EU#2 - From Humble Beginnings to Global Powerhouse

Novo Nordisk, one of the world’s leading pharmaceutical companies, has a unique and inspiring origin story rooted in personal tragedy and scientific curiosity. The company’s roots date back to the 1920s, when Danish Nobel laureate August Krogh, a renowned physiologist, and his wife Marie, who suffered from type 2 diabetes, traveled to Canada. There, they learned about the newly discovered insulin therapy developed by Banting and Best. Deeply moved by the potential to save lives—including Marie's own—Krogh obtained permission to manufacture insulin in Denmark. This led to the foundation of Nordisk Insulinlaboratorium in 1923 by Krogh and Dr. H.C. Hagedorn. A few years later, a group of former Nordisk employees broke away and formed a rival company: Novo Terapeutisk Laboratorium, which developed its own insulin product.

A Rivalry Ends in Unity

For decades, the two companies competed fiercely in the small but growing diabetes market. However, global competition—especially from American pharmaceutical giants like Eli Lilly—put pressure on both companies. The U.S. firms had deeper pockets, stronger patent portfolios, and a dominant market position, particularly in insulin. By the late 1980s, it became clear that if the Danish firms wanted to compete on the world stage, they needed to join forces.

In 1989, Novo and Nordisk merged to form Novo Nordisk, combining their expertise, resources, and ambitions. At the time, the company was still overshadowed by its American counterparts, but the merger laid the groundwork for a remarkable transformation.

Out of the Shadows

The key to Novo Nordisk’s rise was relentless focus on innovation, especially in diabetes care. The company invested heavily in R&D and became a leader in insulin analogues and injectable treatments. But it was not just innovation—it was also smart execution. Novo Nordisk built a reputation for superior drug delivery systems, including user-friendly insulin pens that improved patients’ quality of life.

Novo also made strategic decisions to expand globally, entering emerging markets early and building strong relationships with healthcare systems. Slowly but surely, Novo Nordisk emerged from the shadow of American giants, becoming a force to be reckoned with in global healthcare.

A Stroke of Luck — and a Windfall

In recent years, the company has been riding an extraordinary wave of success thanks to the global weight-loss drug boom. Its GLP-1-based drug semaglutide, originally developed for type 2 diabetes, turned out to be incredibly effective for weight loss. Under the brand names Ozempic (for diabetes) and Wegovy (for obesity), the drug became a cultural phenomenon, embraced by celebrities, doctors, and patients alike.

This surge in demand has brought tens of billions of dollars in revenue and transformed Novo Nordisk into Europe’s most valuable publicly traded company—surpassing even luxury conglomerates like LVMH. Actually Novo Nordisk is No.2 behind SAP and before LVMH.

Investing in the Future

Rather than simply hoarding cash, Novo Nordisk is aggressively reinvesting in its future. The company is pouring money into R&D for next-generation obesity drugs, including oral versions and drugs with longer-lasting effects. It’s also acquiring companies and technologies to expand its pipeline beyond diabetes and obesity, such as into cardiovascular disease and chronic kidney disease.

The company is also investing heavily in manufacturing infrastructure. It’s currently building and expanding production facilities in Denmark, the U.S. (particularly North Carolina), and France to meet exploding demand for GLP-1 drugs.

What’s in the Pipeline?

Novo Nordisk has a rich pipeline that includes:

• CagriSema – a combination therapy for obesity and diabetes that may be even more effective than Wegovy.
• Oral GLP-1 treatments – for patients who prefer pills over injections.
• Cardiovascular and kidney treatments – expanding the potential applications of their GLP-1 platform.
• Cell and gene therapy projects – long-term bets on curing chronic diseases rather than just managing them.

A Future That Looks Very Secure

With high barriers to entry, a booming market for obesity treatment, and a pipeline that keeps expanding, Novo Nordisk’s future looks remarkably secure. The company also benefits from deep expertise, a strong brand, and a massive manufacturing network that rivals would struggle to replicate.

If there's any threat on the horizon, it's the potential for increased regulatory scrutiny or competition from biosimilars. But for now, Novo Nordisk seems to have found a rare formula: scientific innovation, cultural relevance, and financial discipline.

In short, the once-small Danish firm that began with a mission to help a single diabetic woman is now helping millions around the world—and shaping the future of medicine.

Conclusion Novo Nordisk has built a formidable economic moat ("Burggraben") through decades of expertise in diabetes care, world-class manufacturing, and a trusted global brand. With the unexpected success of its obesity drugs, the company has effectively gained a highly profitable new business segment almost for free—built on the same scientific platform. This windfall is now driving massive capital inflows, which Novo Nordisk is wisely reinvesting to secure its leadership for decades to come.

The recent drop in the share price is, in my view, largely a correction of previous market overexuberance—not a reflection of structural issues. Novo is neither a weak company nor in trouble. While many are currently pulling back, I’m personally using this opportunity to add to my position.

Over the next 5 years I calculate with:

Revenue Growth p.a.: 14% (Currently at 12%) – Because of fab expansion

Profit Marign: 35% (same as current)

uture PE: 24 (currently at 18) – because the 15 year average is 24

Interest rate: 4,74% (same as current)

Which leads to an FV of 850 DKK, means NOVO trades at 52% below fair value (CV: 409DKK, 11.04.25).

I calculated the interest rate of an investment at current stock price 409 DKK (11.04.25). At current value I get 13% annual return.

Here my money is working well.

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