Novo Nordisk, a prominent pharmaceutical company, has revealed extensive restructuring plans that include eliminating 9,000 jobs, representing 11.5% of its total workforce. This major decision is a direct response to increasing competitive pressure, notably from its U.S. counterpart, Eli Lilly. The company aims to simplify its organizational structure, accelerate decision-making, and reallocate resources to areas with higher growth potential, ultimately seeking to save approximately $1.3 billion annually.
The announced job cuts are part of a broader strategy by Novo Nordisk to enhance its market position and operational efficiency. The company, once Europe's most valuable publicly traded firm, has recently experienced a decline in market share and sales growth for its popular diabetes and weight-loss medications, Ozempic and Wegovy. CEO Mike Doustdar emphasized that these changes are crucial for fostering a performance-driven culture and ensuring more effective deployment of company assets.
Market analysts, such as Per Hansen from Nordnet, anticipate a positive reaction from investors to the news, describing the cost-saving initiative as both necessary and challenging. The restructuring is projected to incur one-time costs of 9 billion Danish crowns (approximately $1.4 billion) in the third quarter, which include impairment charges. However, Novo Nordisk expects to realize savings of 1 billion crowns ($156.66 million) in the fourth quarter, leading to total annual savings of 8 billion crowns ($1.25 billion).
Of the total workforce reduction, approximately 5,000 positions will be cut in Denmark, Novo Nordisk’s home country. This follows a global hiring freeze implemented last month for non-essential roles, indicating the company's proactive measures to manage its costs and optimize its global footprint. The company currently employs 78,400 people worldwide.
The necessity for this restructuring becomes clear when examining Novo Nordisk’s recent financial performance. The company's market value has significantly decreased following a profit warning issued in July and the appointment of a new CEO. Its shares have dropped by nearly 38% year-to-date, causing its market capitalization to plummet from an peak of around $650 billion last year to approximately $240 billion.
Furthermore, Novo Nordisk has revised its 2025 sales growth forecast for the second time this year, reducing it from an initial range of 13-21% to 8-14%. This downward adjustment is primarily attributed to heightened competition from compounded GLP-1 alternatives in the U.S., which have impacted demand for Wegovy and Ozempic. The company’s struggles have also had wider economic implications, influencing Denmark’s overall economic projections and resulting in a revised national GDP forecast for 2025.
These recent challenges stand in stark contrast to the pharmaceutical industry’s previous boom, which saw Novo Nordisk and Eli Lilly collectively achieve a market capitalization exceeding $900 billion, largely due to the success of their diabetes treatments. Despite these setbacks, Benzinga's Edge Rankings place Novo Nordisk in the 57th percentile for quality and the 50th percentile for growth, reflecting its current average performance across these key metrics.
Novo Nordisk’s strategic workforce reduction and operational overhaul signify its commitment to adapting to a highly competitive market landscape. By streamlining its structure and re-focusing resources, the company aims to regain momentum and strengthen its position in the global pharmaceutical industry, particularly in the face of intense rivalry from companies like Eli Lilly. This proactive approach underscores a determination to enhance long-term sustainability and profitability.