Novo Nordisk is betting on a CEO shakeup to regain its weight loss drug edge over Eli Lilly
Novo Nordisk is banking on fresh leadership to help it reclaim the crown in the booming weight loss drug market.
The Danish drugmaker on Friday abruptly announced that longtime CEO Lars Fruergaard Jorgensen 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 is emerging as the frontrunner in a space that some analysts believe could be worth more than $150 billion by the early 2030s.
Novo Nordisk's new top executive will need to help the company close the gap with Eli Lilly, fend off emerging rivals and navigate other challenges. The next CEO will have to spearhead the company's plans to launch a new slate of weight loss 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 Jorgensen's place, but the company said it is considering both internal and external candidates.
"While Novo [Nordisk] took a commanding early lead in the obesity duopoly, they have ceded ground at a critical moment when more competitors are quickly approaching," BMO Capital Markets analyst Evan Seigerman said in a note on Friday, referring to other drugmakers racing to market their own obesity treatments.
Novo Nordisk once held the title of Europe's most valuable company – worth $615 billion at its peak – driven by skyrocketing demand for Wegovy and its diabetes counterpart, Ozempic.
But investor enthusiasm has faded after Eli Lilly gained a 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 more than 50% over the past year, wiping out over $300 billion in market value.
Novo Nordisk's stock is still up more than 250% since Jorgensen took over as CEO in January 2017. But shares of Eli Lilly have gained about 800% since that same month, when CEO Dave Ricks took over the company.
Mounting pressure also came from the powerful Novo Nordisk Foundation, the controlling shareholder of the Danish drugmaker. The foundation recently urged Novo Nordisk's leadership to consider an "accelerated CEO succession" and pushed for greater board representation, according to a statement on Friday.
Novo Nordisk on Friday said it jointly concluded with Jorgensen that it was time to find a new CEO following the foundation's request, recent market challenges and the steep decline in the company's share price. Jorgensen said he did not see his ouster coming and was only informed of it recently, according to several reports on Friday.
Days before the announcement, Novo Nordisk slashed its sales and profit forecast for the first time since the launch of Wegovy four years ago.
Seigerman said it's still unclear whether a new top executive will be able to address the company's challenges.
"Although it might satisfy some for investors to drive a CEO transition, without meaningful change in near-term strategy, we continue to see a more difficult path forward," he said.
Novo Nordisk has been ceding market share to Eli Lilly, even 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, according to a separate note from Seigerman earlier this month.
That outpaces the combined 46% share of Novo Nordisk's Wegovy and Ozempic.
New U.S. prescriptions of Zepbound surpassed those for Wegovy for the first time in early March 2024, just months after the launch of Eli Lilly's drug, Reuters reported at the time. By August, some analysts were estimating that Zepbound had captured 40% of the U.S. weight loss 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 leads to more weight loss than Wegovy.
Novo Nordisk has also struggled to convince Wall Street that its pipeline of next-generation weight loss drugs can help it maintain its position in the market, especially after Wegovy loses exclusivity and drugmakers can sell cheaper generic alternatives.
For example, 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. But the once-weekly drug failed to live up to that forecast in December 2024, sending shares of the company plunging.
The company in April said it has filed for U.S. approval of an oral version of semaglutide, the active ingredient in Wegovy and Ozempic. It comes as drugmakers rush to develop more convenient weight loss pills, which could account for $50 billion of the market in the coming years, according to 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 is "likely to challenge growth in the end of the 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 not a peptide medication. That means Eli Lilly's drug is absorbed more easily in the body and doesn't require dietary restrictions like oral semaglutide does, which may be a notable advantage for the company.
Seigerman acknowledged that Novo Nordisk's experimental small-molecule pill, amycretin, could be competitive long-term. But he said that won't happen soon, as the drug is not expected to launch for several years.
Outside of pipeline issues, Novo Nordisk and the rest of the pharmaceutical industry are grappling with the Trump administration's ambitions to lower drug prices and bring 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 aims to cut drug prices by tying them to the lowest prices abroad.
Novo Nordisk made it clear that its strategy remains unchanged despite Jorgensen's abrupt exit.
"We have a strong product portfolio with lots of potential," Novo Nordisk board chairman Helge Lund said on a call with analysts on Friday. "We have an experienced executive team to continue to evolve and drive the company forward with a long-term perspective."
But Seigerman said the decision to swap CEOs seems to "draw attention to pivots in this strategy that may be necessary."
Investors have already been seeing potential signs of that shift, according to Seigerman.
Novo Nordisk has long prioritized peptide-based therapeutics. But the company's recent dealmaking indicates that it is leaning "heavier on oral small molecule solutions for the obesity market," Seigerman said.
The company 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 those products are years from entering the market, meaning the agreement is still risky.
The same can be said of several of Novo Nordisk's other recent tie-ups.
For example, Novo Nordisk in March said it had agreed to pay up to $2 billion for the rights to an early experimental drug from the Chinese pharmaceutical company United Laboratories International.
The newly acquired drug is a clear potential competitor to Eli Lilly's so-called "Triple G" obesity drug retatrutide because they both use a three-pronged approach to promoting weight loss and regulating blood sugar. But retatrutide is in late-stage clinical trials, which means it could enter the market years before Novo Nordisk's drug does.
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