COPENHAGEN (Reuters) — Novo Nordisk, the maker of blockbuster weight-loss drug Wegovy, said on Wednesday it will cut 9,000 jobs in a bid to reignite growth and fend off intense competition from U.S. rival Eli Lilly and a wave of compounded copycat drugs.
The restructuring, including the largest layoff in Denmark’s history, is expected to save 8 billion Danish crowns ($1.25 billion) annually and comes as Novo Nordisk is battling to revive its fortunes under a new CEO after it lost its lead to Eli Lilly in the obesity and diabetes markets.
Sales growth has stalled and shares have slumped, knocking $450 billion off the Danish company’s market cap since the middle of last year and hurting the local economy. The company issued its third profit warning this year on Wednesday, citing 9 billion crowns in one-off costs tied to the overhaul.
“They need to reignite investor confidence with an appealing growth story for the future,” said Novo Nordisk shareholder Lukas Leu, a portfolio manager at ATG Healthcare.
“The obesity market was misjudged. It’s much more consumer-driven than anticipated, and Novo expanded organisational complexity too quickly.”
Novo’s meteoric rise began in mid-2021 when Wegovy became the first highly effective obesity drug approved in the U.S., catapulting the firm to the top of Europe’s stock market.
But a hiring spree that nearly doubled its headcount over five years has now backfired. The layoffs – around 11.5% of the total workforce – take Novo’s headcount back to early 2024 levels, said Redburn Atlantic analyst Simon Baker.
Denmark’s economy remains robust despite the job cuts at Novo Nordisk, Danish Finance Minister Nicolai Wammen told Reuters, dismissing concerns they could further impact the country’s economic outlook.
Shares have fallen nearly 46% since the start of the year, bringing its market capitalisation to around $181 billion — well below its peak of approximately $650 billion last year.
Bank of America analysts said they now expect Novo to issue a fourth profit warning when it reports third-quarter results in November, doubting the company can meet the top end of its sales guidance.
Shares in Novo Nordisk were up 2.1% at 1315 GMT, having initially fallen 3%.
