Novo Nordisk, the maker of blockbuster weight reduction remedy Wegovy, will lower 9,000 jobs amid rising competitors within the trade led by US rival Eli Lilly.
The Danish pharmaceutical large introduced the cuts on Wednesday, marking the most important layoff in Denmark’s historical past. The restructuring is slated to save lots of the corporate 8 billion Danish crowns ($1.25bn) yearly.
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This comes amid modifications within the firm’s C-suite. Final month, Novo named Maziar Mike Doustdar as CEO to substitute Lars Fruergaard Jorgensen.
As soon as Europe’s most beneficial firm by market capitalisation, Novo has seen its market cap fall to roughly $181bn from its peak final 12 months of $650bn. On the time, Novo’s market cap exceeded Denmark’s annual gross home product.
On Wednesday, the corporate issued its third revenue warning this 12 months.
“They should reignite investor confidence with an interesting development story for the long run,” mentioned Novo Nordisk shareholder Lukas Leu, a portfolio supervisor at ATG Healthcare, to the Reuters information company.
“The weight problems market was misjudged. It’s way more consumer-driven than anticipated, and Novo expanded organisational complexity too shortly.”
Rise and fall
The Danish pharma large’s surge in development started in 2021, when Wegovy was the primary extremely efficient weight problems drug to be accredited in the US. Novo Nordisk almost doubled its headcount during the last 5 years amid its then surge in development, which drove it to change into Europe’s most beneficial firm — a title it has gone backwards and forwards with during the last 12 months with the proprietor of Moet Hennessy and Louis Vuitton, LVMH.
The corporate, which relies in Bagsvaerd simply exterior Copenhagen, has 78,400 staff. Final month, it introduced a hiring freeze on non-essential roles. The new cuts will account for 11.5 % of the corporate’s whole workforce, with not less than 5,000 cuts from the workforce in Denmark. Novo Nordisk declined to specify which enterprise items can be impacted.
In July, Novo misplaced $70bn in market worth because it warned of a success in income amidst elevated competitors in a promote it as soon as dominated.
Financial institution of America analysts mentioned they now count on Novo to subject a fourth revenue warning when it stories third-quarter leads to November, doubting the corporate can meet the highest finish of its gross sales steerage.
Novo is slimming down whereas additionally attempting to spice up output to fulfill rising demand for its merchandise and readying the capsule model of Wegovy in addition to exploring the extra well being advantages of its glucagon-like peptide-1 (GLP-1) portfolio.
Within the fourth quarter, it expects to save lots of not less than one billion Danish crowns ($157m), which it plans to redirect into analysis and growth, manufacturing growth, and enhancing world affected person entry.
“We have to have the best-in-class launches, particularly as competitors is rising,” Doustdar mentioned in a name with reporters. “We wish to be certain that we don’t should spare a dime.”
“That is the brand new CEO’s first main transfer to simplify Novo’s construction and redirect sources towards development in diabetes and weight problems,” mentioned Michael Novod, head of fairness analysis for Denmark at Nordea Financial institution.
Elevated competitors
Novo Nordisk has confronted challenges as gross sales of Wegovy and diabetes therapy remedy Ozempic start to lose momentum, significantly in the US.
Eli Lilly’s Zepbound overtook Wegovy in weekly prescriptions within the US earlier this 12 months, though Wegovy prescriptions started to extend at a sooner tempo over the summer time, narrowing Lilly’s lead within the essential market.
Novo’s inventory has misplaced worth on the rise in competitors. Shares have fallen almost 46 % for the reason that begin of the 12 months. For the day, the inventory is in optimistic territory, up by 0.4 % as of 11:45am in New York (15:45 GMT).