When Novo Nordisk A/S Chief Government 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 value of the maker of Wegovy weight problems pictures, 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 route of the corporate.
So on Friday, Novo stated it was changing Jorgensen, the manager who had introduced one of many greatest drug franchises of the previous decade to market with Ozempic and Wegovy — $26 billion blockbusters which have mushroomed into a star craze and cultural phenomenon.
“I respect that,” Jorgensen, 58, stated in an interview. “I think that’s part of the game, so to say. It’s not for me to judge the criteria.”
The transfer was as a lot a shock to the market because it was for the manager. Jorgensen says after the Groups name and in-person conferences that adopted over a bit greater than a day, it turned clear to him that Lund and Novo’s board had been searching for a brand new chief for the corporate that’s quickly shedding 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 probably 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 primary ingredient of Ozempic and Wegovy), has fallen wanting each the corporate’s and analysts’ hopes in medical trials.
Novo will have a look at exterior in addition to inside candidates for the subsequent CEO, Lund stated 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 stated Novo’s technique would stay the identical, within the interview, he was extra nuanced.
Novo’s recreation plan “must evolve and change to be fit to the market and the environment,” he stated. For Lund, the turmoil at Novo coincides with a tumultuous interval he has traversed at one other firm: BP. Final month, he stated he would step down from being BP’s chairman because the UK power large struggles to win investor confidence after two main technique pivots on his watch. BP’s market valuation when Lund turned chairman was about $106 billion. Now, it’s about $78 billion.
Unprecedented Transfer
At Novo, Jorgensen’s departure is an unprecedented transfer for an organization that prides itself for its stability. The suddenness of the motion is a mirrored image of the ability of the Danish drugmaker’s greatest shareholder, the Novo Nordisk Basis, which wields huge sway over how the corporate is run.
Jorgensen stated that previous to the decision with Lund, he had all the time felt robust assist from Novo’s board.
“There’s no unsettled issues between management and board,” he stated. “There’s been no such, say, gaps in strategic choice. I’ve all along felt strong support in the direction we have pursued based on proper reviews of the strategic options and the choices we have 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 additionally 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 turned clear the highly effective new medication had been creating a brand new marketplace for weight problems therapies. In 2023, the corporate proved that Wegovy may scale back the danger of coronary heart assaults and strokes, a vital 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 didn’t stay as much as its potential, whereas Lilly’s medicines delivered medical 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.
“Last year, when Novo was not sending starter doses of Wegovy. I think they started to create a more permanent shift in the market,” stated Evan Seigerman, an analyst with BMO Capital Markets. “If a prescriber has an option to write Zepbound or Wegovy and they keep writing Wegovy scripts and their patient can’t find the drug, then they have to go back and write a Zepbound script…You only do that a few times until you say, you know what, I’m done with this. I’m going to permanently 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 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 “experience and insights will be valuable.”
The wealthiest charitable basis on this planet, the Novo basis controls the drugmaker by way of a two-tier share construction that provides it a 77% voting share within the firm regardless of holding 28% of its share capital. Its property 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 think it offers decent value for those who can look through the short-term uncertainty,” stated Mark Ellis, portfolio supervisor of Nutshell Asset Administration Ltd., whose progress fund holds Novo shares which are price about £6.5 million ($8.6 million).
However for a lot of staff, the information got here as a shock.
In a clip posted by Danish broadcaster TV2 on Friday, staff applaud as Jorgensen walks down the steps within the open, multi-story central atrium of the drugmaker’s headquarters.
“You have truly 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
