Novo Nordisk Axes Jobs to Cut Costs
The world’s biggest insulin producer, Novo Nordisk, has announced plans to cut 1,000 jobs in response to a challenging environment and increased competition, particularly in the US which accounts for about half of its revenue. The Danish drugmaker, which has a global workforce of 42,300, said the layoffs will affect its R&D units and headquarter functions, as well as its global commercial organization. Around 500 of the job losses are expected to be in Denmark.
President and CEO Lars Rebien Sørensen said the move was needed to provide a sustainable balance between income and costs, adding that the company needs to prioritize investments in key product launches that will bring innovation to patients and drive future growth. At its half-year results in August, Novo Nordisk trimmed its full-year profit forecast to the lower end of its previously announced range. It said the job cuts and associated costs did not change its financial outlook for 2016.
Growth has slowed in the key US market where pharmacy benefit managers have been forcing drug companies to offer big discounts for employers and health insurance plans. Nevertheless, Novo Nordisk has high hopes for Tresiba, a new insulin product it launched in the US in January of this year. But the long-acting treatment faces new competitors such as Eli Lilly’s cheaper generic version of Sanofi’s Lantus due to be launched in December, which could limit any price premium that Novo Nordisk might attain for Tresiba.
