Novo Nordisk Freezes Hiring in Noncritical Areas
The move comes shortly after Maziar Mike Doustdar took the reins
- Novo Nordisk paused hiring in noncritical areas to tighten cost controls amid challenges in the obesity-drug market.
- The company’s growth slowed due to competition from knockoff drugs and rival Eli Lilly, impacting its market value.
- New CEO Maziar Mike Doustdar aims to improve efficiency after a period of rapid expansion and market shifts.
Novo Nordisk NOVO.B 1.14%increase; green up pointing triangle said it paused hiring in noncritical business areas, as the Danish drugmaker seeks to tighten cost controls amid challenges in the obesity-drug market.
The move comes shortly after Maziar Mike Doustdar took the reins and at a time the company behind blockbuster drugs Ozempic and Wegovy is looking to fend off competition from knockoff versions of its medicines and from rival Eli Lilly.
The pharmaceutical giant went on a hiring spree that almost doubled the size of its workforce over the last five years as it raced to catch up with soaring demand for its obesity and diabetes drugs. However, the company’s fortunes turned as its grip on the market for weight-loss medicines came under threat and investors grew skeptical about the potential of the next drugs in its pipeline.
Novo Nordisk implemented a hiring freeze in areas that aren’t critical for the business, a spokeswoman said Wednesday. This followed hiring restrictions in certain areas already in place, she added.
The company is still hiring in areas including manufacturing, sales, clinical development and finance, according to its website.
The company employed more than 78,000 people as of the end of June, according to its most recent earnings report. This marks an 80% increase compared with five years ago, as the company embarked on a postpandemic hiring binge. From 2014 to 2019, the company’s workforce had grown by roughly 5%.
Doustdar, a longtime company insider, took up the chief executive role on Aug. 7, a week after Novo Nordisk cut its outlook for the second time this year blaming competition from copycat versions of its weight-loss and diabetes drugs that held back sales growth.
Novo Nordisk Chair Helge Lund had singled out that driving greater efficiency across the company would be one of Doustdar’s priorities when his appointment was announced.
Challenges in the obesity market and research-and-development setbacks took a toll on Novo Nordisk’s share price and forced a surprise ousting of Lars Fruergaard Jorgensen as CEO. The company was until recently Europe’s most valuable public company, but it lost about 60% of its market capitalization over the past year and now trails European pharmaceutical peers Novartis, Roche and AstraZeneca by that metric.
“Two years ago, we were alone. Now everyone wants to play in obesity and diabetes,” Doustdar said in a presentation video released by Novo Nordisk. “This means we need to move faster, focus harder on what we do best, be precise about where we invest.”