Global Pharma Focus | The strategic calculus behind Novo Nordisk's century of innovation

Founded in 1923, Novo Nordisk has dominated the global diabetes and weight-loss markets with its semaglutide portfolio, once reaching a market capitalization exceeding $350 billion and becoming Europe's most valuable listed company. Yet at its peak, the company faces mounting competition while grappling with internal challenges such as capacity misjudgments and lagging commercial strategies. To protect its leadership, Novo Nordisk is now doubling down on strengthening its moats — from its recent attempt to outbid Pfizer in acquiring Metsera, to divesting global gene therapy and oncology R&D pipelines, and carrying out a major restructuring of its China operations.

Against a backdrop of structural challenges facing the global pharmaceutical industry, Novo Nordisk's strategic choices carry emblematic significance. The underlying logic is clear: concentrate resources on the most certain core business areas to hedge against future uncertainties.

The success of the semaglutide series has validated the vast potential of the GLP-1 pathway in metabolic diseases, but it has also brought unprecedented pressure in manufacturing, next-generation innovation, and competition. In this context, any non-core operations that divert focus have become burdens to be shed. The execution of this global strategy is unfolding in China as an intricate contest shaped by policy dynamics, channel strategies, and an increasingly competitive market.

As Novo Nordisk's second-largest market, its operations in China are both a mirror of global strategy and a reflection of local nuances. From spinning off its insulin division to doubling down on GLP-1 therapies and streamlining go-to-market channels, each move is tailored to the unique logic of China's pharmaceutical landscape—the normalization of volume-based procurement, the rise of domestic innovation, and the advancing tiered healthcare system.

These recent shifts—a reorganization in China, the global divestment of gene therapy, and the termination of certain oncology R&D pipelines—may seem contradictory but are in fact closely linked. This is not a simple retrenchment. It is a "strategic slimming"—a proactive effort to shed the weight of exploratory "possibilities" in exchange for the leanness and agility needed for absolute leadership in its core areas.

Beyond the strategy of a single company, this represents a telling case for the entire pharmaceutical industry in an era of technological disruption, cautious capital, and fierce competition. Novo Nordisk is demonstrating to the world that in times of uncertainty, extreme focus may be the ultimate formula for survival.

As previously noted, Novo Nordisk's global reorganization constitutes a proactive "strategic slimming" executed from its market peak. The core objective extends beyond mere operational retraction—it is a disciplined shedding of exploratory "possibilities" to secure unequivocal dominance in its primary therapeutic domains.

This transformation is propelled by what can be termed the "resource siphon effect" generated by the semaglutide portfolio. The extraordinary commercial success of these products has concentrated capital, talent, and executive attention almost exclusively on the diabetes and obesity super-therapy area.

The triumph of semaglutide—encompassing Ozempic, Wegovy, and Rybelsus—transcends a single product victory; it has unlocked a validated market valued in the hundreds of billions. Diabetes and obesity, as intertwined chronic conditions, provide Novo Nordisk with a robust foundation for sustained growth, underpinned by long-term treatment regimens and substantial patient populations. Consequently, the company's central challenge has evolved from "market development" to an unprecedented test of "production scalability and innovation cadence."

The semaglutide portfolio, which remains the most closely watched product line, continues to drive revenue growth and stands as Novo Nordisk's largest contributor to sales. The three key brands—Ozempic, Rybelsus, and Wegovy—generated revenues of DKK 95.264 billion (approx. USD 14.328 billion), DKK 16.790 billion (approx. USD 2.525 billion), and DKK 57.242 billion (approx. USD 8.609 billion), respectively. Combined sales reached approximately DKK 169.296 billion (around USD 25.462 billion), reflecting a 24% year-on-year increase. However, compared to the USD 24.837 billion in sales reported for Eli Lilly's tirzepatide in the first three quarters, semaglutide's competitive edge appears less pronounced.

In R&D, the focus is reflected in a deeper exploration of the GLP-1 pathway. Novo Nordisk is accelerating efforts to optimize oral formulations, develop long-acting injections, and investigate combinations of GLP-1 with other targets—such as GIP and dual GLP-1/GCGR agonists. These initiatives aim to build formidable technological barriers, delay competition from generics, and maintain leadership in the next generation of therapies.

At the same time, expanding production capacity has become a global strategic priority. The company is investing heavily to scale up manufacturing sites worldwide and address supply chain constraints. In this context, any non-core operations that divert management attention or tie up financial resources have become increasingly difficult to justify—which fundamentally explains Novo Nordisk's decision to divest its gene therapy and oncology businesses.

The gene therapy business was once regarded as a pivotal step for Novo Nordisk toward next-generation technologies. The 2015 acquisition of Danish firm Etiologics signaled its ambition to expand into rare diseases such as hemophilia. However, gene therapy faces universal challenges—including vector delivery efficiency, long-term safety concerns, complex manufacturing processes, and prohibitive costs—making its commercialization pathway long and uncertain.

More critically, the "one-time cure" model of gene therapy differs fundamentally from the chronic disease management expertise that Novo Nordisk has honed over decades. Sustaining this business would require an entirely independent system in terms of R&D, production, marketing, and commercial models, significantly increasing managerial complexity and financial strain.

From a return on invested capital (ROIC) perspective, allocating the same level of resources to GLP-1 capacity expansion or next-generation obesity drug development promises substantially higher mid- to short-term returns compared to the protracted and high-risk nature of gene therapy.

The divestment of the oncology business follows the same strategic focus logic. Although cancer represents the second leading cause of death globally—a field no major pharmaceutical company can ignore—Novo Nordisk lacks disruptive core assets in its oncology pipeline, making it difficult to break through the entrenched dominance of PD-1/L1 inhibitors established by giants like Roche, MSD, and BMS.

The oncology field is an innovation-intensive, fiercely competitive "red ocean," where latecomers must expend enormous resources to gain even a modest foothold. For Novo Nordisk, allocating $1 billion to oncology would likely yield only marginal returns, whereas deploying the same amount to strengthen its leading position in metabolic diseases could deliver decisive strategic impact. This precise evaluation of strategic opportunity cost forms the core rationale behind the divestment decision in its global restructuring.

At the heart of this global restructuring is a strategic refocusing. Novo Nordisk clearly recognizes that its core strengths and competitive advantages lie in protein chemistry, long-acting formulation technologies, and the ecosystem built around chronic disease management. Concentrating all resources on the areas where it creates the most value represents a rational choice to maintain its leadership over the next decade.

This transformation involves not only portfolio prioritization but also a reorganization of corporate structure and a realignment of global human resources. In September 2025, Novo Nordisk announced a global workforce reduction affecting approximately 9,000 positions—a move aimed at streamlining operations and redirecting resources toward high-growth business areas.

It is worth noting, however, that this focus strategy is not without risks. Overreliance on the GLP-1 portfolio creates a "put all your eggs in one basket" scenario. The approaching patent cliff, the emergence of disruptive new therapies, or unexpected drug safety issues could all undermine the company's foundation. Yet, at this juncture, building integrated barriers in technology, production capacity, and brand strength through focus remains the most viable path to mitigate those risks.

Novo Nordisk's global restructuring sends a clear signal to the entire industry: in an uncertain world, extreme focus may be the only rule of survival.

Novo Nordisk's operational adjustments in China represent a deeply localized implementation of its global refocusing strategy, as well as a necessary response to the unique policy, competitive, and channel dynamics of the Chinese market.

On November 11, 2025, the company announced a major reorganization effective January 1, 2026. This includes renaming the Emerging Business Department (EBD) to the Insulin Business Department (IBD), strengthening the core position of GLP-1 therapies within the Diabetes & Obesity Department (DOD), and consolidating full-channel operations under the Distribution & Retail Department (DRD). These moves mark the completion of a strategic realignment around "GLP-1 growth drivers and the insulin foundation," following leadership changes earlier in the year and departmental integrations mid-year.

As Novo Nordisk's second-largest global market, China's restructuring is heavily influenced by the volume-based procurement (VBP) policy. The normalization of VBP has made the traditional reliance on insulin products unsustainable, accelerating the shift toward innovative drugs like semaglutide.

In the first three quarters of 2025, Novo Nordisk's China revenue reached DKK 14.874 billion (approx. USD 2.237 billion), an 8% year-on-year increase. Although this growth rate is below the 16% average for the Asia-Pacific region, it demonstrates resilience amid downward revisions in global performance expectations. During an earnings call, management explicitly identified China as a "core market for resource allocation post-restructuring" and set a target to raise growth to over 12% in 2026.

The organizational restructuring directly supports the transformation of the product strategy. The newly established Insulin Business Department (IBD) is designed to focus exclusively on the innovative insulin portfolio, having been separated from GLP-1-related operations, thereby continuing the company's century-long leadership in insulin. Although global insulin revenue faced pressure in the first three quarters, totaling DKK 39.736 billion (approx. USD 6.124 billion), insulin still holds a critical share in China's primary care market and within the volume-based procurement system. A dedicated IBD helps prevent resource dilution and strengthens dual capabilities in "innovation and market access," accelerating the introduction and penetration of next-generation insulin products.

Concurrently, the strengthened Diabetes & Obesity Department (DOD) underscores the central role of the GLP-1 business. This department now oversees the semaglutide portfolio across all indications. It is tasked not only with consolidating the leading position of Ozempic®(Chinese brand name: 诺和泰®) in diabetes and building the Rybelsus® (Chinese brand name: 诺和忻®), but also with pursuing leadership in China's obesity market through Wegovy®(Chinese brand name: 诺和盈®).

Financial data clearly highlights the driving force of the GLP-1 portfolio in China:

Another key dimension of the China restructuring lies in channel integration. The establishment of the Distribution & Retail Department (DRD) aims to strengthen the channel moat by coordinating grassroots hospital coverage, volume-based procurement product distribution, and online-to-offline retail synergy—serving as the terminal driver for the two core business lines.

This move is precisely tailored to China's evolving market dynamics, characterized by "tiered healthcare delivery and retail upgrade." By leveraging online platforms to capture consumer-driven demand for GLP-1 therapies, while maintaining the insulin patient base through grassroots coverage, Novo Nordisk is building an omnichannel, multi-scenario commercial network to counter the two-front competition from domestic innovators.

The rapid rise of local pharmaceutical companies represents a critical variable in the China market. Even before the semaglutide patent expiry, dozens of Chinese companies have been developing GLP-1 analogs. Six domestically developed GLP-1 innovative drugs, including Innovent's Mazdutide, have entered Phase III clinical trials, while generics manufacturers are also accelerating their preparations. According to Nature, the price of semaglutide could drop to one-tenth of its current level after patent expiration.

Facing this landscape, Novo Nordisk is building competitive barriers through organizational focus, brand strengthening, and channel consolidation.

In March 2025, Jiang Yiwei, Vice President of the Emerging Business Department, departed and was succeeded by Niu Yan, former head of the rare disease business. Her experience in building patient support systems laid the groundwork for expanding insulin services into broader markets.

In April, Sasha Semienchuk, former General Manager of the Korean operations, was appointed Vice President of Marketing for Greater China, enhancing collaboration between the GLP-1 and insulin divisions.

By June, the obesity and insulin units were merged into the Diabetes & Obesity Department (DOD), with Zhang Hui leading sales integration and driving business focus.

Notably, the restructuring in China also reflects the continuity of Novo Nordisk's global strategy. Although the global workforce reduction in September did not specify headcount impacts in China, local streamlining efforts—such as refocusing the EBD and consolidating the DOD—ensured alignment with the worldwide shift of resources toward high-growth businesses. By year-end, the respective responsibilities of the Insulin Business Department (IBD) and DOD were clearly delineated, resolving previous operational overlaps and supporting the board's call for "accelerated transformation" following global leadership changes in October.

Behind these adjustments lies Novo Nordisk's pressing need to tackle a dual challenge: capturing growth in the GLP-1 market while defending the insulin core business, all under mounting pressure from generics and policy headwinds.

The "adaptation journey" in China represents not only an overhaul of organizational efficiency, but also a test of strategic foresight. By clearly defining business boundaries, allocating resources with precision, and integrating channels cohesively, Novo Nordisk is building a more resilient and competitive local operating framework. Whether this system can prevail in the critical battles of 2026 will ultimately define the company's future position in the Chinese market.

Novo Nordisk's strategic realignment is not an isolated case, but rather a representative example of the current evolution in the global biopharmaceutical industry. Its decisions reflect a broader shift from "diversified expansion" to "extreme focus," illustrating how technology, capital, and competitive dynamics are reshaping strategic priorities. In this section, we analyze the industry-wide significance of Novo Nordisk's strategy and explore its implications for corporate strategic choices and the future direction of the sector.

First, the company's restructuring signals a shift in industry logic—from being "too big to fail" to being "too large not to specialize." In the past, large pharmaceutical firms often relied on continuous M&A and diversified pipelines to mitigate R&D risks, pursuing what was known as "pipeline breadth." However, in an era of diminishing investor patience, the focus has shifted toward whether a company can achieve global leadership in specific domains, rather than maintaining a broad but mediocre portfolio.

Following its windfall from COVID-19 products, Pfizer embarked on large-scale acquisitions such as Seagen to reinforce its oncology division. Similarly, GSK spun off its consumer health unit Haleon to concentrate on core prescription drugs in infectious diseases, oncology, and immunology. Novo Nordisk’s decision represents the ultimate expression of this trend—even after securing a dominant position in the substantial diabetes and obesity arena, it has chosen to decisively exit other businesses, transforming "leadership" into "domination." This focus strategy offers what might be called a "certainty premium" in a highly unpredictable environment.

Another key trend is the "convergence" of technological pathways. While biomedical innovation is exploding—with dazzling advances in gene editing, cell therapy, ADCs, and RNA therapeutics—the strategic approach for individual companies is shifting from diversification to concentration. The goal is no longer to chase every hot technology, but to build platform-level advantages in selected domains. Novo Nordisk’s platform capabilities in protein engineering and delivery technology, for instance, have enabled it to consistently produce best-in-class or first-in-class products.

In contrast, while gene therapy and oncology R&D represent cutting-edge fields, they align poorly with Novo Nordisk's core competencies. Maintaining these businesses would require building entirely independent systems, significantly increasing organizational complexity. By divesting these operations, Novo Nordisk can concentrate resources on deep innovation around GLP-1 therapies, aiming to establish both patent thickets and specialized know-how barriers. This approach creates a far wider moat than pursuing me-too development across multiple therapeutic areas.

Changes in capital market valuation logic have also driven Novo Nordisk’s strategic choices. Previously, pharmaceutical companies were often valued using risk-adjusted net present value (rNPV) models, which emphasized discounted future cash flows. Today, however, capital markets place greater weight on "near-term certainty and market scalability."

The semaglutide portfolio, as a proven blockbuster with continued market expansion potential, grants Novo Nordisk a significant certainty premium. In comparison, the "future narrative" of gene therapy and oncology—though scientifically compelling—faces long, uncertain paths to commercialization. Exiting these businesses helps elevate the company's overall valuation and attract more long-term capital. This shift in valuation logic is forcing biopharma companies to make clear strategic choices: either establish absolute leadership in core areas or risk being marginalized by the market.

Novo Nordisk's strategic shift also reflects the growing emphasis on "ecosystem building" in the pharmaceutical industry. Future competition will extend beyond products to entire ecosystems. Novo Nordisk is actively constructing an ecosystem centered on weight management and chronic disease control, incorporating digital therapeutics, wearable devices, and personalized nutrition guidance—areas that represent both new capabilities and a cultural shift for a traditional pharmaceutical company.

In China, the establishment of the Distribution & Retail Department (DRD) is designed to build a full-lifecycle patient platform through online-to-offline integration. Such ecosystem-based operation not only strengthens patient loyalty but also helps preserve brand premium value amid increasing generic competition.

However, this focus strategy is not without its risks. Novo Nordisk's heavy reliance on the GLP-1 portfolio exposes it to multiple threats: the patent cliff, displacement by disruptive therapies, and potential safety-related "black swan" events. After the core semaglutide patent expires in 2026, generic manufacturers in China and India are expected to trigger price wars—with nearly 30 generic versions already in clinical development in China alone. Moreover, if new therapies emerge that prove more effective or safer than the GLP-1 mechanism, the foundation of Novo Nordisk's dominance could be undermined.

Geopolitical variables also pose ongoing challenges. As a European company with its largest market in the U.S. and a crucial growth market in China, balancing global operations against a backdrop of technological competition remains a long-term strategic imperative for its leadership.

From an industry-wide perspective, Novo Nordisk's strategic streamlining offers an important reference for other companies. In an era of technology explosion, cautious capital, and intense competition, every firm must answer three core questions: Who are we? What are we best at? And where are we going? Novo Nordisk's answer is clear and resolute—to become the unequivocal global leader in metabolic diseases. This strategic clarity involves not only business choices but also the reshaping of organizational capabilities and culture.

Novo Nordisk's trajectory demonstrates that the future of pharmaceuticals belongs to those with the courage to reinvent themselves at their peak and navigate toward deep waters with extreme focus. Its strategic realignment is more than a corporate transformation—it is a recalibration of value for the entire industry. In an uncertain world, focus may well be the most powerful rule of survival.