Novo Nordisk loses senior executive in succession mix-up

Company president walks after demotion following succession review that opted to stick with current CEO

 

Drugmaker Novo Nordisk demoted company president Kaare Schultz 15 months after putting him in line to become the next chief executive, prompting him to walk out after 26 years at the world’s largest insulin maker.

Mr Schultz (53) “made no secret of looking forward to assuming my position”, CEO Lars Rebien Sorensen, who will stay in his post until his contract ends in 2019, said during a conference call with reporters.

A reorganisation of the management team eliminated Mr Schultz’s role as chief operating officer and he didn’t want a less important job, he said.

The board’s unexpected decision, made at a meeting yesterday, leaves Novo Nordisk without a clear successor to Mr Rebien Sorensen (60). Mr Schultz had been considered heir-apparent after he was made president in January 2014, and the speculation intensified when the CEO said in a December interview that the board was seeking his successor.

“Something clearly went wrong with the planned succession,” Jerome Forneris, who helps manage $8.5 billion at Banque Martin Maurel in Marseille, France, said in an interview. “Schultz didn’t convince them. They need a replacement now and it won’t be easy. Succession problems are never good.”

Makers of diabetes treatments have been under pressure in recent months, as payers of prescription bills in the United States., the world’s biggest insulin market, seek to wring discounts from drugmakers.

“This was not the time to make a CEO change,” chairman Goeran Ando said in a telephone interview. “The business conditions have changed and will continue to change, the conditions in the US are more challenging and changing quite fast and Novo Nordisk is launching a number of new medicines.”

The board discussed succession planning for about six months, before making the decision to retain Mr Rebien Sorensen, Mr Ando said.

Mr Schultz didn’t respond to an e-mail and voicemail seeking comment and wasn’t available for an interview, according to a Novo representative.

The failed handover also raises the question of why the board was seeking a replacement for Mr Rebien Soerensen before the end of his contract, Mr Forneris said.

The moves came as Novo raised its operating profit forecast for 2015 following an initial public offering of its information-technology services unit NNIT in Copenhagen, and posted first-quarter net income that beat analysts’ estimates.

Operating profit in local currencies may climb by about 17 per cent this year, and sales growth on the same basis will probably be 7 to 9 per cent, the company said in a statement on Thursday.

Net income for the first quarter rose 53 per cent to 9.88 billion kroner, Novo said. That beat the 9.27 billion-kroner average estimate of analysts.

The profit was boosted by a one-time gain of 2.4 billion kroner as Novo divested a 74.5 percent stake in NNIT during its March IPO. – Bloomberg