Novo Nordisk, the manufacturer of Wegovy, announced that Lars Fruergaard Jorgensen, its CEO, will resign due to concerns that the business is losing its first-mover advantage in the fiercely competitive market for obesity medications.
But after reaching a record high in June of last year, its stock has fallen as competition, especially from American rival Eli Lilly, has eroded its market share and investors have not been impressed by its pipeline of new medications.
Since mid-March, Eli Lilly's Zepbound obesity injection prescriptions in the US have outpaced those of Wegovy in its largest market.
The business stated that Jorgensen, 58, who has served as CEO since 2017, will continue to hold the position until a replacement has been found.
Lars Rebien Sorensen, the current chair of the Novo Nordisk Foundation and a 16-year former CEO of Novo Nordisk, will join the board as an observer with immediate effect in order to attend the next annual general meeting, Novo said.
The Novo Nordisk Foundation owns 77 percent of the voting shares in Novo Nordisk and controls the company through its investment arm.
After trading four percent higher earlier in the day, Novo Nordisk's share price dropped three percent at 1133 GMT as a result of the news.
The stock is down 59 percent from its peak in June of last year and 32 percent so far this year.
“Considering the recent market challenges, the share price decline, and the wish from the Novo Nordisk Foundation, the Novo Nordisk Board and Lars Fruergaard Jorgensen have jointly concluded that initiating a CEO succession is in the best interest of the company and its shareholders,” the company said.
Also Read: CES 1991: Nintendo's Treason Made Sony Rule With PlayStation's Success
Wegovy and its companion medication Ozempic were the first medications Novo brought to market for diabetes, but the Danish company has since lost market share to Lilly. According to BMO Capital Markets, its competitor Zepbound currently leads in prescriptions for obesity, and Lilly's diabetic version of the medication, Mounjaro, is expected to overtake Ozempic by August of next year.