Discover Novo Nordisk a portfolio company in the European Focus Fund!
Like many of the companies in the European Focus Fund, Novo Nordisk has been one of Christian’s core holdings for the better part since 2004. Novo Nordisk is an old business; the company was founded in 1923 and it has thus stood the test of time given an unprecedented focus on its core competence, insulin.
In our opinion, Novo Nordisk is an outstanding company. It is the world’s largest manufacturer and supplier of insulin. The company holds a global market share of some 50% in the insulin industry with the #2 and #3 competitors, Eli Lilly and Sanofi, controlling an additional estimated joint share of 30-35% between the two of them. Hence, such industry concentration should ensure R&D leadership, distribution dominance and pricing power for many years to come.
For us, what makes Novo Nordisk and the diabetes industry so spectacular from an investment perspective are several factors. Not only is the industry concentration with the top-three players quite unique, but due life-style changes, such as increased affluence and more desk-bound jobs, diabetes care grows by some 5-7% annually.
In addition, through experience we have found that very few companies control and drive their industries, but Novo Nordisk is one of them. As the leading player in its field, Novo Nordisk leads the development of new products, such as in the field of GLP-1 and more recently in anti-obesity where a causal relationship with diabetes has been established. Novo Nordisk holds the first-mover advantage in this field and the company is lobbying governments and healthcare authorities to get obesity classified as an illness. In short, by preventing obesity through weight-loss, diabetes and secondary more serious illnesses, such as renal care and later-stage amputations, can be avoided. The net effect is that by spending more on better diabetes drugs, society is able to generate longer-term healthcare savings.
For more information about the European Focus Fund and its other holding, click here.
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