Novo Nordisk said Friday it will replace Chief Executive Lars Fruergaard Jorgensen, citing a sharp tumble for Novo shares amid growing competition for its popular diabetes and obesity drugs Ozempic and Wegovy.
The drugmaker says Jorgensen will continue as CEO while the board searches for his replacement.
"During his weight-year tenure as CEO, Novo Nordisk's sales, profits and share price have almost tripled," the company said in a news release. "The changes are, however, made in light of the recent market challenges Novo has been facing, and the development of the company's share price since mid-2024."
Novo Nordisk stock hit a record high at 148.15 last June. Today, shares trade in the mid-60s. As of Friday's close, shares have shed 56.5% from that high point. In response to Friday's news, Novo Nordisk stock fell 2.7%, closing at 64.38.
Jorgensen's Impact On Novo Nordisk
The move is a surprise from the drugmaker behind two of the biggest-name drugs in the world.
Novo Nordisk launched Ozempic in 2018, a year after Jorgensen was appointed CEO. In 2017, the company's sales were just shy of $19 billion and Novo shares ended the year at 26.84.
Last year, Ozempic generated $16.81 billion in sales, while Wegovy brought in $8.13 billion in sales. To put that in perspective, the combined sales power of those two drugs, alone, tops 99.7% of the 712 companies tracked by Investor's Business Daily's Medical-Biomed/Biotech industry group.
In terms of annual sales, Novo Nordisk ranks seventh in IBD's Medical-Ethical Drugs industry group, with Ozempic and Wegovy accounting for roughly 61.5% of a total $40.57 billion in sales.
But investors have soured on Novo Nordisk stock amid the growing competition with Eli Lilly. Lilly makes diabetes treatment Mounjaro and weight-loss drug Zepbound. They work similarly to Novo's rival drugs, Ozempic and Wegovy, mimicking the GLP-1 hormone to curb hunger and improve blood sugar. But they also hit on a second hormone, GIPR. The result is increased weight loss.
According to the New York Times, which cited industry data tracked IQVIA, American patients have filled more prescriptions for Zepbound than for Wegovy this year.
And other companies are coming. Viking Therapeutics, Amgen, Roche, AstraZeneca and others are all working on weight-loss drugs.
Can Novo Reverse Its Stock Decline?
Novo Nordisk is working hard to bolster its weight-loss efforts.
Novo has inked a number of business deals recently, including a collaboration with small biotech Septerna earlier this week. In March, Novo licensed an experimental obesity drug from Lexicon Pharmaceuticals. That deal came on the heels of another licensing agreement with The United Laboratories International for a different weight-loss drug.
More recently, CVS' Caremark selected Wegovy as its preferred GLP-1-based weight-loss drug over Lilly's Zepbound. Novo Nordisk also inked a deal allowing Hims & Hers Health, the top IBD 50 stock, to sell Wegovy with a Hims membership for $599 a month.
Still, the paradigm is expected to shift next year. That's the first year analysts expect Mounjaro sales to top Ozempic. By 2030, Mounjaro will have a solid lead with a projected $34.5 billion in sales vs. $23.5 billion, according to FactSet. Wegovy is still expected to have a small edge on Zepbound in 2030 with expectations for $23.12 billion to $21.29 billion in sales, respectively.
But even that's likely to change over time with growing evidence that Zepbound is a more effective weight-loss drug. Over the weekend, the New England Journal of Medicine published the first head-to-head study comparing Zepbound and Wegovy. Patients who took Zepbound lost 50 pounds, on average, over 72 weeks. In comparison, Wegovy recipients lost 33 pounds.
Another study, in March, showed Novo's experimental obesity drug, CagriSema, failed to top Zepbound in a final-phase study. CagriSema is harder to make than Zepbound due to the type of device it requires.
Novo Leapfrogs Lilly With Obesity Pill
Both companies are working on next-generation efforts, and Novo Nordisk recently came out of left field, asking the Food and Drug Administration to approve its oral semaglutide two years after wrapping Phase 3 testing. Semaglutide is the chemical backbone behind its shots, Wegovy and Ozempic.
The Street largely expected Lilly to be the first to hit the market with a weight-loss pill. The Novo move puts Lilly in second place. Eli Lilly is expected to have the results of its final-phase test for an oral GLP-1-based weight-loss drug in the third quarter.
Still, Novo Nordisk recently cut its outlook for 2025, citing "unlawful compounding" of its diabetes and weight-loss drugs. The company now expects just 13% to 21% sales growth in constant currency, down from its previous outlook for 16% to 24% growth.
Last year, sales grew 26% when excluding the impact of exchange rates.
'Management Risk To Existing Challenges'
CFRA analyst Wan Nurhayati said the unexpected CEO transition "adds management risk to existing challenges, including disappointing data readouts for potential successor drugs and rising competition, particularly from Eli Lilly."
Nurhayati rates Novo Nordisk stock a hold.
"While we expect NOVO to maintain its position as a market leader in obesity treatment in the near term and we commend its efforts to expand Wegovy's access, we believe this development is particularly challenging given recent setbacks, including promising data from competitors and the company's own guidance downgrade," she wrote in a client note.
Follow Allison Gatlin on X/Twitter at @AGatlin_IBD.
