A view of the brand of Novo Nordisk on the firm’s workplace in Bagsvaerd, on the outskirts of Copenhagen, Denmark, March 8, 2024.
Tom Little | Reuters
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 therapy, Zepbound. Whereas Eli Lilly entered the market later, it’s rising because the frontrunner in an area that some analysts imagine could possibly be price 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 subsequent CEO should spearhead the corporate’s plans to launch a brand new slate of weight reduction medication 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 stated 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 shortly approaching,” BMO Capital Markets analyst Evan Seigerman stated in a observe on Friday, referring to different drugmakers racing to market their very own weight problems therapies.
Novo Nordisk as soon as held the title of Europe’s most useful firm – price $615 billion at its peak – pushed by skyrocketing demand for Wegovy and its diabetes counterpart, Ozempic.
Novo Nordisk shares have plunged within the final yr as Eli Lilly beneficial properties floor on its rival.
However investor enthusiasm has pale after Eli Lilly gained a much bigger share of the market and medical trial information on Novo Nordisk’s subsequent wave of weight problems medication underwhelmed traders. 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 remains 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 strain additionally got here from the highly effective Novo Nordisk Basis, the controlling shareholder of the Danish drugmaker. The inspiration not too long ago urged Novo Nordisk’s management to contemplate an “accelerated CEO succession” and pushed for better board illustration, in accordance with a assertion on Friday.
Novo Nordisk on Friday stated it collectively concluded with Jorgensen that it was time to discover a new CEO following the inspiration’s request, current market challenges and the steep decline within the firm’s share worth. Jorgensen stated he didn’t see his ouster coming and was solely knowledgeable of it not too long ago, in accordance with a number of stories on Friday.
Days earlier than the announcement, Novo Nordisk slashed its gross sales and revenue forecast for the primary time because the launch of Wegovy 4 years in the past.
Seigerman stated it is nonetheless unclear whether or not a brand new prime govt will be capable of deal with the corporate’s challenges.
“Though it’d fulfill some for traders to drive a CEO transition, with out significant change in near-term technique, we proceed to see a tougher path ahead,” he stated.
Competitors rises forward of drug launches
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 observe from Seigerman earlier this month.
That outpaces the mixed 46% share of Novo Nordisk’s Wegovy and Ozempic.
A mix picture exhibits an injection pen of Zepbound, Eli Lilly’s weight reduction drug, and containers of Wegovy, made by Novo Nordisk.
Hollie Adams | Reuters
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, scorching 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 observe in early Could. Actual-world information and a head-to-head medical trial have proven that Zepbound results in extra weight reduction than Wegovy.
Novo Nordisk has additionally struggled to persuade Wall Avenue that its pipeline of next-generation weight reduction medication may also help it keep its place available in the market, particularly after Wegovy loses exclusivity and drugmakers can promote cheaper generic alternate options.
For instance, Novo Nordisk repeatedly informed traders its CagriSema shot, anticipated to be launched in 2026, would assist folks lose 25% or extra of their physique weight. However the once-weekly drug did not reside as much as that forecast in December 2024, sending shares of the corporate plunging.
The corporate in April stated it has filed for U.S. approval of an oral model of semaglutide, the lively ingredient in Wegovy and Ozempic. It comes as drugmakers rush to develop extra handy weight reduction capsules, which may account for $50 billion of the market within the coming years, in accordance with some analyst estimates.
However Seigerman, in a separate observe in April, stated Novo Nordisk has no clear technique for its oral weight problems drug portfolio. He stated that’s “more likely to problem progress in the long run of the last decade,” particularly as Eli Lilly’s personal weight problems tablet impresses traders 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 treatment. Which means Eli Lilly’s drug is absorbed extra simply within the physique and would 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, could possibly be aggressive long-term. However he stated that will not occur quickly, because the drug is just not anticipated to launch for a number of years.
Outdoors 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 produce manufacturing to the U.S. Trump has stated he plans to impose tariffs on prescribed drugs imported into the U.S. and signed an govt order that goals to reduce drug costs by tying them to the bottom costs overseas.
Indicators of a altering technique
Novo Nordisk made it clear that its technique stays unchanged regardless of Jorgensen’s abrupt exit.
“We have now a powerful product portfolio with a lot of potential,” Novo Nordisk board chairman Helge Lund stated on a name with analysts on Friday. “We have now an skilled govt group to proceed to evolve and drive the corporate ahead with a long-term perspective.”
However Seigerman stated the choice to swap CEOs appears to “draw consideration to pivots on this technique which may be essential.”
Buyers 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 current dealmaking signifies that it’s leaning “heavier on oral small molecule options for the weight problems market,” Seigerman stated.
The corporate final week introduced a licensing deal with the U.S. biotech firm Septerna for experimental small-molecule capsules for weight problems and different cardiometabolic ailments.
However these capsules are in early improvement and people merchandise are years from getting into the market, which means the settlement remains to be dangerous.
The identical will be stated of a number of of Novo Nordisk’s different current tie-ups.
For instance, Novo Nordisk in March stated 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 method to selling weight reduction and regulating blood sugar. However retatrutide is in late-stage medical trials, which suggests it may enter the market years earlier than Novo Nordisk’s drug does.