Novo Nordisk - a focused healthcare company and diabetes

The link between obesity and type II diabetes is well known in medical circles. Obesity is attributable to inadequate activity, unhealthy eating habits and changing food alternatives. The rise in the prevalence of adult obesity in the United States has increased dramatically from 12 percent in 1989 to 27 percent in 2008. This increased rate of obesity has gone hand in hand with an increase in the number of diagnosed cases of diabetes which is up from 2.7 percent to 6.3 percent over the same period. In 2007 alone the US spent an estimated USD116 billion on direct medical expenses related to diabetes.

The increase in cases of diabetes is not limited to the developed world, developing economies too are experiencing increased incidents of diabetes. The irony of increased wealth in developing economies is that factors such as increased demand for fast food and a reduction in subsistence farming are leading to increased rates of Walter Scott Global Equity funds Macquarie Professional Series® diabetes. It has also become apparent that those in developing economies have a greater susceptibility to diabetes than Europeans. In this regard it is anticipated that the greatest increase in future cases of diabetes will be in developing economies.

Novo Nordisk has the broadest diabetes product portfolio in the industry including advanced products within the area of insulin delivery. They were created in 1989 through a merger between two Danish companies – Novo Industri A/S and Nordisk Gentofte A/S and are listed on the Copenhagen and London Stock Exchanges. The company employs approximately 26,500 full-time employees in 81 economies, and markets its products in 179 economies. 

In 2009 Novo Nordisk’s sales totalled DKK 51.1 million. Of their total sales in this period diabetes care accounted for DKK 37.5 million (73 percent) and biopharmaceuticals DKK 13.6 million (27 percent). They currently capture approximately 52 percent of the total insulin market which is used to treat diabetes. Important here is the growth in modern insulin which is a synthetic form of insulin (as opposed to human and animal insulin) and has grown from 31 percent of the total insulin market in 2004 to 59 percent in 2009. Over

the same period Novo Nordisk have increased their market share over their closest two rivals and alone account for 45 percent of the modern insulin market.

The first nine months of 2009 have been a period of solid growth for Novo Nordisk with total sales up 15 percent on the corresponding period. Sales growth in modern insulin has also been impressive, up 28 percent. On top of that the company’s gross margin has improved by 2.5 percent to 79.5 percent.*

* Past performance is not indicative of future performance. The Fund’s holding in this security will differ over time. The Fund’s performance is not expected to be in line with the performance of this security holding because there are other holdings in the Fund’s portfolio.