Novo Nordisk to cut 9,000 jobs in $1.3bn restructuring amid competition from Eli Lilly

Novo Nordisk, the Danish pharmaceutical giant behind blockbuster weight-loss drug Wegovy, has announced plans to cut 9,000 jobs about 11.5 percent of its global workforce as part of a sweeping restructuring aimed at saving $1.3 billion annually.

The move comes as the company faces mounting pressure from U.S. rival Eli Lilly and slowing sales growth in its obesity and diabetes treatments, particularly in the United States.

Chief Executive Officer, Mike Doustdar, who assumed leadership just last month, said the overhaul was necessary to reposition the company for long-term success.

“Our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well,” Doustdar said in a statement on Wednesday.

He added that Novo Nordisk would focus on instilling a performance-driven culture, deploying resources more effectively, and prioritising investment in its strongest therapy areas.

About 5,000 of the job cuts will affect staff in Denmark. The company, which currently employs 78,400 people worldwide, had already introduced a hiring freeze last month for non-essential roles.

ALSO READ: African Presidents may be kidnapped by special forces — Primate Ayodele

The restructuring will result in one-off costs of 9 billion Danish crowns in the third quarter, including impairment charges, but Novo expects to achieve savings of 1 billion crowns in the fourth quarter alone. Annual savings are projected at 8 billion crowns.

Following the announcement, analysts suggested that investors could respond positively despite the short-term costs. “The savings plan is tough, natural, and very necessary at the same time,” said Nordnet analyst Per Hansen.

Novo also revised its operating profit growth forecast for 2024 to between 4% and 10%, down from an earlier projection of 10% to 16%, due solely to restructuring costs.

The drugmaker has endured a turbulent year. In July, investors wiped $70 billion off its market value after it issued a profit warning and appointed Doustdar as CEO. Its shares have since dropped nearly 46% since January, cutting its valuation to about $181 billion, far below the $650 billion peak it reached last year.

“Sometimes the hardest decisions are the right ones for the future we’re building,” Doustdar wrote in a LinkedIn post. “I’m confident that this is the right thing to do for the long-term success of Novo Nordisk.”

ALSO READ TOP STORIES FROM NIGERIAN TRIBUNE