TLDR
- Novo Nordisk cuts 9,000 jobs globally (11% of workforce) targeting $1.25 billion in annual savings by 2026
- Stock rises 3.3% despite third profit warning this year and reduced operating profit growth forecast to 4-10%
- Company faces intense competition from Eli Lilly’s Zepbound and compounded weight-loss drug alternatives
- New CEO Mike Doustdar implements first major strategic restructuring since taking leadership role last month
- Shares down 46% year-to-date as market cap falls from $650 billion peak to around $181 billion
Novo Nordisk stock climbed Wednesday morning after the weight-loss drug maker announced plans to eliminate 9,000 positions worldwide. The job cuts represent 11% of the company’s global workforce of 78,400 employees.
The Danish pharmaceutical giant expects the restructuring to generate annual savings of 8 billion Danish crowns ($1.25 billion) by end of 2026. Denmark will bear the brunt of layoffs with 5,000 positions eliminated locally.
NVO shares rose 3.3% in Copenhagen trading despite the company issuing its third profit warning of 2025. American depositary receipts gained 1.7% in premarket trading at $55.20.
New CEO Mike Doustdar, who assumed leadership last month, described the workforce reduction as his first major strategic move. The restructuring aims to simplify operations and accelerate decision-making processes.
Intense Competition Pressures Growth
Novo Nordisk battles mounting pressure from rival Eli Lilly’s competing obesity treatment Zepbound. Lilly’s medication overtook Wegovy in weekly U.S. prescriptions earlier this year, though Wegovy has since narrowed the gap.
The company also confronts challenges from cheaper compounded versions of its drugs. These knockoff alternatives have gained popularity among consumers seeking more affordable weight-loss treatments.
Novo’s rapid expansion following Wegovy’s 2021 U.S. approval nearly doubled its workforce over five years. The hiring spree that once fueled growth has now become a liability requiring correction.
The layoffs will return the company’s headcount to early 2024 levels, according to Redburn Atlantic analyst Simon Baker. This workforce adjustment reflects the new reality of slower growth in the obesity drug market.
Financial Outlook Deteriorates Further
The restructuring comes with Novo Nordisk’s third profit warning this year. Operating profit growth expectations dropped to 4-10% from the previous 10-16% forecast range.
One-off restructuring costs will total approximately 9 billion crowns, weighing on near-term financial performance. The company originally projected 19-27% profit growth at the beginning of 2025.
Investors eliminated $70 billion from Novo’s market value in July after previous guidance cuts. Shares have fallen 46% since January, reducing market capitalization to $181 billion from last year’s peak of $650 billion.
Michael Novod from Nordea Bank views the move as redirecting resources toward growth areas rather than simple margin improvement. The focus remains on diabetes and obesity treatments despite market headwinds.
Lukas Leu from ATG Healthcare said the cost-cutting measures fell short of reassuring investors. He noted the obesity market proved more consumer-driven than anticipated, leading to unsustainable organizational expansion.
The company declined to specify which business units face the heaviest job reductions. A global hiring freeze for non-essential roles was announced last month as an initial cost control measure.
Sydbank analyst Soren Lontoft Hansen called the layoff scale “surprising” but appropriate for the company’s transition from rapid growth to slower expansion reality.
