Novo Nordisk also lowered its full-year profit growth guidance in connection with the restructuring effort. The pharma now anticipates operating profit to grow from 4% to 10%, down from its prior projection of 10% to 16%.
Novo Nordisk is cutting some 9,000 staff across its global operations in a bid to generate around $1.25 billion in annualized savings through 2026.
The layoffs amount to an 11% headcount reduction, according to BMO Capital Markets.
“With shares down ~37% YTD . . . a significant shift was the only option,” the analysts wrote in a note to investors early Wednesday morning. “From underinvestment in manufacturing, over promising on clinical data (CagriSema), being slow-to-act in launching [direct-to-consumer], and a tepid initial response to compounders—Novo did not seem to get it right.”
The structural reorganization, BMO continued, “is a clear step in the right direction,” however Novo will still need to show “concrete results.”
The layoffs will begin “immediately” and Novo expects to incur 9 billion Danish Kroner ($1.41 billion) in one-off costs, which will reflect in third-quarter 2025 results, according to the pharma’s news release on Wednesday. These expenses, attributable to impairment and severance charges, will be offset by 1 billion Danish Kroner in savings in the fourth quarter, or around $160 million. There are 78,400 positions at Novo and Wednesday’s layoffs will affect some 5,000 employees in Denmark.
According to the pharma, the restructuring will help Novo “simplify” its business to “improve the speed of decision-making.” The savings, the company continued, will be “redirected to growth opportunities in diabetes and obesity,” with a particular focus on commercial execution and R&D.
In conjunction with the workforce reduction, Novo also slashed its full-year outlook, knocking what it called “one-off negative impact of around 6 percentage points” off projected growth. The pharma now expects operating profit to grow from 4% to 10% at constant currencies, down from previous guidance of 10% to 16%. This prior forecast had already been lowered: Novo in May set its 2025 operating profit growth target at 16% to 24%.
Novo was quick to point out, however, that this latest downward adjustment in forecast “only factors in the one-off restructuring costs” associated with the layoffs. The pharma will release its third-quarter business report on Nov. 5.
Wednesday’s restructuring effort is the first major move under new CEO Maziar Mike Doustdar. In a prepared statement, he said that the layoffs will instill an “increased performance-based culture,” across the company, as well as help deploy “resources ever more effectively” and prioritize “investment where it will have the most impact.”
“Our markets are evolving,” Doustdar added. “Our company must evolve as well.”
Doustdar had already telegraphed major structural changes ahead during Novo’s Q2 earnings call last month. Speaking to investors, the new CEO said that “we need to reallocate and look at our cost base and really put the money where the growth is.”
