By Ana Nicolaci da Costa, CNN

London (CNN) — Novo Nordisk, the maker of weight loss drug Wegovy, will lay off about 9,000 people as it grapples with rising competition in the obesity market.

The Danish company has been battling it out with US rival Eli Lilly, with each developing newer medicines to turbocharge weight loss and diabetes results since the approval of Nordisk’s Ozempic in 2017.

The job cuts announced by Novo Nordisk Wednesday amount to more than 11% of its global workforce.

“Our markets are evolving, particularly in obesity, as it has become more competitive and consumer-driven,” Mike Doustdar, president and CEO, said in a statement.

The company expects the layoffs to deliver annualized savings of around $1.25 billion by the end of 2026, which will be redirected to “growth opportunities” in diabetes and obesity, including research and development, it said in the statement.

In a sign of rising competition in the United States – by far the largest market for Novo Nordisk – Eli Lilly said last month that it would hike the price of its rival weight loss drug Mounjaro in the United Kingdom as it tries to bring down prices in the US, after weeks of pressure from the Trump administration.

“Lilly supports… the objective of more fairly sharing the costs of breakthrough medical research across developed countries,” the company said in a statement, adding that the prices paid by governments and health systems will need to increase in other developed markets, such as Europe, in order to make them lower in the US.

Novo Nordisk stock (NVO) was up 2.5% on the day in afternoon trading in Copenhagen, paring earlier gains.

“Following a period of hyper-growth in employee numbers, Novo is resizing headcount with the aim to reduce complexity in the organization,” analysts at Swiss bank UBS said in a note. “The key question is when could the topline see the benefit of the reinvestment… We expect that investors will remain somewhat skeptical until the growth plan is outlined.”

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