Novo Nordisk CEO steps down in surprise move as 'market challenges' weigh on obesity drugmaker
Novo Nordisk (NVO) CEO Lars Jørgensen is stepping down from his post after eight years in the role, during which he lead the company to an all-time high in the markets.
Despite being the first-to-market in the latest generation of GLP-1 drugs, notably with its well-known diabetes drug Ozempic and weight loss drug Wegovy, Novo has recently faced several headwinds, causing the stock to suffer.
That includes missing sales estimates in first quarter earnings this year.
Those headwinds contributed to the decision Friday, the company said in a statement.
"Considering the recent market challenges, the share price decline, and the wish from the Novo Nordisk Foundation, the Novo Nordisk Board and Lars Fruergaard Jørgensen have jointly concluded that initiating a CEO succession is in the best interest of the company and its shareholders," the statement said.
Jørgensen, who has been with the company since 1991, will stay on through the transition as the company searches for a new leader.
Novo's stock was trading down more than 5% in premarket trading Friday.
In June 2024, the company was trading ata high of more than $140 per share, and the stock is up nearly 107% in the past five years.
Novo had to upgrade its guidance three times that year. It was why Yahoo Finance named it the 2023 Company of the Year.
In June 2024, the company was trading at a high of more than $140 per share, and the stock is up nearly 107% in the past five years.
After years of being known for its insulin and diabetes products, Novo produced what some have deemed an accidental blockbuster in the form of Ozempic, a diabetes treatment that showed greater weight loss than any prior treatment. It subsequently released Wegovy to target obesity.
The move has been credited with changing the narrative and stigma around obesity.
But trouble for the company began brewing when its popularity outstripped its supply, and the company began to face stiff competition with Eli Lilly (LLY).
Despite recent efforts, like partnering with telehealth firm Hims & Hers (HIMS), and sealing an exclusive deal for CVS's (CVS) drug formulary — Wall Street appears unimpressed.
Lilly followed Novo with similar drugs, for both the diabetes and obesity categories, within a year. With greater weight loss potential, Lilly's drugs also soon became popular, and the race began.
Both companies suffered shortages of their drugs, spurring a robust— and profitable — copycat market for compounding pharmacies. The FDA has since taken both companies' drugs off the shortage list, but the compounders appear to be determined to continue selling copycats where they can.
Lilly was able to get its drugs off the shortage list sooner, and has been able to ramp up manufacturing. Novo's parent company bought an existing contract manufacturer, Catalent, and sold three sites to Novo to help ease the production constraints.
Despite both mirroring efforts to compete, Lilly appears to be leading the race. Most recently, its weight loss drug Zepbound overtook Wegovy for new prescriptions. And Novo Nordisk missed first quarter sales this year,and cut its full year guidance.
The result has been pressure on the stock, and questions from Wall Street about whether or not it can continue to compete in the GLP-1 space.
"Not sure buy that that the entire delta is due to compounders, but stock washed out. Cleary need to regain share/confidence," Mizuho's healthcare expert Jared Holz said in a note to clients earlier this month.
Jørgensen's announcement marks the second surprising large healthcare CEO departure this week, as the sector faces several headwinds and underperforms the broader markets. Jørgensen is expected to be elected to the company's board in 2026.
Anjalee Khemlani is the senior health reporter at Yahoo Finance, covering all things pharma, insurance, care services, digital health, PBMs, and health policy and politics. That includes GLP-1s, of course. Follow Anjalee as AnjKhem on social media platforms X, LinkedIn, and Bluesky @AnjKhem.
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