Novo Nordisk, the pharmaceutical giant behind Wegovy, announced the removal of CEO Lars Fruergaard Jorgensen on Friday, signaling rising concern over the company’s waning dominance in the booming weight-loss drug sector.

The leadership shake-up comes just days after the Danish drugmaker downgraded its sales and earnings outlook for the first time since Wegovy’s debut four years ago. While Jorgensen had expressed confidence in a rebound in its largest market later this year, that optimism wasn’t enough to offset investor unease.

Chairman Helge Lund sought to calm nerves during a call with investors, stressing that Novo’s overarching strategy remains intact. However, he confirmed to Reuters that internal talks about leadership change had been ongoing for several weeks. Jorgensen will stay on until a successor is appointed.

Under Jorgensen's tenure, Novo Nordisk rose to the forefront of the global obesity treatment market, riding a wave of blockbuster demand for Wegovy and Ozempic. Yet the decision to remove him has drawn skepticism from market observers.

“He delivered strong results over eight years—this move seems puzzling,” said Lukas Leu, a portfolio manager at Bellevue Asset Management. Danske Bank analyst Carsten Lonborg Madsen echoed the surprise, commenting, “Novo Nordisk has typically shown patience when the strategy is sound. Something clearly went off course here.”

The company’s stock has stumbled significantly since reaching record highs in mid-2024, under pressure from intensifying competition—particularly from Eli Lilly’s fast-growing presence with its rival drug, Zepbound. Novo’s pipeline has also underwhelmed investors, adding to its market woes.

In a statement, the company said the leadership change was driven by "recent market headwinds and the downward trajectory of the share price since mid-2024."

Once valued at $615 billion and crowned Europe’s most valuable publicly listed firm, Novo Nordisk has seen its market capitalization shrink to roughly $310 billion. The stock dipped 0.8% following Friday’s announcement, after earlier gains of 4%. It is now down 32% year-to-date and nearly 60% below its peak.

Meanwhile, Eli Lilly has gained traction in the U.S., with prescriptions for Zepbound overtaking Wegovy since March. Following the news, Lilly's shares climbed 2.6%.

The leadership turmoil deepened last month when Camilla Sylvest, head of commercial strategy and corporate affairs and a key executive under Jorgensen, abruptly resigned without public explanation.

In a further shake-up, Novo announced that Lars Rebien Sorensen—its former CEO of 16 years and current chairman of the Novo Nordisk Foundation—will rejoin the company’s board as an observer, with the intent of becoming a full board member at the next annual general meeting.