Once so valuable its market capitalization eclipsed that of its home country of Denmark, pharmaceutical giant Novo Nordisk is now showing signs of strain. Most recently, several members of Novo Nordisk’s board of directors quit after failing to reach an agreement with the Novo Nordisk Foundation, the firm’s controlling shareholder (via Novo Holdings), on the future composition of the board. The board’s chair, Helge Lund, is stepping down, as well as six other members.
“The Board proposed a renewal focusing on addition of select, new competencies while also maintaining continuity, whereas the Board of the Foundation wanted a more extensive reconfiguration,” Lund said in a press release.
Clashes over slow decision-making
The chair of the foundation, Lars Rebien Sørensen, said the foundation wanted a faster decision from the board. The foundation proposes that Sørensen will also serve as the chair of the board of directors until a new chair is elected.
The board of directors was too slow to recognize market changes in the U.S., and there was a disagreement on how to manage the change of CEO, Sørensen said during an investor call following the announcement. The foundation wanted a quick appointment, while the board proposed a more comprehensive process to review candidates.
“There’s no overall disagreement on the overall company strategy, its ambition and the execution program, which Mike and his leadership team have embarked on since September 10. We are fully aligned behind that. However, we believe in the foundation board that we needed a fresh set of eyes, new energy, to support management on this main process,” Sørensen said.
“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,” he added.
Sørensen also said during the call that the company is looking for potential board members who have expertise in the U.S. pharmaceutical market.
Novo Nordisk announced yesterday that the board of directors will convene an extraordinary general meeting to elect new members on Nov. 14. The proposed members to be elected at the meeting include Sørensen, Cees de Jong, Mikael Dolsten, Britt Meelby Jensen and Stephan Engels. It is proposed that Kasim Kutay, Elisabeth Dahl Christensen, Liselotte Hyveled, Mette Bøjer Jensen and Thomas Rantzau remain members of the board.
Market repercussions
Novo Nordisk stock dropped more than 1% at market open yesterday following the company’s announcement and an investor call. The stock fell another 2% at open this morning.
This is just the latest in a series of Novo Nordisk shakeups. In May, the company announced a new CEO who, just last month, announced the company would be making 9,000 cuts to the workforce. Former employees are now joking about being part of “Club 9,000” on social media. Novo Nordisk has had trouble competing with Eli Lilly’s Zepbound this year, which CEO Maziar Mike Doustdar cited as a reason for the cuts.
In the U.S., Donald Trump is determined to lower the cost of GLP-1s, vowing to reduce the monthly cost to just $150 a month. Payer net prices (post-rebate) for semaglutide (Wegovy) and tirzepatide (Zepbound) work out to about $569 and $664 per month, respectively, according to ICER data (or $6,829 and $7,973). Mehmet Oz, Administrator for the Centers for Medicare & Medicaid Services, said the reduced prices have not been negotiated yet.
Filed Under: Endocrinology
