COPENHAGEN (Reuters) - Wegovy-maker Novo Nordisk said on Friday its CEO Lars Fruergaard Jorgensen will step down over concerns the company is losing its first-mover advantage in the highly competitive obesity drug market.

Under Jorgensen's leadership, Novo Nordisk became a world leader in the weight-loss drug market, with sky-rocketing sales of its Wegovy and Ozempic treatments which propelled its share price to become Europe's most valuable listed company.

However, its shares have plunged since hitting a record-high in June last year as competition, particularly from U.S. rival Eli Lilly, makes inroads into its market share and as its pipeline of new drugs has failed to impress investors.

"The changes are 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," Novo said in a statement.

Eli Lilly's U.S. prescriptions for its Zepbound obesity shot have surpassed Wegovy since mid-March in its biggest market.

Jorgensen, 58, who has been CEO since 2017, will remain in the role until a new CEO has been appointed, the company said.

Former CEO of Novo Nordisk for 16 years and current chair of the Novo Nordisk Foundation, Lars Rebien Sorensen, will join the board as an observer with immediate effect with the aim of taking a seat at the next annual general meeting, Novo said.

Novo Nordisk is controlled by the Novo Nordisk Foundation through its investment arm which owns 77% of the voting shares.

"Considering the recent market challenges, the share price decline, and the wish from the Novo Nordisk Foundation, the Novo Nordisk Board and Lars Fruergaard Jorgensen have jointly concluded that initiating a CEO succession is in the best interest of the company and its shareholders," Novo Nordisk said.

Novo Nordisk's share price fell on the news, trading 3% lower by 1133 GMT after trading 4% higher earlier in the day.

The shares are down 32% year-to-date and 59% from the all-time high in June last year.