A view of the brand of Novo Nordisk at the corporate’s office in Bagsvaerd, on the outskirts of Copenhagen, Denmark, March 8, 2024.
Tom Little | Reuters
Novo Nordisk is banking on fresh leadership to assist it reclaim the crown within the booming weight reduction drug market.
The Danish drugmaker on Friday abruptly announced that longtime CEO Lars Fruergaard Jørgensen is stepping down, as its obesity injection Wegovy loses ground to Eli Lilly‘s rival treatment, Zepbound. While Eli Lilly entered the market later, it’s emerging because the front-runner in an area that some analysts imagine might be value greater than $150 billion by the early 2030s.
Novo Nordisk’s recent top executive might want to help the corporate close the gap with Eli Lilly, fend off emerging rivals and navigate other challenges. The subsequent CEO could have to spearhead the corporate’s plans to launch a brand new slate of weight reduction drugs before key patents for Wegovy expire, and manage the impact of Medicare drug price negotiations and President Donald Trump’s planned tariffs on pharmaceuticals.
It’s unclear who will take Jørgensen’s place, but the corporate said it’s considering each internal and external candidates.
“While Novo [Nordisk] took a commanding early lead within the obesity duopoly, they’ve ceded ground at a critical moment when more competitors are quickly approaching,” BMO Capital Markets analyst Evan Seigerman said in a note Friday, referring to other drugmakers racing to market their very own obesity treatments.
Novo Nordisk once held the title of Europe’s most respected company – value $615 billion at its peak – driven by skyrocketing demand for Wegovy and its diabetes counterpart, Ozempic.
Novo Nordisk shares have plunged within the last yr as Eli Lilly gains ground on its rival.
But investor enthusiasm has faded after Eli Lilly gained an even bigger share of the market and clinical trial data on Novo Nordisk’s next wave of obesity drugs underwhelmed investors. Shares of Novo Nordisk have plunged greater than 50% over the past yr, wiping out greater than $300 billion in market value.
Novo Nordisk’s stock remains to be up greater than 250% since Jørgensen took over as CEO in January 2017. But shares of Eli Lilly have gained about 800% since that very same month, when CEO Dave Ricks took over the corporate.
Mounting pressure also got here from the powerful Novo Nordisk Foundation, the controlling shareholder of the Danish drugmaker. The inspiration recently urged Novo Nordisk’s leadership to think about an “accelerated CEO succession” and pushed for greater board representation, in line with a statement on Friday.
Novo Nordisk on Friday said it jointly concluded with Jørgensen that it was time to search out a brand new CEO following the muse’s request, recent market challenges and the steep decline in the corporate’s share price. Jørgensen said he didn’t see his ouster coming and was only informed of it recently, in line with several reports on Friday.
Days before the announcement, Novo Nordisk slashed its sales and profit forecast for the primary time for the reason that launch of Wegovy 4 years ago.
Seigerman said it’s still unclear whether a brand new top executive will find a way to handle the corporate’s challenges.
“Even though it might satisfy some for investors to drive a CEO transition, without meaningful change in near-term strategy, we proceed to see a harder path forward,” he said.
Competition rises ahead of drug launches
Novo Nordisk has been ceding market share to Eli Lilly, though Zepbound’s dollar sales still trail Wegovy’s.
Zepbound and Eli Lilly’s diabetes drug Mounjaro now make up over half of U.S. prescriptions for so-called GLP-1s, which mimic hormones to tamp down appetite and regulate blood sugar, in line with a separate note from Seigerman earlier this month.
That outpaces the combined 46% share of Novo Nordisk’s Wegovy and Ozempic.
A mixture image shows an injection pen of Zepbound, Eli Lilly’s weight reduction drug, and boxes of Wegovy, made by Novo Nordisk.
Hollie Adams | Reuters
Latest U.S. prescriptions of Zepbound surpassed those for Wegovy for the primary time in early March 2024, just months after the launch of Eli Lilly’s drug, Reuters reported on the time. By August, some analysts were estimating that Zepbound had captured 40% of the U.S. weight reduction drug market, hot on Wegovy’s heels.
That “market-share traction clearly demonstrates that physicians and patients prefer Zepbound” over Wegovy, Bernstein analyst Courtney Breen wrote in a note in early May. Real-world data and a head-to-head clinical trial have shown that Zepbound results in more weight reduction than Wegovy.
Novo Nordisk has also struggled to persuade Wall Street that its pipeline of next-generation weight reduction drugs might help it maintain its position available in the market, especially after Wegovy loses exclusivity and drugmakers can sell cheaper generic alternatives.
For instance, Novo Nordisk repeatedly told investors its CagriSema shot, expected to be launched in 2026, would help people lose 25% or more of their body weight. However the once-weekly drug did not live as much as that forecast in December 2024, sending shares of the corporate plunging.
The corporate in April said it has filed for U.S. approval of an oral version of semaglutide, the energetic ingredient in Wegovy and Ozempic. It comes as drugmakers rush to develop more convenient weight reduction pills, which could account for $50 billion of the market in the approaching years, in line with some analyst estimates.
But Seigerman, in a separate note in April, said Novo Nordisk has no clear strategy for its oral obesity drug portfolio. He said that’s “prone to challenge growth in the long run of the last decade,” especially as Eli Lilly’s own obesity pill impresses investors and inches closer to entering the market.
Unlike oral semaglutide, Eli Lilly’s pill is a small-molecule drug and never a peptide medication. Meaning Eli Lilly’s drug is absorbed more easily within the body and doesn’t require dietary restrictions like oral semaglutide does, which could also be a notable advantage for the corporate.
Seigerman acknowledged that Novo Nordisk’s experimental small-molecule pill, amycretin, might be competitive long run. But he said that will not occur soon, because the drug isn’t expected to launch for several years.
Outside of pipeline issues, Novo Nordisk and the remainder of the pharmaceutical industry are grappling with the Trump administration’s ambitions to lower drug prices and produce manufacturing to the U.S. Trump has said he plans to impose tariffs on pharmaceuticals imported into the U.S. and signed an executive order that goals to chop drug prices by tying them to the bottom prices abroad.
Signs of a changing strategy
Novo Nordisk made it clear that its strategy stays unchanged despite Jørgensen’s abrupt exit.
“We have now a robust product portfolio with a lot of potential,” Novo Nordisk board Chairman Helge Lund said on a call with analysts Friday. “We have now an experienced executive team to proceed to evolve and drive the corporate forward with a long-term perspective.”
But Seigerman said the choice to swap CEOs seems to “draw attention to pivots on this strategy which may be obligatory.”
Investors have already been seeing potential signs of that shift, in line with Seigerman.
Novo Nordisk has long prioritized peptide-based therapeutics. But the corporate’s recent deal-making indicates that it’s leaning “heavier on oral small molecule solutions for the obesity market,” Seigerman said.
The corporate last week announced a licensing deal with the U.S. biotech company Septerna for experimental small-molecule pills for obesity and other cardiometabolic diseases.
But those pills are in early development and people products are years from entering the market, meaning the agreement remains to be dangerous.
The identical may be said of several of Novo Nordisk’s other recent tie-ups.
For instance, Novo Nordisk in March said it had agreed to pay as much as $2 billion for the rights to an early experimental drug from the Chinese pharmaceutical company United Laboratories International.
The newly acquired drug is a transparent potential competitor to Eli Lilly’s so-called Triple G obesity drug retatrutide because they each use a three-pronged approach to promoting weight reduction and regulating blood sugar. But retatrutide is in late-stage clinical trials, which suggests it could enter the market years before Novo Nordisk’s drug does.
