Novo Nordisk said today it will eliminate 1000 jobs worldwide, in a cost-cutting move the company blamed on “a challenging competitive environment in 2017” given growing competition in diabetes products and growing efforts to contain prices as insurers increasingly balk at covering costly new treatments.

Jobs to be eliminated include R&D and staff positions at its headquarters in Denmark, as well as positions across its global commercial organization, Novo Nordisk stated. About 500 of the jobs to be cut are based in Denmark.

The job reductions amount to 2% of Novo Nordisk’s workforce of 42,300 people based in 75 countries.

“We have concluded that it is needed in order for us to have a sustainable balance between income and costs,” Novo Nordisk President and CEO Lars Rebien Sørensen said in a statement. “In the current situation, we have to prioritize investments in key product launches that will bring innovation to patients and drive our future growth.”

Sørensen—who is retiring at year’s end—told Bloomberg TV that his company has initiated a process to decide which drugs to proceed with developing, with the company favoring new products that can justify higher prices.

“The next line of products have to have an even greater height of innovation, which means those that do not have that height of innovation will have to be culled,” Sørensen said. “Otherwise, it’s going to be difficult for us to get reimbursement for our drugs. Me-too or me-better drugs will not be good enough in the future and hence we need to prioritize.”

In releasing first-half results on August 5, Novo Nordisk disclosed that it had lost a contract to supply NovoLog® (insulin aspart [rDNA origin] injection), a fast-acting mealtime insulin indicated for people with type 1 or type 2 diabetes. Sørensen has publicly described that contract as “sizeable,” without giving details. In 2013, Novo Nordisk lost a contract to supply NovoLog to Express Scripts, which opted instead for an insulin product made by Eli Lilly.

Novo Nordisk said today the job cuts, and their associated costs, will not change its revised guidance to investors issued on August 5. At that time, the company scaled down its growth projections for this year, shrinking its range for expected sales growth to between 5% and 7%, and its projection of growth in adjusted operating profit to between 5% and 8%, both measured in local currencies. Projections for both had been between 5% and 9% when they were made on February 3.

Lars Fruergaard Jørgensen, Novo Nordisk evp and chief of staff and a 25-year veteran of the company, has been named to succeed Sørensen effective January 1, 2017.

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