Value Innovation
Novo Nordisk – simplifying life for diabetics
Calet written for INSEAD by Henrik Nieln
November 2001
Nieln Innovation SARL
Le Point Cardinal
10 Passage Ronsin
77300 Fontainebleau
France
Tel +33 1 64 69 07 31
Fax +33 1 64 69 07 15
Novo Nordisk – simplifying life for diabetics
In 1985, a new era for diabetes patients started : Novo Industri, the Danish insulin producing company, introduced the NovoPen. Before, life for diabetics had been quite complicated. Many of the patients needed to inject insulin veral times a day, and this meant carrying syringes and vials everywhere and to administer the dos in an accurate way.
Jørn Rex, who then was in charge of the development of the NovoPen, explains: “Novo’s Marketing Director, Sonnic Fryland, asked me one day to come to his office. He had just read an article in “The Lancet” about a modified syringeholder, which the English Doctor, John Ireland, had created. The syringeholder could give a ries of injections with a predetermined dosage from a prefilled syringe, but the mechanism was home made and not easy to u. Sonnic asked me, if I thought it would be possible to design a fountain pen with a built-in insulin dosing system ?” In the beginning nobody at Novo believed in the idea. For many, it was simply regarded as an extra cost on top of the price of the insulin products. The authorities, which in most European countries reimburs the patients insulin costs, were not expected to accept any increa in price.
But at the same time, veral rearch studies indicated that Short-Acting insulin, taken just before a meal, 3-4 times a day, would give less complications later in life, than would one shot per day of Slow-Acting insulin. Using syringes and vials could be accepted at home, but nobody wanted to fiddl
e around with syringes and needles outside their home. Henrik Jul Nieln, PhD, MD of Nieln Innovation SARL, prepared this calet in conjunction with Professor W. Chan Kim and Professor Renée Mauborgne.
© INSEAD, 2001
Therefore a pull in the market was created, and the patients liked the convenient pen and the improved treatment of diabetes.
The NovoPen was designed as a fountain pen, containing a cartridge with insulin, allowing the patient to carry, in one lf-containing unit, what corresponds to, up to, a week-u of insulin. The pen had an integrated click mechanism allowing, even blind patients, to control the dosing. From Insulin producer to diabetes care company
NovoNordisk was created in 1989 by a merger of Novo Industri, founded in 1925, and Nordisk Gentofte, founded in 1923. Both had long traditions in hospital and laboratory rearch, especially in the field of insulin. Until the merger, the two Danish companies had been cond- and third-largest producers of insulin in the world, after the leader Eli Lilly & Co. After the merger, they were number one, providing nearly 45% of the global demand.
The major product in the new group was insulin, accounting for 65% of the total revenues. In 2000 this number had incread to 70% and the revenue tripled to 20.8 billion DKK.
The remaining turnover of approximately 30% stems from other business areas, such as Industrial Enzymes (demerged as a parate company in 2000), Coagulation Disorders, Human Growth Hormone and Hormone Replacement Therapy.
Novo Industri started developing the first NovoPen in the beginning of the eighties, and the first version was introduced in 1985. This was the start of a new strategy. Before the NovoPen, Novo Industry was mainly producing insulin in bottles or vials. After the NovoPen, Novo Industry progressively widened its business focus to become a “diabetes care company”. In 2001 the mission statement of the NovoNordisk says : “Our aspiration is to defeat diabetes by finding better methods of diabetes prevention, detection ”.
Innovation in no-man’s-land
The new business scope led to a range of products, aiming at making the administration, dosing and carrying of insulin easier. Novo Nordisk t out to occupy the land between the patient/ur and the drug supplier. Before, the drug suppliers were happy to supply insulin to the patient in vials, and to fo
cus the R&D effort on new and better insulin. This left the patient with the quite complex task of handling syringes, needles, insulin and of administering dos according to his/her needs. This is a phenomenon, en in (or in-between) many industries ; the delicate interface between two domains of experti is often left untouched for long periods – as long as there is room for innovation within each domain. But innovation in the field of both insulin and syringes had climbed to the top of the s-curves, to
a point where the payoff from further investments is expected to give little results. In the ca of insulin, “purity” had been a major innovation parameter for veral years, but Novo had already created the first “human monocomponent” insulin, and introduced it in 1981, and little progress in this direction could be made. Syringes had also been optimized in terms of materials, costs, and a fusion of the two areas became attractive.
The new range of pens developed by Novo included increasing degrees of intelligence and simpler u. After the NovoPen, which was a pen containing an insulin cartridge and dial-a-do function, came the NovoLet in 1989, a prefilled insulin delivery pen. In 1999 came the Innovo, an integrated electronic memory and cartridge-bad delivery system. It was designed to manage the delivery of insulin, thanks to a built-in memory and display of do, last do, The main purpo
was to reduce risk and eliminate worries about missing injections.
Europe and Japan conquered – in USA the battle has
Today the success of the NovoPen and the later insulin delivery systems is striking : In Europe 64%, and in Japan 72%, of all sales of insulin is in prefilled devices or pens. In USA the same number is only 3% !
Why this big difference in u of convenient pen devices, between the markets ? First, Eli Lilly has 80% of the market for insulin in USA and Becton Dickinson commands 63% of the entire insulin delivery system market. Neither of the two es the insulin pen market as a profitable business. Second, the way treatment is administered. Europe has more of a team approach, led by an endocrinologist with a diabetes educator involved. There is in Europe and Japan a trend towards more frequent injections per day (3-4), which again makes the convenience of the pens more apparent. In USA most people only inject themlves once or twice a day. Third, the cost can be a factor, especially for individuals without health insurance. Per unit of insulin delivered, injecting insulin via pens is more expensive than injecting with syringes.
But Eli Lilly has now taken the first step toward widespread u of pens in USA. In 2001 Eli Lilly intro
duced a line of three prefilled pens.
Novo Nordisk insulin delivery products
Since the introduction of the first NovoPen in 1985, Novo Nordisk has introduced new insulin delivery devices at regular intervals. The Major Innovations are :
Product Description
1985 - NovoPen
Insulin pen with cartridge
“Dial-a-do. Push the button to inject”
1989 - NovoLet
Prefilled, disposable insulin syringe with dosing system
1999 - Innovo
Delivery system with memory.
Us std. cartridges Displays:
- do and elapd time since last injection - last do
200? – AERx
Inhaler system under development and testing.
Joint venture with Aradigm.
Inhaler with liquid insulin.
Synchronizes with patient’s breathing cycle.
Financial conquences of the innovation
“It’s hard to measure the impact of the innovations, when you already have the lion’s part of the market”, says Novo Nordisk’s Jørn Rex. Today Novo Nordisk has 20% of the insulin market in USA, 65% in Europe and 80% in Japan. Eli Lilly is the market leader in USA and Aventis is a
challenger in the insulin market in Europe. 70% of Novo Nordisk’s turnover comes from diabetes care, whereas the two major competitors Eli Lilly and Aventis, who are multi-product companies, are four to eight times bigger. Therefore Novo Nordisk does not benefit from a larger group’s advantage
