The “surprise” CEO removal of the Wegovy maker cast uncertainty on Novo Nordisk’s future just a few months ago. At the heart of the story is a medication that made headlines and transformed lives; it is widely regarded as a revolutionary advancement in the worldwide battle against obesity. Massive demand, remarkable profits, and a surge in international attention were all brought about by its popularity. However, the pressure to keep that position has led to instability at the top behind the scenes. The leadership of the corporation is already hinting at more challenging adjustments.
Novo Nordisk issues a warning about potential layoffs and slower Wegovy growth
Novo Nordisk expects continued competition from copycat versions of its blockbuster Wegovy obesity drug this year and could face layoffs as it battles rising pressure from main U.S. rival Eli LillyLLY.N, the Danish drugmaker warned on Wednesday. Novo NOVOb.CO, which became Europe’s most valuable company worth $650 billion last year on booming sales of Wegovy, is facing a pivotal moment.
As the medicine loses market share and sees sales growth slow, especially in the United States. It has warned of far slower growth this year, in part due to compounders who have been allowed to make copycat medicines based on the same ingredients as Wegovy due to shortages. Novo cut its full-year sales and profit forecasts last week, wiping $95 billion off its market value since.
Novo’s stock drops as the CEO warns of layoffs and lower-priced competitors
The shares were down 3.4% at 13:50 GMT. The slide is a huge and abrupt turnaround for the firm that has been one of the world’s hottest investment stories to date, which led to a rapid expansion of manufacturing and sales capacity. Now the firm is eyeing potential cost-cutting measures. Outgoing CEO Lars Fruergaard Jorgensen told the Danish broadcaster DR:
“We probably won’t be able to avoid layoffs. When you have to adjust a company, there are some areas where you have to have fewer people, some (areas) where you have to be smaller.”
He added, though, that any decision on layoffs would be in the hands of the incoming CEO, company veteran Maziar Mike Doustdar, who takes over on Thursday. On a media call, Jorgensen said the market for copycat versions of Wegovy’s class of drugs – known as GLP-1 receptor agonists – was of “equal size to our business” and compounded versions of Wegovy were sold at a “much lower price point”.
Knudsen told analysts that when asked under what circumstances the
“Company could see negative growth in the last six months of the year.”
A caution that jobs may be affected by the competition for market share
Novo Nordisk’s new management is having a hard time striking a balance. On the one hand, Wegovy continues to be a huge success for the company. However, they must move swiftly and cautiously due to the swift expansion of competitors and the growing need for innovation. This has raised worries that the business would resort to cost-cutting strategies. Another challenge is that Thailand and Cambodia hold a shaky truce amid disputes.
In May, the company said it expected many of the roughly one million U.S. patients using compounded GLP-1 drugs to switch to branded treatments after a U.S. Food and Drug Administration ban on compounded copies of Wegovy took effect on May 22, and it expected compounding to wind down in the third quarter. However, finance chief Karsten Munk Knudsen said on Wednesday that more than one million U.S. patients were still using compounded GLP-1s. There has been a rising issue, too, of a Georgian journalist jailed for slapping a police chief.
GCN.com/Reuters
