Novo Nordisk, the largest insulin maker in the world, will slash 1,000 jobs to lower costs, reports Reuters.
The drugmaker said the layoffs affect about 500 employees working in its research and development units and headquarters office in Denmark, along with various positions involving the company's global workforce of 42,300, according to the report.
"We have concluded that it is needed in order for us to have a sustainable balance between income and costs," CEO Lars Rebien Sorensen said in a statement. While Novo Nordisk earns about half its revenue from the 30 million diabetic people in the U.S., pharmacy benefit managers have squeezed prices, putting a strain on the drugmaker.
Michael Friis Jorgenson, an analyst for Alm Brand Markets, estimated the job cuts would save Novo Nordisk about $105 million to $150 million, or about 2 to 3 percent of next year's earnings before interest and tax.
"That they cut hard in R&D poses a risk in the long term, as in whether they can keep momentum going. They are messing with their life-blood, which means that there isn't much fat left to cut off," said Mr. Jorgenson.
News of the layoffs comes a month after Mr. Sorenson announced his plans to step down as CEO in January.