Novo Nordisk's dropping share price spells the end for CEO

Novo Nordisk's chief executive, Lars Fruergaard Jørgensen, is stepping down by "mutual agreement" with the company's board.

In a statement, Novo Nordisk said that finding a new CEO is in the best interests of the company and its shareholders considering "recent market challenges, the share price decline, and the wish from the Novo Nordisk Foundation," which has a controlling interest in the Danish pharma group.

Shares in Novo Nordisk have lost around half their value in the last year, after a stellar rise – fuelled by burgeoning sales of its GLP-1 agonist-based therapies for diabetes and obesity – which at one point made it the largest listed company in Europe.

That status fell by the wayside after the sales momentum for the products was pegged back by shortages, which allowed a thriving market in compounded versions of its drugs to spring up in the US, as well as competition from rivals, notably Eli Lilly whose obesity drug Zepbound (tirzepatide) outperformed Novo Nordisk's Wegovy (semaglutide) in a head-to-head clinical trial.

Wegovy reached the market much earlier, but Zepbound is catching up fast, and the two products had first-quarter revenues of $2.64 billion and $2.31 billion, respectively. In its latest financial update, Novo Nordisk cut sales and earnings forecasts for the year due to lower-than-expected penetration of branded GLP-1 treatments in the US and the impact of compounding.

At the same time, there have been some disappointment with Novo Nordisk's new generation of weight-loss drugs, including late-stage candidate CagriSema (semaglutide and cagrilintide), as Lilly has reported positive data with its pipeline, including oral GLP-1 drug orforglipron.

Jørgensen has agreed to stay on while the search for a successor is carried out, and the chair of the Novo Nordisk Foundation and former Novo Nordisk CEO, Lars Rebien Sørensen, is joining the pharma company's board, initially as an observer.

"I am pleased to be able to contribute my experience to the board of Novo Nordisk," said Sørensen, who said his appointment reflected a desire by the Novo Nordisk Foundation to get closer to the drugmaker's board.

"We also think that the timing is right for a new profile as CEO of the company," he added. "There have been some market challenges recently, which the board and executive leadership have taken actions to address. I look forward to contributing to this and to working with the entire Novo Nordisk board."