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It may currently be grabbing the headlines because of excitement over its weight-loss drug, Wegovy, but Novo Nordisk is a company that has a record of innovation dating back a century.
Denmark’s biggest company and the world’s biggest maker of insulin celebrates its centenary this year, having been founded in 1923, just two years after the discovery of insulin itself by the Canadian scientists Frederick Banting, John Macleod and Charles Best.
The finding prompted August Krogh, a Danish professor who had just won the Nobel Prize in physiology or medicine, to travel to Canada at the urging of his wife Marie, a renowned scientist in her own right, who had just been diagnosed with diabetes.
At the time, diabetes was incurable, so being diagnosed with it represented a death sentence.
Macleod invited Krogh to visit him in Toronto and there gave him permission to continue experimenting with his team’s findings back in Denmark.
Within months Krogh was treating patients suffering from diabetes in Copenhagen, having formed a business called Nordisk Insulinlaboratorium in partnership with another scientist, Hans Christian Hagedorn.
The latter ended up falling out with and firing two of his employees, Thorvald and Harald Pedersen, who subsequently set up their own business called Novo Terapeutisk Laboratorium.
The rival firms competed ferociously before they came together in 1989 to form Novo Nordisk.
One very interesting aspect of the two businesses is that they each set up their own charitable foundations.
Macleod, when allowing Krogh to continue his work in Scandinavia, did so on the condition that Krogh would not profit personally from the discovery and that profits made from it would be invested in new research that would support the fight against diabetes.
The Pedersen brothers, likewise, had set up their own charitable foundation in 1951.
So the merger that formed Novo Nordisk in 1989 also saw the creation of the Novo Nordisk Foundation which, with an endowment of more than $93bn, is the world’s biggest charitable foundation.
That foundation remains the biggest single shareholder in Novo Nordisk.
To put its wealth into context, the foundation has billions more in the bank than the much better-known Bill and Melinda Gates Foundation.
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Scientific breakthroughs
Novo Nordisk’s focus on insulin has led to a number of breakthroughs over the years.
Novo’s experimentations with fermentation as a way of producing drugs led to the invention of a detergent enzyme made by the process and, eventually, the business became so large that it was eventually spun off as a separate company, Novozymes, in 2000.
Novo Nordisk and Novozymes are, respectively, the biggest and 11th biggest quoted companies in Denmark. The former, with a stock market valuation of DKK1.77trn (£212bn), would be the biggest company in the FTSE-100 if it was listed in London.
Other scientific breakthroughs achieved down the years include products such as human growth hormone and oral contraceptives, as well as an ever-evolving array of delivery mechanisms for insulin, including Novopen, the world’s first insulin pen device and GLP-1, a tablet which does away with the need for insulin injections.
The creation of Wegovy
It was this relentless research into diabetes and Novo Nordisk’s work on hormones that eventually led to the creation of Wegovy.
The product, semaglutide, was originally developed as a treatment for type 2 diabetes and had been developed alongside liraglutide, a related product that had been specifically developed to tackle weight loss, which is now marketed under the brand name Saxenda.
It was only over time that semaglutide became to be seen more as a treatment for obesity than type 2 diabetes.
Diabetes drug turned diet quick-fix
Initially, the company was sceptical.
Lars Fruergaard Jorgensen, who became Novo Nordisk’s chief executive at the beginning of 2017, said in one of his earliest presentations to investors that working on treatments to tackle obesity had been a “graveyard” for the pharmaceutical industry in the past.
At the time, a number of treatments had been discontinued by rivals, with healthcare insurers in the US – the biggest market for such treatments – reluctant to pay for them, and the weight loss benefits they delivered thought to be only negligible.
That was what marked semaglutide, which works by mimicking the effects of hormones which control the appetite, as significant. The weight loss it delivers was greater than for rival products.
The breakthrough also came at a crucial time for Novo Nordisk. Between August 2015 and November 2016 its share price had fallen by 47%, amid concerns the company was too dependent for its earnings on mature insulin treatments that were coming under pricing pressure, particularly in the crucial US market.
It was a bold decision by Mr Fruergaard Jorgensen to step up investment in obesity treatments.
He told investors at the end of 2017: “We are making a bet on obesity, and we believe we can ride it based on lifting efficacy. And that will create the market.”
Pay offs for Novo Nordisk
That bet has paid off in spades.
The product, christened Wegovy for commercial use, was made available to US patients in June 2021 and, despite problems with supplies, has garnered a huge following.
Mr Fruergaard Jorgensen told investors last month that, during the first few weeks of the year, Wegovy prescription trends had accelerated to record levels.
He went on: “The uptake underlines the significant unmet need for patients with obesity. Many patients have been waiting for all doses of Wegovy to be available again, which has created a pent-up demand.”
Those investors who stuck with the company between 2015 and 2016 – among them, the renowned British investor Terry Smith – have been rewarded for their patience.
From the low point of November 2016, shares of Novo Nordisk have more than quadrupled in value.
Not that Mr Fruergaard Jorgensen is stopping there.
Investment in future treatments
Mindful of past accusations that the company has been too dependent on diabetes, he has been investing in other therapy areas, including Alzheimer’s disease, haemophilia – a natural extension of the company’s work in injectable medicines – chronic kidney disease, non-alcoholic fatty liver disease, sickle cell disease and cardiovascular disease.
The company’s work in these areas has not received as much attention as perhaps it deserves.
Mr Fruergaard Jorgensen has freely admitted that “these are high-risk areas [in which] we might not succeed” – but has noted that, if Novo Nordisk does, it will be “among very few companies, if any, to take those markets and help those patients”.
That might sound like shooting for the moon.
But the hundreds of millions of patients who suffer from these conditions will be hoping that this giant Danish enterprise, backed staunchly by a foundation with very clear humanitarian objectives, can achieve similarly exciting breakthroughs in its second century.
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