How Is Novo Nordisk Doing in the Diabetes Space?
What Factors Support Novo Nordisk's Premium Valuation?
Revenue from diabetes drugs
Novo Nordisk (NVO) is a leader in the diabetes space, and 79% of its total revenue is generated from the segment. For details on the leadership of the company in the diabetes space, please refer to, How Is Novo Nordisk’s Position in the Diabetes Segment?
The diabetes care franchise of Novo consists of insulin, glucagon-like peptide-1 (or GLP-1) class drugs, and other antidiabetics. The insulin segment further comprises of human insulin, modern insulin, and new generation insulin.
Modern insulin
The modern insulin portfolio includes NovoRapid/NovoLog, Levemir, and NovoMix/NovoLog Mix. More details of the modern insulin portfolio can be found at Novo Nordisk Revenues Still Healthy from Modern Insulin Portfolio and How Much Did Modern Insulin Fetch for Novo?
The contribution from modern insulin is expected to rise to 52.5 billion Danish kroner in fiscal 2016 and 53 billion Danish kroner in fiscal 2017. The contribution from Novorapid is expected to be ~21.9 billion Danish kroner in fiscal 2016 and ~22.7 billion Danish kroner in fiscal 2017.
Followed by NovoRapid, Levemir would generate ~19.3 billion Danish kroner and 19 billion Danish kroner in fiscal 2016 and fiscal 2017, respectively.
Next generation insulin
Next generation insulin includes Tresiba, Xultophy, and Ryzodeg. With recently launched Tresiba, Novo is expected to gain market share, and sales from the drug class are expected to rise. Novo’s Tresiba competes with GlaxoSmithKline’s (GSK) Tanzeum, Sanofi’s (SNY) Toujeo and Lantus, and Eli Lilly’s (LLY) Basalgar. For more details on next generation insulin, please refer to Next-Generation Insulin: Novo Nordisk’s Major Growth Driver? and How Tresiba and Xultophy Will Drive Novo’s Performance.
GLP-1 class drugs
The contribution from the GLP-1 class is increasing steadily. Victoza, the GLP-1 class drug, is one of the major drivers for the company. The details of GLP-1 class are available at Novo Nordisk’s Victoza Maintains Leadership in GLP-1 Market.
Industry-specific factors such as pricing pressure and volume uptake are the major contributors for the company performance. Stock price is susceptible to such events. To avoid such risk, ETFs are a good option. To get exposure to Novo Nordisk Pharmaceuticals and control excessive company-specific risks, investors can choose to invest in the PowerShares International Dividend Achievers Portfolio (PID). Novo Nordisk accounts for 0.41% of PID’s total holdings.
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