Ozempic maker Novo Nordisk to cut 9,000 global jobs

COPENHAGEN (AFP): Danish pharmaceutical giant Novo Nordisk announced Wednesday it would cut 11 percent of its workforce, as the maker of Ozempic and Wegovy faces rising competition for its anti-obesity treatments.

The drug maker said in a statement it would save eight billion kroner ($1.3 billion) by slashing 9,000 jobs across the company, including 5,000 in Denmark.

And for the third time this year, the company lowered its earnings forecast. It now expects operating profit growth of between four and 10 percent, down from 10-16 percent.

The announcement appears to have pleased investors, as the company’s share price surged by more than three percent near midday trading in Copenhagen.

Novo Nordisk said the job cuts were part of a “company-wide transformation to simplify its organisation, improve the speed of decision-making, and reallocate resources towards the company’s growth opportunities in diabetes and obesity”.

The popularity of Novo Nordisk’s weight-loss injections had once made it a darling of investors, boosting its share price and at one point making it Europe’s most valuable company.

It went on a hiring spree, raising its workforce from 43,700 in 2020 to 78,400 today.

The company’s success was even credited for boosting Denmark’s economic growth in 2023.

But its share price has been tanking since last year and sales have slowed as competition grows from rival treatments in its key market, the United States.

Evolving markets
“Our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well,” Novo Nordisk chief executive Mike Doustdar said in the statement.

“This means instilling an increased performance-based culture, deploying our resources ever more effectively, and prioritising investment where it will have the most impact –- behind our leading therapy areas,” said Doustdar, who succeeded Lars Fruergaard Jorgensen in August.

Palle Sorensen, chief economist at Nykredit bank, said the 5,000 domestic job cuts were “significant”.

“The Danish economy created 2,300 new job in June. So it is approximately equal to two months of job growth,” he told AFP.

Novo Nordisk said Wednesday its “transformation” plan reflected “the company’s commitment to meet rising global demand while also competing in a more dynamic and consumer-driven obesity market, as evidenced by the recent slowdown in growth”.

Copycats

Novo Nordisk faces stiff competition from rival treatments made by US group Eli Lilly.

The Danish company’s limited production capacity had also led the US Food and Drug Administration to temporarily allow pharmacies to create so-called “compound” or copycat versions of Ozempic and Wegovy.

The authorisation expired on May 22 but Novo Nordisk said last month that sales of generic versions of its treatments were continuing “under the false guise of ‘personalisation'”.

Ozempic is an injectable anti-diabetic treatment that became popular on social media for its slimming properties.

Wegovy, which has the same active ingredient as Ozempic in a different dose, is a weight-loss drug.

The treatments use analogues of the hormone GLP-1, which regulates blood glucose levels and appetite.

“Analysts say management underestimated emerging competition and misjudged its own market position,” said Jochen Stanzl, chief market analyst at CMC Markets, a trading platform.

“Investors who bought in at higher valuations are paying the price, as the stock now reflects fading hopes of a return to its earlier growth trajectory,” he said.

Novo Nordisk said Wednesday its “transformation” plan reflected “the company’s commitment to meet rising global demand while also competing in a more dynamic and consumer-driven obesity market, as evidenced by the recent slowdown in growth”.