Sweet Relief for Diabetes: Novo Nordisk (NVO)

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Novo Nordisk, based in Denmark, is the world’s leading manufacturer of medicines for treating diabetes. The company’s roots date back 90 years, when it started producing insulin. Aging — and increasingly obese — populations are leading to a greater prevalence of diabetes. As of 2015, an estimated 415 million people throughout the world had diabetes. Amid this global pandemic, it is estimated that only 10–15% get adequate care. Novo Nordisk is working to increase access to badly needed medicines for the disease. The company continues to work on improved diabetes medicines, and it is producing newer versions of insulin analogs that have fewer side effects.
Novo Nordisk has an exceptional sustainability profile, especially among health care companies. Novo Nordisk published its first environmental report in 1994, making the company one of the first internationally to do so. In 2006, Novo Nordisk announced the long-term target of cutting its production-related CO2 emissions by 10% within 10 years, using 2004 data as the baseline. It met the goal by 2014 and has since pledged that all of its electricity consumption for production will come from renewable sources by 2020; currently, its production sites in Denmark, Brazil, and Japan source electricity only from renewables. The company has also pledged to work with its key suppliers to encourage them to lower carbon emissions.
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The company ranked second among pharmaceuticals in the 2014 Access to Medicines Index and was cited for its good governance, access management, stakeholder engagement, and integrated strategy for improving access to diabetes care. “Compared to peers,” the Index authors noted, “it is highly transparent, has robust codes of conduct, and audits compliance in countries in scope. Plus, its equitable pricing strategies extend across most relevant countries it has a presence in, and it is among the leaders when it comes to rapidly registering new products and applying for stringent approvals.”
Novo Nordisk is the type of company we like — its products save lives and help millions of people around the world. The company emphasizes ethical business practices and a “triple-bottom-line” approach (financial, social, environmental) that benefits stakeholders while being good business in the long run. We consider the stock to be moderately undervalued at current prices and view it as a solid long-term holding. The stock has fallen recently because of downward pricing pressure by pharmacy benefit managers for insulin, which is made by Novo and others. Despite this, we continue to like this high-quality company.
Dividend Yield: 1.0%
Stock 52-Week Low–High: $45.80–$59.00
Risk: Low
Price: $47.50
Market Capitalization: $92 billion
Website: www.novonordisk-us.com