Transcript fra special investor call efter Novo Nordisk-chef Lars Fruergaards exit: Sådan forklares hans afgang

Welcome to this Novo Nordisk call regarding the changes to Novo Nordisk executive leadership and Board of Directors that we have announced today. My name is Jacob Rode, and I’m the Head of Investor Relations at Novo Nordisk. With me today, I have Helge Lund, Chair of the Board of Directors of Novo Nordisk.

Today’s announcement is available on our website, novonordisk.com. Please note that the call is being webcasted live and a recording will be made available at our website as well. The call is scheduled to last for a maximum of 30 minutes.

We need to advise you that this call will contain forward-looking statements. These are subject to risks and uncertainties that could cause actual results to differ materially from expectations. For further information on forward-looking statements and risk factors, please see the company announcement for the first 3 months of 2025, which was released on May 7.

With that, over to you, Helge, for a review of today’s announcement.

Thank you, Jacob, and thank you for — to everyone for calling in. We have today announced 2 changes to Novo Nordisk’s executive leadership and Board of Directors. As per mutual agreement with the Novo Nordisk Board, Lars Fruergaard Jørgensen will step down from his role as the CEO of Novo Nordisk. He will continue as CEO for a period to support a smooth transition to new leadership. Furthermore, the Novo Nordisk Board has agreed with the Novo Nordisk Foundation Board that Lars Rebien Sørensen, Chair of the Novo Nordisk Foundation, as of today will participate as an observer in Novo Nordisk’s Board meetings. This is with the intention that he be nominated for election as a Board member at the Annual General Meeting in 2026.

As I’m sure you know, the Novo Nordisk Foundation, through its investment company, Novo Holding A/S, is the majority shareholder of Novo Nordisk. The changes are made on the background of the market challenges Novo Nordisk has been facing recently and the development of the company’s share price since mid-2024.

In light hereof, the Novo Nordisk Foundation Board initiated a dialogue with the Novo Nordisk Board on the merits of an accelerated CEO succession and expressed a wish to increase its representation on the Novo Nordisk Board. Following this dialogue, Novo Nordisk Board and Lars Fruergaard Jørgensen has, after careful consideration of the wishes from our main shareholder, decided at the Board meeting today to make the mentioned changes.

As regards to CEO change, the Novo Nordisk Board has until now been working with a different CEO succession time line that did not call for an imminent change. However, given the circumstances, we and Lars Fruergaard Jørgensen have concluded that it is in the best interest of the company that he steps down, which is what we have announced today. He will, as I mentioned earlier, continue as a CEO for a period to support a smooth transition to new leadership. Therefore, we are not, at this point, ready to announce a successor to Lars Fruergaard Jørgensen. Succession planning is not an event.

It’s an ongoing process, including both internal and external candidates. And given the decision for Lars Fruergaard Jørgensen to step down and considering the nature of the accelerated succession process ahead, we inform the market now. This means that I will not offer any suggestions for when a new CEO will be appointed, but just say that we have accelerated our ongoing succession process and will make an announcement in due course.

The other change we announced today concerns the Board of Directors. I would like to welcome Lars Rebien Sørensen as an observer to the Board. He knows the company very well. And Lars Rebien Sørensen has extensive firsthand experience of the pharmaceutical industry and the environments in which it operates from his 16 years as a CEO of Novo Nordisk. His experience will be valuable for the Board, and we look forward to working with him initially as an observer.

An announcement like the one we have made today will, of course, raise questions about whether they imply changes to the company’s current plans and strategies and how the company will manage in the period until the new CEO is in place. Let me say this, Novo Nordisk’s strategy remains unchanged as to the plans and initiatives we presented last week in connection with our first quarter financial announcement. And the plans have the Board’s full support, and we are confident in the company’s ability to execute on those plans also in the period until the new CEO is in place.

So with that, thank you, Jacob, and back to you.

Thank you, Helge. And with that, we are now ready to take the first question. [Operator Instructions] and remind that the purpose of this call is on today’s announcement and only today’s announcement, please. Thank you.

[Operator Instructions] We will now take the first question from the line of Sachin Jain from Bank of America.

Could you just discuss what profile of candidate you’re looking for? And could you clarify whether the guidance still stands? You said the plans are supported by the Board, but you didn’t officially say the guidance still stands.

There are no changes to the guidance that we’ve given at the first quarter. When it comes to the profile of the new CEO, that is a focus of the Succession Committee and the Board, and we do not — and we will keep that to ourselves until we are ready to make the announcement.

Next question is from the line of Carsten Lønborg from Danske Bank.

Just last time I looked, I think Novo Nordisk has had 5 CEOs in 100 years, and Lars is now stepping down after only 8 years. In the release, you write that it’s market challenges and the share price decline, which doesn’t really feel like something — at least the share price decline is not exactly something he can control. So I was wondering if you can give some more details on what exactly has driven this change right now because it seems like a very big thing.

So as we said in our release earlier, the changes are made in the context of the recent market challenges and the recent share price decline as well as a wish from our main majority owner to accelerate the CEO succession process and taking those considerations into account, the Board has determined that the best interest of the company is to announce the change of a CEO today.

But this is something that has been going on since mid-2024, right? And I’m sure there are many on this call that has covered Novo for a very, very long time. And the way we know Novo is that normally you have patience when you’re on the right track and then you kind of let things move in the right direction once you have the strategy right. So it just feels like there’s something that gone pretty wrong here.

We have a clear strategy and that remains unchanged. We have a strong product portfolio with lots of potential. We have an experienced executive team to continue to evolve and drive the company forward with a long-term perspective. And again, what drove the decision now was a combination of the recent market challenges, the share price decline as well as an expression from our main owners to accelerate the CEO succession process. There is nothing more behind this.

The next question is from the line of Michael Novod from Nordea.

Another question to the guide, as you say, is standing, but is there anything on sort of pipeline strategy that has also accelerated the wish from the Novo Foundation to accelerate the CEO succession?

As I said, I refer to what I said earlier on the call, there is nothing more than I indicated earlier, these 3 factors, the recent market challenges, the share price decline as well as the wish from the foundation. And the company has a strong product portfolio, a strong pipeline that creates a very strong basis for taking the opportunities in a large growing market with a significant unmet need.

The next question comes from the line of Richard Vosser from JPMorgan.

Just wanted to ask what Lars Rebien Sørensen brings exactly to the Board. Obviously, he has a lot of experience during the insulin days and the early days of GLP-1. But what skills does the Novo Foundation think that he will add to the Board? And aligned to that, do you think you need more consumer experience on the Board given the overlap of obesity with medical prescribing and consumerism?

Thank you, Richard, for your question. And of course, Lars Rebien Sørensen knows the company very well and has extensive first-hand experience of the pharmaceutical industry and also the environment in which he operates from his 16 years as a CEO of Novo Nordisk. And the Novo Nordisk Board will definitely benefit from his capabilities and experience. You may recall, Richard, that a couple of years back, we recruited a new member to the Board of Novo Nordisk, Christina Law. Her entire career in fast-moving consumer goods has been a fantastic addition to our Board. And of course, we will continue to review the composition of the Board as we move forward. So your question is definitely relevant.

The next question comes from the line of Peter Verdult from BNP.

Pete Verdult, BNP. Sorry to test your patience, but I just want to just delve a little bit more into the timing of this announcement. I mean we were all with management last week, a clear strategy being laid out to try and reverse Novo’s fortune. So should we infer that this decision is some sort of signal that the Board doesn’t believe in the strategy or it’s a reaction to some of the recent moves being made by Novo as it relates to telehealth and the CVS deal? I just want to — sorry, as I said, to test your patience, but I just want to understand better the timing of the deal — the timing of the move.

Thank you, Peter. And I just wanted to reiterate that Novo Nordisk’s strategy remains unchanged. And the Board is confident that the current business plans and its ability, the organization’s ability to deliver on those plans — and I can assure you that the plans have been extensively discussed with the Board of Directors and the plans have the full support of the company.

Next question comes from the line of Simon Baker from Redburn Atlantic.

Just another one on the strategy. You said that the strategy as it stands is intact and unchanged. I’m just wondering, given that the Board clearly thinks that some change needs to be made in the future on the appointment of a new CEO, does the Board envisage there being a significant change to strategy? Or is this more a case of changing execution on the existing plan? Any color you can give there would be most helpful.

Thank you, Simon. We do not envision a significant strategy change in the company, as I’ve already said. So the strategy is unchanged. The plan that we are executing now will not change. But of course, over time, when the market is developing, the industry is developing, of course, the new CEO will also continue to evolve and adapt the strategy to the prevailing sort of environment. But this is not an announcement about the strategy change. This is an announcement about that Lars is stepping down and that we have Lars Rebien Sørensen coming on to the Board of the company. And that is the framework for this conversation.

Next question from the line of Harry Sephton from UBS.

This announcement follows what has already been a number of changes at the senior management level with Doug and Camilla also recently stepping down. So what do you think has been lacking from Novo Nordisk leadership? And do you think you need to look externally for experience to address those shortcomings?

There is no linkages between the announcements that you’re referring to. This is only about Lars Fruergaard Jørgensen and the Board’s decision that he steps down given what I talked about earlier and changes to the Board. We have a strong and experienced leadership team that is fully focused on executing on our plan and also largely support that in the next coming transition period. And of course, Novo is primarily developing and promoting leaders from within, but we have also successfully recruited very strong talent from the outside of the company, and that will continue.

Next question comes from the line of Mike Nedelcovych from TD Cowen.

So you’ve been very clear that there’s no change to the current strategy. I’m curious if there was any disagreement as to how one might envision what Novo Nordisk looks like in 10, 20 or 30 years and if perhaps that played into this decision. And this is probably a reach, but it’s interesting that this announcement comes on the heels of the small molecule partnership, which one could consider already something of a departure from Novo’s strategic history.

We have had very extensive strategy discussions over the past few years, and we have communicated the framework of our strategy and our strategic aspirations to the market, and there is no change to that. And the company is fully focused and the Board is fully focused on delivering on those. And also, Mike, there are no — there is no connection to the deal that we announced earlier this week on small molecule technologies.

Next question from the line of Evan Seigerman from BMO Capital Markets.

This is Conor MacKay on for Evan. With the CEO transition still expected to take several months, can you maybe walk us through a bit on how Novo can work to drive continuity and not succeed ground to competitors in the endocrine market during this time of transition?

Lars has the full support of the Board, the full support of the foundation in terms of taking the company forward and leading the company in the transition period. We have a very strong leadership team, which are focusing on delivering on the plan. So there are no discontinuities in the way we execute on the plan for the next few months.

Next question is from the line of Kerry Holford from Berenberg.

I would just be interested to hear whether the CEO transition plan was already in place. Was this already something you were considering this year? And then a quick follow-up in the context of the surprise announcement today. I wonder if you can just provide the assurance on CagriSema, the upcoming data presentations at ADA and whether you will host an investor event at that conference.

Thank you for the question, Kerry. I think Jacob can take the second question. I just wanted to underline that a succession process, that’s a process and not an event. And I can assure you that we are working diligently with succession at all levels of the company, including at the CEO level. So this is an ongoing process where we are looking at internal as well as external candidates. So the announcement this morning is about accelerating that process and building on the work that we have done so far.

And then on the second one, thank you, Kerry. Given the focus of today’s call is on today’s announcement, a colleague from the Investor Relations team will follow up with you separately. Thanks a lot.

The next question comes from the line of James Quigley from Goldman Sachs.

So I’ve got one on what the goal is for the foundation to add another member to the Board. Is this specific to the skill set that Lars Rebien Sørensen is going to bring to the Board? Is it something that they felt was missing either from a communication or a shareholder alignment point of view? Just any thoughts there on what the goal of adding another Novo or adding a further Novo Foundation representative to the Board is.

Thank you, James. So the most important starting point, I think, for the Board is that the Board is an independent Board with the majority members that are independent. And the Board concluded after a dialogue with the foundation that Lars has experience from the company as well as from the industry that can add value to the discussions in the Novo Board first as an observer. But subsequently, the intention is that he will be nominated as a Board member also in AGM 2026, and we expect him to engage on the full spectrum of Board matters on the Board agenda.

Next question comes from the line of Rajesh Kumar from HSBC.

So if I understand correctly, your strategy is unchanged. Your guidance is in place. The main reason for the change is what happened to the share price and communication. So first part of the question is, what could have been done different in the past, which you’ll focus on in the future? And second, are there any other organizational changes that are happening along with the CEO succession?

So just to go back to what I said earlier, the reason for this is based on recent market challenges, the share price sort of declined over the past 6 months or so as well as a request and a wish from the foundation of an accelerated succession process. And that is the basis on which the Board has made its decision. And an organization is an organism. It changes and evolve all the time, and we do that as well at Novo Nordisk, but there are no significant changes that I think is relevant to report to investors at this stage beyond what we have communicated over the past few months on changes in the executive leadership team.

Final question comes from the line of Seamus Fernandez from Guggenheim Securities.

I’m sorry to belabor the point, but I have to say I’m confused by the discussion. If I were the next potential CEO of Novo Nordisk, I would be very nervous to take the role if the senior shareholder, Novo Holdings, and the stock goes down another 30% that I could lose that job relatively quickly. So just trying to get a better sense of exactly what’s going on here. It just seems a little bit confusing and a little bit more reactive to a single shareholder than one might expect of Novo historically.

So the governance of the company will not change as a result of Lars Rebien Sørensen joining the Board and the CEO is accountable to the entire Board, and that has been the case in this case, too. And based on the development that we talked about earlier and the wish from the foundation, the Board has had a discussion and concluded that this is in the best interest of the company, and it’s about an accelerated CEO succession process. And I also refer to the fact that Lars has been more than 8 years in role already. So there is nothing more behind this.

Good. And then we are ready to close for the questions. Before rounding off, I’ll hand it over to you, Helge, for a few final remarks.

Yes. Can I just say that Novo Nordisk is a well-run company with a clear strategy and a strong pipeline, also a strong portfolio of products. And the experienced leadership team will continue to manage the business and execute on the strategy presented a few weeks back together with Lars.

And on behalf of the Board, I would like to thank Lars Fruergaard Jørgensen for his outstanding contribution to Novo Nordisk’s success during his tenure as a CEO, both inside and outside the company. He is highly respected for his leadership, his values and vision for the company and the pharmaceutical industry at large.

Before I close, it’s important for me to make it absolutely clear that although the decisions we have announced today are made following a dialogue we had with the company’s majority shareholder, we have taken all shareholders’ interest into account in our decisions. And Novo Nordisk Board, of course, takes full ownership of the decisions, and we firmly believe that the changes announced today are in the best interest of the company and all its shareholders.

And with that, Jacob, thank you, and back to you.

And those were the final remarks. So thank you, everyone, for calling in, and have a good weekend when you get there. Thank you. Bye.