Overhaul at Novo Nordisk Amid Market Challenges

The Danish pharmaceutical company Novo Nordisk, manufacturer of the GLP-1 weight-loss treatments Ozempic and Wegovy, is undergoing a complete overhaul in its governance structure. The Novo Nordisk Foundation, which holds 77% of the firm's voting rights, has executed a decisive boardroom shuffle, removing seven directors, including Chairman Helge Lund, who had been in the role since 2018. This aggressive intervention is a direct consequence of the Foundation’s profound dissatisfaction with the company's operational execution and strategic foresight, particularly in the critical U.S. market, concluding that the prior board was "too slow to recognize changes."

The move follows a severe erosion of Novo Nordisk’s market lead and a steep decline of approximately 60% in shareholder value since mid-2024. This market position has been undermined by two primary factors: the intense competition from Eli Lilly's successful rival drugs Mounjaro and Zepbound, and the proliferation of cheaper, compounded GLP-1 versions in the U.S. market. The Foundation also cited internal "strategic missteps," such as insufficient manufacturing capacity for Wegovy and an underestimation of the consumer self-pay segment, as necessitating this radical change in oversight.

A notable part of this restructuring is the appointment of Lars Rebien Sorensen, the current Chairman of the Novo Nordisk Foundation, as the new Chairman of the drug company's board. This dual role is historically unprecedented for Novo Nordisk and, given the Foundation's majority voting share, effectively grants Mr. Sorensen a carte blanche to steer the company's strategy. While some view this activist investor move as essential to instill immediate operational discipline, it introduces significant governance risk. Analysts are scrutinizing the potential conflict of interest and the erosion of board independence, with investor groups already demanding the dual role be strictly temporary, ideally for no more than 18 months.

This board overhaul reinforces the scrutiny on the new leadership team, including CEO Maziar Mike Doustdar, who has already announced a massive restructuring plan involving 9,000 job cuts. For investors, the near-term focus shifts entirely to execution. However, the fundamental risk remains whether this concentrated power can deliver immediate strategic clarity and competitive advantage without compromising long-term governance integrity. The market may temporarily tolerate this controversial structure only if it swiftly translates into successful product development, supply chain stability, and a regained competitive footing in the highly lucrative metabolic market.

WSJ Source