Novo Nordisk Announces Major Restructuring with 9,000 Job Cuts

In a bold move to streamline operations and combat fierce competition, Novo Nordisk, the renowned maker of the weight-loss drug Wegovy, has revealed plans to eliminate 9,000 jobs globally. This decision comes as the company faces intense rivalry from U.S. competitor Eli Lilly and a surge in compounded copycat drugs.

Financial and Operational Impact

The restructuring is projected to save approximately 8 billion Danish crowns (US$1.25 billion) annually. However, Novo Nordisk has also issued its third profit warning this year, citing 9 billion crowns in one-off costs linked to this overhaul. This follows a period of rapid growth that saw the company's headcount nearly double over five years, a strategy that has now backfired.

Market Dynamics and Competition

Novo Nordisk's rise to prominence began in mid-2021 with the U.S. approval of Wegovy, propelling it to the top of Europe's stock market. Yet, recent challenges include slowing sales momentum for Wegovy and its diabetes treatment Ozempic, particularly in the United States. Eli Lilly's Zepbound has even overtaken Wegovy in weekly U.S. prescriptions, though Wegovy is regaining ground.

Leadership and Strategic Shifts

New CEO Mike Doustdar, who took over last month, emphasized that this restructuring aims to simplify operations, accelerate decision-making, and redirect resources toward growth areas like diabetes and obesity treatments. Despite initial investor skepticism, with shares falling nearly 46% since the start of the year, the stock saw a 3.3% increase following the announcement.

Global Implications and Future Outlook

The layoffs will affect 5,000 workers in Denmark and are part of a broader effort to reinvest savings into research and development, manufacturing expansion, and improving patient access. Analysts note that this marks a transition from rapid growth to a slower, more sustainable pace, reflecting a misjudgment of the consumer-driven obesity market.