In a big change, Danish pharmaceutical company Novo Nordisk said that CEO Lars Fruergaard Jørgensen will leave his job after being in charge for eight years. The decision comes when the company is dealing with more competition in the obesity drug market and sees its stocks go down. The company said Jørgensen will stay in his job for a short time to help make sure everything goes smoothly until the board finds a replacement.
Leadership Exit Comes Amid Market Turmoil
Jørgensen’s departure was announced on Friday, May 16, after Novo Nordisk’s share price dropped about 50% in the last few months. Once the darling of investors because of how well its obesity drug Wegovy was doing, Novo now faces tough competition from new rivals and has lost some ground in the U.S. market since cheaper versions of its main drug became available.
The announcement right away made stocks go up or down, depending on what was said. Novo Nordisk shares dropped by 2.3%, while Eli Lilly shares, which make the drug Mounjaro, went up by 1.7%. These movements show that investors are unsure if Novo can keep leading the weight-loss drug industry.
Board Chairman Helge Lund confirmed that the members of the board and the company’s main shareholder, the Novo Nordisk Foundation, talked about changing the CEO for about a month before making the decision. However, according to a report from Reuters, Jørgensen said in interviews that he found out about it just now and wasn’t expecting it.
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Challenges Behind the Leadership Change
Novo Nordisk has recently had problems both with how much money they made and with some of their medicines not doing as well clinically as people had hoped. In its most recent quarterly earnings report, the company made fewer sales than expected from the weight-loss medication Wegovy and had to lower its forecast for how much the company will grow this year. CEO Jørgensen said that lots of compounded drugs, which are made when there’s not enough of the real medicine available, were taking away some of Novo’s business in the U.S.
The issue is expected to get better now that the FDA is no longer calling it a shortage, but people still don’t trust the supply of oil as much as before the problem started. On top of that, Novo had to deal with bad results from the tests of its new obesity drug, CagriSema.
A Familiar Face Returns to the Board
As part of the leadership reshuffle, Lars Rebien Sørensen, who is now chairman of the Novo Nordisk Foundation, will come back to the company’s board, starting out as a non-voting member for a while. His involvement seems to mean the company might go back to a more traditional way of leadership and will keep a closer eye on things during a tough period.
Despite the change in leadership, the wider approach the company plans to take is still the same, says Chairman Lund. “The board is sure that the company’s plans are good right now and that they can be put into action in the way the company wants,” he said.
Looking Ahead
Novo Nordisk’s future now depends on helping its obesity drugs do better in the global market and getting investors to trust the company again. The new leadership, once they are in place, will face stricter rules from regulators, lower prices, and see lots of new ideas coming from their competitors.
