A Pharma Player in the Sweet Spot
04/06/2012 10:30 am EST
This company is one of the leading pharmaceutical companies in the world, yet hardly gets the exposure it deserves, writes Nicholas Vardy of Bull Market Alert.
Novo Nordisk (NVO), a Danish pharmaceutical company that focuses on diabetes care and biopharmaceuticals, is is a quiet giant, employing 30,000 people in 76 countries.
I find the short- and long-term investment case for NVO as compelling as any idea out there. Here's why.
More than 200 million people worldwide suffer from some form of diabetes. Patients with type 1 (juvenile) diabetes can’t make insulin at all, and need to inject it their whole lives.
Type 2 diabetes—the kind you get from eating too much and not exercising—now is much more common. Today, more than 26 million Americans have diabetes, and another 79 million have pre-diabetes.
Experts calculate that by 2050, one in three American adults will suffer from the full-blown disease. And as China, India, and the rest of the emerging world adopt Western lifestyles and diets, diabetes is surging there, as well.
No wonder that the treatment of diabetes through insulin has emerged as one of the world's great growth stories. Worldwide insulin sales have quadrupled in the last decade, to $15.4 billion.
As diabetes specialist David Nathan of Massachusetts General Hospital observed, “The market for insulin is almost endless. It is going up and up and up. It is not even close to the peak.”
Today, NVO is the world’s largest insulin maker with a 50% share of the global market. Equally importantly, it has a strong research and development (R&D) pipeline of future products to treat diabetes to keep its competitors at bay.
NVO recently filed for approval of its new drugs Degludec and DegludecPlus. It has another drug for type 2 diabetes, IDegLira, in Phase 3. Five other drugs for type 2 diabetes are in earlier stages of the R&D pipeline.
All of these add up to terrific prospects for NVO in the years ahead. So buy Novo Nordisk at market and set your stop at $128.
[Obviously, great minds think alike. If you haven't yet read Jim Jubak's recommendation of Novo Nordisk, you can here—Editor.]