In a dramatic turn of events, Danish pharmaceutical giant Novo Nordisk has reinstated its former chief executive Lars Rebien Sorensen as chairman, highlighting the intensifying rivalry with American competitor Pfizer Inc. The decision came during an extraordinary shareholder meeting that exposed deep fractures within the company's leadership and set the stage for a new chapter in the competitive obesity drug market.
Boardroom Drama and Pfizer Connection
The shareholder meeting revealed unexpected tensions when proposed board member Mikael Dolsten, former chief scientific officer at Pfizer, withdrew his nomination just one day before the vote. Sorensen confirmed the withdrawal was due to an "issue with a former employer" without naming the company, though the timing raised eyebrows given recent developments.
This development comes less than a week after Pfizer outmaneuvered Novo Nordisk in a $10 billion bidding war for obesity biotech company Metsera Inc. Pfizer's acquisition, which closed on Thursday, positions the two companies as direct competitors in the lucrative obesity treatment space that has become pharmaceutical's hottest market.
"We had very much looked forward to working together with Mikael Dolsten," Sorensen told shareholders. "We hope that he might return at a later point in time. He's welcome any time in the Novo family."
Tumultuous Weeks and Leadership Overhaul
The meeting capped several weeks of turmoil for Novo Nordisk, beginning last month when more than half of the supervisory board resigned following disputes over the pace of change at the company. The maker of blockbuster drugs Ozempic and Wegovy has been struggling to maintain its competitive edge.
Sorensen's appointment was essentially predetermined given his position as head of the Novo Nordisk Foundation, which controls 77% of the company's voting rights. The executive, who previously ran Novo Nordisk for 16 years and brought the company's first weight-loss shot to market, won approval with more than 93% of proxy and postal votes.
However, not all investors supported the leadership revamp. Prominent minority investors including Norway's sovereign wealth fund and CalSTRS, the pension fund for California educators, indicated they would reject the changes. Influential proxy adviser Institutional Shareholder Services Inc. recommended shareholders abstain, criticizing the overhaul for showing "limited transparency and accountability to minority shareholders."
Aggressive New Strategy and Market Challenges
Sorensen acknowledged the concerns and stated he would seek a new chairman for the foundation while also working to "make myself redundant as quickly as possible" on the Novo board. The executive has teamed up with new CEO Mike Doustdar to implement an aggressive recovery plan that has already shown a appetite for risk.
The Sorensen-Doustdar partnership made headlines with their unsuccessful attempt to disrupt Pfizer's acquisition of Metsera. The bidding war escalated all the way to the Oval Office, where Doustdar challenged Pfizer CEO Albert Bourla to raise his bid.
"We have gotten a warrior as a CEO for the company," Sorensen declared during the meeting. "I think that is what he called himself in interviews and certainly we have not been lacking in activity in the company."
This new aggressive stance marks a significant departure from Novo Nordisk's traditionally consensual culture. Since taking leadership, Sorensen and Doustdar have announced layoffs affecting 11% of the workforce, axed long-term pet projects including diabetes cure research using stem cells, and initiated the high-stakes bidding war with Pfizer.
Danish author Hanne Sindbaek, who has written three books about Novo, observed: "The velvet gloves are off. Now they realize it's a rough market, and we have to play rough."
Competitive Pressures and Future Outlook
Novo Nordisk faces significant challenges in the obesity market after losing its lead to rival Eli Lilly & Co. and experiencing disappointments with its next-generation experimental drug CagriSema. While competitors advance novel compounds, Novo's upcoming offerings are primarily reworked versions of existing drugs, including Wegovy in pill form and higher-dose injections.
Some investors expressed concerns about the company's new aggressive direction. Markus Manns, a portfolio manager at Union Investment in Frankfurt, advised that Novo needs to evaluate future deals more carefully "and definitely take much less risk than they did" with the Metsera pursuit.
"What I don't want are bold actions or risky deals," Manns emphasized, calling for a "sound and sustainable" strategy to regain market share from Eli Lilly and diversify the company's portfolio.
Despite the challenges, some investors remain optimistic about Sorensen's return. Sebastien Malafosse of Edmond de Rothschild Asset Management noted that Sorensen was a "very successful CEO" during his previous tenure, overseeing a 400% sales increase and the introduction of Saxenda, Wegovy's predecessor.
The leadership changes and strategic shifts come at a critical juncture for Novo Nordisk as it attempts to reclaim its position in the rapidly evolving obesity treatment market while navigating increased competition from both established rivals and new entrants.
