Novo Nordisk’s outgoing CEO, Lars Fruergaard Jorgensen, has warned that layoffs on the Danish pharmaceutical big might be unavoidable as competitors heats up in opposition to its blockbuster weight problems drug Wegovy amid rising strain from rival Eli Lilly.
Novo Nordisk – which turned Europe’s most respected firm, value $650bn, final yr on booming gross sales of Wegovy – is going through a pivotal second as the medication loses market share and sees gross sales development sluggish, particularly in the US.
It has warned of far slower development this yr, partly on account of compounders who’ve been allowed to make copycat medicine primarily based on the identical components as Wegovy on account of shortages. Novo Nordisk, which in line with its web site has 77,000 workers, minimize its full-year gross sales and revenue forecasts final week, wiping $95bn off its market worth since.
The slide is an unlimited and abrupt turnaround for the agency that has been one of many world’s hottest funding tales, which led to a speedy enlargement of producing and gross sales capability. Now the corporate is eyeing potential cost-cutting measures.
Layoffs loom
“We in all probability gained’t have the ability to keep away from layoffs,” Jorgensen informed Danish broadcaster DR. “When you need to alter an organization, there are some areas the place you need to have fewer individuals, some [areas] the place you need to be smaller.”
He added, although, that any determination on layoffs can be within the fingers of the incoming CEO, firm veteran Maziar Mike Doustdar, who takes over on Thursday.
On a media name, Jorgensen stated the marketplace for copycat variations of Wegovy’s class of medicine – referred to as GLP-1 receptor agonists – was of “equal dimension to our enterprise” and compounded variations of Wegovy had been offered at a “a lot cheaper price level”.
In Could, Novo Nordisk stated it anticipated lots of the roughly a million US sufferers utilizing compounded GLP-1 medicine to change to branded therapies after a US Meals and Drug Administration ban on compounded copies of Wegovy took impact on Could 22, and it anticipated compounding to wind down within the third quarter.
Nonetheless, finance chief Karsten Munk Knudsen stated on Wednesday that multiple million US sufferers had been nonetheless utilizing compounded GLP-1s and that the corporate’s lowered outlook has “not assumed a discount in compounding” this yr.
“The weight problems market is unstable,” Knudsen informed analysts when requested underneath what circumstances the corporate might see damaging development within the final six months of the yr. The low finish of the agency’s new full-year steerage vary can be for “unexpected occasions”, equivalent to stronger pricing strain within the US than forecast, he stated.
The decrease finish of the vary would indicate gross sales round 150 billion Danish krone ($23bn) within the second half of 2025, in contrast with 157 billion krone ($24.5bn) in the identical interval final yr.
Knudsen reiterated that the corporate was pursuing a number of methods, together with lawsuits in opposition to compounding pharmacies, to halt illegal mass compounding.
Jorgensen stated the corporate was inspired by the tennis US prescription knowledge for Wegovy. Whereas the drug was overtaken earlier this yr by rival Eli Lilly’s Zepbound when it comes to US prescriptions, that lead has narrowed previously month.
Second-quarter gross sales of Wegovy rose by 36 p.c within the US and greater than quadrupled in markets outdoors the US in comparison with a yr in the past, Novo Nordisk stated.
Whereas Wegovy’s US pricing held regular within the quarter, the corporate anticipated deeper erosion in the important thing US market within the second half, on account of a higher portion of gross sales anticipated from the direct-to-consumer or cash-pay channel, in addition to increased rebates and reductions to insurers, Knudsen stated.
He stated Novo Nordisk was increasing its US direct-to-consumer platform, NovoCare, launched in March, and will must pursue related “money gross sales” on to sufferers, outdoors of insurance coverage channels, in some markets outdoors the US.
Value cuts
Novo Nordisk reiterated its full-year earnings expectations on Wednesday after final week’s revenue warning.
Jorgensen stated the corporate was performing to “guarantee efficiencies in our value base” because it introduced it might terminate eight analysis and improvement initiatives.
“There appears to be a bigger R&D clean-out than typical, however we have no idea if this displays a strategic re-assessment or only a coincidence,” Jefferies analysts stated in a word.
Traders have questioned whether or not the corporate can keep aggressive within the booming weight-loss drug market. A number of fairness analysts have minimize their value targets and suggestions on the inventory since final week.
Shares in Novo Nordisk plunged 30 p.c final week – their worst weekly efficiency in over twenty years. The inventory has continued to tumble for the reason that market opened in New York. As of 12pm native time (16:00 GMT), the pharmaceutical big was down by greater than 3.3 p.c.