Foundation Ownership at Novo Nordisk

Novo Nordisk is a large Danish life science company specializing in diabetes care. Its financial performance has been good over the past decades – outperforming both the closest rivals Eli Lilly and Sanofi as well as the S&P 500 index. It is now the largest Nordic firm by market value. 

The company is majority-owned by the Novo Nordisk Foundation through the holding company Novo. This case study considers the causes of the company’s success and to what extent they are related to foundation ownership. The company has apparently benefitted from a long run commitment to diabetes care, strong values, employee loyalty, and strict governance principles which may have contributed to its success along with the special characteristics of insulin production.


Novo Nordisk is a multinational pharmaceutical company headquartered in Denmark. It is a global market leader in diabetes care, but also active in haemophilia, growth disorders and obesity. Novo Nordisk employs approximately 41,000 people in 75 countries. With sales of USD 15 bill it is the World’s 17th largest pharmaceutical company.

The company’s growth has been impressive, for example the number of employees was doubled over the period 2005-2015. For an overview see the timeline below. Much of it has been in a single therapeutical area, diabetes care, which still accounts for the bulk of the company’s business and earnings. This is a unique situation, since most other pharmaceutical companies are plagued by constant patent expiration and competition from generic producers. However, it is costly and difficult to produce insulin, and there are economies of scale in production, which shield insulin producers from some of the most intense competition. Insulin production is biological rather than chemical which means that it is more complex and that the production process also needs to be regulated. For new types of insulin production efficiency will increase over time as more efficient strands of yeast are cultivated, and new generations of insulin are regularly brought to the market. For potential imitators and entrants this constitutes significant barriers to entry. Nevertheless, there are several global competitors, including Eli Lilly and Sanofi, and constant product development is necessary to keep up. Novo Nordisk is very research intensive with R&D expenditures of about 15% of sales. 

The company Nordisk Insulin started producing in 1923 using methods developed in Canada. The co-founder August Krogh was a Nobel Prize laureate in physiology and the company was thus research-based from the beginning. The company was founded as a non-profit foundation with the aim of helping diabetes patients. Shortly after in 1925 two senior employees broke out to start their own competing business, Novo, which eventually grew to become much bigger than the original company. Eventually, in 1989, the two companies were reunited by merger to Novo Nordisk. Starting in 1941 Novo started producing industrial enzymes, which became a successful business that was spun out to a separate company, Novozymes, in 2000. Similarly, the IT division NNIT was separated out as an independent company in 2015. See the timeline below for more details.

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