Novo Nordisk’s extraordinary shareholder meeting marked one of the most consequential governance shifts in modern European corporate history, as the Novo Nordisk Foundation consolidated near-total boardroom control of the world’s most valuable pharmaceutical company by market capitalization. The Foundation’s success in restructuring the board and installing its own leadership reflects deep strategic concerns over the company’s direction, competitive pressures in the obesity-drug market and the urgency for operational stability after a turbulent year. The episode offers a revealing look at how and why foundation-owned firms exercise control when commercial risks escalate, and why this shift has raised governance alarms among international investors.

How concentrated ownership reshaped strategic control

The confrontation between Novo Nordisk’s outgoing leadership and the Foundation has been years in the making. For decades, the company operated under a hybrid governance model in which the Foundation held majority voting rights—77%—through Novo Holdings, while maintaining only about 28% ownership of the share capital. This structure was designed to balance stability with accountability, relying on independent directors to moderate the Foundation’s influence.

However, the commercial environment changed rapidly. The runaway success of Wegovy, followed by the rapid arrival of rival therapies and supply constraints, altered the company’s risk profile. As profits softened, sales growth slowed and competitive pressure from Eli Lilly intensified, the Foundation grew increasingly dissatisfied with the board’s handling of strategic decisions—particularly the response to eroding leadership in the U.S. obesity market.

This dissatisfaction culminated in a governance rupture. When the outgoing board and Chair Helge Lund resisted accelerated structural changes, the Foundation used its voting power to force resignations and call for a complete overhaul. At the extraordinary meeting, shareholders approved the Foundation-backed slate of directors with over 90% support, despite visible discontent among minority investors. For the Foundation, the move was less a takeover than a corrective intervention aimed at reclaiming strategic momentum in a high-stakes therapeutic category.

Why the Foundation moved now and how it reflects shifting commercial pressures

Timing played a critical role in the Foundation’s decision to assert more direct control. Novo Nordisk’s dominance in the obesity-drug market—once unassailable—had begun to erode more quickly than expected. Eli Lilly’s competing therapy gained traction as Novo faced production bottlenecks, slower rollout of new capacity and uneven commercial execution. The company’s share price, buoyed earlier by Wegovy’s blockbuster performance, began to soften.

The Foundation’s chairman, Lars Rebien Sørensen—formerly the company’s long-serving CEO—publicly argued that the board failed to respond fast enough to competitive realities and missed opportunities to stabilize U.S. operations. His frustration over the pace of change centered around several issues: the speed of naming a new CEO, supply-chain expansions, commercial missteps and the need for decisive cost restructuring. Sørensen had pressed for an accelerated CEO transition that brought Mike Doustdar into the top role, a move viewed internally as critical to regaining market discipline.

The Foundation also worried that hesitance within the old board would jeopardize Novo’s ability to defend long-term market leadership as obesity therapies shift from niche prescriptions to mainstream pharmaceutical categories. For a foundation charged with ensuring scientific progress, stable governance and long-term strategic vision, these vulnerabilities were intolerable. In its view, decisive intervention was required before competitive disadvantages calcified.

The dual role of Lars Rebien Sørensen and the governance implications

The most contentious aspect of the boardroom overhaul is Sørensen’s appointment as board chair, which gives him simultaneous influence over the Foundation’s strategic oversight and the company’s corporate governance. While foundation-owned Danish companies such as Carlsberg and Maersk have long used foundation structures to reinforce long-term planning, the combination of both roles in one individual is unprecedented at Novo Nordisk.

International investors raised concerns over conflict of interest, oversight independence and the potential erosion of accountability mechanisms. Minority shareholders—particularly institutional investors—either abstained or cast protest votes, signaling discomfort not with the Foundation’s legitimacy but with the manner of execution and the concentration of authority.

The Foundation countered by presenting Sørensen’s appointment as a stabilizing measure. It argued that his history with Novo Nordisk, deep industry knowledge and strategic continuity were essential for navigating the next two to three years, a period projected to include increased competition, aggressive capacity expansion and global pricing debates around obesity drugs. Sørensen himself indicated that his tenure as chair would be temporary, signaling a possible return to a more balanced governance model once the company’s strategic position strengthens.

Strategic stakes for Novo Nordisk as competition intensifies

The boardroom consolidation coincides with a high-pressure moment for the company. Wegovy, launched in 2021, propelled Novo Nordisk to the top of Europe’s market capitalization rankings. The drug ignited a transformative shift in the global obesity-treatment landscape, reshaping public health narratives, insurance negotiations and pharmaceutical-industry expectations. But success came with constraints: limited production capacity, supply shortages, and operational bottlenecks eroded Novo’s head start.

While the company was the first to crack large-scale regulatory and commercial adoption of GLP-1-based obesity medications, competition caught up faster than expected. Eli Lilly’s entry accelerated as doctors pivoted to whichever treatment was more consistently available. The arrival of copycat formulations and broader therapeutic applications raised concerns that the market would become more fragmented.

The Foundation’s takeover reflects a belief that Novo must move more aggressively to secure long-term leadership—expanding production, tightening commercial execution, protecting intellectual property and rationalizing global operations. Doustdar’s early moves, including cost-cutting and global layoffs, signal a more assertive operational stance aligned with the Foundation’s expectations.

The change also reinforces the broader purpose of the Novo Nordisk Foundation: to secure the financial stability and scientific direction of the Novo Group for the long term. The Foundation’s stewardship model, dating back to its formation in the late 20th century, was built on the principle that long-term scientific mission should outweigh short-term shareholder returns. The current governance conflict tests whether that principle can remain credible in a global environment where pharmaceutical competition is fierce and investor scrutiny is intense.

(Adapted from MarketScreener.com)