Novo Nordisk, largest Nordic company, shoots for top drugmaker
Novo Nordisk's CEO Lars Sorensen acknowledges there was an odd element of good fortune for the drugmaker in becoming the largest company in the Nordic region by capitalization and among the top 10 drug companies in the world. That good fortune, of course, has a flip side--an epidemic of diabetes.
"What we are good at, all of a sudden becomes the biggest public health problem we have ever seen," Sorensen recently told the Financial Times.
With a market cap coming in at about $85.3 billion, the specialist in diabetes treatments is now larger than the Norwegian oil and gas company, Statoil, which stands at about $75.6 billion, the Financial Times points out. Sorenson says he wants to build Novo Nordisk ($NVO) into one of the biggest drugmakers, but it has a ways to go to achieve that. Johnson & Johnson ($JNJ), for example, has a market capitalization of $191 billion.
The extent of the diabetes epidemic, from which Novo Nordisk can track much of its growth, was outlined last week during World Diabetes Day. More than 371 million people worldwide have diabetes, up 5 million from just a year ago, according to the latest numbers from the International Diabetes Federation. In the U.S., there are 26 million diabetes patients, and treatment was pegged at $218 billion in 2007, according to figures cited by the Pharmaceutical Research and Manufacturers of America (PhRMA). Diabetes rates, in Type 2 diabetes specifically, have rocketed around the world. PhRMA says drugmakers have responded by developing 221 new medicines against diabetes.
And some of the most promising come from Novo Nordisk. Its degludec--or Tresiba--an ultra-long-lasting insulin that is effective for 24 hours with a single injection, has the advantage over the current best selling insulin, Sanofi's ($SNY) Lantus, which lasts for 12 hours or more. Novo this month got a recommendation from an FDA panel that the long-lasting insulin be approved by the agency, although the scientific group recommended further study of the drug's heart risk. Still, if the FDA buys the recommendation, Tresiba promises to become a blockbuster in short order.
These kinds of developments have allowed Novo to throw up some pretty impressive gains. The Danish company's share price is four times what it was in 2009. That growth came even though its largest shareholder is the Novo Nordisk Foundation, which not only owns 26% of the shares but also controls 73% of the voting rights, a fact that Sorenson says other shareholders should not fear.