Novo Nordisk Announces Job Cuts

Novo Nordisk A/S 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 Nordisk 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 product 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 would further intensify competition and could limit the price premium that Novo can command.

Write to Denise Roland at Denise.Roland@wsj.com and Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

September 30, 2016 01:25 ET (05:25 GMT)

Novo Nordisk (NYSE:NVO)
Historical Stock Chart
From Mar 2024 to Apr 2024