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Novo Nordisk to slash 250 U.S. jobs in the face of ongoing pricing pressure

September 29, 2018 By fiercepharma

Days after swinging the ax on 400 R&D jobs in China and Denmark, diabetes giant Novo Nordisk is laying off again—this time in the U.S.

Novo Nordisk to slash 250 U.S. jobs in the face of ongoing pricing pressure

The company has informed employees that it is reducing about 250 positions in the U.S. as part of a reorganization that's the result of an assessment of resource needs against its business priorities, a company spokesperson confirmed to FiercePharma on Friday.

“[Novo] is ensuring the company is positioned to achieve long-term, sustainable growth in the face of pricing and competitive pressures in the U.S.,” said the company in a statement. “Equally important is our need to invest in our current and future portfolio that will continue bringing innovation to patients.”

It didn’t specify which segments the cut will hit but said those affected will be given an opportunity to apply for open positions within Novo.

The latest U.S. job cuts come hard on the heels of another round that saw 400 R&D employees in China and Denmark out the door. The company framed the restructuring as a way to enable investment in biological and technological innovation in both core therapeutic areas and to diversify its pipeline.

With the ambition to transform how it does drug R&D, Novo said it’s turning the R&D structure into four biotech-like units in the U.S., U.K. and Denmark, and increasing investment in digital capabilities, including machine learning and artificial intelligence.

The Danish company has repeatedly referred to the harsh competitive environment in the U.S.—from which it gets about half its revenue—as the rationale behind its restructuring, including a massive layoff round in 2016 that affected 1,000 positions. It will also need to help fill the Medicare Part D “doughnut hole” in 2019 by offering bigger discounts for its diabetes therapies.

Despite 14% sales growth from GLP-1s Victoza and Ozempic, Novo’s revenue growth in the U.S. remained flat in the first half of 2018 measured by local currency. And it just took a hit of $300 million in rebate adjustments on Victoza in the second quarter, CEO Lars Fruergaard Jørgensen recently said at a J.P Morgan event.

The pricing pressure in basal insulin will likely continue into next year, but Jørgensen told in an interview in August that the company should be able to leverage its broad access to mitigate pricing impact. Although U.S. formulary negotiations with PBMs for 2019 were still progressing at that time, Jørgensen said market access for Novo’s key products is expected to remain unchanged compared to 2018.

Since the launch of Ozempic, the company has shifted most of its promotion focus from Victoza to the new GLP-1. That has impacted Victoza sales, but management said on the second-quarter earnings call that the collective effect will be positive, as it expected full-year sales to grow between 3% and 5%.

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