The chairman of Novo Nordisk (NOVOb.CO) and six other independent board members quit on Tuesday after a dispute with the company's controlling shareholder, as the drugmaker looks to revive sales of its blockbuster weight-loss drug Wegovy.
The boardroom feud brings fresh turmoil 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 (LLY.N) grabbed market share.
The non-profit Novo Nordisk Foundation, which combines business ownership with philanthropy, criticised the outgoing board for being too slow to recognise market changes in the key U.S. market and to change management.
It said it would propose former Novo CEO and current head of the foundation Lars Rebien Sorensen to return as a temporary chairman for the next two or three years.
FOUNDATION SEEKS MORE INFLUENCE
Novo, which installed a new CEO in August to launch a turnaround plan, said chair Helge Lund and the other independent directors would step down at an extraordinary shareholder meeting on November 14.
The firm said in a statement that it had been impossible to reach a "common understanding" over the make-up of the board.
"The Board proposed a renewal focusing on addition of select, new competencies while also maintaining continuity, whereas the Board of the Foundation wanted a more extensive reconfiguration," it said.
The clash is the latest move by the foundation to increase control over Novo as it seeks to revive sales and restore investor confidence. It pushed for the early exit of CEO Lars Fruergaard Jorgensen in May.
Novo's shares dipped to trade down around 1.7% after the news.
Jorgensen's replacement, CEO Mike Doustdar, has launched a restructuring drive, including 9,000 job cuts globally that has helped bolster the share price. The firm, however, still faces challenges in the key U.S. 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."
Manns added that the proposed new chairman would be "well qualified" and his experience could help the firm.
NOVO FACING A 'RAPIDLY CHANGING ENVIRONMENT'
In a statement, foundation chair Sorensen said that the challenging environment meant moving fast was important.
"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 trying to digest the board 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 the move marked something of a power play by the top shareholder.
"The Foundation now takes control for a period of time," he said. "I will follow intensely any signs of new initiatives to reinvigorate growth and innovation."
