Novo chairman to step down in board rift over tempo of change

The move is part of a wider shakeup at the maker of Wegovy and Ozempic drugs, with more than half of the board members set to depart. It comes not long after Novo replaced its chief executive officer following a slump in the shares, as the company has fallen behind US rival Eli Lilly & Co.

The overhaul followed a disagreement between the board and the Novo Nordisk Foundation, the biggest shareholder in Novo Nordisk, over the extent and speed of a planned shakeup, according to Lund.

“It has not been possible to reach a common understanding,” Lund said in a statement. 

The foundation prevailed over Lund and other departing directors in its drive for immediate, sweeping changes on the board in support of new Chief Executive Officer Maziar Mike Doustdar’s strategy. The new chief is trying to instill a “performance culture” to regain lost ground in the key US market.

“The board was perhaps too slow in recognizing the significance of the market changes in the United States and thereby also prompting management to take the necessary actions to adjust the base of the company towards the future business environment,” Sorensen said on a call with analysts. “It was a matter of speed and scope, basically, that we disagreed on.”

After pioneering the new class of weight-loss drugs, Novo has fallen behind Lilly in the booming market. The company has grappled with manufacturing issues in the US and a surge in sales of copycat drugs when demand for Wegovy outstripped supply. Doustdar, who took over in August, plans to slash Novo’s workforce by 11%. 

Weight-Loss Boom

The latest moves will extend the turmoil at Novo, which was known for its stable corporate culture until the weight-loss boom prompted a surge in its shares that briefly made the company the most valuable in Europe. That was followed by a slump when rivals led by Lilly muscled into the market.

Novo has also been under pressure from US President Donald Trump’s push to lower drug prices. Trump recently touted plans to cut the cost of Ozempic, the blockbuster diabetes treatment, to just $150 a month. Still, the scale of the board overhaul jolted investors.

The board was too slow to recognize and adapt to changes in the US market, and failed to stem an overexpansion at the company, even as growth slowed, according to Sorensen. 

“This is a huge failure,” he said on a media call.  

Novo shares traded 2.4% lower on Tuesday in Copenhagen. They’re down 56% over the past 12 months.

‘Clean Sweep’

“What surprises me is that it feels a bit like what you’d call a clean sweep — like when you break up with a partner and cut off all contact immediately,” said Lars Hytting, head of trading at ArthaScope, an investor in Novo. “I’ve been in this game for nearly 20 years, and I can’t recall seeing such a large-scale shake-up all at once, especially not at a company the size of Novo Nordisk.”

When previous CEO Lars Fruergaard Jorgensen was replaced with Doustdar, Sorensen joined the supervisory board, initially as an observer, with a full director’s role expected from next year. The foundation then issued a statement saying Sorensen had valuable experience and insights to share with Novo, suggesting he’d play a key role in the company’s overhaul.

In addition to Lund, Vice Chairman Henrik Poulsen and five independent board members will not stand for reelection, Novo said. Only five directors will remain, prior to an extraordinary general meeting on Nov. 14. Among them is Kasim Kutay, CEO of Novo Holding A/S, which oversees the foundation’s investments.

Novo also proposed several new members for election to the board, including former Pfizer Inc. Chief Scientific Officer Mikael Dolsten and ex-Danske Bank A/S Chief Financial Officer Stephan Engels. Helena Saxon, a former Investor A/B chief financial officer, was proposed for addition to the board next year. 

Lund also recently departed his other board chair position — from energy giant BP Plc — after the gap between BP and its peers widened. The company reset its strategic direction earlier this year to return to focusing on oil and gas after a 2020 pivot into low-carbon ventures failed. Weeks later, after the new strategy received a lukewarm reception from investors, Lund said he would step down.

One of the wealthiest charitable organizations in the world, the Novo foundation controls the drugmaker via a two-tier share structure. Sorensen previously served as CEO of Novo Nordisk from 2000 through 2016.