Novo Nordisk’s Leadership Crossroads: Can It Regain Momentum in the GLP-1 Wars?

The abrupt resignation of Novo Nordisk CEO Lars Fruergaard Jørgensen, after eight years of transformative leadership, has thrown the world’s largest diabetes drugmaker into a spotlight it would rather avoid. The move, framed as a “mutual agreement” with the Novo Nordisk Foundation, masks deeper tensions between the company’s corporate governance and its struggle to adapt to a rapidly shifting competitive landscape. With Eli Lilly’s Zepbound now eroding Wegovy’s dominance and compounding pharmacies undercutting pricing power, Novo Nordisk faces a critical inflection point. The question for investors is whether its scale, pipeline, and legacy in metabolic therapies justify a “value trap” or a contrarian buy at today’s depressed valuations.

The Leadership Crisis: A Signal of Structural Weakness?

The timing of Jørgensen’s exit is telling. His departure follows a 50% decline in Novo’s share price since mid-2024, driven by mounting headwinds from Eli Lilly’s aggressive R&D and the FDA’s leniency toward compounded generics. While the company reported robust Q1 2025 sales growth (19% year-over-year), its revised 2025 guidance—lowered due to slower U.S. uptake of branded GLP-1s—hints at deeper vulnerabilities.

The Novo Nordisk Foundation’s push for accelerated CEO succession and increased board influence underscores its impatience with the status quo. Lars Rebien Sørensen, the Foundation’s chair and former Novo CEO, will now join the board, signaling a return to a more interventionist governance model. While this could stabilize the transition, it risks creating a perception of micromanagement—a red flag for investors wary of corporate infighting.

Eli Lilly’s Unrelenting Assault: More Than a Head-to-Head Trial

The real threat lies in Lilly’s relentless outpacing of Novo in the GLP-1 race. The SURMOUNT-5 trial, which showed Zepbound outperforming Wegovy in reducing body weight, has already dented Novo’s narrative of invincibility. But Lilly’s advantage runs deeper:

• Pipeline Dominance: Lilly’s next-gen GLP-1 drugs, including a weekly injection of Zepbound, promise to further eclipse Wegovy’s twice-daily regimen.
• Strategic Pricing: Lilly has leveraged its broader portfolio to secure formulary coverage in the U.S., while Novo’s reliance on Wegovy for 30% of revenue leaves it exposed to payer pushback.
• Compounding Erosion: Generic alternatives, though temporary, are siphoning demand from both companies—but Novo’s premium pricing makes it a more attractive target for price-sensitive buyers.

Valuation Risks: Is the Discount Justified?

At a 50% price drop over 12 months, Novo’s stock now trades at 23x trailing earnings—well below its five-year average of 35x. Bulls argue this discounts the worst-case scenario, pointing to Novo’s $11.6 billion Q1 revenue and its pipeline wins, like the FDA-filing-ready CagriSema obesity therapy.

Bears, however, see a “value trap.” The company’s reliance on U.S. obesity sales (which now account for ~20% of revenue) leaves it vulnerable to competition, regulatory scrutiny, and generic erosion. With Lilly’s market cap now surpassing Novo’s—a first in their decades-long rivalry—the question is whether Novo can pivot fast enough to reclaim its crown.

The Pipeline Pivot: Can Novo Regain Its Edge?

Novo’s CagriSema, a once-weekly GLP-1/GIP dual agonist, is its best hope to reassert dominance. If approved in Q1 2026, it could neutralize Lilly’s Zepbound by offering superior efficacy and convenience. Additionally, its semaglutide-based therapies for metabolic dysfunction-associated steatohepatitis (MASH) could open a $10 billion market.

Yet execution risks loom large. The company’s supply chain struggles—a result of Wegovy’s meteoric rise—have already cost it market share. A new CEO must quickly address these bottlenecks while navigating a more crowded R&D field.

Investment Recommendation: Caution Now, but Hope Later

For now, investors should tread carefully. The leadership transition’s uncertainty, coupled with Lilly’s relentless advances, justifies a short-term caution stance. Novo’s valuation may be low, but its moat is narrowing.

Longer-term, however, the company’s scale—77,400 employees, a $100 billion market cap, and a 100-year legacy in insulin—offers a foundation for recovery. If the new CEO can accelerate CagriSema’s rollout, diversify beyond obesity, and counter compounding threats, Novo could rebound. Until then, hold only for those with a multi-year horizon and a tolerance for volatility.

The GLP-1 wars are far from over. But for Novo Nordisk, the next CEO’s first 100 days may determine whether its recent stumble becomes a fatal fall—or a temporary setback in a century-long journey.