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A lab technician at Novo Nordisk conducts in vitro research in Malov, Denmark.
Denmark’s Novo Nordisk reported weaker-than-expected earnings on Thursday, citing currency headwinds and also announced its plans to cut more than a thousand jobs.
The drugmaker on Thursday said it plans to cut 1300 jobs by the end of the year in what it described as a “restructuring initiative”, but what many saw as a means to cut costs amid an increasingly competitive market.
Novo Nordisk CEO Lars Fruergaard Jørgensentold explained the company’s vision, speaking to CNBC’s Squawk Box Europe on Thursday.
“It’s important to say that the majority of these job cuts have already been done, so we are simply explaining today that when we get to the end of the year we’ll have reduced our workforce by 1300 people,” he said.
“We do it to really strengthen our strategic execution, so by being sharp on how we allocate resources, we believe we can grow our strategic brands, our innovative products even stronger in the future, and we can set up our R&D function even stronger going forward.”
The world’s top maker of diabetes drugs posted net profit of 9.037 billion Danish krone ($1.374 billion) for the three-month period ending Sept. 30 on Thursday. Analysts at data firm Refinitiv had been expecting third-quarter net profit to come in at around 9.565 billion Danish krone.
The company also saw its operating profit decrease 6 percent in Danish krone and increase 2 percent in local currencies to 36.5 billion Danish krone on the back of “significant depreciation of the U.S. dollar and related currencies versus the Danish krone in the first half of 2018 compared with same period in 2017.”
In the third quarter of 2017, Novo Nordisk reported net profit of 9.77 billion Danish krone.
In the face of mounting competition and price pressure in the U.S., Jørgensentold remained upbeat, pointing out that the drugmaker’s U.S. operations grew in the most recent quarter.
“I’m actually very encouraged by what we’re seeing in the U.S.; we grew our U.S. business in the third quarter by 3 percent,” the CEO said, attributing that to a number of new and innovative products like Ozempic, a once-weekly non-insulin medicine designed to help improve blood sugar in adults with type 2 diabetes.
“We’re increasing our market share overall in the U.S. I believe we’re executing strongly in the U.S. and I’m very pleased with that.”
Shares of Novo Nordisk have fallen nearly 15 percent year-to-date.