Danish pharma giant Novo Nordisk, the maker of popular weight-loss and diabetes drugs Wegovy and Ozempic, said Wednesday it will cut 9,000 jobs or 11.5% of its workforce as part of a restructuring to save some $1.3 billion annually, as it battles competition from U.S. rival Eli Lilly.
Novo, which at one point last year was Europe's most valuable listed company, is facing a pivotal moment as Wegovy and its diabetes treatments Ozempic lose market share and sales growth slows, especially in the U.S.
The overhaul will simplify the company, improve the speed of decision-making, and reallocate resources towards growth opportunities, the company said in a statement on Wednesday.
"Our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well," CEO Mike Doustdar, who only took the helm last month, said in the statement.
"This means instilling an increased performance-based culture, deploying our resources ever more effectively, and prioritizing investment where it will have the most impact – behind our leading therapy areas," he added.
Nordnet analyst Per Hansen said he expected Novo shares to react positively to the news.
"The savings plan is tough, natural, and very necessary at the same time," Hansen said.
"Mike Doustdar needs to clear the decks so that Novo can move forward."
Novo will report one-off restructuring costs of 9 billion Danish crowns in the third quarter, including impairment charges, but also expects 1 billion crowns of savings in the fourth quarter, it said.
It expects annual savings of 8 billion crowns.
Novo, which currently has a global workforce of 78,400, said about 5,000 of the job cuts will be in its native Denmark. The move comes after it implemented a global hiring freeze last month for job roles not critical to its business.
Operating profit growth this year is now expected at between 4% and 10%, down from between 10% and 16% seen last month – changing due to the restructuring costs.
"Sometimes the hardest decisions are the right ones for the future we're building. I'm confident that this is the right thing to do for the long-term success of Novo Nordisk," Doustdar said in a post on LinkedIn.
It expects far slower growth this year, in part due to compounders who have been allowed to make copycat medicines based on the same ingredients as Wegovy due to shortages.
Investors in July wiped $70 billion off the drugmaker's market value after Novo issued a profit warning and named company veteran Doustdar as its new CEO.
Its shares have fallen nearly 46% since the start of the year, lowering its market value to about $181 billion as of Tuesday's close. That is far below its peak valuation of around $650 billion last year.
