When Novo Nordisk A/S Chief Govt Officer Lars Fruergaard Jorgensen dialed right into a Groups video name with Chairman Helge Lund, he was anticipating an abnormal catchup.
As a substitute, Jorgensen says Lund was successfully telling him he wanted to go.
After a 53% decline over the previous yr within the share worth of the maker of Wegovy weight problems photographs, setbacks in trials of recent weight-loss medication and intensifying competitors from Eli Lilly & Co., the inspiration that controls Novo had knowledgeable its board it was dissatisfied with the path of the corporate.
So on Friday, Novo mentioned it was changing Jorgensen, the chief who had introduced one of many largest drug franchises of the previous decade to market with Ozempic and Wegovy — $26 billion blockbusters which have mushroomed into a celeb craze and cultural phenomenon.
“I respect that,” Jorgensen, 58, mentioned in an interview. “I feel that’s a part of the sport, so to say. It’s not for me to guage the standards.”
The transfer was as a lot a shock to the market because it was for the chief. Jorgensen says after the Groups name and in-person conferences that adopted over a bit greater than a day, it grew to become clear to him that Lund and Novo’s board have been searching for a brand new chief for the corporate that’s quickly dropping its high spot within the weight problems market.
Its arch-rival Lilly is leapfrogging forward with Zepbound, an weight problems drug that has confirmed it might pare extra kilos than Wegovy. Extra fierce competitors is within the playing cards, with Lilly within the lead within the race for a strong and easy-to-take weight problems tablet. Novo’s personal next-generation candidate CagriSema, a shot that’s constructed on its current blockbuster semaglutide (the principle ingredient of Ozempic and Wegovy), has fallen wanting each the corporate’s and analysts’ hopes in scientific trials.
Novo will have a look at exterior in addition to inner candidates for the following CEO, Lund mentioned in an interview. The drugmaker has had 5 CEOs in its century-long historical past, and none of them has come from exterior the corporate. Though on a name with analysts, Lund repeatedly mentioned Novo’s technique would stay the identical, within the interview, he was extra nuanced.
Novo’s recreation plan “should evolve and alter to be match to the market and the surroundings,” he mentioned. For Lund, the turmoil at Novo coincides with a tumultuous interval he has traversed at one other firm: BP. Final month, he mentioned he would step down from being BP’s chairman because the UK vitality large struggles to win investor confidence after two main technique pivots on his watch. BP’s market valuation when Lund grew to become chairman was about $106 billion. Now, it’s about $78 billion.
Unprecedented Transfer
At Novo, Jorgensen’s departure is an unprecedented transfer for a corporation that prides itself for its stability. The suddenness of the motion is a mirrored image of the facility of the Danish drugmaker’s largest shareholder, the Novo Nordisk Basis, which wields huge sway over how the corporate is run.
Jorgensen mentioned that previous to the decision with Lund, he had all the time felt sturdy help from Novo’s board.
“There’s no unsettled points between administration and board,” he mentioned. “There’s been no such, say, gaps in strategic alternative. I’ve all alongside felt sturdy help within the path we’ve pursued based mostly on correct critiques of the strategic choices and the alternatives we’ve made.”
Like many different Novo managers, Jorgensen has spent his profession on the firm, which has lengthy been targeted on the diabetes market. Insulin had all the time been Novo’s core product.
When Jorgensen took over as CEO in 2017, the corporate was navigating a shift towards treating not simply diabetes, but in addition weight problems. Ozempic hit the U.S. market in 2018. In 2021, Jorgensen introduced its sister remedy Wegovy, for weight reduction, to market within the US.
Novo’s shares soared because it grew to become clear the highly effective new medication have been creating a brand new marketplace for weight problems therapies. In 2023, the corporate proved that Wegovy might cut back the danger of coronary heart assaults and strokes, an important step towards getting insurers to pay for the costly therapies.
Then, a bit lower than a yr in the past, Novo’s challenges started to pile up. The corporate needed to defend its costs for Ozempic and Wegovy in Congress, with Jorgensen questioned by Bernie Sanders throughout a Senate listening to.
Quickly thereafter, CagriSema did not reside as much as its potential, whereas Lilly’s medicines delivered scientific wins. Novo additionally continued to wrestle to satisfy demand for Wegovy, an element that some analysts now say additionally helped tilt the market towards Lilly’s competing shot.
“Final yr, when Novo was not sending starter doses of Wegovy. I feel they began to create a extra everlasting shift available in the market,” mentioned Evan Seigerman, an analyst with BMO Capital Markets. “If a prescriber has an possibility to jot down Zepbound or Wegovy they usually hold writing Wegovy scripts and their affected person can’t discover the drug, then they’ve to return and write a Zepbound script…You solely do this just a few occasions till you say, what, I’m finished with this. I’m going to completely shift my prescribing habits to Zepbound.”
Sorensen’s Return
The departure is queuing up a return for Jorgensen’s predecessor, Lars Rebien Sorensen, who led Novo for the primary 16 years of the 2000s and can now be a part of the supervisory board, initially in an observer function and as a full board member from subsequent yr. The inspiration issued a press release supporting Sorensen, saying his “expertise and insights will likely be helpful.”
The wealthiest charitable basis on this planet, the Novo basis controls the drugmaker through a two-tier share construction that offers it a 77% voting share within the firm regardless of holding 28% of its share capital. Its belongings misplaced 4.8% in worth final yr, leaving it with holdings of 1.06 trillion Danish kroner ($159 billion), about twice as a lot because the Gates Basis.
“Novo is already so depressed we expect it affords first rate worth for many who can look by way of the short-term uncertainty,” mentioned Mark Ellis, portfolio supervisor of Nutshell Asset Administration Ltd., whose progress fund holds Novo shares which can be price about £6.5 million ($8.6 million).
However for a lot of workers, the information got here as a shock.
In a clip posted by Danish broadcaster TV2 on Friday, workers applaud as Jorgensen walks down the steps within the open, multi-story central atrium of the drugmaker’s headquarters.
“You may have actually been a lighthouse for all of us,” Jacob Petersen, Novo’s head of diabetes, weight problems and MASH, wrote on LinkedIn.
This story was initially featured on Fortune.com
