Novo Nordisk bets on new CEO to regain weight loss drug edge over Eli Lilly

Novo Nordisk is banking on contemporary management to assist it reclaim the crown within the booming weight reduction drug market.

The Danish drugmaker on Friday abruptly introduced that longtime CEO Lars Fruergaard Jorgensen is stepping down, as its weight problems injection Wegovy loses floor to Eli Lilly‘s rival remedy, Zepbound. Whereas Eli Lilly entered the market later, it’s rising because the frontrunner in an area that some analysts consider might be value greater than $150 billion by the early 2030s. 

Novo Nordisk’s new prime govt might want to assist the corporate shut the hole with Eli Lilly, fend off rising rivals and navigate different challenges. The following CEO must spearhead the corporate’s plans to launch a brand new slate of weight reduction medicine earlier than key patents for Wegovy expire, and handle the impression of Medicare drug worth negotiations and President Donald Trump’s deliberate tariffs on prescribed drugs. 

It is unclear who will take Jorgensen’s place, however the firm mentioned it’s contemplating each inside and exterior candidates. 

“Whereas Novo [Nordisk] took a commanding early lead within the weight problems duopoly, they’ve ceded floor at a essential second when extra rivals are rapidly approaching,” BMO Capital Markets analyst Evan Seigerman mentioned in a notice on Friday, referring to different drugmakers racing to market their very own weight problems remedies. 

Novo Nordisk as soon as held the title of Europe’s most beneficial firm – value $615 billion at its peak – pushed by skyrocketing demand for Wegovy and its diabetes counterpart, Ozempic.

However investor enthusiasm has pale after Eli Lilly gained a much bigger share of the market and scientific trial knowledge on Novo Nordisk’s subsequent wave of weight problems medicine underwhelmed buyers. Shares of Novo Nordisk have plunged greater than 50% over the previous yr, wiping out over $300 billion in market worth.

Novo Nordisk’s inventory continues to be up greater than 250% since Jorgensen took over as CEO in January 2017. However shares of Eli Lilly have gained about 800% since that very same month, when CEO Dave Ricks took over the corporate. 

Mounting stress additionally got here from the highly effective Novo Nordisk Basis, the controlling shareholder of the Danish drugmaker. The inspiration just lately urged Novo Nordisk’s management to think about an “accelerated CEO succession” and pushed for better board illustration, in accordance with a press release on Friday.

Novo Nordisk on Friday mentioned it collectively concluded with Jorgensen that it was time to discover a new CEO following the inspiration’s request, latest market challenges and the steep decline within the firm’s share worth. Jorgensen mentioned he didn’t see his ouster coming and was solely knowledgeable of it just lately, in accordance with a number of studies on Friday. 

Days earlier than the announcement, Novo Nordisk slashed its gross sales and revenue forecast for the primary time for the reason that launch of Wegovy 4 years in the past. 

Seigerman mentioned it is nonetheless unclear whether or not a brand new prime govt will be capable to tackle the corporate’s challenges.

“Though it’d fulfill some for buyers to drive a CEO transition, with out significant change in near-term technique, we proceed to see a tougher path ahead,” he mentioned. 

Novo Nordisk has been ceding market share to Eli Lilly, though Zepbound’s greenback gross sales nonetheless path 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 urge for food and regulate blood sugar, in accordance with a separate notice from Seigerman earlier this month. 

That outpaces the mixed 46% share of Novo Nordisk’s Wegovy and Ozempic. 

New U.S. prescriptions of Zepbound surpassed these for Wegovy for the primary time in early March 2024, simply months after the launch of Eli Lilly’s drug, Reuters reported on the time. By August, some analysts have been estimating that Zepbound had captured 40% of the U.S. weight reduction drug market, sizzling on Wegovy’s heels.

That “market-share traction clearly demonstrates that physicians and sufferers want Zepbound” over Wegovy, Bernstein analyst Courtney Breen wrote in a notice in early Could. Actual-world knowledge and a head-to-head scientific trial have proven that Zepbound results in extra weight reduction than Wegovy. 

Novo Nordisk has additionally struggled to persuade Wall Road that its pipeline of next-generation weight reduction medicine may also help it keep its place out there, particularly after Wegovy loses exclusivity and drugmakers can promote cheaper generic options. 

For instance, Novo Nordisk repeatedly informed buyers its CagriSema shot, anticipated to be launched in 2026, would assist individuals lose 25% or extra of their physique weight. However the once-weekly drug didn’t stay as much as that forecast in December 2024, sending shares of the corporate plunging. 

The corporate in April mentioned it has filed for U.S. approval of an oral model of semaglutide, the energetic ingredient in Wegovy and Ozempic. It comes as drugmakers rush to develop extra handy weight reduction drugs, which may account for $50 billion of the market within the coming years, in accordance with some analyst estimates. 

However Seigerman, in a separate notice in April, mentioned Novo Nordisk has no clear technique for its oral weight problems drug portfolio. He mentioned that’s “more likely to problem development ultimately of the last decade,” particularly as Eli Lilly’s personal weight problems tablet impresses buyers and inches nearer to getting into the market. 

In contrast to oral semaglutide, Eli Lilly’s tablet is a small-molecule drug and never a peptide remedy. Which means Eli Lilly’s drug is absorbed extra simply within the physique and does not require dietary restrictions like oral semaglutide does, which can be a notable benefit for the corporate. 

Seigerman acknowledged that Novo Nordisk’s experimental small-molecule tablet, amycretin, might be aggressive long-term. However he mentioned that will not occur quickly, because the drug will not be anticipated to launch for a number of years. 

Exterior of pipeline points, Novo Nordisk and the remainder of the pharmaceutical trade are grappling with the Trump administration’s ambitions to decrease drug costs and convey manufacturing to the U.S. Trump has mentioned he plans to impose tariffs on prescribed drugs imported into the U.S. and signed an govt order that goals to chop drug costs by tying them to the bottom costs overseas. 

Novo Nordisk made it clear that its technique stays unchanged regardless of Jorgensen’s abrupt exit. 

“We’ve a robust product portfolio with plenty of potential,” Novo Nordisk board chairman Helge Lund mentioned on a name with analysts on Friday. “We’ve an skilled govt group to proceed to evolve and drive the corporate ahead with a long-term perspective.”

However Seigerman mentioned the choice to swap CEOs appears to “draw consideration to pivots on this technique that could be crucial.” 

Traders have already been seeing potential indicators of that shift, in accordance with Seigerman.

Novo Nordisk has lengthy prioritized peptide-based therapeutics. However the firm’s latest dealmaking signifies that it’s leaning “heavier on oral small molecule options for the weight problems market,” Seigerman mentioned. 

The corporate final week introduced a licensing take care of the U.S. biotech firm Septerna for experimental small-molecule drugs for weight problems and different cardiometabolic illnesses. 

However these drugs are in early growth and people merchandise are years from getting into the market, which means the settlement continues to be dangerous. 

The identical will be mentioned of a number of of Novo Nordisk’s different latest tie-ups.

For instance, Novo Nordisk in March mentioned it had agreed to pay as much as $2 billion for the rights to an early experimental drug from the Chinese language pharmaceutical firm United Laboratories Worldwide. 

The newly acquired drug is a transparent potential competitor to Eli Lilly’s so-called “Triple G” weight problems drug retatrutide as a result of they each use a three-pronged strategy to selling weight reduction and regulating blood sugar. However retatrutide is in late-stage scientific trials, which suggests it may enter the market years earlier than Novo Nordisk’s drug does.