‘Compassion Vs Competitiveness’ Dilemma at Novo Nordisk

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Excerpts

In the late 1960s, Novo Nordisk faced severe stakeholder criticism for the first time in its history. During the 1960s, Novo Nordisk’s predecessor, Novo, had started producing enzymes through new production processes of fermentation of microorganisms. These new processes used genetically engineered microorganisms and led to the evolution of a successful new product line of enzymes. These enzymes became important ingredients in many products like detergents. Environmental organizations and activists alleged that the use of enzymes developed by Novo could cause skin allergies in people who came into contact with them.

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After the demerger of Novo Nordisk A/S, a new sustainability strategy focusing on the healthcare business of Novo Nordisk was developed. This new strategy marked the shift to Novo Nordisk’s next stage of sustainability endeavors. According to the new strategy, Novo Nordisk would have global health at the heart of its sustainability initiatives...............

Novo Nordisk was quick to react to the criticism and it started a dialogue with the NGOs. It came out with a new policy to increase its presence in developing countries and to develop new medicines for combating diseases there. It adopted a new pricing policy under which it started supplying insulin to the 50 poorest countries designated by the United Nations at 20 percent of the average price in North America, Europe, and Japan.......

By the year 2005, Novo Nordisk had significantly grown its business around the world. In 2005, it emerged as the leader in the US insulin market for the first time since it had entered the market. By 2011, it got 40.1 percent of its sales from North America and 28.9 percent of its sales from Europe. Novo Nordisk also emerged as the leading producer of insulin in the world with a market share of 50 percent. ......

Novo Nordisk had it presence in Greece through its wholly-owned subsidiary Novo Nordisk Hellas Ltd. The subsidiary was engaged in sales and marketing of the company’s products in Greece where the company maintained prices that were among the lowest in Europe. The market generated annual sales of €48 million (US$58 million) in 2009. In the end of May 2010, Novo Nordisk stopped selling some of its insulin products in Greece.......

Novo Nordisk was severely criticized by patients and NGOs for the withdrawal. Activists alleged that this decision ran contrary to the social responsibility that Novo Nordisk claimed in its annual reports. The Greek diabetes association called the withdrawal of Novo Nordisk’s insulin products from Greece a “brutal blackmail and a violation of corporate social responsibility”........

Novo Nordisk resumed selling all its insulin products in Greece after the government agreed to raise the prices of its drugs there in July 2010. In June 2010, the Greek government issued a new price bulletin for 48 insulin products which became effective June 14. The new prices were 7-8 percent lower than the average of the three lowest prices in Europe. The government also said that it would base future prices in Greece on the average of the three lowest prices in Europe in an upcoming price decree, which it planned to put in place by September 1, 2010.......

Exhibit I: Income Statement of Novo Nordisk (2007-2011)
Exhibit II: Key Statistics for Novo Nordisk (2007-2011)
Exhibit III: Key Quarterly Statistics for Novo Nordisk (2009-2011
Exhibit IV:Economic Pyramid and Access to Diabetes Care
Exhibit V: Novo Nordisk’s Ambitions in Improving Access to Diabetes Care Up to 2015
Exhibit VI: Nordisk’s Communication to Patients and Doctors regarding its Decision
Exhibit VII: SPercentage of Poorest Countries Where Novo Nordisk Sold Subsidized Insulin