(Bloomberg) -- Novo Nordisk A/S is cutting back on recruiting in Denmark after reaching the limits of its home country’s labor market in the rush to add capacity for blockbuster drugs Ozempic and Wegovy.
Novo won’t completely halt hiring in Denmark but will now focus its workforce growth on China, France and the US, Chief Financial Officer Karsten Munk Knudsen said in an interview on Tuesday. In the US, Novo is building both its research and development and manufacturing workforce, he said.
“There will be a slowdown in growth of staff in Denmark,” Knudsen said. “It’ll not be a complete stop, but there’ll be a slowdown.”
Novo has vacuumed up the workforce in its home market amid multi billion-dollar factory expansion projects in the Danish towns of Kalundborg and Hillerod. That has helped drive Danish employment levels to record highs during times of economic slowdown, but it’s also bringing challenges for other businesses who report losing staff and difficulties hiring because of the attractive salaries the drugmaker can pay.
Novo has also secured land and planning permissions for a major factory site in Odense, which could create thousands more jobs once completed. The company had about 28,700 employees in Denmark at the end of last year, just under half of its global workforce.
Adding production capacity by hiring people and building factories is key as Novo seeks to increase the supply of Wegovy, which could become available to more people in the US under a Biden Administration proposal unveiled Tuesday to broaden access under Medicare and Medicaid. Greater access under Medicare would have more impact for Novo, because a sizable portion of Wegovy sales in the US are already through Medicaid, the CFO said.
The drugmaker created more than 7,500 direct jobs in Denmark from the beginning of 2023 through March 2024, according to figures released earlier this year by the Danish fiscal watchdog. It concluded that Novo was responsible for half of Denmark’s private-sector job growth outside the agricultural industry in the period, either through direct hiring or indirect jobs.
Novo is focused on paying market-based salaries and does not want to drive wage inflation in Denmark, Knudsen said.
The impact of the drugmaker’s rapid growth can be felt at its headquarters in Bagsvaerd, where space is at such a premium that employees face stiff competition just to reserve a conference room. Traffic backs up on the freeway at the exit to the office during commuting hours.
“We talk a lot about supply and demand on manufacturing, but we have the same on parking lots and office buildings,” Knudsen said.
Novo is pushing to defend its lead in the growing obesity market against its arch-rival Eli Lilly & Co. A head-to-head study of Novo’s Wegovy and Lilly’s weight-loss shot, branded as Zepbound in the US, is expected to deliver results this year. Also still to come next month are results from a large clinical trial of Novo’s next-generation obesity candidate, CagriSema, which the Danish company has said should deliver weight loss of more than 25%.
Novo still expects a crucial three-way deal with its biggest shareholder Novo Holdings and contract manufacturer Catalent Inc. to complete by the year-end, Knudsen said. The deal will help build factory capacity for Wegovy with the purchase of three of Catalent’s factories.
The company’s shares have risen 9% this year, though they remain about 26% below their high in June. That compares to a year-to-date 5.5% increase in a Bloomberg index tracking European pharmaceutical companies.
--With assistance from Jonas Ekblom and Madison Muller.
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