Novo Nordisk to Cut 1,000 Jobs Amid Growing Competition -- Update
September 29 2016 - 4:40AM
Dow Jones News
By Denise Roland and Dominic Chopping
Novo Nordisk A/S (NVO) said it will slash around 1,000 jobs in a
cost-cutting response to increased competition for its
all-important insulin business.
The Danish diabetes-treatment specialist said trimming its
42,300-strong workforce would involve eliminating jobs across its
research and development, sales and administrative operations, with
around half the layoffs in Denmark.
The move underlines Novo Nordisk's struggle to maintain strong
growth amid intensifying competition in the insulin market which
accounts for more than half of the company's sales.
Novo Nordisk's slowing growth is marked in the U.S. where
increasingly cost-conscious pharmacy benefit managers are forcing
companies to offer deep discounts to retain their products in
prescription-drug insurance plans. It is a trend that led Novo to
trim its 2016 guidance to the lower end of its previously announced
range. The company said the latest job cuts won't alter that
guidance.
Chief Executive Lars Sorensen said the job cuts were necessary
for "a sustainable balance between income and cost" and would
enable the company to plow more investment into other product
launches.
The company earlier this year launched a new insulin called
Tresiba in the U.S. that it hopes will grab market share from
Sanofi SA's Lantus. Novo believes Tresiba has an edge over Lantus
because it is longer-acting and is associated with a lower risk of
low blood sugar, or hypoglycemia.
Efforts to ramp up sales of Tresiba could be hurt by the
impending U.S. launch of a lower-cost copycat of Lantus by Eli
Lilly & Co., which will further intensify competition and could
limit the price premium that Novo can command.
Novo Nordisk shares were down 0.5% in early trading on
Thursday.
Write to Denise Roland at denise.roland@wsj.com and Dominic
Chopping at dominic.chopping@wsj.com
(END) Dow Jones Newswires
September 29, 2016 04:25 ET (08:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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