Novo Nordisk A/S

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Novo Nordisk A/S

Novo Allé, 2880 Bagsvaerd
Denmark
Telephone: +45 4444 8888
Fax: +45 4449 0555
Web site: http://www.novonordisk.com

Public Company
Incorporated: 1940
Employees: 18,664
Sales: DKr 25.18 million ($4.0 billion) (2002)
Stock Exchanges: Copenhagen London New York
Ticker Symbol: NVO
NAIC: 325412 Pharmaceutical Preparation Manufacturing

Novo Nordisk A/S is one of the world's leading suppliers of insulin and industrial enzymes. Although the Danish company is engaged in a variety of pharmaceutical and chemical activities, the production of insulin and enzymes remains the core of Novo Group's diverse enterprises. The company's current international stature evolved out of refining long-established skills and acquiring expertise within these specific fields. Novo Nordisk also produces the antidepressant Seroxat (Paxil in the United States), the NovoSeven clotting drug, Norditropin growth hormone therapy, and hormone replacement therapy treatments. The Novo Nordisk Foundation owns a controlling interest in Novo Nordisk A/S.

Origins

August Krogh, a Danish physiologist and Nobel Prize recipient, informed his colleagues of innovative drug research taking place in Toronto. There, scientists were using pancreas extracts as a treatment for diabetes. Inspired by Krogh's enthusiasm, a number of Danes engaged in further investigation of this "revolutionary" hormone called insulin. Among these early converts were Harald Pedersen, a mechanical engineer, and his brother Thorvald, a pharmacist. Together they established a rudimentary production facility in the basement of Harald's home in Copenhagen. In 1925, just four years after the discovery of insulin, the Pedersen brothers were producing a stable, commercially viable, solution called "Insulin Novo."

By 1931 production demands required the Pedersens to leave their cellar and rent space in a former dairy factory. Eventually the brothers purchased the building along with property surrounding the plant. Growing in just ten years from a fledgling basement operation into a large-scale enterprise, the company sold insulin in 40 countries. Pancreas from oxen, calves, and swine were procured from slaughterhouses across Europe and were transported to Novo first by refrigerated car, then by railway van, and finally by lorries. To satisfy Novo's growing need for space Arne Jacobsen, the renowned Danish architect, was contracted to design modern factories.

Research and development remained a priority from the very beginning of the company's history. Profits from insulin sales were reinvested to fund the company's laboratories. Novo opened the Hvidore Hospital for the exclusive treatment of diabetic patients and as an additional facility for investigating the uses of insulin. Yet it was not until Knud Hallas-Moller joined Novo in 1937, immediately after graduating in pharmacy, that the company's research activities accelerated. As head of a new research team comprised mostly of former classmates, Hallas's first project involved investigating methods of improving insulin yields and prolonging its effectiveness.

The result of Hallas's years of study became the foundation for Novo's Lente series of insulins. Based on his discovery that auxiliary substances were not necessary to produce sustained effects, at present the Lente series remains one of the most widely used insulin preparations around the world. Hallas's research garnered him a doctorate from the University of Copenhagen. Later, Hallas received an honorary doctorate from the University of Toronto where insulin was first discovered. In 1977 he received the H.C. Orsted Gold Medal for his significant scientific contribution and in 1981, the year he retired as president to become chairman of the board, Hallas was elevated to the First Class of the order of Knights of the Dannebrog. Hallas met his wife, Gudrun Hallas-Moller (daughter of founder Harald Pedersen), while still working as a researcher.

An additional product line was added to Novo's operations in 1938, thus expanding the company's activities outside the exclusive task of manufacturing insulin. Sterilizing and autoclaving sheep guts produced a versatile surgical thread called Catgut. The popularity of this product kept Novo Facilities occupied over the course of many years; however, in the 1950s, when new methods of suturing wounds supplanted the need for Catgut, production was abandoned.

Producing Trypsin in World War II

Novo introduced another product during this time that marked a significant step in the direction of developing biochemicals. When the company began competing with the tanning industry for animal glands during World War II, Novo decided to extract both insulin and trypsin, an enzyme necessary for batting hides. The combined manufacture of these two products complemented each other well; once insulin was extracted, trypsin could be produced from the gland residues. From the first production of trypsin in the dark cellar of the insulin factory, Novo proceeded to manufacture a wide range of enzymes, which eventually led to its becoming one of the world's leading manufacturers of enzymes.

At the same time Novo pursued this early enzyme production, the company possessed basic knowledge of fermentation techniques. This knowledge soon proved useful both for the future manufacture of enzymes and the immediate need for penicillin. During World War II there was increased pressure on the scientific community to produce mass quantities of the recently isolated bacterial combatant. Novo, eager to contribute, ordered its employees to examine anything from old ski boots to jam jars in order to find the correct fungi. While yields varied as Novo attempted to improve its technology, it was not until Hallas's postwar visit to the United States that the company finally perfected production.

Observing the superior qualities of crystalline penicillin developed at Cornell University, Hallas encouraged Novo to develop its own method of crystallization. By 1947 Novo researchers obtained the desired results and the company became one of the first to commercially produce this stable form of penicillin. With this success Novo proceeded to extend its operations to include the manufacture of second generation antibiotics. Today these pharmaceuticals remain indispensable for the treatment of patients with penicillin allergies and for fighting bacteria resistant to penicillin.

The following decade saw the introduction of Heparin Novo, a notable drug used in the treatment of blood clots. As trypsin is a necessary ingredient in the manufacture of this new product, heparin fit well with Novo's established activities. Using organ tissue from oxen or pigs as raw materials, Novo packaged heparin in small disposable syringes enabling doctors to closely monitor the dosage.

Restructuring in the 1950s

In addition to the manufacture of heparin, the 1950s brought significant structural changes to the growing company. Under Hallas's encouragement, the Pedersen brothers created the Novo Foundation as a receptacle for all Novo's non-negotiable shares. Prior to this decision, control of the company remained in the hands of the founding family. As the Pedersens neared retirement, a solution was sought to protect Novo's future as an independent company. By establishing a foundation with a voting majority, the company acquired an important defense against hostile takeovers as well as a source for contributing to humanitarian projects.

By acquiring expertise in fermentation technology through the manufacture of penicillin, Novo stood well prepared to initiate enzyme production by fermentation of microorganisms. The first product of this technology was amylase, an industrial enzyme used in the manufacture of textiles. Over the next 15 years a number of enzymes emerged from Novo's laboratories that no longer required animal organs for raw materials. The most successful of these products was Alcalase, an enzyme used in detergents. In the mid-1960s these types of enzymes became popular around the world and propelled Novo to the forefront of the industry.

A major setback in 1970, however, caused enzyme sales to drop precipitously. A campaign in the United States to expose alleged health hazards for users of enzymes brought Novo under harsh criticism. After just having completed three new fermentation plants, the company was forced to lay off 400 workers as millions of kroner were lost in sales. Only when the National Academy of Sciences dismissed evidence of health risks did enzyme sales in the United States regain some of their lost momentum. In 1979 Novo completed an enzyme factory in North Carolina for the production of fructose sugar. Increasing demand for this product resulted in expansion of this facility.

Company Perspectives:

Our Vision. We will be the world's leading diabetes care company. Our aspiration is to defeat diabetes by finding better methods of diabetes prevention, detection and treatment. We will work actively to promote collaboration between all parties in the healthcare system in order to achieve our common goals.

We will offer products and services in other areas where we can make a difference. Our research will lead to the discovery of new, innovative products outside diabetes. We will develop and market such products ourselves whenever we can do it as well as or better than others.

We will achieve competitive business results. Our focus is our strength. We will stay independent and form alliances whenever they serve our business purpose and the cause we stand for.

A job here is never just a job. We are committed to being there for our customers whenever they need us. We will be innovative and effective in everything we do. We will attract and retain the best people by making our company a challenging place to work.

Our values are expressed in all our actions. Decency is what counts. Every day we strive to find the right balance between compassion and competitiveness, the short and the long term, self and commitment to colleagues and society, work and family life.

Our history tells us, it can be done.

In 1955 Novo purchased a piece of land in Bagsvaerd, an area north of Copenhagen. Over the course of the next several years Novo built an array of facilities on this site and Bagsvaerd became the center of administrative and production activities. Also during this period several new lines of pharmaceuticals augmented Novo's traditional businesses. These included steroid products for gynecological applications and Glucagon, a diagnostic aid.

Despite these successful additions, the improvement of insulin products remained a company priority. In a major scientific breakthrough, Novo introduced Monocomponent insulins, the purest preparation of insulin available. For the first time in the treatment of diabetes insulin could be administered without the presence of contaminants found in other preparations. Other improvements included the basal/bolus concept of treatment whereby a diabetic could simulate the natural patterns of short- and long-acting insulin. The compact NovoPen, an injection device based on this concept, allows diabetics more freedom in their lifestyles.

First Commercially Produced Human Insulin in 1982

Novo's innovation in insulin products included the 1982 introduction of the first commercially produced human insulin. Aware that porcine insulin differs from human insulin by only one amino acid, Novo discovered a chemical process to transform porcine insulin into an identical copy of that found in the human body. Novo's industry competitors had successfully developed human insulin produced through genetic engineering. In response to this and other technological developments in the industry, Novo organized its own genetic laboratory to manufacture both enzymes and hormones.

The need for capital to support Novo's growth over the past years resulted in the company's stock being listed first on the Copenhagen and later on the London and New York exchanges. In 1975, to celebrate Novo's 50th anniversary, company employees were allowed the opportunity to become co-owners through the purchase of stock at nominal value. Some 90 percent of Novo's employees were shareholders. While Novo's stock was an attractive investment, fluctuations in exchange rates caused earnings per share to decline between 1984 and 1986. Nevertheless, sales for human insulin more than doubled during the same time period.

Novo factories then operated in the United States, Japan, France, South Africa, and Switzerland with plans underway to construct new facilities around the world. In 1981 a jointly owned company was initiated with the large U.S. pharmaceutical-concern Squibb. Research and development, always a company priority, was funded through the annual reinvestment of an average 10 percent of sales. In addition to insulin research, the company was engaged in developing a broad range of innovative applications for enzymes. These applications included such diverse areas as pollution control, fuel alcohol projects, and food protein sources.

Creation of Novo Nordisk: 1989

In 1989, Novo Industri A/S merged with Nordisk Gentofte A/S to create Novo Nordisk A/S. Nordisk Gentofte, a leader in blood factors and growth hormones (Norditropin brand), was also a force in the world insulin market, though it was only a fifth the size of Novo. While Nordisk was much smaller, it was respected for its research capacities and was then planning to build an advanced insulin production plant in Ireland. Novo was considered the best-managed company in Denmark, reported Britain's Financial Times.

The combined company had annual revenues of more than DKr 6 billion ($835 million) and 7,350 employees. It was estimated to control up to half of the market for insulin in the Western world.

While Novo Nordisk had a market share of 75 percent in Europe, in the United States it only controlled 20 percent. Towards the end of 1989, the company formed a U.S. subsidiary, Novo Nordisk Pharmaceuticals Inc., to replace the marketing joint venture set up with Squibb in 1982.

Innovation in the 1990s

Novo Nordisk introduced a number of innovations after the merger, including NovoLet pre-filled insulin syringes. The Novopen insulin "pen" was another convenience. Novo researchers were also studying Alzheimer's disease and other central nervous system disorders.

Novo rolled out a depression drug, Seroxat—known as Paxil in the United States—in 1992. Gabitril, for epilepsy, was introduced in 1995, as was the clotting drug NovoSeven, used to treat hemophilia. In the same year, Novo teamed with leading blood glucose monitor manufacturer LifeScan (owned by Johnson & Johnson) in a marketing alliance.

The company was also a leader in industrial enzymes, particularly for detergents. It had a 50 percent market share in the early 1990s. In 1992 Novo spent $100 million expanding its enzyme manufacturing facilities in North Carolina. The company also spent $50 million opening a nearby insulin plant, which employed about 150 people. In 1994, the U.S. sales office was relocated from Connecticut to North Carolina.

Novo Nordisk stepped up its attack on the U.S. insulin market, dominated by Eli Lilly, by forming another alliance with Schering-Plough Corp. in 1998. The pact was formed to market a recently approved, oral non-insulin drug called Prandin (Novonorm outside the United States) for treatment of adult-onset diabetes.

Key Dates:

1925:: Commercially available Insulin Novo is produced.
1938:: Catgut surgical thread is added to product line-up.
1947:: Novo becomes early producer of crystalline penicillin.
1979:: North Carolina enzyme plant is built.
1982:: First commercially produced human insulin is marketed.
1989:: Novo Industri merges with Nordisk Gentofte.
1992:: Antidepressant Seroxat (Paxil) is introduced.
1995:: Epilepsy treatment Gabitril and NovoSeven clotting drug are introduced.
2000:: Novo Nordisk restructures.
2002:: ZymoGenetics is spun off.

NovoLog, a fast-acting insulin product to challenge Lilly's Humalog, was introduced in the United States in 2000. Novo continued to increase market share in other areas. Novoseven, a hemophilia treatment, was introduced in the United States in 1999 and in Japan in 2000. This helped maintain momentum for the drug, whose sales grew 40 percent a year between 1996 and 2001.

Restructuring for the New Millennium

Novo Group underwent some restructuring between 1999 and 2002. A holding company, Novo A/S, was established in September 1999. New brand identities were unveiled for Novo A/S, Novo Nordisk A/S, and the newly formed Novozyme A/S during a demerger in 2000. U.S.-based ZymoGenetics Inc. was spun off in 2002, with Novo Nordisk retaining a 40 percent stake.

In 2000, Novo had begun building up a portfolio of promising biotech stocks in Denmark and the United States. These included a 25 percent holding in BioImage, a promising Danish biotechnology company.

Novo was also looking at new uses for existing products. Novoseven, a treatment for hemophilia, was being developed as a hemostatic drug to treat cerebral hemorrhage and other conditions.

Novo Nordisk was planning to build a $200 million insulin plant in Montes Claros, Brazil. It was to become operational in 2007. Emerging markets in India, China, and Latin America were expected to provide ample demand for growth. The company was planning to employ 36,000 people globally by 2010, reported Workforce.

Principal Subsidiaries

FeF Chemicals A/S; Hermedico B.V. (Netherlands); Hermedico GmbH (Germany); Home Care Srl. (Italy); Nippon Novo Ltd. (Japan); Novo Investment Pte. Ltd. (Singapore); Novo Nordisk Asia Pacific Pte. Ltd. (Singapore); Novo Nordisk Canada Inc.; Novo Nordisk Comercio Produtos Farmaceuticos, Lda. (Portugal); Novo Nordisk Engineering A/S; Novo Nordisk Engineering Tianjin Co. (China); Novo Nordisk Europe N.V. (Belgium); Novo Nordisk Farma B.V. (Netherlands); Novo Nordisk Farma OY (Finland); Novo Nordisk Farmaceutica do Brasil Ltda. (Brazil); Novo Nordisk Farmaceutici SpA (Italy); Novo Nordisk Farmaka A/S; Novo Nordisk Health Care AG (Switzerland); Novo Nordisk Hellas Ltd. (Greece); Novo Nordisk Holding Ltd. (U.K.); Novo Nordisk Hungaria Kft. (Hungary); Novo Nordisk Pharmaceuticals Ltd. (U.K.); Novo Nordisk Invest 1 A/S; Novo Nordisk IT A/S; Novo Nordisk Limited (Ireland); Novo Nordisk Ltd. (Israel); Novo Nordisk of North America, Inc. (U.S.A.); Novo Nordisk Pharma AG (Switzerland); Novo Nordisk Pharma Argentina S.A.; Novo Nordisk Pharma AS (Norway); Novo Nordisk Pharma AS (Spain); Novo Nordisk Pharma GmbH (Austria); Novo Nordisk Pharma GmbH (Germany); Novo Nordisk Pharma India Ltd; Novo Nordisk Pharma Korea Ltd.; Novo Nordisk Pharma Ltd. (Japan); Novo Nordisk Pharma (Malaysia) Sdn. Bhd.; Novo Nordisk Pharma (Singapore) Pte. Ltd.; Novo Nordisk Pharma Sp.Zoo. (Poland); Novo Nordisk Pharma (Taiwan) Ltd.; Novo Nordisk Pharma (Thailand) Ltd.; Novo Nordisk Pharmaceutical, Inc. (U.S.A.); Novo Nordisk Pharmaceutical Industries, Inc. (U.S.A.); Novo Nordisk Pharmaceuticals A/S; Novo Nordisk Pharmaceuticals Ltd. (New Zealand); Novo Nordisk Pharmaceuticals (Philippines) Inc.; Novo Nordisk Pharmaceuticals Pty. Ltd. (Australia); Novo Nordisk Pharmaceutique SA (France); Novo Nordisk (Pty) Ltd. (South Africa); Novo Nordisk Saglik Urunleri Ticaret Ltd. Sti. (Turkey); Novo Nordisk Scandinavia AB (Sweden); Novo Nordisk Servicepartner A/S; Novo Nordisk Servicepartner Sikring A/S; Novo Nordisk s.r.o. (Czech Republic); Novo Nordisk Tianjin Biotechnology Co. Ltd. (China); S.A. Novo Nordisk Pharma N.V. (Belgium); S.A.V.P.O. (France; 50%).