TLDR
- Novo Nordisk (NVO) announces 9,000 job cuts, representing 11% of its global workforce, with 5,000 cuts in Denmark
- The restructuring aims to save $1.25 billion annually by end of 2026 as the company faces intense competition from Eli Lilly’s Zepbound
- Stock rises 3% despite third profit warning this year, with operating profit growth cut to 4-10% from previous 10-16% forecast
- New CEO Mike Doustdar’s first major move addresses slowing momentum in obesity and diabetes drug sales
- Company expects 9 billion crowns in one-off restructuring costs but will reinvest savings in R&D and manufacturing
Novo Nordisk announced Wednesday it will eliminate 9,000 positions worldwide as the Danish pharmaceutical giant restructures operations. The job cuts represent 11% of the company’s 78,400 global workforce.
The layoffs will hit Denmark hardest, with 5,000 positions eliminated in the company’s home market. The remaining 4,000 cuts will affect international operations across various business units.
New CEO Mike Doustdar, who took the helm last month, described the restructuring as his first major strategic move. The cuts aim to simplify operations and accelerate decision-making processes.
The company expects annual savings of 8 billion Danish crowns ($1.25 billion) by the end of 2026. These savings will be reinvested in research and development, manufacturing expansion, and improving global patient access.
NVO stock climbed 3.3% in Copenhagen trading Wednesday morning after initially falling 3%. The positive reaction suggests investors view the cost-cutting measures favorably despite the company’s challenges.
Facing Intense Competition
Novo Nordisk faces mounting pressure from U.S. rival Eli Lilly’s competing weight loss drug Zepbound. Lilly’s medication overtook Wegovy in weekly U.S. prescriptions earlier this year.
However, Wegovy prescriptions accelerated over the summer, narrowing Lilly’s lead in the critical American market. The competition has intensified as both companies battle for dominance in the lucrative obesity treatment space.
The company also confronts challenges from compounded copycat versions of its drugs. These cheaper alternatives have gained popularity, eating into Novo’s market share.
Novo’s meteoric rise began in mid-2021 when Wegovy became the first highly effective obesity drug approved in the U.S. This success catapulted the firm to the top of Europe’s stock market.
But the hiring spree that nearly doubled headcount over five years has now backfired. The layoffs will return Novo’s workforce to early 2024 levels, according to Redburn Atlantic analyst Simon Baker.
Third Profit Warning This Year
The restructuring comes with Novo Nordisk’s third profit warning of 2025. The company now expects operating profit growth between 4% and 10% for the year.
This marks a sharp reduction from the previous forecast of 10% to 16%. The company had originally projected 19%-27% growth at the beginning of the year.
One-off restructuring costs will total approximately 9 billion crowns. These expenses will weigh on near-term financial performance.
Michael Novod from Nordea Bank called this the new CEO’s first major move to redirect resources toward growth areas. The restructuring focuses on diabetes and obesity treatments rather than simply cutting costs to boost margins.
Investors wiped $70 billion off Novo’s market value in July after the company warned on profits. Shares have fallen nearly 46% since the start of 2025.
The company’s market capitalization now sits around $181 billion, well below its peak of approximately $650 billion last year. This dramatic decline reflects investor concerns about slowing growth momentum.
Lukas Leu from ATG Healthcare said Novo’s cost-cutting measures fell short of reassuring investors. He noted the obesity market proved more consumer-driven than anticipated, leading to rapid organizational expansion that proved unsustainable.
The company declined to specify which business units would be most affected by the workforce reduction. A global hiring freeze for non-essential roles was announced last month.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
