Novo to lay off 400 staff in major R&D reorganization

Novo Nordisk is laying off 400 employees in China and Denmark as part of a reorganization of its R&D department. The reshuffle comes as the company seeks to build a pipeline of chronic disease drugs capable of mitigating the pressures faced by its core diabetes business.

Denmark’s Novo turned itself into a leading European biopharma company with 42,000 staff on the back of success in diabetes. But, with fierce competition and pricing pressures affecting the diabetes field, it sees drugs to treat other serious chronic diseases as critical to its future. With that it mind, Novo is axing staff, restructuring its R&D unit, investing in artificial intelligence and planning to rely more on third parties for innovation. 

The headline change is the loss of 400 R&D posts in Denmark and China. Novo CSO Mads Krogsgaard Thomsen said the cuts are necessary to ensure the company has “sufficient new research capabilities needed to support our long-term growth ambitions.”

Novo will establish some of the new research capabilities at four biotech-like units that will “operate as satellites” of the company’s central R&D function. The new units will work out of sites in the U.S., U.K. and Denmark. Novo will also set up a business development unit in Cambridge, Massachusetts, to secure the external collaborations the management team sees as critical to the company’s future.

The final piece of the plan relates to technology. Novo is set to “significantly increase” its investment in AI and machine learning to streamline the selection and development of lead molecules. In parallel, Novo will try to increase R&D efficiency by integrating its lab infrastructure and IT systems.

The changes mark the second time since 2016 Novo has made cuts to its R&D department. The previous round of layoffs affected 1,000 jobs across Novo’s R&D unit, headquarters and commercial team. Novo framed those cuts as a cost-cutting measure intended to ensure income and costs were balanced in the new, harsher commercial environment it faced in the U.S.