Novo Nordisk Joins Eli Lilly in Lowering Insulin Prices

For the estimated 37 million Americans who have diabetes (per the CDC), prices of the lifesaving drug insulin have a direct impact on their health and longevity. Novo Nordisk is offering an insulin price drop. Who owns Novo Nordisk, and how will lower prices impact the insulin market?

As is common in healthcare, the cost to make insulin is much lower than the cost for patients to purchase it. With only three manufacturers making insulin that's available to patients in the U.S., there has been pressure on those companies to lower insulin prices, a decision Lilly announced two weeks ago. Novo Nordisk, one of the remaining two U.S. insulin manufacturers, is following suit.

There are several companies involved in Novo Nordisk's mission of helping improve lives of diabetes patients. First of all, there's the Novo Nordisk Foundation, an international enterprise foundation with an emphasis on medical research and treatments. That foundation is headquartered in Denmark.

Under the umbrella of the Novo Nordisk Foundation is Novo Holdings A/S, which is a holding company. Novo Holdings is the primary shareholder of Novo Nordisk, the Danish pharmaceutical firm that's in headlines this week for dropping the price of insulin.

In February 2023, Novo Nordisk A/S celebrated 40 years on the NYSE. The pharmaceutical firm trades under the symbol NVO. The occasion also marked 100 years since the company was founded in Denmark. In 1922, Danish professor August Krogh received permission to produce insulin in Denmark and other Nordic countries.

Hans Christian Hagedorn created NPH insulin and founded the Nordisk Insulinlaboratorium, now called Novo Nordisk. Together with Danish professor August Krogh, he received permission to produce insulin in 1923. They founded a nonprofit foundation in 1926.

While Novo Nordisk is based in Copenhagen, Denmark and was founded there, today the company has a number of operations in the U.S. According to the company's website, Novo Nordisk now operates 80 offices worldwide, employs 50,000 people, and markets its products in 170 countries.

Novo Nordisk employs about 860 people in the research and development part of the firm in the U.S. The company as a whole is focused on treatments for diabetes, obesity, hemophilia, and growth hormone-related disorders.

Novo Holdings, the parent company of Novo Nordisk, is a valuable business. In 2022, the firm released revenue data for 2021 via press release. The company's 2021 income and returns were approximately 5 billion euros, which was a 29 percent increase over the same figures for 2020.

But let's look at the total value of the holding company as well. Novo Holdings ended 2021 with total assets of 697 billion Danish kroner, or 94 billion euros. The investment portfolio of Novo Holdings also had gone up to a record 24 billion euros in 2021.

The Novo Holdings Investment Portfolio has holdings of 151 companies (including Novo Nordisk). Its Life Science investments make up 52 percent of the portfolio, while Novo Capital Investors comprise the other 48 percent.

By late 2022, Novo Nordisk fell into the top 10 global pharma and biotech companies, based on market capitalization. It's the world's largest company making treatments for diabetes.

Who are Novo Nordisk's main competitors? In the pharmaceutical and biotech spaces, it competes against players like Abbott, Amgen, and Gilead Sciences. However, in insulin production, its only U.S. competitors are Eli Lilly and Sanofi.

The company press release said it had been "working to identify a sustainable approach to reduce insulin costs for patients that addresses changes in health policy and market shifts." Whether due to pressure from the Biden administration or competitor Eli Lilly both pushing for $35 monthly insulin caps for private insurance holders, Novo Nordisk is taking similar measures.

Several product prices will drop by up to 75 percent, mainly pre-filled insulin pens and vials. Levemir®, Novolin®, NovoLog® and NovoLog® Mix 70/30 are the main drugs slated for the price drops, to take effect on Jan. 1, 2024.

Novo Nordisk joins a concerted global effort to lower insulin prices, as demonstrated by Lilly's price drop and Walmart's insulin pen