Novo Nordisk is the largest insulin maker in the world and with [type 2] diabetes on the rise you would think that business is good for them. Well, if things are swimming along nicely for Novo Nordisk, then why are they cutting approximately 1,000 jobs as part of a plan to lower costs?
It might be the more complex and challenging global pharmaceutical industry landscape of 2017. In the United States, alone, the marketplace continues to grow more and complicated.
Accordingly, the Denmark-based company—with a global workforce of 42,300—reports that approximately half of these cuts will come from its home country, in all only accounting for about 2 percent of the company’s total workforce. Furthermore, they report that the cuts in personnel will not affect the company’s financial outlook for 2016.
Furthermore, the company explains that the jobs they will eliminate will be in the R&D and HQ staff positions, mostly, as well as other positions scattered throughout its global operations (across 75 countries).
“We have concluded that it is needed in order for us to have a sustainable balance between income and costs,” explains Novo Nordisk President and CEO Lars Rebien Sørensen. “In the current situation, we have to prioritize investments in key product launches that will bring innovation to patients and drive our future growth.”
Sørensen is retiring at the end of the year, so perhaps this is a final effort to help the company make smarter choices regarding which drugs they should develop at a time when the company wants to favor new products (that can, in turn, justify charging higher prices).
He explains, “The next line of products have to have an even greater height of innovation, which means those that do not have that height of innovation will have to be culled. Otherwise, it’s going to be difficult for us to get reimbursement for our drugs. Me-too or me-better drugs will not be good enough in the future and hence we need to prioritize.”
When Sørensen leaves at the end of the year, Novo Nordisk evp and chief of staff Lars Fruergaard Jørgensen—a 25-year veteran of the company—will take over. His charge will begin on January 1, 2017.