The company behind Ozempic and Wegovy is axing 9,000 jobs as the fat jabs war intensifies.
Danish pharmaceutical giant Novo Nordisk outlined proposals to shed about 11 per cent of its 78,400-strong workforce amid stiff competition from Mounjaro-maker Eli Lilly.
The announcement – which includes 5,000 job losses in Denmark – came as Novo counted the cost of disappointing sales with its third profit warning of the year.
Russ Mould, investment director at AJ Bell, said: ‘Novo Nordisk is paying the price for failing to beat its rival Eli Lilly in the race to have the most effective weight-loss drug on the market.
‘The company’s goal is to help people slim down, but now it’s having to slim down itself.’
The update even triggered a response from the Danish government, which last month cut its economic growth forecasts for the year from 3 per cent to 1.4 per cent due to Novo’s troubles.
Job cuts: Danish pharmacuetical giant Novo Nordisk outlined proposals to shed around 11% of its 78,400-strong workforce amid stiff competition from Mounjaro maker Eli Lilly
‘I do not see today’s announcement as something that changes the economic estimates that the government has made,’ insisted finance minister Nicolai Wammen. ‘The Danish economy is extremely strong.’
A meteoric rise in the Novo share price began in mid-2021, when Wegovy became the first highly effective obesity drug approved in the US.
At its peak, the firm was the most valuable in Europe, with a market capitalisation larger than Denmark’s annual gross domestic product.
But with sales growth stalling under pressure from rivals, the stock has fallen some 65pc since June last year, although the shares rose 3.7 per cent yesterday.
It is now battling to revive its fortunes under new boss Mike Doustdar, who took over in July and is seeking to streamline its operations and boost its obesity and diabetes drug offerings.
Novo said the job cuts would cost some £600million in restructuring charges, hitting profits this year.
The cuts are due to help it save £930million a year by 2026 and follow a 75 per cent rise in staff numbers over the past five years.
‘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,’ said Doustdar.
‘We need a shift in our mindset and approach so that we can be faster and more agile.’
Doustdar became chief executive when his predecessor, Lars Fruergaard Jorgensen, left the business after its share price fell amid mounting competition from Eli Lilly.
‘This is the new CEO’s first major move to simplify Novo’s structure and redirect resources toward growth in diabetes and obesity,’ said Michael Novod, head of equity research for Denmark at Nordea Bank.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: ‘Novo Nordisk, which had grown fat on the spoils of its weight-loss drugs, has been feeling the effects of rivals marching into the space.’
She added: ‘It’s now drastically slimming down. With so much depending on these products, there’s little hiding place when market dynamics move in the wrong direction.’
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