Novo rejigs U.S. team as passed-over CEO candidate heads for the door

Jakob Riis, Novo Nordisk’s departing head of North America Operations.

Someone entirely new at Novo Nordisk will have to figure out how to deal with big challenges in its largest market. The company's recently appointed head of North American operations, Jakob Riis, quit in a fit of pique over losing out on the Danish drugmaker's CEO job.

A 20-year veteran of Novo, Riis had been as a potential successor to Lars Rebien Sørensen, who stepped down as CEO in September, but Novo instead selected Lars Fruergaard Jørgensen. Riis was given the job of dealing with the U.S. market, where the company is facing a tough pricing picture and a volatile political scene.

Riis, who is leaving to be CEO of an ambulance provider, acknowledged to Denmark’s TV 2 news that he couldn't get past losing the horse race for Novo's top job. According to a translated copy of the interview, he said that after spending several years preparing to lead Novo, he found himself fighting the disappointment. He said he could not “dampen the desire to be number one.”

Frank Horning Andersen, an analyst for Jyske Bank in Denmark told WHTC radio that Riis is not the only one disappointed by the change of events.

"Investors had confidence in Jakob Riis, so I think this will be received negatively by the market," Andersen said.

Riis will be replaced by Doug Langa, who came to Novo in 2011 after years at Johnson & Johnson and then GlaxoSmithKline, Novo said today. Langa's expertise is in market access and payer marketing.

That background should serve Langa well, given the difficulties with which Novo is wrestling in the U.S., where payers have pitted companies against each other to extract deep discounts for diabetes meds.

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Novo last month reported that it managed 4% growth in the U.S. market in 2016, but this year could be another story. It forecast worldwide sales next year could fall in local currencies, and growth could be 1% to 6% on a reported basis. In explaining the downshift, CEO Jørgensen cited not only the tough payer picture but also the “uncertain” U.S. political environment where the president has told drugmakers to put a lid on prices.  

Toward that end, Novo has joined other companies with a promise that U.S. price increases would be limited to the single digits, and that it would make its products affordable for patients.

RELATED: Novo Nordisk vows to limit price hikes, stepping up pressure on its pharma rivals

Some of the public ire on price hikes has been focused directly at Novo and its diabetes rivals Sanofi and Eli Lilly, for their practice of steadily raising the cost of their insulins. That also has provided fuel for a couple of lawsuits alleging price fixing, one a putative class-action lawsuit filed by investors against Novo. A similar suit also names Sanofi and Lilly and suggests the diabetes giants have all been raising prices so they can offer discounts that appear bigger, in an attempt to gain better placements on formularies.  

But Novo says Langa is up to the task. Göran Ando, chairman of the Novo board, today said in the announcement that Langa’s “expertise in the area of market access makes him the natural successor to Jakob Riis."