Novo Nordisk, a predominant global pharmaceutical company, maker of every major anti-obesity drug, just did something unexpected. They have already made CEO Lars Fruergaard Jørgensen resign. The company’s total market cap has tanked too, falling by just under half in the last year. This drop in share price occurs despite the fact that sales and profits have hit record highs, up over 300 percent!
Jørgensen, who has been at the helm for Novo Nordisk since 2017 and with the company since 1991, has engendered that company’s culture. Under his leadership, sales skyrocketed by over 4,000%. The firm’s revenues have more than tripled since 2021, jumping 25% to surpass 290 million Danish kroner last year. In that same period, costs only increased by about 11% while profits skyrocketed by nearly 20%. Even with this expansion, it has not been sufficient to stop the tide of their recent share price collapse. Since starting the year above $60, the price has been in free fall.
Novo Nordisk’s GLP-1 class drugs mostly drove it to becoming Europe’s most valuable company. Just earlier this month, the firm had forecasted that sales would increase at least 13% — if not as high as 21%. They further predict an increase in operating profit of 16% to 24%. The company is losing that race amid stiff competition, especially from Eli Lilly. This rivalry might finally be cutting into its share price.
Despite the company’s strong financial performance, Jørgensen expressed surprise at the board’s decision regarding his leadership. Even though he is leaving his executive post, Lars Rebien Sørensen will still maintain a higher profile as chairman of the board. He was the chief executive of Novo Nordisk until 2000 and now directs the Novo Nordisk Foundation. Helge Lund, the current chair of the board.
The recent upheaval has raised concerns among industry analysts about what else may be driving down the share price. Carsten Lonborg Madsen, an industry expert, noted, “Share price decline is not exactly something he can control so I was wondering if you can give some more detail on what exactly has driven this change right now.” He further commented, “It just feels like there’s something that has gone pretty wrong here.”
Seamus Fernandez added to the discourse, stating, “I’m sorry to belabour the point but I have to say that I’m confused by the discussion.”
Novo Nordisk has a rocky road ahead. Stakeholders are keenly watching how leadership changes will affect the company’s strategic direction and long term market position.