The news: Novo Nordisk is cutting 9,000 jobs—11% of its workforce—as it aims to regain its lead in obesity drug sales against Eli Lilly and telehealth companies.

Why it matters: The layoffs mark another shift for Novo in a turbulent year. CEO Mike Doustdar is only about a month into the role after the previous CEO stepped down amid plummeting stock prices and sales.

Novo expects to save about $1.25 billion by the end of next year and will reinvest the savings into obesity and diabetes’ R&D and commercial efforts. Doustdar’s goal is to make Novo more agile in the consumer-focused obesity market.

How we got here: Novo’s Wegovy (semaglutide) was the first GLP-1 drug to market, two years ahead of Lilly’s Zepbound, but it failed to capitalize on its advantage.

• Novo didn’t anticipate high demand for Wegovy, spurring shortages and opening the door for compounding pharmacies to make copycat versions. For context, the FDA allows compounded drugs during shortages, of which it declared is no longer applicable for Wegovy/semaglutide and Zepbound/tirzepatide.
• Telehealth companies like Hims & Hers and Noom continue to cut into Novo sales by offering lower cost, personalized versions of semaglutide.
• Novo recently cut its 2025 sales growth guidance to 8% to 14%, down from the prior view of 13% to 21%, citing lower-than-expected sales of Wegovy.

Our take: Novo’s layoffs and lowered outlook are near-term moves mostly aimed at appeasing Wall Street and investors amid a challenging year; its stock is down about 38% YTD.

Though Novo lost the GLP-1 market lead to Lilly, it can regain ground if its weight loss drug pill gains approval ahead of Lilly’s oral option and executes a strong launch. It should focus on reinvesting layoff savings into commercial efforts for what will be the first GLP-1 pill for weight loss.

Novo also needs to lean into tech such as AI to avoid past mistakes around forecasting drug supply needs, and focus on bringing GLP-1 drugs to market faster on its own and through partnerships.

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