Novo Nordisk is heading for lean times
The healthcare company Novo Nordisk is holding an extremely strong position in the market for diabetes, and a new leg in the fight against obesity may turn out to be yet another golden egg for Novo.
”Novo Nordisk has already been a good investment for us, and we also expect the company to be a good investment going forward.”
Senior portfolio manager at Danske Capital Claus Henrik Johansen is investment specialist within the pharmaceutical and healthcare sector. He states that currently Novo Nordisk has a very strong hand within particularly two segments: The very diabetes treatment and the treatment of patients who are developing diabetes but who have not yet become dependent on insulin.
”Novo Nordisk has never had a stronger position than today. The company has a very strong hand, and we see a huge growth potential driven by Novo Nordisk’s global presence. Moreover, Novo Nordisk has great experience and competence with respect to cooperating with authorities and doctors about the significance of the treatment of diabetes, and Novo has relatively few competitors in the market for insulin - primarily Eli Lilly and Sanofi," explains Claus Henrik Johansen. He is also highlighting the fact that more and more people in the world are developing diabetes - among others because the populations in the emerging markets become wealthier and adopt Western life styles.
Novo Nordisk is in a leading position
He points out that while Novo Nordisk used to be positioned in the slipstream of several competitors, today the Danish pharmaceutical company is in a leading position within the treatment of diabetes. Novo Nordisk holds a market share of 40-60%, and Novo has an improved generation of insulin in its pipeline, which Claus Henrik Johansen expects will increase the company’s market share – particularly in the USA. In addition, studies have shown that the drug, Victoza, has some eminent side effects with a great potential.
Today Victoza is used for treating patients who are in the process of developing diabetes. Victoza is postponing the time when the patient receives an actual diabetes diagnosis. However, studies have shown that patients who use the drug are exhibiting significant weight losses.
Therefore, Novo Nordisk has initiated research to identify the extent to which the patients are losing weight and to find out whether the drug can obtain approval for being used for the treatment of obesity and overweight among otherwise healthy people. The preliminary studies have shown that some patients lose more than 10% of their weight when they use Victoza. If Novo Nordisk will obtain a breakthrough within the treatment of obesity, the company has the prospect of obtaining yet another solid leg on which it can built its business, and this leg may potentially be more lucrative than the diabetes leg.
Very big potential
”Today there are many people in the world who are overweight, and there is not much competition within the market for the treatment of obesity. There is still much uncertainty in respect of Victoza, and it is uncertain whether and if so when the drug can obtain approval for treating obesity. However, if Novo Nordisk will enter the obesity market, this business has the potential for becoming very big,” says Claus Henrik Johansen.
In his view the price of the Novo Nordisk-share does neither reflect the potential associated with the new generation of insulin nor the potential associated with Victoza in the market for obesity. Thus, he believes that there is still a great potential associated with the Novo-share.
Danske Invest invested in Novo Nordisk back in 2006, and today many of our sub-funds have large positions in Novo Nordisk - among others Danske Invest Europe Focus where 5.03% is invested in Novo Nordisk.
