Sector News

Novo searching for new CEO with Sørensen out as soon as next year

December 30, 2014
Life sciences
With Novo Nordisk’s chief exec Lars Rebien Sørensen headed out sometime within the next few years, the company’s board is scouting his replacement. But finding one that can help the Danish drugmaker deliver a follow-up performance that rivals its track record under Sørensen will be no easy task.
 
The 60-year-old helmsman likely won’t stay on through the end of his contract in 2019, and he’ll pack up once the board taps a successor, Bloomberg reports–something that could happen as soon as next year.
 
After taking up the reins just over 14 years ago, Sørensen “has been there for a very long time, so the board is naturally looking at having a fresh pair of hands to lead the company,” Bloomberg Intelligence analyst Sam Fazeli told the news service.
 
But Sørensen will leave big shoes to fill. During his CEO stint, Novo’s stock has returned 9-fold including dividends–an increase of about 17% a year, compared with about 6% for its U.S. pharma counterparts, Bloomberg notes. It’s also rode a global diabetes wave to yearly insulin sales growth of about 14% over the past decade.
 
And while the past year hasn’t been Novo’s best, it looks like Sørensen has the company on course for next year. In late October, the drugmaker said it expects growth in the high single digits in 2015, and brand new FDA approval Saxenda will help toward that end. The company thinks the weight-loss injection can help fill the U.S. sales gap for Tresiba, a therapy the FDA rejected last year that’s gaining ground overseas.
 
So far, some industry-watchers have speculated that Novo may turn to deputy CEO Kåre Schultz to keep Sørensen’s hot streak going. In January, the company fueled those rumors by promoting the then-Chief Operating Officer, a move Sørensen said would give Schultz “an opportunity to develop his leadership.”
 
If the board does select Schultz, he’ll have the chance to make good on his June prediction that Novo would double its annual revenues within the next decade. By 2020, 40 million diabetes patients will be using the company’s products, up from 20 million now, he figures–an increase that’ll lift revenues by at least 10% a year.
 
But no matter who gets the baton from Sørensen, Fazeli predicts, the leadership transition should go smoother than it has for pharma peers Sanofi ($SNY) and Teva ($TEVA), both of which saw their execs exit amid squabbles with the board. It’s “a normal time to change,” he told Bloomberg, “and the company’s strategy is not complicated.”
 
By Carly Helfand
 

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