Novo Nordisk to Cut 9,000 Jobs as Competition from Eli Lilly Squeezes Sales

Novo Nordisk said it plans to cut about 9,000 jobs, roughly 11% of its 78,400-strong workforce, citing disappointing sales and intensifying competition in the obesity drug market dominated by rivals such as Eli Lilly.

The Danish pharmaceutical group said the proposals include about 5,000 job losses in Denmark and will generate restructuring charges of about £600 million this year while targeting annual savings of £930 million by 2026. The announcement accompanies the company’s third profit warning of the year as it seeks to streamline operations and refocus resources on diabetes and obesity treatments.

Novo Nordisk attributed the cuts to weaker-than-expected sales growth after a period of rapid expansion following the approval and launch of highly effective obesity medicines, including Wegovy and Ozempic. The company’s share price has fallen sharply from its 2023 peak as competitors entered the market, and management said the reductions are designed to create a faster, leaner organisation better positioned for longer-term growth.

Chief Executive Mike Doustdar, who took the top job in July, said the company needed a ‘‘shift in mindset and approach’’ to become "faster and more agile." Doustdar framed the reduction as a strategic redirection after a 75% increase 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," he said.

Analysts and investors have pointed to rising competition from Eli Lilly, maker of the weight-loss drug Mounjaro, as a major factor in easing demand for Novo Nordisk’s products. Russ Mould, investment director at AJ Bell, said the company 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." Susannah Streeter, head of money and markets at Hargreaves Lansdown, said the business "has been feeling the effects of rivals marching into the space" and described the move as a substantial slimming of the company’s cost base.

Market data cited by the company show the stock has fallen about 65% since June of last year, although shares rose about 3.7% on the day of the restructuring announcement. Management said the workforce reduction and other measures are intended to redirect resources toward core growth opportunities in diabetes and obesity and to stabilise returns to shareholders over time.

The announcement drew comment from Danish authorities. Finance Minister Nicolai Wammen said the government did not see the job cuts as altering its recent downward revision of national growth forecasts and described the Danish economy as "extremely strong." The government last month trimmed its growth estimate for the year from 3% to 1.4%, in part citing the company’s troubles.

Novo Nordisk rose to prominence after Wegovy became among the first highly effective prescription obesity treatments approved in the United States in mid-2021, a development that helped lift the company to the top of Europe’s market capitalisation rankings. At its peak, the company’s market value exceeded Denmark’s annual gross domestic product. The surge in demand for its weight-loss drugs led to rapid staff expansion and heavy investment in manufacturing and distribution.

The company said the planned cuts will cost several hundred million pounds this year but are expected to deliver sustained annual savings by 2026. Michael Novod, head of equity research for Denmark at Nordea Bank, described the move as the new CEO’s first major step to simplify Novo Nordisk’s structure and reallocate resources toward growth in its core therapeutic areas.

Novo Nordisk’s third profit warning this year underscores the shift in market dynamics for obesity and diabetes medicines as more pharmaceutical companies introduce competing treatments. Management did not provide a detailed timetable for the reductions beyond saying they will take effect over coming quarters and vary by geography and function. The company said it will engage local works councils and authorities where required and that it will offer support measures for affected employees.

Investors and industry watchers will be watching the company’s next earnings updates and product launch plans closely for signs that the restructuring and strategic refocus are stemming the sales slowdown and restoring momentum in key markets.