The value has increased by 1,000 billion. since Helge Lund became chairman of the board – E24
The stock market rise for Novo Nordisk under chairman Helge Lund corresponds more than the entire market value to Equinor. – We get paid for large investments in technology and innovation, says Lund.
– I experience that the whole company is driven by a clear and meaningful purpose, which is to overcome diabetes and other serious chronic diseases, says Helge Lund to E24.
The former CEO of Statoil, renamed Equinor, has since 2018 been chairman of the board of Novo Nordisk, one of the world’s largest manufacturers of the diabetes medicine insulin.
The 98-year-old company was already the Nordic region’s most valuable when Lund was proposed as the new chairman of the board in February 2018.
In recent years, however, the distance to the chasing field, consisting of other Nordic giants such as Equinor, Atlas Copco, Investor and Volvo, has become ever greater.
On the Copenhagen Stock Exchange, the share has delivered and a return of 148 percent incl. dividend from Lund’s entry, and last year the first Nordic company for a transfer of DKK 1,000 billion in market value.
In the current year alone, the stock has jumped 76 percent to a record high of 1.731 billion. The increase in value since Lund became chairman of the board is close to DKK 1,000 billion.
In comparison, Lund’s old employer Equinor prices to 719 billion, after rising to a new all time high on rising oil prices.
– There are several similarities between the oil industry and the health industry. Both include heavy, long-term and risky investments, as well as an active interaction with the authorities of different countries. The focus on safety and quality is also as intense in both places, says Lund.
Secured Nordic patent in 1922
This year it is 100 years since a group researcher at the University of Toronto discovered the hormone insulin, and thus one could get life-threatening high blood sugar levels in people with type 1 diabetes.
Until then, the disease had been a death sentence for those affected, since the body had lost its own ability to produce insulin on its own.
The Nobel Prize-winning Danish researcher August Krogh secured a Nordic patent for insulin after a study trip to Toronto in 1922.
The company has been established, the Nordic Insulin Laboratory, was founded for Novo Nordisk, which today controls almost 30 percent of the global insulin market.
The company’s largest owner is one of the world’s largest non-profit foundations, the Novo Nordisk Foundation, which holds 28.3 percent of the share capital, but controls 76.8 percent of the voting shares.
– My experience is that this ownership model combines the best of both worlds. We have a type of main owner which means that we can be very long-term in our way of thinking and the way we invest, says Lund.
– At the same time, we have the disciplining effect of being listed, and thus measured against our results every single quarter. I think that has been part of the success formula for the company, he adds.
Invested 15.5 billion. research last year
Every year, Novo Nordisk invests between 12–13 percent of revenue in research and development. For 2020, it amounted to DKK 15.5 billion of a record high turnover of DKK 127 billion.
– The fact that we are involved in solving some of the world’s biggest health challenges means that we have managed to attract difficult people, who are also inspired by the purpose of Novo Nordisk. We have also been willing to invest in new technology, and thus maintained a high rate of innovation, says Lund.
Novo Nordisk the first company to launch was so-called long-acting insulin in the 1940s, and was also the first on the market with insulin pens in 1985, which made injection of simple and less painful agent.
The company’s research on the usual GLP-1 hormone in recent decades has also contributed to several successful product launches for the treatment of type 2 diabetes, which is the fastest growing variant of the disease globally.
It is now estimated that 537 million people live with diabetes, and only about half of these are diagnosed. Thus, there are an enormous number of people who do not get the treatment they need, and both we and the industry feel this and an enormous responsibility for it, says Lund.
Every other person in the world who needs insulin cannot get it or pay for it, according to the Diabetes Association.
On its website, the association describes compounds as «still a luxury and privilege that only a few rich people can afford», although it is different in life and death for those living with type 1 diabetes.
– We are involved in several programs to help the most vulnerable groups. But we recognize that we do not reach all those we have to reach, and these are challenges we must solve in collaboration with different countries’ health authorities, says Lund.
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Helge Lund new chairman of the board in the Nordic region’s largest company
Got criticism for sky-high prices
In the US, Novo Nordisk and the other dominant manufacturers, US Eli Lilly and French Sanofi, have been criticized for several years as the list price of insulin has risen by more than 1,000 percent over the last 20 years.
Sky-high insulin prices have forced one in four Americans with diabetes to ration the insulin they have, according to a Yale study. Such rationing has been linked the death of 26-year-old Alec Smith in 2017.
Smith had become too old to be covered by his mother’s health insurance, and was therefore forced to squeeze in the insulin doses. He died as a result of severe ketoacidosis, which is the consequence of a little insulin.
In February, US authorities released a very critical report on the role of the insulin producer in the extreme price increase.
I the report, prepared by the Senate Finance Committee, the second was stated that Novo Nordisk conducted shadow pricing of Sanofi, and responded with identical prices only days or hours after the competitor.
It was also claimed that the board of Novo Nordisk had voted down a proposal for price reductions on insulin for fear of a negative response from buyers who had a financial interest in further price increases.
– The company has commented on the report you are referring to. What I can say in addition is that we must be competitive, and that it is completely quiet prices that we follow current rules and norms in the markets we operate in, says Lund.
Novo Nordisk has subsequently stated that the information in the mentioned report and associated documentation «provides a limited picture of the efforts and other companies have made to ensure access to our doctors».
The company also believes the case shows that people with chronic illnesses are all too often let down by insurance company and it is necessary to reform to ensure treatment everyone can afford.
Read on E24 +