Danish pharmaceutical giant Novo Nordisk has announced one of the largest workforce reductions in its history, cutting a total of 9,000 positions worldwide. The biggest impact will be on its home base, with 5,000 jobs in Denmark affected, marking the largest layoffs the country has seen from a single company. For context, the previous major downsizing in 2018 saw 1,300 employees lose their positions.

The move comes after weeks of speculation, following a period of turbulence for the company that included a change in CEO, declining share prices, and increasing competition from U.S. rival Eli Lilly. Novo Nordisk acknowledged that it had expanded too quickly over recent years and framed the decision as part of a company-wide effort to simplify its structure, accelerate decision-making, and redirect resources toward growth in its diabetes and obesity product lines.

The layoffs are projected to save the company around DKK 8 billion ($1.25 billion) annually. CEO Mike Maziar Doustdar described the restructuring as essential for the firm’s long-term health, aiming to restore investor confidence and maintain its market leadership in diabetes and obesity treatments.

Novo Nordisk’s meteoric rise began in mid-2021 with the approval of Wegovy, a highly effective obesity drug, which propelled it to the top of Europe’s stock market. However, the company’s rapid hiring spree, nearly doubling its workforce over five years, is now being reversed, with approximately 11.5% of employees laid off, returning headcount to early 2024 levels.

The Danish economy, while robust, faces potential ripple effects from the layoffs, although Finance Minister Nicolai Wammen dismissed concerns about a broader economic impact. Shares of the company have dropped nearly 46% since the start of the year, with a market capitalization of around $181 billion, down from a peak of approximately $650 billion last year. Analysts warn that Novo may issue a fourth profit warning when reporting third-quarter results in November, with growth expectations for 2025 revised down to 4%-10% from an earlier forecast of 19%-27%.

The restructuring plan includes reinvesting savings into research and development, pipeline expansion, and global distribution strategies. This also covers plans for the pill version of Wegovy and exploring additional health benefits of the company’s GLP-1 drug portfolio. The company emphasizes the need for strong market launches, particularly as competition from Eli Lilly’s Zepbound grows, which had recently overtaken Wegovy in U.S. weekly prescriptions before Novo regained some ground during the summer.

In addition to Denmark, the global cuts follow a hiring freeze announced last month for non-essential roles. The company projects savings of DKK 1 billion in the fourth quarter and confirmed that these resources will be reinvested to expand manufacturing capacity, enhance patient access worldwide, and strengthen the commercialization of its obesity and diabetes treatments. CEO Doustdar stressed that the overhaul is fully aligned with his strategic priorities: focusing on core growth areas, enhancing commercial execution, and ensuring Novo maintains a competitive edge in increasingly crowded markets.

This restructuring represents a significant recalibration for the Danish company as it seeks to adapt to a more competitive and consumer-driven global pharmaceutical market while maintaining its leadership in obesity and diabetes care.