Lars Fruergaard Jorgensen, retired CEO of Novo Nordisk, warns that a layoff for the Danish drug giant could be inevitable as competition heats up amid rising pressure from rival Eli Lilly.
Novo Nordisk has become Europe’s most valuable company, worth $6500 billion in booming sales of Wegovy last year, but in the US, it faces a pivotal moment, especially as drugs lose market share and slow sales growth.
This year, we are warning about much slower growth this year, because of the comparsner, who were allowed to make mimic drugs based on the same ingredients as Wegovy due to a shortage. Novo Nordisk, which employs 77,000 people, has cut its full-year sales and profit forecasts last week, cutting $95 billion since then.
Slide is a vast and sudden turn for a company, one of the hottest investment stories in the world. This has rapidly expanded our manufacturing and sales capabilities. Currently, the company is focusing on potential cost-saving measures.
Layoff loom
“We probably won’t be able to avoid layoffs,” Jorgensen told Danish broadcaster DR. “When you have to coordinate your company, there are some areas where you need to have fewer people, some (areas) there.”
However, he added that the decision on the layoffs will be in the hands of the next CEO of Magiar Mike Dustdahl, a company veteran who will take over on Thursday.
In a media call, Jorgensen said the market for copycat versions of Wegovy’s class of drugs known as GLP-1 receptor agonists was “the same size as our business,” and the combined version of Wegovy was sold at “a much lower price.”
In May, Novo Nordisk said it hopes that compound interest will decline in the third quarter, with the use of compound GLP-1 drugs using compound GLP-1 drugs to switch to branded treatment after the US Food and Drug Administration banned compound copies of Wegovy.
But finance director Karsten Mank Knudsen said Wednesday that more than 1 million US patients still use compound GLP-1, and that the company’s lower outlook “doesn’t expect a compound interest reduction” this year.
“The obesity market is volatile,” Knudsen told analysts when asked what situations have seen negative growth over the past six months. He said the low-end of the company’s new annual guidance range is for “unexpected events,” such as greater pressure on US pricing than forecasts.
The lower end of the range implies sales of Danish krone ($23 billion) in late 2025 of approximately $150 billion ($23 billion).
Knudsen has reiterated that the company is pursuing multiple strategies, including litigation against pharmacies, to stop illegal mass harmony.
Jorgensen said the company was encouraged by Wegovy’s latest US prescription data. The drug was overtaken by rival Eli Lily’s Zepbound from a US prescription perspective earlier this year, but that lead has narrowed over the past month.
Wegovy’s second quarter sales rose 36% in the US, more than four times higher in non-US markets than a year ago, Novo Nordisk said.
Although Wegovy’s US prices remained stable quarterly, the company was expecting deeper erosion in the major US markets in the second half due to the majority of expected sales from direct consumer or cash payment channels and higher rebates and discounts to insurers, Knudsen said.
He said Novo Nordisk is expanding its US consumer platform Novocare, which launched in March, and that it may need to pursue similar “cash sales” directly to patients outside the insurance channel in some markets outside the US.
Cost reduction
Novo Nordisk repeated its full-year revenue expectations on Wednesday after last week’s profit warning.
Jorgensen said the company is taking action to “ensure cost-based efficiency” as it announced it would close eight research and development projects.
“It appears there are more R&D cleanouts than usual, but I don’t know if this reflects a strategic reassessment or just a coincidence,” a Jeffries analyst said in a memo.
Investors are questioning whether the company will remain competitive in the booming weight loss drug market. Several stock analysts have been cutting price targets and stock recommendations since last week.
Novo Nordisk’s shares plummeted 30% last week. This is the worst weekly performance in over 20 years. Stocks have been falling since the market opened in New York. At 12pm local time (16:00 GMT), the Pharmaceutical giant had dropped by more than 3.3%.
