Novo-Nordisk Value Stock - Dividend - Research Selection

Description of the company

Novo Nordisk is a global healthcare company and a world leader in diabetes care. The Company has one of the broadest diabetes product portfolios in the industry, including new generation insulin, a full portfolio of modern insulin as well as a human once-daily GLP-1 analog. In addition, Novo Nordisk also has a leading position within haemophilia care and growth hormone therapy, and Novo Nordisk’s first product to treat obesity, Saxenda®, was launched in the United States in April 2015 and has now been launched in an additional 14 countries. Novo Nordisk manufactures and markets pharmaceutical products and services that make a significant difference to patients, the medical profession and the society. Headquartered in Denmark, Novo Nordisk employs approximately 42,500 employees in 75 countries and markets its products in more than 180 countries.

Segment information

Novo Nordisk is engaged in the discovery, development, manufacturing and marketing of pharmaceutical products and has two business segments: (i) diabetes and obesity care and (ii) biopharmaceuticals. The diabetes and obesity care segment covers insulin, GLP-1, other protein-related products (such as glucagon, protein-related delivery systems and needles) and oral anti-diabetic drugs. The biopharmaceuticals segment covers the therapy areas of haemophilia care, growth hormone therapy and hormone replacement therapy.

Seasonality

Sales of individual products in individual markets may be subject to fluctuations from quarter to quarter. However, the Company’s consolidated operating results have not been subject to significant seasonality.

Raw materials

The impact on the overall profitability of Novo Nordisk from variations in raw material prices is unlikely to be significant. There is no raw material supply shortage that is expected to significantly impact the Company’s ability to supply any significant market. The Company’s production is largely based on common and readily available raw materials with relatively low price volatility. Certain specific raw materials are, however, less available. For these raw materials, it is the policy of Novo Nordisk to develop close and long-term relationships with key suppliers as well as to secure at least dual sourcing whenever possible and when relevant operate with a predefined minimum safety level of raw material inventories.

Market and competition

Novo Nordisk’s insulin and other pharmaceutical products are marketed and distributed through subsidiaries, distributors and independent agents with responsibility for specific geographical areas. In 2016, Novo Nordisk reported based on a regional structure comprising the USA, Europe, International Operations, China and Pacific. However, a new regional structure was announced in September 2016. The new regional structure for reporting will be implemented in January 2017. The new regional structure is comprised of two main commercial units: North America (the United States and Canada) and International Operations. International Operations will cover all countries except for North America and will be organised in the following five regions: Europe; Latin America; AAMEO (Africa, Asia, Middle East & Oceania); Japan & Korea; and Region China. For 2016, the most important markets are the United States, China, Japan and the major European countries. In addition there is an increasing contribution to Novo Nordisk’s total sales from the following markets: Brazil, India, Turkey, Algeria, Saudi Arabia, Iran, Argentina and Russia.