Novo Nordisk announced that its CEO, Lars Fruergaard Jørgensen, will step down as the company navigates increasing competition and aims to revive its performance. Jørgensen, who has been CEO for eight years, will remain in his position temporarily to facilitate a smooth transition to new leadership. The search for his successor is underway, and an announcement will be made in due course.

The decision follows a period of challenges for Novo Nordisk, with its stock price declining by over 50% since mid-2024. This decline is attributed to heightened competition in the obesity drug market and disappointing trial results for its next-generation treatments. Shares of rival Eli Lilly rose by 1.7% following the announcement.

Board Chairman Helge Lund stated that discussions regarding Jørgensen's replacement had been ongoing for several weeks between Novo Nordisk and the Novo Nordisk Foundation, which controls the company. Jørgensen reportedly told Danish broadcaster TV2 that he was only recently informed of the decision and did not anticipate it.

Lund emphasized that Novo Nordisk's strategy remains unchanged, and the board is confident in the company's current business plans and its ability to execute them. However, the changes reflect the recent market challenges and the company's share price development since mid-2024.

Former Novo CEO and current chair of the Novo Nordisk Foundation, Lars Rebien Sørensen, will join Novo Nordisk's board, initially as an observer. This move is part of the company's efforts to address the challenges it faces.

Novo Nordisk recently reported lower-than-expected first-quarter sales for its flagship Wegovy obesity drug and adjusted its full-year sales growth forecast due to increased competition from compounded drug markets in the U.S. CEO Jørgensen acknowledged that "compounders took a part of our business away." However, the company anticipates sales to improve in the second half of the year as the availability of copycat compounded drugs decreases following the Food and Drug Administration's decision to end its drug shortage ruling.

The company has also faced negative sentiment due to disappointing trial results for its next-generation obesity drug candidate, CagriSema, despite Jørgensen's previous optimism about the treatment's prospects. He stated, "From the data we have, CagriSema is the best product that has been tested out or is on the market, and we believe we can get those data even better."