Post #46: Diabetes – “we are just at the beginning of the innovation curve” - Heptagon Capital – Production

These were the words spoken by Novo Nordisk during their biennial Capital Markets Day event for the investment community. As the world’s largest producer of…

Post #46: Diabetes – “we are just at the beginning of the innovation curve”

These were the words spoken by Novo Nordisk during their biennial Capital Markets Day event for the investment community. As the world’s largest producer of insulin and leading player in the market for treating obesity, there are few businesses better placed to comment on diabetes than Novo. Along with 100+ other attendees, we spent a day in Denmark digesting diabetes. Here’s what we learned.

Large unmet opportunity: Some 463m people globally (6% of the world’s population) have diabetes, yet only 40% of these are treated. In many of the cases where people remain untreated, diabetes has not even been diagnosed. China remains a particular problem, where fewer than 50% of the population have been diagnosed and only 20% are receiving effective treatment for the disease.Diabetes needs to be addressed: it is associated with shorter life expectancy (typically 8 years) as well as a range of comorbidities, i.e. related diseases, such as cardiovascular (CVD) or kidney issues. 70% of people with diabetes, for example, die from CVD-related illness. 

Turning to obesity, the burden is significantly larger, with 650m adults and 130m children globally defined as obese. Part of the problem here lies not just with prevention, but also with recognition. In many countries, obesity is still not seen as a medical condition. Overall, the annual global cost of dealing with obesity totals more than $2tr, over ten times the size of the diabetes market ($48bn).

Solving the problem: Novo Nordisk summarised this succinctly, highlighting “we can only survive the future if we innovate and provide access.” In other words, product development needs to be centred around ongoing innovation. Insulin has evolved markedly from daily injections to oral solutions (such as Rybelsus – Novo’s latest product launch, pictured above). Treatment using stem cells may be the next big thing.

It is also important to recognise that not every treatment will be suited to all countries. Beyond considerations about disease complexity, working with regulators and healthcare authorities to provide as much access to treatments as possible remains crucial. Ongoing education for all stakeholders matters. Novo highlighted during the course of its presentations that its spend on research and development was set to increase in the coming years. Watch this space for more.

Disclaimers

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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