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A view of the brand of Novo Nordisk on the corporate’s place of work in Bagsvaerd, at the outskirts of Copenhagen, Denmark, March 8, 2024.
Tom Little | Reuters
Novo Nordisk is banking on contemporary management to lend a hand it reclaim the crown within the booming weight reduction drug marketplace.
The Danish drugmaker on Friday all of a sudden introduced that longtime CEO Lars Fruergaard Jorgensen is stepping down, as its weight problems injection Wegovy loses flooring to Eli Lilly‘s rival remedy, Zepbound. While Eli Lilly entered the marketplace later, it’s rising because the frontrunner in an area that some analysts imagine may well be price greater than $150 billion by way of the early 2030s.
Novo Nordisk’s new best govt will wish to lend a hand the corporate shut the space with Eli Lilly, fend off rising opponents and navigate different demanding situations. The subsequent CEO must spearhead the corporate’s plans to release a brand new slate of weight reduction medicine sooner than key patents for Wegovy expire, and set up the affect of Medicare drug worth negotiations and President Donald Trump‘s deliberate price lists on prescription drugs.
It’s unclear who will take Jorgensen’s position, however the corporate mentioned it is thinking about each interior and exterior applicants.
“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 mentioned in a word on Friday, relating to different drugmakers racing to marketplace their very own weight problems remedies.
Novo Nordisk as soon as held the name of Europe’s most precious corporate – price $615 billion at its top – pushed by way of skyrocketing call for for Wegovy and its diabetes counterpart, Ozempic.
Novo Nordisk stocks have plunged within the closing yr as Eli Lilly good points flooring on its rival.
But investor enthusiasm has pale after Eli Lilly won a larger percentage of the marketplace and medical trial knowledge on Novo Nordisk’s subsequent wave of weight problems medicine underwhelmed buyers. Shares of Novo Nordisk have plunged greater than 50% during the last yr, wiping out over $300 billion in marketplace worth.
Novo Nordisk’s inventory continues to be up greater than 250% since Jorgensen took over as CEO in January 2017. But stocks of Eli Lilly have won about 800% since that very same month, when CEO Dave Ricks took over the corporate.
Mounting force additionally got here from the tough Novo Nordisk Foundation, the controlling shareholder of the Danish drugmaker. The basis not too long ago recommended Novo Nordisk’s management to believe an “accelerated CEO succession” and driven for better board illustration, in step with a commentary on Friday.
Novo Nordisk on Friday mentioned it collectively concluded with Jorgensen that it used to be time to discover a new CEO following the root’s request, contemporary marketplace demanding situations and the steep decline within the corporate’s percentage worth. Jorgensen mentioned he didn’t see his ouster coming and used to be simplest knowledgeable of it not too long ago, in step with a number of experiences on Friday.
Days sooner than the announcement, Novo Nordisk slashed its gross sales and benefit forecast for the primary time because the release of Wegovy 4 years in the past.
Seigerman mentioned it is nonetheless unclear whether or not a brand new best govt will have the ability to deal with the corporate’s demanding situations.
“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 mentioned.
Competition rises forward of drug launches
Novo Nordisk has been ceding marketplace percentage to Eli Lilly, although Zepbound’s greenback gross sales nonetheless path Wegovy’s.
Zepbound and Eli Lilly’s diabetes drug Mounjaro now make up over part of U.S. prescriptions for so-called GLP-1s, which mimic hormones to tamp down urge for food and keep watch over blood sugar, in step with a separate word from Seigerman previous this month.
That outpaces the blended 46% percentage of Novo Nordisk’s Wegovy and Ozempic.
A mix symbol displays an injection pen of Zepbound, Eli Lilly’s weight reduction drug, and containers of Wegovy, made by way of Novo Nordisk.
Hollie Adams | Reuters
New U.S. prescriptions of Zepbound surpassed the ones for Wegovy for the primary time in early March 2024, simply months after the release 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 marketplace, scorching 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 word in early May. Real-world knowledge 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 Street that its pipeline of next-generation weight reduction medicine can lend a hand it take care of its place out there, particularly after Wegovy loses exclusivity and drugmakers can promote less expensive generic choices.
For instance, Novo Nordisk many times advised buyers its CagriSema shot, anticipated to be introduced in 2026, would lend a hand other folks lose 25% or extra in their frame weight. But the once-weekly drug did not are living as much as that forecast in December 2024, sending stocks of the corporate plunging.
The corporate in April mentioned it has filed for U.S. approval of an oral model of semaglutide, the energetic aspect in Wegovy and Ozempic. It comes as drugmakers rush to increase extra handy weight reduction drugs, which might account for $50 billion of the marketplace within the coming years, in accordance to a couple analyst estimates.
But Seigerman, in a separate word in April, mentioned Novo Nordisk has no transparent technique for its oral weight problems drug portfolio. He mentioned this is “likely to challenge growth in the end of the decade,” particularly as Eli Lilly’s personal weight problems tablet impresses buyers and inches nearer to coming into the marketplace.
Unlike oral semaglutide, Eli Lilly’s tablet is a small-molecule drug and now not a peptide drugs. That approach Eli Lilly’s drug is absorbed extra simply within the frame and does not require nutritional restrictions like oral semaglutide does, that could be a notable benefit for the corporate.
Seigerman said that Novo Nordisk’s experimental small-molecule tablet, amycretin, may well be aggressive long-term. But he mentioned that may not occur quickly, because the drug isn’t anticipated to release for a number of years.
Outside of pipeline problems, Novo Nordisk and the remainder of the pharmaceutical business are grappling with the Trump management’s ambitions to decrease drug costs and produce production to the U.S. Trump has mentioned he plans to impose price lists on prescription drugs imported into the U.S. and signed an govt order that objectives to lower drug costs by way of tying them to the bottom costs out of the country.
Signs of a converting technique
Novo Nordisk made it transparent that its technique stays unchanged in spite of Jorgensen’s abrupt go out.
“We have a strong product portfolio with lots of potential,” Novo Nordisk board chairman Helge Lund mentioned on a decision 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 mentioned the verdict to switch CEOs turns out to “draw attention to pivots in this strategy that may be necessary.”
Investors have already been seeing doable indicators of that shift, in step with Seigerman.
Novo Nordisk has lengthy prioritized peptide-based therapeutics. But the corporate’s contemporary dealmaking signifies that it’s leaning “heavier on oral small molecule solutions for the obesity market,” Seigerman mentioned.
The corporate closing week introduced a licensing deal with the U.S. biotech corporate Septerna for experimental small-molecule drugs for weight problems and different cardiometabolic sicknesses.
But the ones drugs are in early building and the ones merchandise are years from coming into the marketplace, that means the settlement continues to be dangerous.
The similar will also be mentioned of a number of of Novo Nordisk’s different contemporary 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 pharmaceutical corporate United Laboratories International.
The newly obtained drug is a transparent doable 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. But retatrutide is in late-stage medical trials, because of this it will input the marketplace years sooner than Novo Nordisk’s drug does.
