No one stays on top forever. It’s a lesson that Ozempic maker Novo Nordisk may be painfully learning about. The Danish pharmaceutical company has enacted a hiring freeze—the latest sign of a sinking financial outlook for the once-titan of the obesity treatment world.

Reuters reported on the hiring freeze Wednesday. The company has faced numerous setbacks in recent months, including billions shaved off its stock market value and continued competition from cheaper, compounded versions of its blockbuster drug semaglutide. Though the freeze will apparently only apply to certain segments of the company, layoffs are likely not far off in the distance.

“We currently have a hiring freeze in non-business critical areas,” said Novo Nordisk in a statement to Reuters.

A fall from the top

Semaglutide is the active ingredient in Novo Nordisk’s diabetes drug Ozempic and obesity medication Wegovy. It and similar compounds mimic the hormone GLP-1, which helps regulate insulin production and our appetite (among other functions). Though GLP-1 drugs have existed for two decades, semaglutide has proven more effective at helping people lose weight than diet and exercise alone, as well as other older medications.

The approval of Wegovy in 2021 greatly reshaped the field of obesity medicine and earned plenty of money for Novo Nordisk. In 2024, the company reported about $42 billion dollars of revenue, driven by increasing sales of Wegovy and Ozempic (sometimes prescribed off-label for weight loss treatment). The company’s success was so tremendous that it even helped bolster Denmark’s local economy.

But the company’s meteoric rise has stumbled as of late for several reasons.

For starters, it’s no longer the only game in town, following the approval of Eli Lilly’s tirzepatide for obesity (under the name Zepbound) in 2023. The drug, which combines GLP-1 with another weight-related hormone, is generally more effective than semaglutide, and people have steadily started to prefer it. Though Ozempic and Wegovy might still be more well known to the public, prescriptions of Zepbound in the U.S. now appear to be surpassing the former.

Novo Nordisk has also explicitly cited the emergence of the compounded drug market for GLP-1 therapy for its recent struggles. Compounded drugs are custom-made formulations of semaglutide and tirzepatide, often much cheaper, and produced by specialized pharmacies. The Food and Drug Administration has attempted to crack down on this industry, but many companies are still producing these drugs, and many people are still buying them.

The fight over these compounded drugs has become so fierce that Novo Nordisk abruptly ended its newly formed partnership with telehealth company Hims in June. The company alleged that Hims was trying to deceptively market their compounded version of semaglutide over Wegovy to its users (Hims, for its part, has denied the accusation).

These headwinds led Novo Nordisk to admit earlier this year that its projected sales growth in 2025 will fall short of past projections, which has since fueled further financial calamity. In May, the company fired its longtime CEO amid declining stocks. In July, investors wiped off $70 billion from the company’s market value after it once again lowered its sales growth forecast for the remainder of the year.

More to shed

Sales of Wegovy and Ozempic do remain strong overall. And Novo Nordisk is developing other treatments intended to reclaim its throne in the obesity medicine field (including weight loss pills and drugs potentially more effective than any other treatment to date). But the company’s fortunes are likely to worsen before they get better.

Departing CEO Lars Fruergaard Jørgensen stated in early August that the company, which currently employs nearly 80,000 people, will probably experience layoffs. The company’s new CEO, Maziar Mike Doustdar, is also considering layoffs, according to a recent report from Danish TV2.

This new era of obesity treatment isn’t going anywhere anytime soon. But whether Novo Nordisk will remain the big dog on top is much more in question today than it would have been even just a few months ago.