Latest news with #LarsFruergaardJorgensen
Forbes
26-05-2025
- Business
- Forbes
Three Governance Lessons From Novo Nordisk's Stunning CEO Dismissal
Novo Nordisk, maker of the blockbuster diabetes and weight-loss treatments Ozempic and Wegovy, ... More outside their building in Bagsvaerd, Denmark (Photo by Mads Claus Rasmussen / Ritzau Scanpix / AFP) / Denmark OUT (Photo by MADS CLAUS RASMUSSEN/Ritzau Scanpix/AFP via Getty Images) The abrupt firing of Lars Fruergaard Jørgensen exposed a fatal flaw in Scandinavia's most stable ownership model: too much separation between social and business considerations. But the governance reforms sparked by this crisis may be exactly the fix Novo Nordisk needed. When Novo Nordisk announced on May 16 that CEO Lars Fruergaard Jørgensen was "stepping down," the pharmaceutical world was stunned. The real shock wasn't the departure itself—it was how it happened. The board leaked the decision before informing the CEO, who told Danish broadcaster TV2 that he never saw it coming. This mess exposed vulnerabilities in one of the world's most respected ownership models—foundation-owned firms—used by corporate giants from Patagonia to Ikea to the Tata Group. The Novo Nordisk crisis may offer a chance to fix these cracks, and Carlsberg's foundation structure shows how. Jørgensen's firing followed a spectacular market meltdown. Novo Nordisk shares plunged almost 50% since mid-2024 as U.S. rival Eli Lilly stole market share. The company lost approximately $300 billion in market value from its peak of $615 billion in March 2024. WASHINGTON, DC - SEPTEMBER 24: Novo Nordisk President and CEO Lars Fruergaard Jorgensen (Photo by ... More) This collapse happened despite Novo Nordisk operating in what analysts call the most lucrative pharmaceutical market in decades. The company stumbled badly. Compound copycats—temporarily allowed to ease supply shortages—hurt demand. Disappointing trial results for its next-generation obesity drug shook investor confidence. Meanwhile, Eli Lilly got its drugs off shortage lists faster and ramped up manufacturing more effectively. Even though Novo Nordisk's Foundation had good reason to worry about Jørgensen's performance, the company is organized to ensure that the Foundation stays out of Novo Nordisk's operations. Yet, this was clearly not the case in Jørgensen's firing. Novo Nordisk Board Chair Helge Lund said explicitly that the decision came from "an expression from our main owners to accelerate the CEO succession process." This level of interference broke the rules that Novo Nordisk seemed to have established. Here's how the Novo Nordisk Foundation is structured. Novo Nordisk Foundation has full ownership of Novo Holdings A/S, which is their profit arm. The 'A/S' is equivalent to 'Inc' in the US or 'PLC' in the UK, signaling a joint-stock, limited liability company. The Foundation appoints two members to Novo Holdings A/S, which owns 28.1% of the share capital of Novo Nordisk A/S. The Novo Nordisk Foundation, then, is quite removed from the Novo Nordisk board, but retains some influence through the Novo Holdings. This helps to separate the Foundation's philanthropic activities from the pharma business, which generates the philanthropic funds from their business activities. This setup was designed to prevent the Foundation from meddling in the operations of the business – the type of meddling seen with Jørgensen's firing. Chair of the Novo Nordisk Foundation Board, Lars Rebien Sorensen. Photo taken February 17, 2014. ... More (Photo by JEAN-FRANCOIS MONIER) But the recent crisis shows that too much separation creates its own problems. When foundations feel cut off from their companies, they may act rashly. In the case of the Novo Nordisk Foundation, these feelings may have been especially acute, because the Foundation Board Chair, Lars Rebien Sørensen, ran Novo Nordisk from 2000 to 2016. In 2015, the Harvard Business Review placed him at the top of their 'Best-Performing CEOs' list. Sørensen likely had strong opinions about Jørgensen's performance. Yet, Novo Nordisk Foundation did not waste this crisis. It is taking steps to fix the original problem. Sørensen will now sit in on Novo Nordisk board meetings as an observer and will also be nominated for a full board position at the 2026 Annual General Meeting. This marks a major shift toward dual-board representation. The question is whether this change undermines the foundation model or improves it. Industrial foundations are nonprofits that combine business ownership with philanthropy while prioritizing social goals. Foundation ownership challenges traditional shareholder capitalism's profit-first mentality and is gaining recognition as a viable way to control large public companies. Foundation-owned firms are common in Denmark, controlling about 25 of the country's 100 largest companies and 60% of its stock market value. Examples include Bertelsmann, Heineken, Ikea, Robert Bosch, Rolex, and the Tata Group. Although the evidence is not recent, a foundation-owned structure performs at least as well as dispersed ownership and family ownership, yet systematically performs better on its social impact. The key to their success is the clear separation of the foundation from the enterprises it owns: foundations advance social interests, businesses pursue profits. The foundation ensures the company doesn't violate core values but otherwise remains independent. Blur the boundaries between foundations and their companies, and the companies could lose focus while foundations develop conflicts of interest. But some communication is needed—if done right. Carlsberg shows how. Two of the Carlsberg Foundation's five board members sit on the brewery's board, including the Foundation Chair who serves as the company's Vice-Chair. This creates 'governance bridges'—formal channels that let foundations oversee without emergency interventions that can destabilize management and spook investors. Regular communication prevents the kind of crisis that hit Novo Nordisk. Some distance between foundations and companies helps both pursue their missions. But too much distance can trigger crises. Even well-designed governance separation becomes dangerous when communication breaks down during crises. Separation without communication channels can be as harmful as excessive meddling. I gained a genuine interest in this corporate form after interviewing the former CEO of Novo Nordisk, Mads Øvlisen, and 'father of CSR'. I became so intrigued that I investigated this form of ownership and also wrote about Yves Chouinard's decision to divest control of Patagonia to a trust. The Novo Nordisk crisis teaches three key lessons: Novo Nordisk's governance experiment faces close scrutiny in coming months. Whether the company can restore investor confidence while preserving foundation ownership's long-term stability will determine if this crisis becomes a cautionary tale or a successful reform model for foundation-controlled enterprises worldwide.
Reuters
22-05-2025
- Business
- Reuters
Focus: Novo Nordisk's former chief makes comeback to steer choice of new CEO
COPENHAGEN/LONDON, May 22 (Reuters) - Years before Novo Nordisk's ( opens new tab obesity drug Wegovy became a U.S. blockbuster, then-CEO Lars Rebien Sorensen told a press conference in Copenhagen: "You ain't seen nothing yet." More than a decade later, the 70-year-old is returning to Denmark's biggest company and is expected to strongly influence its future direction - most immediately through the selection of a new chief executive. His appointment as an observer on the board follows the removal on Friday of current CEO Lars Fruergaard Jorgensen by Novo and the Novo Nordisk Foundation - the company's controlling shareholder, which Sorensen chairs. Jorgensen succeeded Sorensen as CEO in 2017. Six people interviewed by Reuters said they think Sorensen will use his influence to push for an external hire, the first in Novo's 103-year history. The company has had only five chief executives, all Danes. A source close to Novo who spoke on condition of anonymity said Sorensen would look for someone who could recharge the company's U.S. performance, and that such a candidate was likely to come from outside. Under Jorgensen's leadership, Novo became a world leader in the lucrative weight-loss drug market, launching Wegovy in 2021. But in the United States, its largest and most profitable market, the drug has been struggling against U.S. rival Eli Lilly's (LLY.N), opens new tab Zepbound. The decision to remove Jorgensen showed the Foundation's frustration with management over the execution of a strategy to shift Novo's focus to obesity from diabetes care, devised when Sorensen was CEO, the same person said. Novo Nordisk chair Helge Lund on Friday said the company's strategy is unchanged despite the shake-up. Lund said last week the search would include internal and external candidates and Jorgensen will stay on until a successor is appointed. The Foundation declined to comment on Thursday. A Novo Nordisk spokesperson said Sorensen will participate in board meetings but holds no voting rights as an observer. He will become a full board member at the next AGM. Novo's shares have more than halved from their peak when the company was valued at $615 billion in June last year, one reason cited by the Foundation for intervening to remove Jorgensen. At one point Europe's most valuable company, its expansion bolstered Denmark's economy and the country's global standing. Nevertheless, Friday's move stunned investors, analysts and many Danes, who viewed it as a public humiliation of Jorgensen and the company's board. The change of CEO also comes at a critical moment for the pharmaceutical industry as U.S. President Donald Trump threatens tariffs on pharmaceutical products and wants drugmakers to cut U.S. prices of brand-name medicines. Financial analysts Reuters spoke to last week said an American chief executive might be better placed to deal with the Trump administration. Investors and analysts do not see Sorensen himself - who during his 16 years in charge was twice named global CEO of the year by Harvard Business Review - as a candidate for the job. When he stepped down as CEO in 2016, Novo cited as reasons increased competition in the U.S. market and pricing pressures for insulin, then its most profitable line. But some people said Sorensen might want someone with a similar style to his own. "He was very self-confident and a great communicator," said Frank Horning Andersen, a former analyst at Jyske Bank who covered Novo during Sorensen's tenure. In contrast, Jorgensen, an economist by training, is a self-described introvert. Pointing to "market challenges", Sorensen said on Friday the "timing is right for a new profile as CEO of the company". Gareth Powell, head of healthcare at London-based investment fund Polar Capital, told Reuters the Foundation's move to oust Jorgensen implied "a greater degree of scrutiny". "I think they need to be very careful going externally (for a CEO) because they've got to keep the pace up whilst they're going through this process," he said. "But if they think they need to do something dramatic here, then maybe an external (hire) shakes things up." As CEO, Sorensen had his own clash with the Foundation, over plans in 2004 for a merger with Swiss-based drug company Serono that could have seen company headquarters moved to Switzerland. The Foundation blocked the deal to preserve Novo's Danish roots, according to Kurt Jacobsen, professor emeritus at Copenhagen Business School, who wrote a book about the company. "Sorensen was furious," Jacobsen said.
Yahoo
21-05-2025
- Business
- Yahoo
BMO Capital Maintains Cautious Outlook on Novo Nordisk Amid CEO Transition
On May 19, BMO Capital Markets reaffirmed its "Market Perform" rating and $64.00 price target for Novo Nordisk A/S (NYSE:NVO) following the announcement of a CEO transition. Analysts view the leadership change as a response to competitive pressures and shareholder demands, but warn that without a strategic shift, challenges may persist. Pressmaster/ On May 16, Novo Nordisk (NYSE: NVO) removed CEO Lars Fruergaard Jorgensen, citing concerns over losing its first-mover advantage in the competitive obesity drug market. While Jorgensen led booming sales of Wegovy and Ozempic, the company's shares have fallen since reaching a record high in June 2024, facing growing competition from Eli Lilly (NYSE: LLY) and an unimpressive drug pipeline. Novo Nordisk stated the leadership change was driven by market challenges and its declining stock performance. While the CEO transition may reassure investors, BMO Capital remains skeptical about its near-term impact, noting that it does not signal a fundamental change in the company's strategy. The firm's April downgrade of the stock serves as a backdrop to its assessment, highlighting concerns about Novo Nordisk's competitive position and clinical progress. Experts warn that if Novo Nordisk doesn't make important changes to its strategy, it may keep facing tough challenges in the industry. The reaffirmation of its "Market Perform" rating and $64.00 price target underscores a cautious outlook on the company's future prospects. While we acknowledge the potential of Novo Nordisk A/S (NYSE:NVO) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than NVO and that has 100x upside potential, check out our report about the . READ NEXT: 20 Best AI Stocks To Buy Now and 30 Best Stocks to Buy Now According to Billionaires. Disclosure: None. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
CNBC
20-05-2025
- Business
- CNBC
Novo Nordisk's future in doubt after Wegovy maker's 'surprise' CEO ouster
Novo Nordisk 's ousting of longtime CEO Lars Fruergaard Jørgensen shocked analysts, with many questioning the future of the Wegovy obesity drug maker in its quest to fend off competition. The Danish pharmaceutical giant on Friday said that its chief was stepping down over concerns that the company was losing its market lead, adding that he would remain in situ throughout the search for a replacement. "[It's] a gigantic surprise," analysts at Denmark's Sydbank wrote in a note shortly after the announcement. "We admit that Novo Nordisk is currently facing challenges on the American market as a result of compounders' copies of Wegovy, just as the share price has fallen more than 50% [since summer 2024]," they added. "However, we also remind you that the share price has more than tripled during Lars Fruergaard Jorgensen's tenure as CEO of Novo Nordisk." NVO 5Y line Novo Nordisk. Jørgensen served at the helm of Novo Nordisk for eight years, overseeing the firm's transition from a key player in diabetes drug development to one of two market leaders in the nascent but burgeoning obesity drug space, alongside U.S. rival Eli Lilly . Novo Nordisk's share price has ridden a dramatic wave over that period, briefly rising to become Europe's most valuable company in 2023 on growing hype around weight loss drugs and their potentially wide-reaching applications . Over the past year, however, the stock's value has taken a battering on the back of rising competition from U.S. drug compounders and disappointing trial results for its next-generation obesity treatments. Shares dropped immediately on Friday's news, closing 1.8% lower, before rebounding Monday to trade up around 2.5%. Deutsche Bank said it had "mixed feelings" about the announcement, commending Novo Nordisk for taking ownership for recent shortcomings, but also questioning the timing of the announcement. "We welcome companies taking responsibility for poor performance ... even when that may not be fully under their control," the analysts wrote Friday. "Nonetheless, the decision appears a little haphazard in both timing and content," they added, noting that the news may have been better delivered during the firm's first-quarter earnings announcement earlier this month. J.P. Morgan was more sanguine on the move, saying it would allow the company to move its focus toward regaining market share. "While the announcement of the CEO transition is unexpected, we believe this reflects decisive action from the Novo Nordisk Foundation to put Novo in the strongest position to capitalize on the GLP-1 market opportunity over the next 10 years," the analysts wrote. What's next for Novo? The pharmaceutical industry at large has come up against increasing pressure from the Trump administration over drug pricing and prospective tariffs. Analysts told Reuters that Novo Nordisk could potentially seek an American CEO to navigate the complexities of its largest market. Novo did not immediately respond to CNBC's request for comment on the claims. However, Sydbank suggested that the decision could point to more wide-reaching issues at the firm. "The price movement in the Novo Nordisk share since the summer of 2024 has, in our estimation, also been largely driven by factors that have been beyond the influence of the Novo Nordisk management," the analysts wrote. "This raises the natural question of whether the current challenges are greater than what Novo Nordisk has expressed so far? The coming months will give a clearer answer to that," it wrote. Boxes of Ozempic and Wegovy made by Novo Nordisk at a pharmacy in London on March 8, 2024.
CNBC
19-05-2025
- Business
- CNBC
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.
