The man who last year topped Harvard Business Review’s “world’s best-performing CEO” ranking will be stepping down from Danish diabetes company Novo Nordisk after 16 years on the job.
Lars Rebien Sorensen's move appears to be a departure from the company's long-term plan, reiterated last year. Novo had said that its long-standing chief would see out his contract until 2019. Then again, this is Sorensen's second retirement announcement; back in 2015 he said he intended to step aside before his term expired.
Sorensen's decision to leave coincides with intensified pricing pressure from U.S. payers and stepped-up competition from rival drugmakers. The pharmacy benefits manager Express Scripts excluded a handful of Novo's best-selling diabetes products from its 2017 formulary, and the company says it has had to trade discounts for formulary placement elsewhere.
Sorensen's shoes will from the start of next year be filled by Lars Fruergaard Jorgensen, currently the company’s EVP and head of corporate development.
Meanwhile, Sorensen will have plenty of work to do. Novo's long-dominant, once-daily GLP-1 drug Victoza may still be growing sales, but it's losing market share to Eli Lilly's longer-acting alternative, Trulicity. Victoza now boasts data showing it cuts heart risks, including the risk of heart attack and cardiovascular death, but Lilly and Boehringer Ingelheim sell an SLGT2 drug, Jardiance, that has similar data in its pocket.
Generic competition to insulin products is also piling on the problems for all diabetes drugmakers. Lilly and Boehringer are expected to launch a biosimilar version of Sanofi's blockbuster Lantus in December; that drug, dubbed Basaglar, will also compete with Novo's new basal insulin, Tresiba, one of the products the company has pegged for growth.
For all these reasons, Novo a month ago cut its forecast for full-year profit growth. Novo now expects sales growth of 5% to 7% and its projected profit growth of 5% to 8%. It earlier expected its profit could grow by as much as 9%.
Jorgensen, then, has a big job to do, and he knows it. “Succeeding Lars, who during 16 years as CEO of Novo Nordisk has spearheaded Novo Nordisk into a global, very successful and highly respected pharmaceutical company, is a tall order," the incoming CEO said in a statement.
Jorgensen may not have been Novo's first choice; in early 2014, the Danish drugmaker appointed longtime exec Kare Schultz to be president and COO. Word was that Schultz was being groomed for the CEO's chair, and by the time 2015 rolled around, Sorensen had said he probably wouldn't serve out his contract. But last May, Schultz jumped the Novo ship to take the helm at crosstown rival Lundbeck.
Göran Ando, the company’s chairman, said Jorgensen had a track record of “creating results, driving change and being a role model for the Novo Nordisk Way of running a company.” He added: “In his new role, he will be charged with leading Novo Nordisk through a time of extraordinary change in healthcare systems around the world."
Among Jorgensen's tasks will be overseeing the last stages of development for semaglutide, the longer-acting GLP-1 Novo sees as a successor to Victoza. Its injectable formula is on track to go to the FDA for approval by the end of this year. Coming up the pipeline behind it is an oral semaglutide, which would be the world's first oral GLP-1 med. The company is also plowing resources into obesity research, and it continues to quest after the holy grail of diabetes treatment, oral insulin.
In the meantime, the company said earlier this month that most of its 2017 formulary negotiations were complete, yielding net prices that will be “moderately lower” compared with this year. But at the time, execs were adamant that, with new innovative products coming on line, there is still room for Novo, which controls nearly half of the global diabetes market, to grow worldwide sales over the next few years.
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