Novo Nordisk (NYSE:NVO) has announced a significant restructuring plan that will see the company cut 9,000 jobs, representing 11.5% of its workforce. The decision comes as the pharmaceutical giant faces mounting pressure from U.S. competitor Eli Lilly (NYSE:LLY).
Novo Nordisk Eyes $1.3Billion Savings Amid Market Struggles
The restructuring is expected to save Novo Nordisk approximately $1.3 billion annually, reported Reuters. The company, which was once Europe’s most valuable listed firm, is currently grappling with a decline in market share and sales growth for its diabetes treatments Ozempic and Wegovy, a popular weight-loss drug.
The overhaul aims to simplify the company’s structure, expedite decision-making, and redirect resources towards areas with growth potential. CEO Mike Doustdar emphasized the need for a performance-driven culture and more effective resource deployment.
Analyst Per Hansen from Nordnet expects the news to have a positive impact on Novo’s shares, describing the savings plan as “tough, natural, and very necessary.”
The restructuring will incur one-time costs of 9 billion Danish crowns ($1.4 billion) in Q3, including impairment charges. Nevertheless, the company expects to achieve 1 billion crowns ($156.66 million) in savings in Q4 and total annual savings of 8 billion crowns ($1.25 billion).
Novo Nordisk, which currently employs 78,400 people globally, will see about 5,000 job cuts in its native Denmark. This decision follows a global hiring freeze implemented last month for non-critical job roles.
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The restructuring comes in the wake of a significant dip in Novo Nordisk’s market value. In July, the company’s shares plummeted, wiping $70 billion off its market value, after it issued a profit warning and appointed Doustdar as its new CEO. The shares have since fallen by nearly 38%, year-to-date, reducing the market cap to approximately $240 billion, a stark contrast to its peak valuation of around $650 billion last year.
Novo Nordisk cut its 2025 sales growth forecast for the second time this year, lowering it from 13-21% to 8-14%, due to continued competition from compounded GLP-1 alternatives in the U.S., which hurt demand for Wegovy and Ozempic.
The company’s slowdown also has had a wider impact, weighing on Denmark’s economic outlook and prompting a cut in the country’s 2025 GDP forecast.
The company’s recent struggles are in sharp contrast to the pharma gold rush it was experiencing earlier this year. Novo Nordisk, along with Eli Lilly, had seen their combined market cap surpass $900 billion, driven by the cultural phenomenon of their diabetes treatments, Ozempic and Zepbound.
Benzinga's Edge Rankings place Novo Nordisk in the 57th percentile for quality and the 50th percentile for growth, reflecting its average performance in both areas. Check the detailed report here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
