Novo Nordisk, the Danish drugmaker behind the blockbuster obesity treatment Wegovy, will slash 9,000 jobs — around 11.5% of its global workforce — in a sweeping restructuring aimed at saving $1.3 billion a year and refocusing the company amid rising pressure from U.S. rival Eli Lilly.

The announcement marks a dramatic turn for a company that, only last year, briefly became Europe’s most valuable listed firm. Wegovy and diabetes drug Ozempic transformed Novo into a household name, fuelling record sales and global headlines. But that dominance is now under strain, as demand slows in the U.S. and compounded copycat medicines begin to erode its market share.

“Markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven. Our company must evolve as well,” said chief executive Mike Doustdar, who only took the helm last month. He described the shake-up as necessary to instil a performance-based culture, speed up decision-making, and concentrate investment behind Novo’s core therapy areas.

The cost-cutting plan will hit Denmark hardest, with about 5,000 of the jobs axed coming from Novo’s native country. The company currently employs roughly 78,400 people worldwide. It introduced a hiring freeze last month for non-critical roles, setting the stage for Wednesday’s announcement.

Investors initially reacted positively. Nordnet analyst Per Hansen called the move “tough, natural, and very necessary,” noting that Doustdar was effectively “clearing the decks so Novo can move forward.” Novo will book one-off restructuring costs of 9 billion Danish crowns (€1.2bn) in the third quarter, but expects to realise 1 billion crowns in savings before year-end and 8 billion annually thereafter.

Operating profit growth this year is now forecast at 4–10%, revised down from the 10–16% guidance given last month, reflecting the hit from restructuring costs. Shares have already shed nearly 46% since January, wiping its valuation down to $181 billion — a far cry from the $650 billion peak reached in 2024 before the company issued a profit warning in July. That warning knocked $70 billion off its market cap in a single day.

The decision underscores the growing challenge facing Novo as it competes with Eli Lilly’s Mounjaro and Zepbound in the lucrative weight-loss market, while also contending with shortages that have opened the door for compounders to sell copycat versions of Wegovy.

“Sometimes the hardest decisions are the right ones for the future we’re building,” Doustdar wrote on LinkedIn. “I’m confident this is the right thing to do for the long-term success of Novo Nordisk.”