Novo Nordisk shares have lost more than half of their value in the 11 months since the Danish drugmaker said it’s going to spend $4.1 billion and create 1,000 jobs in a Johnston County expansion.
The company’s troubles reflect stiffer competition for its obesity injection Wegovy — made in North Carolina — from rival Eli Lilly’s Zepbound treatment. Citing “recent market challenges” and the stock decline, Novo said earlier this month Lars Fruergaard Jørgensen is stepping down after serving as CEO for eight years.
The stock has rebounded since the succession announcement, gaining 90 cents to $69.50 in trading today. Still, that’s down $72.78 from June 24 ($142.28) when the company said its expansion in Clayton represented the largest single life science investment in state history. Eli Lilly shares have decreased about 11% in the past year.
At that time, construction had commenced on the facility that would make and package medications for treating obesity and other chronic illnesses. Aside from a site in Denmark, North Carolina is the only location where Novo produces semaglutide, a critical ingredient in Wegovy and diabetes drug Ozempic, according to Bloomberg News.
Last summer, Novo called the announcement one of the largest manufacturing investments in the company’s history. Novo is best known as the maker of Wegovy, Ozempic and Saxenda. It also makes a variety of insulins.
The expansion will add 1.4 million square feet of production space for aseptic manufacturing and finished production processes, doubling the combined square footage of all three of the company’s existing facilities in North Carolina. It will also add 1,000 new jobs, along with nearly 2,500 Novo Nordisk employees now working in the region.
The completion of construction is slated for 2027 to 2029, Novo said last June. “The manufacturing expansion and hiring efforts in North Carolina are both on track,” Jamie Bennett, a U.S. spokeswoman for Novo, said in an email Thursday.
The average salary for the jobs will range from $65,000 to $70,000 per year, which compares to an average of about $45,000 a year in Johnston County, Chris Johnson, the county’s economic development director, said last summer.
Novo shares peaked at $144.68 a day after the Johnston County announcement. They’ve headed down since then, trading below $100 since December.
They’ve seesawed since mid-April when BMO Capital Markets downgraded the stock from “outperform” to “market perform” and reduced its price target from $105 to $64.
“While Novo took a commanding early lead in the obesity duopoly, they have ceded ground at a critical moment when more competitors are quickly approaching,” BMO Capital Markets analyst Evan Seigerman said in a note.
In early May, the company reduced its sales and profits forecasts for 2025 due to lower-than-expected U.S. demand for its weight loss and diabetes drugs. Even so, the company said it is continuing its global rollout of Wegovy “with around 1 billion people living with obesity globally and only a few million on treatment.”
In announcing the CEO’s departure, Novo said the company’s sales, profits and share price have nearly tripled during his tenure. The company “has a clear strategy, a strong product portfolio and an experienced leadership team,” the statement said.
“The changes are, however, made in light of the recent market challenges Novo Nordisk has been facing, and the development of the company’s share price since mid-2024,” according to the company.
It said the board of the Novo Nordisk Foundation, the holder of majority voting control, sought to accelerate the CEO succession.
Pharmaceutical makers also face pressure from President Donald Trump’s push for lower prescription drug prices. It’s unclear whether the president’s May 12 executive order may result in lower costs for consumers.
The order “does not contain any clear steps and mechanisms on how the White House will reduce prescription drug prices,” according to a recent ALLKA Research note. “Rather, it looks more like a set of slogans and wishes.”
BMO reiterated its neutral rating in May after news that the CEO is departing.
“While Jørgensen led booming sales of Wegovy and Ozempic, the company’s shares have fallen since reaching a record high in June 2024, facing growing competition from Eli Lilly and an unimpressive drug pipeline,” according to an article by Insider Monkey last month. “While the CEO transition may reassure investors, BMO Capital remains skeptical about its near-term impact, noting that it does not signal a fundamental change in the company’s strategy.”
