Novo Nordisk CEO Lars Fruergaard Jørgensen will step down as part of an accelerated leadership transition, marking a significant shift in the company’s leadership. Former CEO Lars Rebien Sørensen, who currently serves as the chair of the parent company and majority shareholder, the Novo Nordisk Foundation, will join the Novo Nordisk board.
Why It Matters
Jørgensen, who has been CEO since 2017, led the company through a period of remarkable share price increases, largely driven by the success of the firm’s GLP-1 therapy, semaglutide. However, since mid-2024, Novo Nordisk has faced pressure on its share price due to pipeline setbacks and increased competition from Eli Lilly.
Leadership Transitions in Healthcare
Leadership transitions appear to be increasingly common in the healthcare sector, driven by intense pressure to maintain growth while preparing for potential disruptions. These disruptions could stem from U.S. policy changes, including tariffs, price controls, and adjustments in research funding. Novo Nordisk’s ability to sustain its growth throughout the rest of the decade will also depend on how it navigates pharmacy benefit manager negotiations, interactions with the U.S. Food and Drug Administration, and the complexities of newer U.S. market dynamics. These dynamics include the emerging direct-to-patient sales channel for obesity drugs and Medicare negotiations for semaglutide.
The Bottom Line
We are maintaining our DKK 640/$89 fair value estimate for Novo Nordisk. Our current valuation accounts for industry pricing pressure, market share loss to Eli Lilly, and headwinds to semaglutide from the upcoming Medicare negotiation (2027) and patent loss in 2032.
Innovative Track Record and Challenges
Novo Nordisk’s long history of innovation has helped it maintain leadership in the insulin market for decades. The company’s continued focus on innovation in GLP-1 therapies and potential amylin combinations supports its competitive moat. However, Novo has a less established track record in acquiring pipeline candidates to supplement its internal innovation, although recent focus on novel oral drug candidates in the cardiometabolic space offers optimism.
What’s Next for Novo Nordisk?
Despite Novo Nordisk’s history of appointing long-tenured executives to its top position, the board may look externally for its next leader. The key criterion for this new leader will likely be a strong understanding of U.S. market dynamics, ensuring Novo can continue to adapt in a rapidly changing healthcare environment.
