Lars Fluergaard Jorgensen has a problem. It's just that too many people want what he's selling.
Mr. Jorgensen is the chief executive officer of Danish pharmaceutical company Novo Nordisk. Even if the company isn't a household name, the jingle for its best-selling drug blares on TV: “Oooooooooooo Ozempic!” — You may experience ringing in your ears. Novo Nordisk's diabetes and weight-loss drugs Ozempic and Wigoby have elevated the company to national celebrity status and helped make it the most valuable publicly traded company in Europe. It can't make enough drugs.
Mr. Jorgensen's problem is one that many executives don't care about, but this success caught him off guard. Last year, when the company celebrated its 100th anniversary, Nordisk's sales soared by a third, to 232 billion Danish kroner, or $33 billion.
“Nobody expected this growth. No analysts, no one inside the company,” Jorgensen said in a recent interview at the company's headquarters outside Copenhagen. “No one expected a 100-year-old company to grow more than 30%,” he said, sounding torn between pride and surprise.
For most of its 100 years, Novo Nordisk has focused on its steadfast business of treating diabetes, one of the world's most prevalent chronic diseases. Even today, half of the world's insulin is produced. But with the development of Ozempic and Wegovy, a bigger and bolder ambition was born: to “conquer serious chronic diseases.” This includes treating and even preventing obesity related to other health problems such as heart disease and kidney disease.
By pursuing a goal much bigger than diabetes, the company hopes to open the door to a multibillion-dollar market with nearly 1 billion potential patients. In the United States alone, over 40% of adults are obese.
Danish pharmaceutical companies are therefore undergoing major changes, becoming larger, more international and more visible. Mr. Jorgensen is ramping up production to meet huge demand for his weight-loss drugs, secure the company's future ahead of competition from the likes of Eli Lilly, and meet lofty goals.
However, amidst all this turmoil, there are some things management is trying to protect. These are the company's long-standing values, codified as the 'Novo Nordisk Way'.
These principles, including a “patient-centered business approach,'' have helped the company earn a good reputation in the country and are seen as a place where people are proud to work. But these signposts are facing pressure as tens of thousands of new employees are hired. Member of Parliament They blame the drug company's high prices and counterfeit products for making people sick.
#ozempic
The pharmaceutical company's headquarters pays homage to its roots in a modern, six-story, white, circular building inspired by the molecular structure of insulin. A spiral staircase winds around an open atrium. On the top floor, Jorgensen and his executive team share an open-plan office space.
“Many of us have been here forever,” Jorgensen, 57, said as he gathered strength from a blizzard outside.
He has worked at Novo Nordisk for more than 30 years and became CEO in 2017. It was a turbulent time when the insulin market was under stress. “In one year he had three profit warnings and the stock price fell 40%,” he recalled. .
About a year later, Ozempic appeared on the market.
Currently, Novo Nordisk is consistently exceeding investor expectations. Last summer, it overtook French luxury goods group LVMH Moët Hennessy Louis Vuitton to become Europe's most valuable company. Its market value is over $555 billion.
For those on the sixth floor who have risen through the ranks at companies focused on insulin, change is coming fast.
“Now it's new patients. New product presentations. Sometimes new molecules,” Jorgensen said. “For example, the management systems and supply chains required are completely different.”
Central to the growth is semaglutide, Novo Nordisk's synthetic version of the hormone known as glucagon-like peptide-1 (GLP-1), which helps regulate the body's blood sugar levels. The patent developed by the company has also been proven to have significant effects on weight loss. Eating makes you feel full and reduces your appetite. Doctors say it could revolutionize the way we think about obesity and what we eat. Food company executives have similar concerns.
Semaglutide has revived Novo Nordisk's fortunes. Decades ago, the company lagged behind its international peers due to failures in insulin medical trials and lack of innovation. And as U.S. lawmakers raised price caps and drug companies were forced to pay hefty rebates, insulin began to dry up as a profit source.
Ozempic is the trade name for semaglutide, a weekly injection for people with type 2 diabetes that has been around for more than six years. However, in recent years, it has exploded in popularity due to massive advertising, social media videos, and conspiracies surrounding its use of celebrities. Elon Musk has said he used it, and Jimmy Kimmel made a gag about it at last year's Oscars. TikTok videos tagged Ozempic have been viewed more than 1 billion times, with people documenting their weight loss.
Once Ozempic took off, Novo Nordisk moved forward with the development of Wigovy, a semaglutide marketed specifically for weight loss. By the time it was approved by the Food and Drug Administration in mid-2021, the Danish company knew it was “something special,” said Camila Sylvest, executive vice president of commercial strategy and corporate affairs. said.
Novo Nordisk is an industry leader in obesity treatment, but it currently faces stiff competition from Eli Lilly, which sells similar drugs under the brand names Mounjaro for diabetes and Zepbound for weight loss. There is. Other drug companies are also working hard to catch up.
So far, most of the people using Ozempic (two-thirds of last year's sales) and Wegovy (nearly all of the sales) are in the United States. Part of the reason is that drugs tend to be introduced first in the United States.
This means that Danes essentially have Americans to thank for their economic growth. Expansion of the pharmaceutical industry, primarily by Nordisk, was responsible for all of Denmark's economic growth last year.
High prices, loud criticism
But the high prices of these drugs have made Novo Nordisk a target.
Sen. Bernie Sanders, an independent from Vermont, said last month that “there is no rationale other than greed for Novo Nordisk to charge Americans nearly $1,000 a month for Ozempic.” A frequent critic of high drug prices, he said Canadians pay $155 a month, while Germans pay just $59.
Ozempic could be a “game changer” in the fight against diabetes and obesity, Saunders added. But, he added, “this prohibitively high price could bankrupt Medicare, the American people, and the entire health care system.”
Ozempic's U.S. list price is just under $1,000 a month, and Wigoby's about $1,350, but Novo Nordisk says most U.S. patients pay less than $25 for Wigoby. Much of the remaining cost is covered by insurance plans, which some people find burdensome. This month, North Carolina stopped covering obesity drugs for state employees in the face of ballooning costs. Even Denmark's National Health Service won't subsidize Wegovy, saying it's not cost-effective.
Jorgensen argues that high obesity rates lead to huge medical costs, and that drugs to combat obesity could ultimately save money. “Health care systems are facing challenges as the population ages,” he said. “If we don't do something about obesity, they're going to break down.”
How to do Novo Nordisk
Although the company's production facilities operate 24/7, limited supplies of Ozempic and Wigoby are expected to remain for several more years, worrying diabetics as counterfeit products enter the market. .
Production capacity is a recurring problem. Novo Nordisk has more than 64,000 employees and traffic jams outside the building are common. At Bagsvaerd's headquarters, if you arrive after 9 a.m., you might have a hard time finding a desk.
In other words, Novo Nordisk is reinventing itself. The company is spending more than $6 billion this year to expand its manufacturing operations, nearly four times what it spent just two years ago, bringing cranes and construction workers onto the scene. The company is buying more production sites in Denmark and emptying out office space.
Last year, the company hired more than 10,000 people worldwide, expanded its research office in Cambridge, Mass., and acquired smaller biotech companies, becoming more international and especially American. There is.
Jorgensen is also working to change thinking within the company. A few years ago, he gathered executives at a training camp called Novo, his Nordisk, his Unknown, and his NNX. The key question, he said, is, “What are your own self-limiting beliefs that might actually hold you back or hinder you from providing leadership in different environments?” .
Since then, more than 400 managers have gone through the program, which aims to help them keep up with their companies' rapid growth.
The company says that until the supply of medicines better matches demand, it will have to make difficult choices about how to decide who gets what is available.
Ms Silvest says here she is guided by the Novo Nordisk Way, which was introduced in the late 1990s. It includes 10 principles, including “Be curious and innovate for the benefit of patients and society as a whole'' and “Build and maintain good relationships with stakeholders.''
“Either way, it always helps to know the basics of what's right,” she said.
In addition to selling in the U.S., where prices are highest, Novo Nordisk wants to expand access internationally for low-income and underinsured people while keeping existing patients at the top of the list. , she added.
hundreds of millions of potential patients
Until recently, obesity drugs had a dismal history. That includes when fen-phen had to be pulled from shelves in the late 1990s because it caused serious heart problems.
Emily Field, a pharmaceutical analyst at Barclays in London, says obesity has been a “graveyard of treatments.” She says the drugs worked well, but either had significant side effects or only led to moderate weight loss.
But science is changing rapidly, and so is public opinion about obesity, with a growing understanding that obesity is a medically treatable disease rather than a lack of willpower or poor diet.
Novo Nordisk is part of this changing landscape. Last summer, a five-year study funded by the company showed that its drug can reduce the risk of heart attacks, strokes and cardiovascular disease. This is “why Novo Nordisk really got noticed,” Ms Field said.
Therefore, hundreds of millions of people could be potential patients. According to Barclays, the market for obesity drugs could grow to $100 billion over the next decade. Novo Nordisk has treated approximately 40 million people worldwide with diabetes and weight loss treatments.
The end of obesity?
The U.S. patents for Ozempic and Wigoby don't expire until 2032, but Novo Nordisk is already working on developing new treatments. Development is progressing on CagriSema, which is expected to be more effective than Wegovy in losing weight with weekly injections. Last month, the company's stock soared after early test results for an oral pill for another weight-loss treatment.
As the company digs deeper into obesity, defined as obesity with a BMI of over 30, the next question is whether the Danish drugmaker can prevent obesity. Based on genetics and data, can we predict who is at risk and treat them first?
Last year, Novo Nordisk established the Transformation Prevention Unit, an internal team to explore ways to predict and prevent obesity.
Not everyone buys the hype. Jefferies has had a negative “underperform” rating on Novo Nordisk stock for over four years. London bank analyst Peter Welford believes obesity drugs will become common and fungible and suffer the same fate as insulin, increasing production and putting pressure on net prices. .
“Ultimately, we think Novo Nordisk needs to diversify,” Welford said. But the bank's bet that Novo Nordisk's share price is too high has so far failed.
“Obviously we were wrong,” he said.