NVO - Novo Nordisk

[Guest roark33]

US ownership would probably grow 10x if they reported their earnings in USD in their 20-F. 

[DooDiligence]

Thanks for link to the CVS topic, DooDiligence, I will read it up.

 

About Novo Nordisk aquisitions:

 

Quite late today, I found this article on Jyllandsposten Finans: Novo-top opening for major acquisitions in historic announcement.

 

I'm surprised, to say the least.

 

Novozymes A/S was spun off i 2000, and NNIT A/S was spun off in 2015 for the very reason of capital allocation - good businesses, but generating a drag on ROIC on the core of Novo Nordisk A/S. Now it seems that aquisitions are under consideration - in non-core activities. Which?

 

I don't get this. It's all on page 1 in the Catecism for capitalists. Why even consider this, if you see growth in the core business long term, that core business running at an extremely high, or at least still very good ROIC? -Price in the aqusition matters, naturally.

 

Agreed (haven't read the info on your link yet but I'd much rather see them stick to core competencies too.

[bergman104]

NVO is one of those stocks that's been on my casual watch list for a long time. The price is starting to look interesting. Anyone have advice on where to start a deeper dive? How understandable is their 10k?

[John Hjorth]

bergman104,

 

I would take a top-down approach on this thing. I would suggest to start with reading the annual reports from the company website for the last three years, and you will be on the move. It will give good insight to has happened in recent years. I consider the annual reports high quality stuff for reading.  Lots of information without having a thickness like an old fashion telephone book.

 

A visit to the company website for a quick read of the story about the company I consider a good read also - it's a fascinating story - actually about not making money, by the way.

 

Personally, I think I need to look at the competitors Sanofi and Elly Lilly as the next thing. I have been struggling for years to understand in detail what is going on in the R&D pipeline, and the related commercial aspects of it, in all honesty.

 

It's a never ending story.

[DooDiligence]

Hey John, I can't get that link you posted to load but I found this from Bloomberg.

 

https://www.bloomberg.com/news/videos/2017-02-02/novo-nordisk-ceo-on-pricing-u-s-investments-m-a

 

From the conversation, I didn't get the impression that Jorgensen planned on straying from core competencies surrounding the endocrine system (I'll try your link again & will devote tomorrow to Novo [i've wasted the last week on retail clothiers...])

 

The interviewer in the Bloomberg vidi is, well, less than competent (to be generous...)

 

He didn't ask about the class action suit & he didn't ask about Novo's dealings with PBM's (not that he'd have gotten much but at least he could have given Jorgensen a chance to intimate that he might be willing to throw Express Scripts under the bus.)

 

He seemed very interested in getting a huge scoop on a Novo acquisition without really knowing enough to ask the right questions (I wish you'd interview Mr. Jorgensen, heyyyyyyyy there's an idea!)

 

[John Hjorth]

DooDiligence,

 

The link I posted actually looked odd to me, but it works for me using Chrome, I suppose you use Safari, or something like that. I hope this link works better.

 

It may be time restrained, as far as I can read.

 

Perhaps the article is just yet another part of the Danish "noise" surronding Novo Nordisk - there is a lot of that.

[DooDiligence]

That link worked!

 

The 1st bit sounded a bit dramatic "billions that previously rained on shareholder will now go to acquisitions."

 

Then the conversation started to jibe with the tone Mr. Sorensen used in the Bloomberg vidi (staying within core competencies & nothing ginormous.)

 

It was mentioned that JNJ & Roche have diabetes businesses for sale (I'll read up tomorrow...)

 

Still can't believe the Bloomberg interviewer missed this...

[John Hjorth]

Is there another product Novo is working on that could be a blockbuster drug?

 

eclecticvalue,

 

If a person suffer from the desease in a type and stage, where the persons health is dependant on the regular use of a pen with a needle to get the drug injected into the body, I personally think such a person would consider it a material increase in quality of life to have the ability to swicth to oral intake in stead of injection.

 

So I consider the development projects in the pipeline related to that swicth game changers, if they eventually end up beeing successful.

[DooDiligence]

An old/small trial of oral therapy for type one.

 

https://www.ncbi.nlm.nih.gov/m/pubmed/23593142/

 

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Good starting point to understanding type 1 autoimmune diabetes

 

https://www.ncbi.nlm.nih.gov/m/pubmed/26272854/?i=2&from=/19079665/related

 

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Roche diabetes reseach & diagnostics

 

http://www.roche.com/research_and_development/what_we_are_working_on/cardiovascular_and_metabolism/taking_on_the_global_rise_of_diabetes.htm

 

and Roche interested in selling diabetes biz (which may or may not be worthwhile) also mentions JNJ

 

https://www.bloomberg.com/news/articles/2017-01-31/roche-said-to-consider-options-for-diabetes-unit-including-sale

 

They've been mulling it over for 3 years (quick read)

 

http://www.ibj.com/articles/41392-report-roche-mulls-sale-of-blood-glucose-monitor-business

 

On again off again (quick read)

 

http://mobile.reuters.com/article/idUSL2N0HF0VB20130919

 

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This thread may get longish as more is found.

 

I'm going to try & invert to look for downside in the business (don't want to just do a big confirmation bias thing...)

 

 

[DooDiligence]

Another interesting primer of therapies

 

https://en.m.wikipedia.org/wiki/Anti-diabetic_medication

[DooDiligence]

Interactions, including absorption problems related to oral therapies

 

http://spectrum.diabetesjournals.org/content/19/4/202.full

[John Hjorth]

Yet another article from Jyllandsposten Finans: Novo Nordisk capitulates and scraps long term diabetes dream.

 

This rubbish is now enough for me. I have had it. No more reading of this crap, and this is the last linking to something similar from me on this board. To me, it now seems like an attempt to start some kind of sh!t storm against the company, based on expressions from Mr. Fruergaard, pulled out of the total context.

[DooDiligence]

Novo's partnership with Glooko in telemedicine looks interesting

 

"01/11/17 Novo Nordisk and Glooko announced that the two companies will work together to deliver jointly-developed and branded digital health solutions for people with diabetes. The non-exclusive collaboration will combine Novo Nordisk's deep knowledge of diabetes with Glooko's digital platform and data analytics expertise. Building on Glooko's mobile and web platforms, the companies aim to deliver personalised, digital services to support people with diabetes in areas including treatment adherence and blood glucose management. The partnership's joint offerings will also assist healthcare professionals to engage and manage patients with the aid of population-wide data reporting. By integrating these offerings within its Digital Health Platform developed with IBM Watson Health, Novo Nordisk aims to generate increasingly valuable insights into diabetes management and treatment outcomes."

 

The following links to Glooko's page aimed at providers & payers

 

https://www.glooko.com/providers-payers/

 

The following links to Glooko's page on reimbursement for providers & it kind of looks like this is at odds with their goal of reducing spend since it's a promo for practices to generate revenue for the provider by onboarding patients for remote monitoring & networking with other providers.

 

https://www.glooko.com/resources/#reimbursement

 

Not sure that this partnership of Novo / Glooko is a great idea given the current scrutiny (maybe I'm wrong & the benefit of closer monitoring will actually improve patient compliance & reduce the expense of adverse events sufficiently to offset the billings for monitoring by providers.)

 

The next few days will be spent digging in to Novo & trying to find what might work & what might lead to problems (screw the Super Bowl...)

[DooDiligence]

Yet another article from Jyllandsposten Finans: Novo Nordisk capitulates and scraps long term diabetes dream.

 

This rubbish is now enough for me. I have had it. No more reading of this crap, and this is the last linking to something similar from me on this board. To me, it now seems like an attempt to start some kind of sh!t storm against the company, based on expressions from Mr. Fruergaard, pulled out of the total context.

 

When you fire an arrow, you don't aim below the target (the company is still generating huge cash flows.)

 

The future is murky as far as pricing is concerned but diabetes is not going away any time soon IMHO.

 

Keep posting anti Novo findings (you & I both want to know everything we can' warts & all...)

[DooDiligence]

Personally' I think it was a mistake to do this

 

http://www.pmlive.com/pharma_news/novo_nordisk_sheds_autoimmune_portfolio_to_bms_690936

 

and this

 

http://www.thepharmaletter.com/article/janssen-gains-rights-to-novo-nordisk-autoimmune-diseases-program

 

John, it seems to me that autoimmune is an adjacency that Novo should stay in (what think you?)

 

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Sanofi's suit seems like Neymar making an aggressive challenge (after being challenged aggressively...)

 

http://www.fiercepharma.com/pharma/sanofi-sues-novo-over-misleading-tresiba-marketing-materials

[DooDiligence]

http://www.drugchannels.net/2016/12/novo-nordisk-sheds-new-light-on-pbm.html?m=1

[John Hjorth]

Yet another article from Jyllandsposten Finans: Novo Nordisk capitulates and scraps long term diabetes dream.

 

This rubbish is now enough for me. I have had it. No more reading of this crap, and this is the last linking to something similar from me on this board. To me, it now seems like an attempt to start some kind of sh!t storm against the company, based on expressions from Mr. Fruergaard, pulled out of the total context.

 

When you fire an arrow, you don't aim below the target (the company is still generating huge cash flows.)

 

The future is murky as far as pricing is concerned but diabetes is not going away any time soon IMHO.

 

Keep posting anti Novo findings (you & I both want to know everything we can' warts & all...)

 

DooDiligence,

 

Exactly! - and by all means, otherwise duly noted. So I'll just continue posting what I personally consider cheap journalist crap on here about Novo Nordisk - despite I'll try on a personal level to do my very best to avoid it in my sphere ... lol!

 

With regard to downside risk on beeing invested in this thing:

 

1. Financial consequenses related to process risk on ongoing litigation: I have no basis to make a qualified judgement on this. The aforementioned class act is about legislation related to racketeering etc. So it's basically about the intellectual honesty of recent and newly former management. All I can say right now is, that this is the ultimate personal test of the integrity of recent and newly former management, and if there is - somewehere - a smoking gun - as basis for this class act - it will be the final nail in the coffin for both newly former and recent management team, who will all have to leave the company. [That incudes Lars Rebien Sørensen as expected to be coming charman of Novo Nordisk A/S, for my part].

 

2. Financial consequenses of the acts from POTUS and his new administration. Time will tell. I expect it - at least to some extent - to crystalize out of the now apaque and fluffy front screen within a year or so.

[John Hjorth]

DooDiligence,

 

OK, so what's the worst case, from we know now? - What I want is your input from here, is: How bad can this get? [it's a test called: "Can you kill it?"][i also call it the Kamikaze test]:

 

It goes like this:

 

1. The US market gets the Novo Nordisk *FU* finger [for whatever reason, from the board and the management]: You are just so cumbersome, give us a call, when you are ready to discuss [And that call never happens].

2. Intellectual inhonest people in group management, related to ongoing lititigation, based on ongoing litigation , room here].

 

- Any more downsides to add? [Other than consequenses related to 1) and 2)?]

[DooDiligence]

DooDiligence,

 

OK, so what's the worst case, from we know now? - What I want is your input from here, is: How bad can this get? [it's a test called: "Can you kill it?"][i also call it the Kamikaze test]:

 

It goes like this:

 

1. The US market gets the Novo Nordisk *FU* finger [for whatever reason, from the board and the management]: You are just so cumbersome, give us a call, when you are ready to discuss [And that call never happens].

2. Intellectual inhonest people in group management, related to ongoing lititigation, based on ongoing litigation , room here].

 

- Any more downsides to add? [Other than consequenses related to 1) and 2)?]

 

Since our president isn't the CEO of Novo, I'm guessing #1 won't happen.

 

As to the class action; I'm thinking that the pharma distribution system has fomented a sort of "price fixing" thing in order to capture rebates, but I find it hard to believe that Lilly, Novo & Sanofi actually colluded (if they did then a settlement would be reached & the decision could be politicized to inflict damage on the entire industry - worst case.)

 

I think the intention is to extract whatever settlement can be obtained & garner evidence against the downstream end of the supply chain with more setlements & the subsequent re-tooling of the supply/delivery system (manufacturers & wholesalers will toss PBM's under the bus.)

 

Overall; Novo has a ton of expertise that's not going to disappear (do you know what the employee turnover is?)

 

As long as the important researchers are productive & happy at Novo...

 

As long as the facilities engineers are productive & happy at Novo...

 

As long as the sales reps are productive & happy at Novo...

 

I'm going to try & be a bit more organized in looking at this tomorrow.

 

1. Compare expectations vs fundamentals (China ops in particular)

2. Separate what's influencing me from what's true

3. Look at acquisitions in the recent past

4. Read up on management history

5. Try & get info on employee retention & avg tenure

[DooDiligence]

This is an excellent Stanford study of the history of Novo (up to 1995) & shows how difficulties have been encountered & overcome through the decades.

 

It also shows that uncertainties regarding managed care have been a concern for quite some time (Merck's foray into PBM resulted in a later biz separation - I owned Merck when they bought Medco & thought it was a good idea at the time but now it looks like the combination was a setup for regulatory scrutiny.)

 

Now a look into how Novo has done over the past dozen years...

Novo_Nordisk_Stamford.pdf

[bergman104]

DooDiligence,

 

I have a background in clinical research and medicine, so I'd be happy to try and answer any medical questions related to NVO

[John Hjorth]

This is an excellent Stanford study of the history of Novo (up to 1995) & shows how difficulties have been encountered & overcome through the decades.

 

It also shows that uncertainties regarding managed care have been a concern for quite some time (Merck's foray into PBM resulted in a later biz separation - I owned Merck when they bought Medco & thought it was a good idea at the time but now it looks like the combination was a setup for regulatory scrutiny.)

 

Now a look into how Novo has done over the past dozen years...

 

Thank you for sharing this paper on here, DooDiligence. I have read the major part of it now, it's a great read. Somehow it is actually striking, with the similarities of the overall situation now compared with the considerations about the companys situation back then.

[John Hjorth]

... Overall; Novo has a ton of expertise that's not going to disappear (do you know what the employee turnover is?)

 

Annnual report 2015, p. 15, Social performance:

 

2011: 9.8%

2012: 9.1%

2013: 8.1%

2014: 9.0%

2015: 9.2%

 

For me basically on level with what I have seen reported for other Danish listed companies, but actually higher than I would expect for Novo Nordisk A/S. It's a competitive workplace, and certainly not a workplace for everybody.

 

It's general and common knowledge here, that if you are newly graduated from university, and have a desire for joining the company, you have to be best in class in your professional field, otherwise writing and sending an application is just plain waste of time.

 

The competition for open positions is intense.

[DooDiligence]

DooDiligence,

 

I have a background in clinical research and medicine, so I'd be happy to try and answer any medical questions related to NVO

 

This is such a complex subject (can you comment on the research by Harvard Stem Cell Institute?)

 

http://hsci.harvard.edu/diabetes-0

 

Novo has stated they MAY begin clinical trials within 5 years

 

https://www.bloomberg.com/news/articles/2016-12-15/stem-cells-may-be-next-frontier-for-diabetes-drugmaker-novo

 

also can you comment on oral insulin

 

http://www.novonordisk.com/about-novo-nordisk/novo-nordisk-in-brief/stories/innovation/insulin-in-a-tablet.html

 

Oral insulin & Novo Nordisk (for the conspiracy theorists)

 

http://www.gurufocus.com/news/466926/something-strange-is-going-on-with-oral-insulin

 

Developing therapies which improve patient adherence through ease of use (less injections & oral insulin) & research into cures are both monumental tasks & predicting who will be the first to market is equally difficult (for me at least.)

 

Political rumblings regarding pricing are presenting buying opportunities & my choice of Novo Nordisk as a winner is largely based on the belief that their focus on metabolic research (I've always liked companies with focus) & their ability to commercialize the results, will make them a winner (whether they're a first mover or not...)

 

Any intelligent thought you can provide either for or against Novo would be greatly appreciated!

[John Hjorth]

DooDiligence,

 

I have a background in clinical research and medicine, so I'd be happy to try and answer any medical questions related to NVO

 

This is such a complex subject (can you comment on the research by Harvard Stem Cell Institute?)

 

http://hsci.harvard.edu/diabetes-0

 

Novo has stated they MAY begin clinical trials within 5 years

 

https://www.bloomberg.com/news/articles/2016-12-15/stem-cells-may-be-next-frontier-for-diabetes-drugmaker-novo

 

also can you comment on oral insulin

 

http://www.novonordisk.com/about-novo-nordisk/novo-nordisk-in-brief/stories/innovation/insulin-in-a-tablet.html

 

Oral insulin & Novo Nordisk (for the conspiracy theorists)

 

http://www.gurufocus.com/news/466926/something-strange-is-going-on-with-oral-insulin

 

Developing therapies which improve patient adherence through ease of use (less injections & oral insulin) & research into cures are both monumental tasks & predicting who will be the first to market is equally difficult (for me at least.)

 

Political rumblings regarding pricing are presenting buying opportunities & my choice of Novo Nordisk as a winner is largely based on the belief that their focus on metabolic research (I've always liked companies with focus) & their ability to commercialize the results, will make them a winner (whether they're a first mover or not...)

 

Any intelligent thought you can provide either for or against Novo would be greatly appreciated!

 

Great! -Now we just need a professor with speciality and a Ph.D. in game theory to join in in this topic, to analyze the game and predict the outcome going forward between the three major insuline producers and the four major PBMs! :-)