Post #22: “Technology is the best way to differentiate ourselves”

These were the words uttered by an executive whom we met when visiting businesses in Denmark last week. It is also a statement with which we wholeheartedly agree. To misquote Charles Darwin, it is neither the strongest nor the most intelligent of businesses that will survive in the long-term, but those that are most responsive to change. Below follow very brief highlights on how the three businesses we met are currently using technology to differentiate themselves – 

Christian Hansen is the largest producer of ‘good bacteria’ in the world, with its solutions used in the food & beverage and healthcare industries. Growing consumer demand is driving the need for innovation in areas such as the microbiome and plant nutrition (e.g. products such as Impossible Burgers). Even in somewhat more mundane categories such as cheese, its latest product (KY-MAX) can drive up to a 1.0% increase in yield, which is clearly attractive for dairy producers. Looking ahead, Hansen sees scope for its innovation to target market opportunities such as substitutes for antibiotics in farming. 

Novo Nordisk is the world’s leading manufacturer of insulin for the treatment of diabetes. There is a clear emphasis on growing research spend at present, particularly into areas where there are the biggest unmet needs, such as obesity (some 80% of diabetics are also obese). Much of the effort at Novo is also on considering other ‘adjacencies’ such as cardiovascular, kidney and liver issues, which also often impact diabetics. Within diabetes specifically, Novo sees further scope to differentiate itself through developing its oral franchise (i.e. moving away from having to inject insulin) and through extending product life (i.e. so patients need take doses less regularly). 

Vestas is the biggest player in the global wind turbine industry. Its scale has helped it recently to innovate ahead of its peers in the following key areas (1) hybrid solutions – Vestas is offering integrated software solutions that will allow customers to purchase combined wind, solar and storage packages. Hybrid solutions can help lift alternative energy penetration into the grid (2) the EnVentus platform (launched in January) represents a step-change in turbine production, shifting to a modular system which allows for improved turbine production and wind farm configuration (3) the recent Utopus acquisition is allowing Vestas to push into new areas regarding algorithms for turbine operators to optimise wind usage in different conditions.

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The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document. 

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