Novo Nordisk A/S, the leading manufacturer of the highly popular Wegovy obesity shots, has been dealing with a series of setbacks. These include a decline in share price by 53% over the past year, disappointing trial results for new weight-loss drugs, and increased competition from rivals like Eli Lilly & Co. Amidst these challenges, the company’s board has decided to replace Chief Executive Officer Lars Fruergaard Jorgensen. This decision was heavily influenced by the dissatisfaction expressed by the controlling foundation of Novo towards the company’s direction.
Jorgensen, who was instrumental in bringing the $26 billion blockbusters Ozempic and Wegovy to the market, was taken by surprise with the decision. His exit is a huge blow to a company known for its stability. The sudden turnover reflects the power of the Novo Nordisk Foundation, Novo’s biggest shareholder, in steering the company’s operations.
Challenges Galore for Novo Nordisk
Novo Nordisk has been facing stiff competition from Eli Lilly & Co., especially with their obesity drug, Zepbound. This rival drug has shown better results in reducing weight than Wegovy. Furthermore, Novo’s next-generation contender, CagriSema, hasn’t lived up to the company’s and analysts’ expectations in clinical trials.
The company is now seeking a new leader to guide them through these difficult times. Helge Lund, Chairman of Novo Nordisk, stated that both external and internal candidates will be considered for the CEO position. This is a significant statement considering all five CEOs in Novo’s century-long history have been internal promotions.
On a related note, Lund himself is stepping down from his position as chairman of BP, a UK energy giant grappling with its own challenges. He believes that Novo’s strategy “must evolve and change to be fit to the market and the environment.”
Looking Ahead
The sudden exit of Jorgensen has led to the return of his predecessor, Lars Rebien Sorensen, who will join the supervisory board. Sorensen’s return has been welcomed by the Novo Foundation, which believes his experience and insights will be valuable.
Despite the upheaval, some believe that the company still holds value for investors. Mark Ellis, portfolio manager of Nutshell Asset Management Ltd., believes that Novo offers decent value for those willing to look beyond the short-term uncertainty.
However, the news of Jorgensen’s departure came as a shock for many employees. In a video posted by Danish broadcaster TV2, employees can be seen applauding as Jorgensen walks down the stairs in the central atrium of the company’s headquarters.
Suffice to say, it remains to be seen how these changes will impact Novo Nordisk’s future trajectory in the competitive field of obesity and weight-loss treatments.
Originally featured on Fortune.com
