A little over a month into his tenure as Novo Nordisk’s new CEO, Maziar Mike Doustdar is making a major mark on the company.
In a bid to save around 8 billion Danish kroner ($1.3 billion) annually by the end of 2026, Novo will lay off roughly 9,000 employees across its global workforce of 78,400. Some 5,000 job cuts will occur in Novo’s home country of Denmark, the company said in a Sept. 10 press release.
The restructuring is set to “begin immediately,” and affected employees will start receiving layoff communications “over the next few months,” pending local labor negotiations, according to Novo’s announcement. The company noted that it’s also eyeing “additional initiatives” to boost Novo’s focus, “performance culture,” decision-making speed and to achieve further cost efficiencies.
“Sometimes the hardest decisions are the right ones for the future we're building,” Doustdar said in a Wednesday LinkedIn post addressing the decision. “I'm confident that this is the right thing to do for the long-term success of Novo Nordisk.”
Novo is charting the move in an effort to better meet rising demand in the increasingly competitive and “consumer-driven” obesity market, citing a slowdown in its sales growth in recent quarters.
“Over the past years, Novo Nordisk’s rapid scaling has increased organizational complexity and costs,” the company explained in its press release. “The transformation aims at addressing that complexity, so Novo Nordisk can invest more behind its science, commercial capabilities and manufacturing ramp-up—aiming to reach the millions of people who remain untreated.”
As part of that “transformation” plan, Novo said it will reallocate resources toward growth opportunities in its bread-and-butter diabetes and obesity businesses. Nevertheless, that prioritization “does not imply that we are turning away from other areas,” a Novo Nordisk spokesperson said in an emailed statement.
“We have ambitious plans within rare disease, with several exciting product launches over the coming years,” the spokesperson added. Novo has not specified which business areas will be hit by the restructuring.
As for the investment opportunities the company is pursuing in metabolic disease, Novo said it will redirect savings toward commercial execution and R&D activities for diabetes and obesity.
The staff reduction will result in a one-off restructuring cost of 8 billion kroner (about $1.3 billion), which is expected to dampen Novo’s full-year operating profit growth by about 6% compared to the outlook the company issued in early August. The company now anticipates profit growth at a range of 4% to 10% for 2025, down from the Aug. 6 range of 10% to 16%.
The restructuring plan comes quickly on the heels of Doustdar assuming the CEO position at Novo last month. Novo first telegraphed plans to part ways with its previous chief executive, Lars Fruergaard Jørgensen, in May, with the company attributing the decision to market challenges and the precipitous drop of the company’s share price in recent months.
The staff reduction shouldn’t come as a complete surprise. Prior to his departure, Jørgensen warned in August that cost-cutting measures were likely on the way at the company, telling Danish news outlet DR that “[w]e probably won’t be able to avoid layoffs.”
Several weeks later, under Doustdar’s stewardship, Novo announced a hiring freeze in “non-business critical areas.”
Novo made waves with the launch of its semaglutide-based obesity drug Wegovy in 2021, unlocking a prescription weight loss market that analysts have pegged as one of the most lucrative fields in modern drug development. Nevertheless, manufacturing constraints and rampant patient demand—fueled by significant media attention and off-label use of Novo’s similar drug Ozempic for diabetes—created significant early supply constraints.
While Novo has beefed up manufacturing and restored supplies of its GLP-1 medicines over the past few years, the company is now battling on two commercial fronts against Eli Lilly’s own incretin medicine for obesity, Zepbound, and the scores of compounding pharmacies that started manufacturing close approximations of Novo and Lilly’s GLP-1 drugs while they were in short supply.
Compounding of both Novo and Lilly’s obesity drugs is now ostensibly restricted by the FDA, but that hasn’t stopped outsourcers and other entities from continuing to peddle cheaper versions of the popular medicines en masse.
During his final earnings call with the company, former CEO Jørgensen noted last month that the market for compounded semaglutide in the U.S. is now “equal” in size to Novo’s own GLP-1 business. Meanwhile, Lilly’s second-to-market Zepbound overtook Wegovy in terms of weekly U.S. prescriptions earlier this year.
In addressing the restructuring Wednesday, Doustdar noted in his LinkedIn post that the plan comes back to the three priorities he laid out when he assumed the role of CEO. Those are to focus on diabetes and obesity, strengthen commercial execution and realign the company’s cost base.
Now, with a plan in place, “we will secure Novo Nordisk’s leadership in diabetes and obesity and continue our mission to defeat chronic disease,” the new CEO pledged.