Among Global Challenges, Novo Nordisk A/S’s CEO Steps Down, Executive Team is Shuffled

Published: Sep 01, 2016

Among Global Challenges, Novo Nordisk’s CEO Steps Down, Executive Team is Shuffled September 1, 2016
By Mark Terry, Breaking News Staff

Bagsvaerd, Denmark-based Novo Nordisk A/S announced today that the company’s president and chief executive officer, Lars Rebien Sorensen, will retire at the end of this year. He will be replaced by the current executive vice president and head of Corporate Development, Lars Fruergaard Jorgensen.

The change is somewhat unexpected. In April 2015, Novo Nordisk indicated that Sorensen would stay as head of the company until the end of his contract in 2019. It’s not clear if this is related to challenges the company is facing and Sorensen’s performance, or if he chose to step down for other reasons.

Sorensen took over the company’s helm in 2000. Since then the company’s share price has increased more than 840 percent. But its peak was in December 2015, and it’s dropped 22 percent since then.

“This move is an acknowledgement of the serious challenges they face, primarily on the U.S. market,” Frank Horning Andersen, an analyst with Jyske Bank, told Reuters. “After first-half results there has been lots of skepticism, especially among foreign investors, about Novo Nordisk’s ability to deliver.”

In a statement, Jorgensen said, “On the one hand, Novo Nordisk has never had a stronger portfolio and organization; on the other hand, we are facing an unprecedented level of payer pressure and competition.”

The competition for the diabetes market is intense, and oddly challenging, given the increasing growth of diabetes worldwide. According to the International Diabetes Federation, about 400 million people globally are affected by the disease. Because of the competition, payers have been able to force deeper discounts for companies that market insulin. MarketWatch wrote that this is “a dynamic which last month forced Novo Nordisk to cut its full-year guidance to the lower end of its previously announced range.”

Sorensen is expected to be nominated to the board of directors of the Novo Nordisk Foundation and Novo A/S in 2017. The foundation awards grants, and Novo A/S is a wholly owned subsidiary of the foundation. Novo A/S managed the Novo Nordisk Foundation’s commercial operations.

“With the competencies and experience that Lars Rebien Sorensen has, we found it obvious to ask him to consider standing for election to the boards of directors of the Novo Nordisk Foundation and Novo A/S,” said Sten Scheibye, chairman of both institutions, to MarketWatch. “Lars Rebien Sorensen has agreed to take on this dual responsibility.”

“It has been an honor to work here for more than 30 years and to serve as CEO during a period where we have been able to grow our business, build a strong pipeline and launch important new products to the benefit of our patients, our shareholders and our employees,” Sorensen said in a statement. “I have been closely involved in the assessments that have led to the Board’s decision to appoint Lars Fruergaard Jorgensen as my successor, a decision which I fully support. He is a great businessman and people leader and has a natural ability to find solutions where others see problems.”

A number of other executive leadership changes were announced as well. Jakob Riis, current executive vice president and head of Region China, Pacific & Marketing, will now be executive vice president and head of North America Operations. He replaces Jesper Hoiland, whose new role will be announced later.

Maziar Mike Doustdar will remain as executive vice president and head of International Operations, but is adding more duties for the company’s International Operations unit. And Jerzy Gruhn is stepping down as executive vice president and head of Europe, and will be senior vice president as head of Europe, reporting to Maziar Mike Doustdar.

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