Annual Report 2007 - Novo Nordisk

Business results Strategy and risks
business strategy,
opportunities
and key risks
In the face of intensified competition the leadership challenge is
to stay focused on pursuing long-term objectives for value creation
and overcoming barriers to sustainable growth.
Novo Nordisk is a focused healthcare company. This focus underlines
the company’s claim to leadership in its markets. Novo Nordisk
offers therapies in areas where significant unmet medical needs remain:
diabetes care, haemostasis management, growth hormone deficiency
and hormone replacement therapy.
Over the years, Novo Nordisk has built expertise in protein engineering
and expression and protein formulation, supported by device technology
for the convenient administration of medicines. Leveraging
these core competences is critical to securing long-term success. In line
with this strategy, Novo Nordisk has decided to discontinue R&D activities
within small molecules for the oral treatment of diabetes and to
refocus its activities within inhaled insulin, discontinuing clinical development
of AERx ® inhaled insulin (AERx ® iDMS).
The dedicated focus in just two core business segments – diabetes
care and biopharmaceuticals – is supported by a simple organisational
structure of functional excellence, a common values-based business
approach and global standards. This structure facilitates flexibility and
agility in a dynamic and highly competitive business environment.
The corporate strategy is based on a 10-year perspective and describes
how Novo Nordisk intends to translate its vision into action.
The market approach is underpinned by the Triple Bottom Line principle,
which encompasses both risk mitigation and innovation. To better
manage emerging risks and act on opportunities, Novo Nordisk engages
with a broad range of stakeholders. The company seeks to make a positive
economic, environmental and social impact through its operations,
global management standards, community engagements, partnerships,
technology transfers and knowledge exchange.
Diabetes care
Strategic objective: maintaining leadership Novo Nordisk offers a
full portfolio of modern insulins and has a strong pipeline with a latestage
product candidate that the company hopes will meet current and
future needs. The company has sufficient production capacity to scale
up deliveries, and a well-tuned sales force in place globally. Moreover,
significant investments in diabetes research make Novo Nordisk the
largest player in this field.
This position is the foundation of Novo Nordisk’s promise to change
diabetes. To curb the diabetes pandemic, which is largely attributable
to an escalating consumer culture, action is required on several fronts.
First, to improve the quality of life for people with diabetes. Modern
insulin therapy serves individuals’ varying needs. Improved outcome,
which can be measured as reduction of HbA 1c levels, may be achieved
by early initiation of insulin therapy and timely intensification. Second,
as a longer-term effort, interventions to prevent the onset of type 2 diabetes.
And third, research into finding a cure for type 1 diabetes.
Growth drivers and risk factors The market for diabetes care is growing
rapidly. It is also becoming increasingly competitive as new products
and biosimilar products become available. Competing under such
conditions hinges on the ability to offer superior products and to effectively
convey the value proposition to customers and healthcare professionals.
Delay or failure of key development projects would impair
Novo Nordisk’s ability to successfully market current and new products.
Causes of delay may include slow recruitment for clinical trials, safety
or efficacy concerns, filing delay or insufficient production capacity.
Novo Nordisk seeks to maintain its lead in injectable insulins through
continued market penetration of the company’s modern insulins, and
to build new platforms with pulmonary insulin and GLP-1, where the
compound liraglutide appears to be promising.
“Our core competences are in therapeutic proteins, and
this is where we can make the greatest difference in
driving company growth and achieving better outcomes
for people whose healthcare needs we serve.”
Lars Rebien Sørensen
president and chief executive officer
Barriers to success include customers’ willingness and ability to pay.
Ageing populations in the developed parts of the world have led to increased
pressure on healthcare costs, and governments seek to cut
prices and do not offer premiums for new, innovative products. This development
threatens to undermine the profitability of bringing improved
treatments to market. In contrast, in the developing parts of the
world the challenge is to provide access to medicines and to healthcare.
Novo Nordisk has stepped up its efforts to engage payers and policymakers
in all parts of the world in understanding the magnitude of the
economic implications of inaction on diabetes. These efforts include
building an evidence-based argumentation for action and for the
health-economic benefits of insulin treatment. The company’s global
programmes to offer inclusive diabetes care help alleviate the current
diabetes burden while simultaneously building long-term presence in
emerging markets and paving the way for commercially viable solutions
in the longer term.
Biopharmaceuticals
Strategic objective: expand the business With a solid range of
therapeutic products, the strategy for biopharmaceuticals is to expand
the business by pursuing new indications and exploring new potential
in other areas where Novo Nordisk can make a difference.
As the primary objective, Novo Nordisk aims at expanding its leadership
in haemophilia based on the company’s product NovoSeven ® and a
number of innovative compounds that cover different blood clotting
factors, including analogues of FVII, in the pipeline.
The therapy areas in the biopharmaceuticals segment predominantly
address small patient groups with significant unmet medical needs. The
exception here is hormone replacement therapy, where Novo Nordisk has
gained market-leading positions despite a generally declining market.
8 Novo Nordisk Annual Report 2007