Novo Nordisk, the company behind the popular weight-loss drug Wegovy, is set to cut 9,000 jobs, accounting for 11.5% of its workforce, in a restructuring effort aimed at saving approximately $1.3 billion annually. This move comes as the company faces increasing competition from U.S. rival Eli Lilly.
Once Europe’s most valuable listed company, Novo is at a critical juncture as its Wegovy and diabetes treatment Ozempic face declining market share and slowed sales growth, particularly in the U.S.
The restructuring aims to streamline operations, quicken decision-making processes, and redirect resources toward growth opportunities, according to a statement released on Wednesday.
“Our market landscape is changing, especially in the obesity sector, which is becoming more competitive and consumer-driven. Our company must adapt,” stated CEO Mike Doustdar, who took over last month.
“We need to foster a performance-driven culture, optimize our resource allocation, and invest where it will make the most impact—focusing on our leading therapy areas,” he added.
Nordnet analyst Per Hansen anticipates a positive reaction from Novo’s shares following the announcement.
“The savings plan is both stringent and necessary,” Hansen commented. “Mike Doustdar needs to prepare the company to move forward.”
Novo will incur one-time restructuring costs of 9 billion Danish crowns in the third quarter, including impairment charges, but expects savings of 1 billion crowns in the fourth quarter.
The company forecasts annual savings of 8 billion crowns.
With a global workforce of 78,400, Novo stated that around 5,000 job cuts will occur in Denmark. This follows a global hiring freeze for non-critical roles implemented last month.
Operating profit growth is now projected to be between 4% and 10% this year, revised from a previous estimate of 10% to 16%, mainly due to restructuring costs.
“Sometimes the toughest decisions are the right ones for the future we’re building. I am confident this is the correct move for Novo Nordisk’s long-term success,” Doustdar shared on LinkedIn.
The company anticipates slower growth this year, partly due to competitors producing copycat drugs using Wegovy’s ingredients amid shortages.
In July, investors shaved $70 billion off Novo’s market value after the company issued a profit warning and appointed veteran Doustdar as CEO.
The company’s shares have declined nearly 46% since the beginning of the year, reducing its market value to about $181 billion as of Tuesday’s close, significantly below last year’s peak valuation of around $650 billion.
