The basics:
- Novo Nordisk plans to cut roughly 9K jobs globally
- Workforce reductions aim to save $1.3B annually by 2026
- Layoffs will allow focus on diabetes, obesity growth initiatives
- Impact on U.S. headquarters in Plainsboro still unclear
Novo Nordisk is set to lay off roughly 9,000 employees across its global workforce of 78,400 as part of a newly launched restructuring initiative.
In a Sept. 10 press release, the Danish pharmaceutical giant said the transformation plan aims to streamline operations and redirect resources to growth opportunities within diabetes and obesity. Novo Nordisk expects the campaign to generate about $1.3 billion in savings annually by the end of 2026.
The pharma – whose portfolio includes blockbuster weight loss drug Wegovy and diabetes shot Ozempic – said about 5,000 of the job cuts will occur in its home country. It is not immediately clear what the impact will be at Novo Nordisk’s U.S. headquarters in New Jersey.
“This is a global transformation, and each country, site or region will be impacted differently,” a company representative told NJBIZ. “We will not be able to share specific numbers or additional facts about the US until plans are finalised and the appropriate consultations have been carried out in line with local labour laws.”
After establishing its presence 43 years ago on Alexander Road in Princeton, the company relocated and consolidated its base to a redeveloped campus on Scudders Mill Road in Plainsboro.
According to Novo Nordisk, affected employees will start receiving layoff communications “over the next few months,” pending local labor negotiations.
The company said it anticipates layoffs across operations, including staff areas and headquarters functions.
Novo Nordisk said it will redirect savings from the workforce reductions to “growth opportunities in diabetes and obesity, including commercial execution initiatives and R&D programs.” It will also explore other ways to “enhance organizational focus, performance culture and speed of decision-making as well as cost efficiencies.”
Necessary evolution
Once the first mover in GLP-1 weight-loss drugs, Novo Nordisk has struggled to maintain market share, particularly in the key U.S. region, amid increased competition from rival Eli Lilly and cheaper compounded weight loss drugs.
In recent years, manufacturing constraints and patient demand created significant early supply constraints for both Wegovy and Ozempic. As a result, the company said it invested $6.5 billion to increase domestic manufacturing capacity of the medications.
Now, the company faces increased competition on two commercial fronts – from Eli Lilly’s weight loss drug Zepbound as well as the scores of compounding pharmacies that started producing cheaper, copycat versions of GLP-1 drugs while they were in short supply.
Though compounding of both Novo Nordisk’s and Eli Lilly’s GLP-1 is essentially restricted by the U.S. Food and Drug Administration, that hasn’t entirely stopped some compounders.
In a statement, Novo Nordisk said, “The transformation reflects 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.”
“Over the past years, Novo Nordisk’s rapid scaling has increased organizational complexity and costs. The transformation aims at addressing that complexity, so Novo Nordisk can invest more behind its science, commercial capabilities and manufacturing ramp-up – aiming to reach the millions of people who remain untreated,” it said.
Over the past years, Novo Nordisk’s rapid scaling has increased organizational complexity and costs. The transformation aims at addressing that complexity …
– Novo Nordisk statement
Aligning resources
The move comes a little over a month after Novo Nordisk’s executive shakeup. New CEO Maziar Mike Doustdar took the helm in July in the wake of the surprise ouster of Lars Fruergaard Jørgensen. The company attributed the decision to part ways with Jørgensen to market challenges and a drop in its share price in recent months.
Doustdar said in a statement, “As the global leader in obesity and diabetes, Novo Nordisk delivers life-changing products for patients worldwide. But our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well.
“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 went on to say, “It is always difficult to see talented and valued colleagues go, but we are convinced that this is the right thing to do for the long-term success of Novo Nordisk. We need a shift in our mindset and approach so we can be faster and more agile.
“Our transformation plan is designed to deliver this. By realigning our resources now, we will be able to prioritize investments to drive sustainable growth and future innovation for the millions of patients with chronic diseases globally, particularly in diabetes and obesity.”
