Novo Nordisk: 100 years of insulin, diabetes, and the rise of GLP-1

Executive overview

Novo Nordisk is Europe's largest company, yet 100% of its business is concentrated in a single disease category: metabolic health. That focus — sustained across a century — is what made the Ozempic moment possible.

The company traces to two rival Danish insulin makers founded in the 1920s, merged in 1989 after 65 years of blood-sport competition. A nonprofit foundation has controlled the company throughout, and once blocked management from selling it — a decision that preserved the GLP-1 pipeline that now defines the company.

The core insight: a century of compounding focus on one disease, governed by a foundation that blocked a sale, produced the defining drug of the 2020s.

The founding of Nordisk and Novo (1921–1950)

• Insulin was discovered in 1921 at the University of Toronto; the Nobel Prize followed in 1923 — one of the most consequential advances in modern medicine
• Nordisk was founded in Copenhagen in 1924 as a foundation-owned operating company — the same structure that controls it today
• Its mission: sell insulin at cost in Scandinavia, export at market prices, return all profits to fund diabetes research
• Novo was founded by two brothers fired from Nordisk in its first year; their spite-driven rivalry powered 65 years of insulin innovation
• Novo launched shelf-stable liquid insulin at half the price of Nordisk's solid tablets — a counter-positioning that forced both companies to keep improving
• World War II made Novo the official insulin supplier for Nazi-occupied Europe, scaling its production capacity far beyond Nordisk's and establishing it as the dominant European manufacturer post-war

The insulin innovation race (1950–1989)

• Nordisk developed NPH insulin (neutral protamine hagedorn), the first long-acting insulin — licensed to Eli Lilly and others but deliberately withheld from Novo
• Novo responded with lente insulin (slower-acting, longer-lasting) and later monocomponent insulin — the first 100% pure, zero-antibody formulation
• Novo invented the insulin pen in the 1980s; Nordisk focused on pumps — parallel product innovation shaped by the competitive dynamic
• Eli Lilly became the technology follower, licensing Nordisk and Novo innovations into its U.S. distribution rather than leading R&D
• In 1989, Novo and Nordisk merged — 62% Novo / 38% Nordisk — forming a company with ~50% global insulin market share and $1 billion in revenue
• The foundation structure meant no shareholder activism could force a sale; the merged entity remained independent despite constant pressure to consolidate

The near-sale and the GLP-1 breakthrough (1989–2010)

• Through the 1990s, management assumed they would eventually merge into a larger pharma giant; instead, 20%+ annual revenue compounding made it unnecessary
• In 2004, management agreed to sell the company to Swiss firm Serono — and were blocked by the foundation board, which ruled the business case unconvincing given their growth record
• That blocked sale preserved the GLP-1 research program led by scientist Lata Bjerre Knudsen, who had been working on the problem since the early 1990s
• The core challenge: natural GLP-1 hormone breaks down in the body within five minutes, making it useless as a drug
• Knudsen solved this by grafting a fatty acid onto the GLP-1 molecule to create liraglutide, which binds to albumin in the bloodstream and resists degradation — extending the half-life from two minutes to 13 hours
• Management had given her an ultimatum: produce a viable drug candidate within a year or the program would be shut down; liraglutide satisfied it
• In parallel, U.S. VA researchers discovered a natural GLP-1 analog in Gila monster venom; licensed to Eli Lilly, it became Byetta — the first GLP-1 drug to market (2005), but required twice-daily injections and was less effective than liraglutide

The GLP-1 market today

• Semaglutide (Ozempic for diabetes, Wegovy for obesity) became the commercial breakthrough — once-weekly injection, dramatic weight loss results, and cardiovascular benefits emerging in trials
• Novo Nordisk became Europe's largest company, surpassing LVMH, on the back of semaglutide demand; supply constraints have been the primary limiting factor, not demand
• Eli Lilly's tirzepatide (Mounjaro / Zepbound) combines GLP-1 with GIP receptor agonism and shows comparable or superior weight loss in early data — real competition is emerging
• The insulin business has simultaneously collapsed in attractiveness: price caps, biosimilars, and reduced demand from GLP-1 patients eliminated most of the profit in a few years
• Non-adherence is a significant problem: up to 68% of patients stop within a year, due to cost, side effects, or supply issues — most regain most of the lost weight
• Payers (insurers, employers, Medicare) are slow-rolling coverage because 40% of the population is obese and list prices exceed $12,000 per person per year; the system cannot afford full coverage at current prices

The U.S. healthcare system and pharma economics

• Pharmacy Benefit Managers (PBMs) — dominated by three firms covering 80% of Americans — set effective drug prices through rebate mechanisms; manufacturers have largely lost pricing leverage
• Insulin prices rose 600%+ between 2001 and 2019 among the big three manufacturers; public backlash triggered price caps that, combined with biosimilars and GLP-1 displacement, destroyed insulin profitability
• Medicare Part D is legally prohibited from paying for weight loss drugs — a structural barrier limiting access for the elderly
• Pharma industry ROIC (~13%) is roughly in line with other industries once R&D failures are included; the perception of outsized profitability ignores the cost of all the drugs that never make it to market
• Health insurance companies, by contrast, maintained or grew profits through COVID — indicating they function as access gatekeepers, not true risk-bearers

Powers and competitive position

• Cornered resource: semaglutide patent runs to 2032; next-generation candidate cagrilintide is in development to extend the cycle, mirroring insulin's century of stacked patentable innovation
• Scale economies: $2.3 billion average cost to bring a drug to market favors incumbents on R&D, manufacturing, and go-to-market
• Switching costs: patients who find an effective treatment rarely switch; weight regain upon stopping creates a strong lock-in dynamic
• Brand power: Ozempic has achieved rare consumer-level brand recognition in pharma — most people are unaware that Mounjaro is a different drug from a different company
• Foundation governance: the nonprofit foundation controlling 77% of voting shares insulates the company from activist pressure and short-term capital markets logic