By Stine Jacobsen, Jacob Gronholt-Pedersen and Maggie Fick
COPENHAGEN/LONDON (Reuters) -Novo Nordisk’s top investor moved to take control of the drugmaker’s board on Tuesday, vowing a sharper focus on the key U.S. market to revive sales of blockbuster weight-loss drug Wegovy as Novo’s chair and six independent board members quit.
The non-profit Novo Nordisk Foundation, which combines business ownership with philanthropy, said it would propose its own chair Lars Rebien Sorensen – a former Novo CEO – to lead the Danish drugmaker’s board for the next two or three years.
Novo said current chair Helge Lund and six other independent board members would step down next month after a dispute with the foundation over the pace of change at the company.
The clash brings fresh upheaval to a company that soared to become Europe’s most valuable company last year on the huge success of Wegovy, only for its shares to plunge more than 40% this year as rival Eli Lilly grabbed market share.
FOUNDATION BACKS NEW NOVO CEO DOUSTDAR
The foundation criticised the outgoing board for being too slow to recognise shifts in the key U.S. market and too cautious on management change. It flagged a need to put more focus on the growing direct-to-consumer and mass markets.
Sorensen said that it had wanted wholesale change on Novo’s board, but backed new CEO Mike Doustdar who took over in August and has ushered in widespread job cuts and a drive to refocus the company on its key markets.
“We are fully aligned behind that,” Sorensen said in a call after the news. “We believed in the foundation board that we needed a fresh set of eyes, new energy to support management on this very important process.”
Novo said Lund and the other independent directors would step down at an extraordinary shareholder meeting on November 14 after it had been impossible to reach a “common understanding” over the make-up of the board.
The move is the latest by the foundation to increase control over Novo as it seeks to restore sales and investor confidence. It pushed for the early exit of previous CEO Lars Fruergaard Jorgensen in May.
Sorensen played down the feud, saying in response to one question that he “preferred not to have it coined as a coup”. Instead the shift would help Novo in its key U.S. market, which he said currently had a “very transactional model”.
Novo, like many rivals, is facing pressure from U.S. President Donald Trump to lower drug prices.
The foundation proposed six new board members – all European, but five of them with long experience in pharmaceuticals and related industries such as biotech and health tech.
“All of us on the board are running businesses that are exposed in the United States. So the U.S. is our daily bread so to speak,” Sorensen said. “Having more representation of people that live in the U.S. would be great.”
Novo’s shares closed down 1.5%.
‘RAPIDLY CHANGING ENVIRONMENT’
Doustdar launched a restructuring drive last month, including 9,000 job cuts globally, that has helped boost Novo’s share price. The firm, however, still faces challenges in the U.S., the world’s biggest drug market, against rival Eli Lilly.
“My guess is that the Novo Nordisk Foundation is still unhappy with the current setup of the company and that they want to have more influence,” Markus Manns, a portfolio manager at mutual fund and Novo shareholder Union Investment, told Reuters.
“There was a dispute about the future composition of the board. Probably they had also different views about the future strategy of the company.”
If the proposed candidates are elected, the board will consist of six shareholder-elected members and four employee-elected members, down from eight shareholder-elected and four employee-elected members on the current board.
In a statement, Sorensen said moving quickly was vital.
“Given the rapidly changing environment in which Novo Nordisk operates, we believe it is in the best interest of the company and its shareholders to carry out a board renewal as soon as possible,” he said.
Lukas Leu, a portfolio manager at Novo Nordisk shareholder ATG Healthcare, was still digesting the shake-up.
“I don’t really get it – why does the old CEO have to be the new Chairman? Don’t like it.”
Claus Henrik Johansen, CEO of Global Health Invest, a Danish healthcare investment fund, said he would “follow intensely any signs of new initiatives to reinvigorate growth and innovation.”
The Novo Nordisk Foundation is Novo Nordisk’s controlling shareholder, and it holds a majority of the voting rights through its ownership of Novo Holdings, its investment arm.
(Reporting by Jacob Gronholt-Pedersen, Stine Jacobsen and Maggie Fick. Writing by Adam Jourdan. Editing by Terje Solsvik and Mark Potter)
