Novo ousts CEO Jorgensen after Lilly competition hits shares

Novo Nordisk A/S ousted Chief Executive Officer Lars Fruergaard Jorgensen as the drugmaker struggles with growing competition for its obesity treatment Wegovy that’s weighing on the share price.

The Danish company said Jorgensen is leaving by mutual agreement with the board, though he’ll continue as chief “for a period to support a smooth transition to new leadership.” A search for a new leader has begun, the company said in a statement Friday.

The move follows a 53% decline in the company’s share price over the past 12 months as it has faced setbacks in trials of new weight-loss drugs and growing competition from Eli Lilly & Co. The shares fell about 2% in midday trading Friday.

“Considering the recent market challenges, the share price decline, and the wish from the Novo Nordisk Foundation, the Novo Nordisk Board and Lars Fruergaard Jorgensen have jointly concluded that initiating a CEO succession is in the best interest of the company and its shareholders,” the company said.

The foundation, a charitable group that controls the drugmaker, started a dialog with Novo’s board “on the merits of an accelerated CEO succession,” Novo said.

Novo was first to market with Wegovy and its sister drug Ozempic for diabetes, but the Danish company has ceded market share to Lilly. Its rival drug Zepbound now has the lead in obesity prescriptions, and Lilly’s diabetes version of the drug, Mounjaro, is on track to catch up with Ozempic as well by next August, according to BMO Capital Markets.

Jorgensen has been with Novo since 1991 and was appointed CEO in January 2017. The company’s market capitalization has more than tripled during his tenure.

This story was originally featured on Fortune.com