Novo Nordisk: Super Focused Pharma Company For The Long Run
Novo Nordisk is a high-quality pharmaceutical company with a unique ownership structure, controlled by a charitable foundation. The company specializes in diabetes and obesity treatments, with a focus on insulin and GLP-1 analogues. Despite a temporary slowdown in recent years, Novo Nordisk is back on track for strong growth and has the potential for further diversification in the future.
Novo Nordisk is a 100-year-old company that until recently almost exclusively focused on diabetes treatment. As such, the company has almost no direct peers. The closest peer is Eli Lilly (LLY) which generates about half of its business from the diabetes area. Until 2019, Novo Nordisk, Eli Lilly and Sanofi (SNY) were considered as three largest global manufacturers of insulin accounting for over 90% of the market in volume and value, but as Sanofi exited research from diabetes in 2019, this gave Novo further opportunity to grow. There are other companies in the diabetes field, however they are focusing mostly on small molecules (not insulin) like Merck (MRK), J&J (JNJ), AstraZeneca (AZN), Boehringer Ingelheim, Takeda (TAK) and several other players.
Novo Nordisk's shares are undervalued, with the company's intrinsic value estimated to be at least double its current value. The success of Novo Nordisk's weight loss medication, Wegovy, has led to increased demand and plans to increase production capacity. The healthcare sector, including Novo Nordisk, is historically cheap compared to the broader market, presenting a buying opportunity.
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