Novo Nordisk warns of layoffs as pressure mounts
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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 US rival Eli Lilly, the Danish drugmaker warns.
Novo, which became Europe’s most valuable company worth $US650 billion ($A1.0 trillion) 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 $US95 billion ($A146 billion) off its market value since.
The shares were down 3.4 per cent on Wednesday afternoon.
The slide is a huge and abrupt turnaround for the firm that has been one of the world’s hottest investment stories, which led to a rapid expansion of manufacturing and sales capacity.
Now the firm is eyeing potential cost-cutting measures.
“We probably won’t be able to avoid layoffs,” outgoing CEO Lars Fruergaard Jorgensen told Danish broadcaster DR.
“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”.
In May, the company said it expected many of the roughly one million US patients using compounded GLP-1 drugs to switch to branded treatments after a US 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 US patients were still using compounded GLP-1s and that Novo’s lowered outlook has “not assumed a reduction in compounding” this year.
“The obesity market is volatile,” Knudsen told analysts when asked under what circumstances the company could see negative growth in the last six months of the year.
Knudsen reiterated that the company was pursuing multiple strategies, including lawsuits against compounding pharmacies, to halt unlawful mass compounding.
Jorgensen said the company was encouraged by the latest US prescription data for Wegovy.
While the drug was overtaken earlier this year by rival Lilly’s Zepbound in terms of US prescriptions, that lead has narrowed in the past month.
Second-quarter sales of Wegovy rose by 36 per cent in the US and more than quadrupled in markets outside the US compared to a year ago, Novo said.
While Wegovy’s US pricing held steady in the quarter, the company expected deeper erosion in the key US market in the second half, due to a greater portion of sales expected from the direct-to-consumer or cash-pay channel, as well as higher rebates and discounts to insurers, Knudsen said.
Reuters
