Novo Nordisk
December 25, 2024
The Founding of Novo Nordisk
Diabetes affects over 500 million people worldwide, with 38 million in the United States alone, resulting in an annual economic burden of over $327 billion. Additionally, obesity and weight management issues impact a staggering one billion people globally, with 75% of the US population classified as overweight or obese. Amidst this significant market opportunity, Novo Nordisk has emerged as Europe's largest company, revolutionizing diabetes treatment and management.
The company's origins date back to 1922 when Nobel Prize winner August Krogh, an animal biologist, embarked on a mission to find a treatment for his wife Marie's diabetes. The Kroghs traveled to Boston, where they met Dr. Elliot Joslin, a renowned diabetes expert. Joslin informed them about the groundbreaking discovery of insulin in Toronto, prompting Marie to suggest securing rights to bring insulin to Denmark. August visited Toronto, met with the insulin committee and obtained rights for Scandinavia.
Upon returning to Copenhagen, the Kroghs partnered with leading Danish physician Hans Christian Hagedorn and August Kongsted's Lion Chemical Factory to extract insulin from animal pancreases using the Toronto method. By 1923, they had successfully completed human trials, leading to the establishment of Nordisk Insulin, a foundation-owned company dedicated to producing and distributing insulin.
Born from Conflict
The discovery of insulin by Frederick Banting and Charles Best in 1921 revolutionized diabetes treatment, offering a lifeline to countless individuals. However, early insulin production was a laborious and often inconsistent process, requiring significant advancements to ensure widespread access and reliable efficacy. To address these challenges, a group of scientists and entrepreneurs, including the Petersen brothers, established Nordisk Insulinumfabrik in Denmark. The company aimed to industrialize insulin production, ensuring a consistent supply of this life-saving medication. However, a bitter dispute arose between Harold and Thorvald Petersen, leading to Thorvald's dismissal from Nordisk. This rift, fueled by ambition and differing visions for the company's future, ultimately resulted in Thorvald founding Novo Insulinumfabrik, a rival company fiercely competing with Nordisk. This sibling rivalry, born from a shared passion for advancing diabetes care, inadvertently spurred rapid innovation and accelerated the development of more effective and convenient insulin therapies.
The ensuing competition between Novo and Nordisk was fierce. Novo disrupted the market with the introduction of shelf-stable liquid insulin, a significant advancement that undercut Nordisk's pricing. Nordisk countered with the development of NPH insulin, a longer-acting formulation that offered improved blood sugar control. However, Nordisk refused to license NPH to Novo, escalating tensions and leading to protracted legal battles. The impact of World War II further intensified the rivalry. While Novo became the primary insulin supplier for Nazi-occupied Europe, Nordisk's international licensing revenue dwindled significantly. These events shaped the trajectory of both companies, driving them to continually innovate and improve insulin therapies, ultimately benefiting countless people living with diabetes.
Post-war, Novo emerged as a scaled pharmaceutical company, while Nordisk struggled. Novo developed a new longer-acting insulin (Lente), which Eli Lilly licensed. In the 1970s, Nordisk entered the fragmented US healthcare market, achieving 30% annual sales growth. Novo, needing capital, conducted a small IPO. By 1980, Novo's insulin sales reached $100 million, while Nordisk's were $30 million. The global insulin market was approximately $500 million.
A Changing Tide
The diabetes market witnessed explosive growth in the late 20th and early 21st centuries, largely driven by the global obesity epidemic. The prevalence of type 2 diabetes skyrocketed, quadrupling between 1980 and 2016. This surge in demand coincided with a transformative period in the industry, marked by the biotech revolution spearheaded by Genentech. Genentech's pioneering work in recombinant DNA technology led to the development of human insulin, a significant breakthrough that surpassed the limitations of animal-derived insulins.
Eli Lilly, recognizing the potential of this new technology, forged a partnership with Genentech, gaining early access to human insulin production. Novo, initially pursuing a strategy of modifying pig insulin, faced challenges in competing with the emerging human insulin market. Nordisk, initially hesitant to embrace human insulin production, strategically shifted its focus towards recombinant DNA technology, recognizing its long-term potential.
By the late 1980s, Nordisk had established a strong market position, capturing approximately 20% of the global insulin market, while Novo held a 30% share. However, the increasing competitive pressures within the industry necessitated a shift in strategy. The high costs of research and development, coupled with the need for significant investments in manufacturing and global distribution, created a challenging environment for independent players.
The 1989 merger of Novo and Nordisk created a dominant insulin company. Despite plans to merge with a larger pharma company, Novo Nordisk's growth continued, driven by the expanding insulin market. A key turning point was the foundation board blocking a merger in 2004, allowing the company to pursue its own path. This decision proved crucial as a research team, led by Lotte Bjerre Knudsen, developed a groundbreaking drug, a GLP-1 analog called Liraglutide.
The discovery of a GLP-1 analog in Gila monster venom led to Eli Lilly's Byetta, the first such drug on the market in 2005. Novo Nordisk developed Liraglutide (Victoza), a more effective, once-daily injection for diabetes, which also showed appetite-suppressing effects. The company later developed Saxenda, a higher-dose version of Liraglutide, for weight management. However, Saxenda only achieved an average of 8% BMI reduction, falling short of the industry's perceived "magic number" of 10% for significant impact.
Semaglutide and Market Leadership
Semaglutide achieves 15%+ BMI reduction, administered weekly, and works by mimicking a hormone that signals fullness to the brain and slows digestion. Despite supply constraints, Ozempic and Wegovy have seen massive demand, driving Novo Nordisk's transition into a GLP-1 company, with these drugs now accounting for 69% of its revenue.
The high cost of GLP-1 drugs in the US, over $1000 per month, remains a significant issue. Payers are hesitant to cover these drugs, leading to intentional slow-rolling of coverage and a push for other interventions first. Even with insurance, out-of-pocket costs can be $300-$500 per month, making them unaffordable for many. Non-adherence is also a problem, with many people stopping treatment after a year, often due to cost, insurance changes or side effects. Eli Lilly's Tirzepatide (Mounjaro/Zepbound) is a strong competitor to Novo Nordisk's Semaglutide, potentially more effective for weight loss.
Ozempic vs. Wegovy vs. Mounjaro
Novo Nordisk's Ozempic and Wegovy both utilize semaglutide, a GLP-1 receptor agonist, to mimic the effects of a gut hormone that regulates blood sugar and appetite. Ozempic is primarily approved for type 2 diabetes, while Wegovy is specifically indicated for chronic weight management. Eli Lilly's Mounjaro, on the other hand, is a dual agonist, targeting both GLP-1 and GIP receptors. This dual action may contribute to Mounjaro's generally higher efficacy, with clinical trials demonstrating greater weight loss compared to Ozempic and Wegovy.
Price can vary significantly depending on insurance coverage, but Mounjaro is often more expensive than Ozempic and Wegovy.
Both companies are actively engaged in research and development of new weight management medications. Novo Nordisk is exploring combinations of semaglutide with other therapies, while Eli Lilly is investigating the potential of other dual-agonist approaches. The future of weight management medications likely lies in personalized medicine, with tailored treatments based on individual patient characteristics and genetic factors.
Rybelsus
Novo Nordisk's Rybelsus (semaglutide) used to manage type 2 diabetes. Similar to Ozempic and Wegovy in that the mimic GLP-1 hormone simulate insulin secretion from pancreas which help lower blood sugar. The drug is taken orally, once a day, on empty stomach with water.