Top Picks 2016: Novo-Nordisk
01/13/2016 7:00 am EST
Jeremy Grantham, chief investment manager at Grantham, Mayo Van Otterloo, recently noted that the only country for decades has consistently outperformed the US is Denmark, which he attributed to one single stock, notes Vivian Lewis, editor of Global Investing.
That stock was Novo-Nordisk (NVO), which rose by a third in 2015. But with that track record, the company can easily chalk up another growth win in 2016.
Novo-Nordisk is a drug firm that acts more like a specialist than a general practitioner, thanks to nearly a century of treating a growing global healthcare need: diabetes.
It specializes in insulin R&D and as we all get richer, more sedentary, and older, diabetes is a growing scourge, most of all in developing countries like China, India, and Mexico.
The company's R&D spillover finds include GLP-1 for weight control, hormones, and hemophilia drugs. But just as a specialist can charge more money than a GP, Novo can charge more for its main new drug line, weight-control drug Saxenda.
Novo's injectable anti-obesity drug is harder to take than a pill and costs about $1075 per prescription, at the high end of diet drugs.
Yet because of its diabetes franchise, and because Saxenda is a higher dose of the same drug as Victoza-liraglutide to treat diabetes-it has a natural market among diabetics with weight problems.
The drug not currently covered by US insurers has already grossed over $2.6 million in prescriptions. It already had doctors and patients in place 32 weeks ago when it launched Saxenda.
Novo-Nordisk is relatively under-owned by institutions-with under 8%-and it is cheap about paying dividends, now yielding 1.3%.