Wegovy-maker Novo Nordisk ousted CEO Lars Fruergaard Jorgensen on Friday over concerns the company is losing its first-mover advantage in the highly competitive obesity drug market.
Under Jorgensenâs leadership, Novo Nordisk became a world leader in the lucrative weight-loss drug market, with sky-rocketing sales of its Wegovy and Ozempic treatments.
However, Novoâs shares have plunged since hitting a record-high in June last year as competition, particularly from US rival Eli Lilly, makes inroads into its market share and as its pipeline of new drugs has failed to impress investors.
âThe changes are made in light of the recent market challenges Novo Nordisk has been facing, and the development of the companyâs share price since mid-2024,â Novo said in its statement.
Novo Nordisk Foundation, the non-profit which controls the company through its investment arm, instigated the early exit at a meeting in April, a spokesperson said.
Jorgensen told Reuters in an interview that he did not see the decision coming, and was only informed very recently.
Days earlier, Novo Nordisk cut its sales and profit forecast for the first time since the launch of Wegovy four years ago, though Jorgensen had predicted a return to growth in its biggest market in the second half of this year.
Still, analysts and investors were unconvinced of the need to replace him, with Novoâs shares ending the day 1.8 percent lower.
âHe was leading the company for eight years and was in my opinion extremely successful,â Lukas Leu, a portfolio manager at Bellevue Asset Management, told Reuters.
Novoâs chairman Helge Lund tried to reassure analysts and investors on a call that the companyâs strategy was intact and the plan for executing it had not changed.
âThe way we know Novo Nordisk is that normally you have patience when youâre on the right track, and then you let things move in the right direction once you have the strategy right,â Danske Bank analyst Carsten Lonborg Madsen said on that call.
âIt just feels like thereâs something that has gone pretty wrong here,â he added.
The chairman told Reuters that discussions had taken place over the past few weeks. Jorgensen will remain in his role until a successor is found.
Eli Lilly, whose shares were up 2.6 percent on the news, has seen US prescriptions for its Zepbound obesity shot surpass Wegovy since mid-March in its biggest market.
US approvals for Zepbound and Wegovy were based on separate trials, but Lillyâs drug helped patients lose more weight.
Compound copycats, temporarily allowed to alleviate supply shortages, have also hurt demand, although Novo expects a ban on US pharmacies producing them to help revive sales this year.
Analysts forecast the obesity drug market could be worth as much as $150 billion by the early 2030s.
New Leader for New Challenges
Jorgensen, 58, oversaw the companyâs strategic pivot into obesity treatments which helped sales more than triple.
Shareholder returns, including dividends, have risen more than 300 percent since he became CEO in January 2017, LSEG data shows.
His exit comes at a challenging time for the global pharmaceutical industry as US President Donald Trump threatens to impose tariffs on imports and calls on drugmakers to lower their US prescription prices.
Denmarkâs business minister warned on Friday about the impact of Trumpâs executive order on drug prices and companies.
Jorgensenâs exit surprised many investors, said Mikael Bak, CEO of the Danish Shareholdersâ Association.
âHowever, it is not entirely unexpected that a company of Novo Nordiskâs calibre may need a different type of leader when facing intense global competition and stormy weather,â he said.
Booming sales of Wegovy helped make Novo the most valuable listed company in Europe, worth $615 billion at its peak in June last year, but its market value has halved to about $310 billion.
The shares are down 32 percent year-to-date and 59 percent from their peak.
Investors are worried about the companyâs drug pipeline particularly following the disappointing trial data in December from its next-generation obesity drug CagriSema.
Its patent for the active ingredient in Wegovy and its diabetes drug Ozempic expires by 2032 in the United States.
Camilla Sylvest, Novoâs head of commercial strategy and corporate affairs and a consistent presence alongside CEO Jorgensen, stepped down last month without citing a reason.
Former CEO of Novo Nordisk for 16 years and current chair of the Novo Nordisk Foundation, Lars Rebien Sorensen, will join the board as an observer with immediate effect with the aim of taking a seat at the next annual general meeting, Novo said.
By Stine Jacobsen and Jacob Gronholt-Pedersen; Edited by Terje Solsvik and Elaine Hardcastle
Learn more:
Why the Obesity Drug Revolution Is a Work in Progress
GLP-1 weight-loss drugs like Wegovy and Zepbound are revolutionising obesity treatment and generating billions for their makers, but challenges including high costs, insurance coverage issues, drug shortages, and competition from copycats could impact their widespread success.