Novo Nordisk CEO to step down as obesity drug competition intensifies

Novo Nordisk said on Friday that Chief Executive Officer Lars Fruergaard Jørgensen will step down, a decision made jointly with the board as the company confronts mounting competitive and financial pressures.

The changes are being made “in light of the recent market challenges Novo Nordisk has been facing, and the development of the company’s share price since mid-2024,” the company said.

The Danish drugmaker said Jørgensen would remain in place “for a period” to help ensure a smooth leadership transition.

A formal search for his successor is underway, with an announcement expected in due course.

Jørgensen’s departure comes at a time when the company’s performance has been under scrutiny.

Shares in the pharmaceutical firm fell by more than 4% following the announcement in Copenhagen, while its US-listed stock dropped 5.61% in premarket trading.

The company’s shares have lost more than 24% of their value so far this year in the US, and close to 35% in Copenhagen.

Meanwhile, Eli Lilly has lost only about 5.8% YTD. Its share price was up by 1.36% in pre-market trading.

In a statement, Novo Nordisk said the decision was the result of internal discussions initiated by the Novo Nordisk Foundation, which considered the merits of accelerating CEO succession.

“Novo Nordisk’s strategy remains unchanged, and the Board is confident in the company’s current business plans and its ability to execute on the plans,” said Chairman Helge Lund.

Jørgensen’s tenure saw early success of Wegovy, Ozempic before Eli Lilly took over

Jørgensen has been with Novo Nordisk since 1991 and took over as CEO in 2017.

Under his leadership, the company cemented its lead in the growing global market for obesity and diabetes treatments, largely thanks to the success of Wegovy and Ozempic.

These drugs contributed to soaring sales and investor enthusiasm, turning Novo Nordisk into one of Europe’s most valuable companies.

However, recent developments have rattled investor confidence.

Eli Lilly’s obesity drug Zepbound has steadily gained traction in the United States, surpassing Wegovy in prescriptions since mid-March.

Meanwhile, results from Novo’s trials for next-generation obesity treatments have fallen short of expectations, casting doubts over the company’s future product pipeline.

Strategic partnerships to defend market share

In response to the competitive threat, Novo Nordisk has pursued several strategic partnerships.

Just a day before the CEO announcement, the company signed a collaboration agreement with biotech firm Septerna, potentially worth up to $2.2 billion.

The partnership aims to discover up to four new obesity therapies, with Septerna eligible for over $200 million in upfront and near-term payments.

Novo has also sought to expand access to its existing treatments through US telehealth firms like Hims & Hers, Ro, and LifeMD.

These partnerships allow for direct-to-patient distribution of Wegovy in the US, amid tighter regulations on compounding pharmacies that previously filled the gap during drug shortages.

Despite these efforts, the CEO transition marks a critical moment for Novo Nordisk as it navigates a more crowded and aggressive market landscape.

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