Blockbuster drugs. Rising profits. Strong sales. And yet, Novo Nordisk, the Danish company behind the GLP-1 drugs Ozempic and Wegovy, made a surprising move last week: It pushed out its CEO. WSJ's Peter Loftus charts the rise of Ozempic and the fall of CEO Lars Jorgensen. Jessica Mendoza hosts. Further Listening: Trillion Dollar Shot Why WeightWatchers Wants in on Drugs Like Ozempic Sign up for WSJ’s free What’s News newsletter. Learn more about your ad choices. Visit megaphone.fm/adchoices
Chapter 1: What makes Ozempic a cultural phenomenon?
In the world of big pharma, this is the sound of liquid gold. An assembly line in Denmark fills glass vials with semaglutide. It's the active ingredient in the injectable drug that's become a bona fide cultural phenomenon. Where would you say Ozempic ranks in terms of successful drugs that you've covered?
One of the most successful of all time. It's up there from a financial perspective, but also just from a cultural impact perspective. It's one of the biggest deals. That's rare.
Tell me about the company behind this blockbuster drug.
Well, the company is Novo Nordisk, which is based in Denmark, and they've been around for about 100 years. Most of that time, probably a lot of Americans never heard of it.
Chapter 2: Who is Novo Nordisk and what is their impact?
Over the last decade, our colleague Pete Loftus has watched Novo Nordisk grow into a pharmaceutical juggernaut. Novo is one of the most valuable companies in Europe by stock market capitalization, thanks to the spectacular success of Ozempic and its sister drug, Wagovi.
Last year, their combined sales of just those two drugs were over $26 billion. Wow. For Ozempic, I think it was up about 25% from the year before. So on paper, the company is still growing tremendously.
Tremendous growth, strong sales, rising profits. Novo is a success story, which makes the latest news from the company all the more surprising.
The CEO of Novo Nordisk for the past eight years is leaving the company.
By leaving, do we mean he's resigning? Is he retiring? What's going on?
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Chapter 3: Why did Novo Nordisk's CEO leave unexpectedly?
This is not part of an orderly plan for him to go spend time on the beach and enjoy retirement. This was not his choice. He's essentially being pushed out.
Welcome to The Journal, our show about money, business, and power. I'm Jessica Mendoza. It's Wednesday, May 21st. Coming up on the show, Ozempic is a huge hit. So why is the drugmaker's CEO out? For most of its hundred-year history, Novo Nordisk was known mainly as a maker of insulin.
Novo's corporate headquarters outside of Copenhagen is even designed to mimic the winding structure of an insulin molecule. The company is also uniquely Danish in its corporate structure.
It's unusual because it's controlled by a nonprofit foundation in Denmark. And by Denmark's standards, there are actually quite a few of these among their larger companies. And it's essentially a way for Denmark, which, you know, is a country that has some socialist aspects, to embrace capitalism, but in a way that they feel helps benefit more than just the shareholders of a company.
So Novo Nordisk, the company, is overseen by the nonprofit Novo Nordisk Foundation. And it's the foundation that decides how to reinvest some of the company's profits.
To do things like invest in medical research or life sciences in some way that they feel potentially can help people in the future.
Novo's corporate structure effectively means that its CEO has to answer to the foundation. And since 2017, Novo's CEO has been Lars Juergensen.
He spent pretty much his entire career at the company. He started out as a health economist, very much a creature of the Novo culture.
And what was his tenure like?
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Chapter 4: What was Lars Jorgensen's impact on Novo Nordisk?
Novo Nordisk is one of the biggest gainers this morning.
Novo Nordisk, yesterday, the stock had the best session in about two and a half years.
And sales were through the roof.
Ozempic launched in the U.S. in 2018, just about a year after Jorgensen took over as CEO. The drug is approved for treating diabetes, but people quickly realized that the weekly doses didn't just help control blood sugar. They could help control weight. And that's when Ozempic really took off.
He oversaw this big change at the company where they went from this very reliable supplier of insulin to now having these newer types of drugs to help first treat diabetes and then weight loss.
Right. All right, have you heard of this so-called miracle drug Ozempic?
And so it was during his tenure that the company came out with Wegovy around 2021, the same drug, but specifically for weight loss.
It's a new weight loss drug that helps some people shave off 15% of their weight.
And that was really like the first significant anti-obesity drug to come out in a long time.
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Chapter 5: How did Eli Lilly respond to Ozempic's success?
The result would be a blockbuster for Eli Lilly. When the Indiana company presented early data of its new drug at a medical meeting, one specialist made a bold prediction.
That while Ozempic was the gorilla of GLP-1s, that what Eli Lilly is doing is the King Kong of GLP-1s.
Okay. In 2022, Lilly released its answer to Ozempic, Monjaro, approved for type 2 diabetes. The following year, the company came out with its answer to Wigovi. Lilly called its weight loss drug Zepbound.
Eli Lilly's drug, Zepbound, has been shown in studies to help people lose more weight than Wegovy. So we're talking between 20 to 25 percent of someone's body weight compared with, you know, 15 to 20 percent for Wegovy. And so that's been Eli Lilly going out there and saying, Novo, that's great what you did, but we think we have something better.
Soon, Novo CEO Lars Juergensen saw his company's lead slipping. Not only was Novo's old rival eating up market share, Novo also found itself struggling to keep up with demand. The company just didn't have manufacturing capacity to produce Ozempic and Wegovy fast enough, and shortages became common, which also opened the way for knockoff versions of the drugs to further erode Novo's market share.
Juergensen eventually resolved the manufacturing problem, but what investors were really after was the next breakthrough, the next Ozempic.
Novo Nordisk has been developing its own combination drug that they call Kagrosima. And this was something that Novo Nordisk itself, as well as investors, were really counting on.
By then, the end of 2024 was approaching, and Novo was hyping up Kagrosima as its new breakthrough drug. It just needed to prove it with a major clinical trial. That's next. Novo Nordisk needed a big win. And its CEO, Lars Jørgensen, was hoping that Cagrosima, a drug they'd been developing to treat obesity and type 2 diabetes, would be able to deliver.
For our confidence in the Cagrosima molecule is very, very high. Good to hear, Martin. Very encouraging.
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Chapter 6: What are the differences between Ozempic and Eli Lilly's new drugs?
Shares of Novo Nordisk plunging by the most on record today after disappointing data from its experimental obesity drug.
It was basically about 22%. But I think the stakes are so high in this industry and among investors that even this small shortfall was a huge disappointment. In a single day in December, Novo Nordisk's share price dropped 20%. And it cut $100 billion worth off their market cap. Wow. And you just don't see that very often for a large pharmaceutical company.
It's pretty incredible to think, you know, a few years ago, the idea of a drug being able to reliably help people lose up to 15% of their body weight was unthinkable. And now they're like, oh, only 22%. Sorry. Like, that's mind blowing.
Well, one thing I've learned is that investors get used to things pretty quickly and they want the next thing.
Pretty soon, the Novo Nordisk Foundation, the nonprofit running Novo Nordisk the company, started to have concerns over their ability to keep pace with Eli Lilly. And in January, those fears became a reality. New data showed that U.S. prescriptions for Lilly's Zepbound had beaten Novo's Wegovi for the first time.
By pharmaceutical industry standards, that's a pretty fast ramp. Zepbound came out at the end of 2023, and in just a year, it was able to take the top spot from Wegovy. And so at some point in the last several weeks, the chair of the Novo Nordisk Foundation expressed his concerns to the board of directors of the drug company.
And that began a discussion that they should speed up their timelines for a CEO transition.
And so, after eight years of leading Novo and helping it become one of the most profitable drug makers in the world, Jørgensen's time was up. Last Friday, the company announced that the CEO was leaving.
Given the circumstances, we and Lars-Fluge Jørgensen have concluded that it is in the best interest of the company that he steps down, which is what we have announced today.
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