Novo Nordisk demands price cuts from suppliers amid margin squeeze

Novo Nordisk ↘ 0.73% has written to its suppliers requesting price reductions as the Danish pharmaceutical giant grapples with mounting cost pressures in a rapidly changing weight-loss drug market, according to a report by MedWatch on Wednesday. The correspondence gave suppliers only the option to accept the request, with some interpreting the approach as a veiled threat to future business relationships.medwatch

The move is part of a broader cost-cutting drive at the company, which earlier projected that both its adjusted sales and operating profit could decline between 4% and 12% at constant exchange rates for 2026, citing what executives have called "unprecedented" pricing pressures in the obesity drug market.reuters+1

A Squeeze From All Sides

Novo Nordisk faces a convergence of challenges that have eroded its once-dominant position. Competition from Eli Lilly ↘ 2.81% and cheaper semaglutide copycats has intensified, while agreements with the Trump administration to offer GLP-1 drugs through the TrumpRx platform at reduced prices have further compressed margins. The company announced in February that it would slash the list prices of Wegovy, Ozempic, and Rybelsus by up to 50% starting January 1, 2027.thehill+3

The supplier discount request follows a restructuring announced last year that will eliminate 9,000 jobs — roughly 11% of the company's global workforce — as part of a plan to generate approximately $1.25 billion in annual savings.xtalks+1

Manufacturing Partnership in India

Separately, Shantha Biologics announced on June 30 that it has entered into an outsourcing agreement with Novo Nordisk to provide cartridge fill-finish manufacturing services at its Hyderabad facility in India. The contract manufacturing partnership signals Novo Nordisk's effort to diversify its production capabilities while managing costs.world.storm+1

Uncertain Outlook

Despite the grim full-year guidance, Novo Nordisk's first-quarter results offered some reassurance, with sales rising 32% on a constant currency basis and the company slightly narrowing its decline forecast for the year. Still, CEO warnings that conditions "may deteriorate further before any improvement" underscore the depth of the competitive and pricing challenge facing the world's largest maker of obesity drugs.cnbc+1