Posted: November 1, 2013 |  AUTHOR: KEN FOX | CONTACT ME

 

Denmark is probably best known for Christian Anderson, the Little Mermaid and Carlsberg Beer and Legos. Some may also know Maersk as the largest shipping line in the world. However, it can also boast one of the premier medical companies in the world, Novo Nordisk.

Novo Nordisk is a publically traded pharmaceutical company (NYSE: NVO) and is the world’s leader in insulin and products for diabetes care. It operates in two segments: diabetes care and biopharmaceuticals. The diabetes care segment includes insulin, obesity, oral anti-diabetic drugs, needles and other supplies for diabetic care. This segment also includes the first human once-daily GLP-1 analog*. The biopharmaceutical segment offers products for haemophilia, growth hormone therapy, hormone replacement therapy and inflammation. The company was founded in 1925, and has its world headquarters in Bagsvaerd, Denmark.

Novo Nordisk’s annual sales in 2012 were approximately $13.8 billion U.S. dollars, which represented an 18% increase from the prior year. North America accounted for the largest share of their business (66%). The company has 35,200 employees globally, with manufacturing facilities in Denmark, U.S., France, Japan, China and Brazil. Novo Nordisk markets its products in 179 countries. The company was ranked by Fortune Magazine as number 48 among the best companies to work for in 2013.

Market growth is being driven by the world’s increasing diabetes population. According to the International Diabetes Federation there were 366 million people globally in 2011 with diabetes. They project this number to increase to 552 million by 2030. Worldwide insulin sales have quadrupled in the last decade to about $15.4 billion annually (according to IMS health). Novo sold $7.1 billion dollars of insulin last year. Competition has been stiff from companies like: Eli Lilly, Sanofi, Merck and Johnson & Johnson. Novo’s stock price has quintupled in the last decade (now $181/share). Novo is controlled by its foundation which owns 26% of its shares and controls 70% of the voting stock.

Novo was historically weak in the U.S. where Eli Lilly had a strong lead. Lilly eventually focused on CNS (central nervous system) drugs. This allowed Novo to expand their sales force and gain insulin and diabetes care market share. The company has not always been the top innovator but a strong follower. Amylin Pharmaceuticals was the first to offer an injectable drug to treat diabetes called Byetta.** Novo then followed with a longer acting competitor called Victoza that did not have to be injected as often. Insulin for human use initially came from the pancreas of cows and pigs. The breakthrough came in 1978 when Genentech produced human insulin using genetic engineering. Eli Lilly marketed the first insulin called Humulin based on the Genentech research. Novo followed later with its own product based on this research. Since then, Novo and its competitors have developed quick-acting and longer lasting insulin versions that make managing diabetes easier. One of Novo Nordisk’s fast acting insulin products is Novolog. Another more recent addition is Victoza, which is insulin that can be taken once a day.

A key to Novo’s success has been prefilled pens with insulin. This saves patients from dealing with vials and syringes.

The global market for diabetes management products accounted for about $42 billion U.S. dollars in 2010, and is expected to grow to $114 billion by 2016. Diabetic management products include: glucose meters, lancets, test strips, continuous blood glucose meters, insulin, insulin pumps, syringes, other insulin delivery devices, and anti-diabetic drugs. The bulk of the product revenues come from three segments: insulin, test strips and anti-diabetic drugs.

The company had and interesting start:
August Krogh, a Danish Nobel laureate, and his wife, Marie, a medical doctor with diabetes, learned about the discovery of insulin in Canada. Marie urged August to meet a Professor Macleod in Canada, who led the team which discovered insulin. They met with him in Toronto. August and Marie later returned to Copenhagen, bringing with them permission to start insulin production. In March 1923, the first patient in Denmark was treated with insulin produced in that country.

This was the beginning of Novo Nordisk. The company has progressed in making great strides in diabetes care, education and discovery of new products to treat and monitor patients with the disease. The company is working on a once week insulin injection and developing Insulin formulations that can be taken orally, as tablets.

A tablet form of the once daily insulin dosage is very challenging. If taken orally, a corresponding tablet would ordinarily be attacked by digestive enzymes in the gastrointestinal tract whose job it is to break down proteins. Even if they were to somehow survive in the stomach, these large molecules would then have difficulty passing through the wall of the intestine and entering the bloodstream. Dr. Peter Kurtzhals, Senior Vice-President and head of diabetes research at Novo Nordisk says:

I first thought this was nearly impossible. But, I’ve been positively surprised and encouraged by the progress we’ve made. Many other companies have tried to develop oral insulin (tablet) but none have been able to show proof of concept-but we are getting close to this stage. I would say we are the leader in this field at this point.
Insulin in a tablet form would enable patients to begin insulin therapy earlier and treat themselves more easily (than injections). This can obviously lead to better compliance and lead to better treatment outcomes. The tablet would probably not be able to totally replace injections in all patients but relieve those whose bodies can produce some insulin. A second company, Oramed Pharmaceuticals, based in Israel, is also developing an oral insulin tablet.

Novo Nordisk established the World Diabetes Foundation in 2001 with the purpose of improving diabetes care in developing countries. The company also established the Hemophilia Foundations in 2005. Novo Nordisk is also establishing a presence in obese patient care. The company is currently in several clinic trials for a once daily taken drug for treating high risk obese patients, ones with obesity related medical conditions, such as: prediabetes, sleep apnea and high blood pressure.

Commentary

The goal of insulin enhancements, anti-diabetes drugs and better devices to manage diabetes is to increase survival rates and facilitate a better quality of life for patients with diabetes. Novo Nordisk has an advantage over competition because of their long history and focus. New innovations appear to be years away due to long development time and lengthy approval process. These include the oral insulin pill, wearable devices to continuously monitor glucose levels and possibly another market entry for oral insulin delivery in a spray. Future inventions and innovations have implications for treating millions more people with diabetes in countries like China and India, where diagnosing diabetes and life expectancies are increasing. Global company collaborations could also take place to accelerate the diabetic new product development product path. So many times it seems companies work in narrowly focused silos when collaboration could bring winners to the market sooner.

*Insulin analogs are genetically engineered forms of insulin that alter absorption, distribution and metabolism of insulin.
**a glucagon like peptide agonist

Resources:
1. Novo Nordisk Annual Report, 2012
2. Novo Nordisk’s Medical Miracle, Forbes, February 9, 2011
3. Research and Markets: Analyzing the Global Diabetes Market, Press Release, April 29, 2013
4. The Hottest Big Pharma You Never heard of, Forbes, September 24, 2010
5. Reuters.com profile
6. Fortune, Best Companies to Work for, 2013

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©2017, The Global Galaxy blog is produced by The Soundings Group, LLC, Charleston, South Carolina, USA, www.thesoundingsgroup.com. The company is an international business consulting firm, specializing in new market assessments, market entry strategies and marketing guidance. The scope of Global Galaxy is to cover timely international trends, issues and business building ideas. Its purpose is to educate, inform and stimulate thinking for business opportunity analyses.

 

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