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Novo Nordisk said on Wednesday that it would axe 9,000 jobs as it lowered its profit guidance for the third time this year.
The Danish pharmaceutical giant pointed to fierce competition in the obesity drug market, hitting its weight-loss products Ozempic and Wegovy.
Around 5,000 of the job losses will be in Denmark, out of a global workforce of 78,400, and the firm expects to save DKK8 billion (€1.1bn) a year by 2026.
Novo forecasts that restructuring charges will come to around DKK8bn. It lowered its operating profit growth to 4-10% this year, from a previous estimate of 10-16%.
“The transformation reflects the company’s commitment to meet rising global demand while also competing in a more dynamic and consumer-driven obesity market, as evidenced by the recent slowdown in growth,” said Novo in a statement.
CEO Mike Doustdar noted that the obesity market had become “more competitive”, an allusion to rivals like US firm Eli Lilly and other companies offering cheaper, dupe versions of its drugs.
When Doustar was named Novo’s new CEO in July, he emphasised that reviewing company costs was one of his key priorities, and in August, he implemented a global hiring freeze.
Novo has also struggled to cheer investors after its CagriSema shot, an experimental obesity drug, disappointed in a clinical trial.
“Novo Nordisk 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,” said Russ Mould, investment director at AJ Bell.
“Disappointing drug trials have cast a dark cloud on the business, wiping billions of dollars off its market valuation and costing CEO Lars Fruergaard Jorgensen his job.”
Mould added: “[The job losses] are a classic response to a strategic setback, aiming to refocus the company on what it does best while also trimming the fat to help reduce costs.”
Shares in Novo were up over 2% in daily trading in Copenhagen at around 11 CEST.