lengthening the repayment period for some of the debt, according to the report.

The massive debt load was created largely by Teva's $40.5 billion purchase of Allergan plc's  (AGN)  generic business in 2016.

Teva's new leader joined as president and CEO on Nov. 1 after helming Valby, Denmark-based pharmaceutical firm H. Lundbeck A/S. At Lundbeck, which Schultz joined in 2015 as the company was facing the loss of critical patents, he implemented a turnaround strategy that included reducing operating costs while targeting new product launches. In the first nine months of 2017, Lundbeck's revenue rose 12% to DKK 12.84 billion ($2.07 billion) compared to the year-ago period, while  earnings per share jumped 182% to DKK 10.50 ($1.69).

On Nov. 27, Teva unveiled a new organizational and leadership structure. Then on Dec. 14, the company said it plans to cut 14,000 jobs globally -- or more than a quarter of its staff -- over the next two years as part of restructuring efforts aimed at lowering its total cost base by $3 billion by the end of 2019 from the current estimated base of $16.1 billion this year.

In early November, credit rating agency Fitch Ratings downgraded Teva's long-term issuer default rating to 'BB' from 'BBB-,' noting that the company is facing "significant operational stress" at a time it needs to cut debt from its acquisition of Allergan's generic business. 

Teva and other firms have experienced pricing pressure for generic drugs in North America. Teva also faces erosion of sales of its branded multiple sclerosis drug Copaxone due to generic competition.

Teva's planned reorganization efforts were "baked into our expectations when we took our action in November," said Patrick Finnegan, a Teva analyst at Fitch, in an interview on Dec. 29.

What's unclear, Finnegan said in the interview, is which assets Teva might sell in the next year or two and which products could be launched that would create enough revenue to offset the erosion of Copaxone sales, as well as the headwinds from generic drug pricing pressure.

"At this stage, it's kind of a wait and see. Will generic drugs continue to erode at the pace they had in 2017?" Finnegan said. "There a lot of moving parts here."

And while there aren't a lot of reasons at this point to be upbeat about Teva, the "recognition of the depth of the company's problems and the strategic realism that Schultz brings to the table is refreshing and overdue, frankly," Finnegan said.

Teva has also  been divesting non-core assets as part of its efforts to raise cash for debt repayment. On Nov. 1, Teva said it had completed the sale of its Paragard intrauterine copper contraceptive to Cooper Cos. (COO) in a $1.1 billion cash transaction. The next day, it announced the completion of the sale of Plan B One-Step, Take Action, Aftera and Next Choice One Dose to Foundation Consumer Healthcare LLC for $675 million in cash. Previously, it had also agreed to sell a portfolio of more than 20 products to CVC Capital Partners Group in a $703 million deal expected to close by year end.

Teva's stock performance in 2017 reflected the company's struggles, with shares down about 48% for the year, versus a gain of almost 20% for the S&P 500. On Friday, the last trading day of 2017, shares fell 0.5% to $18.95.

Allergan is a holding in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells AGN? Learn more now.

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