Novo Nordisk is implementing cost-cutting measures including a global hiring freeze and potential layoffs following a five-year expansion that nearly doubled its workforce to 77,350 employees.

The Danish pharmaceutical company had aggressively hired to meet demand for its blockbuster weight-loss drug Wegovy, adding an average of 131 employees weekly since 2019.

New CEO Maziar Mike Doustdar, who took office August 7, announced the company would examine all cost items including salaries, signaling a strategic shift from the growth-focused approach that propelled Novo to become Europe’s most valuable company last year.

The company has since lost $490 billion in market capitalization after twice warning about profits and projecting potential sales declines in late 2025.

The reversal reflects increasing pressure from competitor Eli Lilly’s Zepbound and cheaper weight-loss alternatives in the crucial U.S. market.

While Novo’s workforce grew from 43,260 to 77,350 since 2019, Lilly’s more modest expansion from 36,000 to 47,000 employees during the same period now appears comparatively sustainable.

Investors have criticized Novo’s rapid growth as complacent, with ArthaScope trading head Lars Hytting noting that strong earnings previously allowed the company to ignore cost concerns.

The hiring freeze and potential workforce reduction represent Doustdar’s first major steps toward streamlining operations and restoring investor confidence amid heightened competition and slowing sales growth.

The pharmaceutical giant’s challenges highlight the volatility of drug-driven growth, even for breakthrough products like Wegovy.

The company must now balance maintaining production capacity with financial discipline as it navigates a more competitive obesity treatment market and changing demand patterns.

Source: Reuters.