Novo Nordisk announced on Friday the resignation of Chief Executive Lars Fruergaard Jorgensen. The decision was made in conjunction with the Board as the Company faces increasing financial and competitive pressures.
According to the company, the changes were made in light of “the recent challenges Novo Nordisk faced on the market and the evolution of its share price from mid-2024.”
Jorgensen will remain at the Danish pharmaceutical company “for some time” in order to ensure that a leadership transition is smooth.
The formal search is under way for his replacement, and an announcement should be made in the near future.
Jorgensen leaves the company at a moment when its performance is under review.
The shares of the Danish pharmaceutical company fell more than 4% after the announcement made in Copenhagen. Its US listed stock also dropped by 5.61% during premarket trading.
In the US and Denmark, shares of this company have fallen by more than 24 percent in value in just one year.
Eli Lilly, on the other hand, has only lost 5.8% so far this year. In pre-market trade, its share price rose by 1.36%.
Novo Nordisk released a press release in which it said that the Novo Nordisk Foundation had initiated internal discussions to examine the benefits of an accelerated CEO succession.
Helge Lind, Chairman of the Board at Novo Nordisk said: “Novo Nordisk’s strategy is unchanged. The Board has confidence in its current business plans as well as the ability of the company to implement them.”
Wegovy and Ozempic were successful during Jorgensen’s tenure before Eli Lilly’s takeover.
Jorgensen joined Novo Nordisk in 1991, and he became CEO of the company in 2017.
The company’s success with Wegovy, and Ozempic, has helped it to gain a leading position in the global obesity and diabetes market.
The drugs have contributed to the soaring of sales and increased investor interest, making Novo Nordisk one of Europe’s most valued companies.
Recent developments, however, have shaken investor confidence.
Since mid-March, Eli Lilly’s Zepbound obesity drug has been steadily gaining traction. It now outsells Wegovy.
The results of Novo’s next-generation treatment trials have not met expectations. This has cast doubts on the future product pipeline.
Partnerships to protect market share
Novo Nordisk, in response to this threat of competition, has established several strategic alliances.
The company had signed an agreement for collaboration with Septerna biotech, which could be worth $2.2 billion.
Septerna is eligible to receive over $200 Million in payments upfront and near term.
Novo also aims to increase access to existing treatments via US telehealth companies like Hims & Hers Ro and LifeMD.
The partnerships will allow Wegovy to be distributed directly to patients in the US. This is due to tighter regulation on compounding pharmacy that filled the gaps during previous drug shortages.
The CEO transition is a crucial moment in Novo Nordisk’s journey through a market that has become more competitive and crowded.
As new information becomes available, this post Novo Nordisk CEO steps down amid obesity drug competition may be updated.
