Novo Nordisk

Case Study
A d i t i y a G a ma 2 9 1 1 8341
E r w an K u r n iawan 2 9 1 1 845 5
F i l d z a R ohm a 2 9 1 1 85 02
L a r asati A ha d i an i n gtyas 2 9 1 18512
Novo Nordisk
C om p a n y P r of i le
Novo Nordisk Brand Analysis

Parent Company Novo Nordisk

Category Pharmaceutical

Sector Pharma and Healthcare

Tagline / Slogan Changing Dibetes

USP It is leading healthcare company with experience in

diabetes treatment & considerable experience in other
area also
Novo Nordisk STP

Segment Diabetes, homeostasis management & hormone

replacement therapy

Target Group Endocrinologists, healthcare professionals providing

treatment to patients suffering from diabetes & other
hormonal disorders

Positioning Novo Nordisk is leading healthcare company with more

than 89 years of experience in diabetes treatment
Novo Nordisk Competitors

Competitors Below are the top 4 Novo Nordisk

competitors:
1. Eli Lilly
2. AstraZeneca
3. Biocon
4. Abbott Laboratories
Novo Nordisk
S W OT A N A L Y S IS
Novo Nordisk TOWS Analysis

Strengths 1. Deep knowledge about diabetes & experience in its treatment

2. Free cash flow can be used for expansion, acquisition or R&D
3. Around 33,000 well trained employees in 75 countries
4. Wide global footprint (present in 190 countries)
5. great diversity in senior management teams which is requisite
for growth
6. It was awarded as the most sustainable company in the world

Weaknesses 1. Company suffered negative brand image due to its failure to

provide information about side effects of Victoza.
2. Past legal actions have created negative image for company
Novo Nordisk

Opportunities 1. Increasing prevalence of diabetes & other chronic ailments due

to increasing urbanization & average life expectancy
2. Biosimilar market has strong growth opportunities
3. Growing numbers of health-conscious people

Threats 1. Increasing public debt in European countries

2. Negative consequences of healthcare reforms in major markets
3. Stringent healthcare regulations
4. Increasing pressure in public spending on healthcare due to
economic slowdown
Novo Nordisk
P E S T E L A N A L Y S IS
Novo Nordisk PESTEL Analysis

Political  Political stability and importance of Drug Manufacturers - Other sector in the
country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Healthcare sector.
 Bureaucracy and interference in Drug Manufacturers - Other industry by
government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Healthcare
 Favored trading partners
 Anti-trust laws related to Drug Manufacturers - Other
 Pricing regulations – Are there any pricing regulatory mechanism for
Healthcare
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Drug Manufacturers - Other
 Mandatory employee benefits
 Industrial safety regulations in the Healthcare sector.
 Product labeling and other requirements in Drug Manufacturers - Other
Novo Nordisk PESTEL Analysis

Economic  Type of economic system in countries of operation – what type of economic

system there is and how stable it is.
 Government intervention in the free market and related Healthcare
 Exchange rates & stability of host country currency.
 Efficiency of financial markets – Does Novo Nordisk A/S needs to raise capital
in local market?
 Infrastructure quality in Drug Manufacturers - Other industry
 Comparative advantages of host country and Healthcare sector in the
particular country.
 Skill level of workforce in Drug Manufacturers - Other industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Business cycle stage (e.g. prosperity, recession, recovery)
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates
Novo Nordisk PESTEL Analysis

Social  Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Novo Nordisk A/S ’s
industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies
encourage entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests

Technological  Recent technological developments by Novo Nordisk A/S competitors

 Technology's impact on product offering
 Impact on cost structure in Drug Manufacturers - Other industry
 Impact on value chain structure in Healthcare sector
 Rate of technological diffusion
Novo Nordisk PESTEL Analysis

Enviromental  Weather
 Climate change
 Laws regulating environment pollution
 Air and water pollution regulations in Drug Manufacturers - Other industry
 Recycling
 Waste management in Healthcare sector
 Attitudes toward “green” or ecological products
 Endangered species
 Attitudes toward and support for renewable energy

Legal  Anti-trust law in Drug Manufacturers - Other industry and overall in the
country.
 Discrimination law
 Copyright, patents / Intellectual property law
 Consumer protection and e-commerce
 Employment law
 Health and safety law
 Data Protection
Novo Nordisk
P OR T E R 'S F IV E F OR C E S
Novo Nordisk Porter’s Five Forces
How Novo Nordisk Handle Threats Of New Entrants

1. By innovating new products and services. New products not only

brings new customers to the fold but also give old customer a
reason to buy Novo Nordisk A/S ‘s products.
2. By building economies of scale so that it can lower the fixed cost per
unit.
3. Building capacities and spending money on research and
development. New entrants are less likely to enter a dynamic
industry where the established players such as Novo Nordisk A/S
keep defining the standards regularly. It significantly reduces the
window of extraordinary profits for the new firms thus discourage
new players in the industry.
How Novo Nordisk Handle Bargaining Power Of Suppliers

1. By building efficient supply chain with multiple suppliers.

2. By experimenting with product designs using different materials so
that if the prices go up of one raw material then company can shift
to another.
3. Developing dedicated suppliers whose business depends upon the
firm. One of the lessons Novo Nordisk A/S can learn from Wal-Mart
and Nike is how these companies developed third party
manufacturers whose business solely depends on them thus creating
a scenario where these third party manufacturers have significantly
less bargaining power compare to Wal-Mart and Nike.
How Novo Nordisk Handle Bargaining Power Of Buyers

1. By building a large base of customers. This will be helpful in two

ways. It will reduce the bargaining power of the buyers plus it will
provide an opportunity to the firm to streamline its sales and
production process.
2. By rapidly innovating new products. Customers often seek discounts
and offerings on established products so if Novo Nordisk A/S keep
on coming up with new products then it can limit the bargaining
power of buyers.
3. New products will also reduce the defection of existing customers of
Novo Nordisk A/S to its competitors.
How Novo Nordisk Handle Threats Of Substitute Products / Services

1. By being service oriented rather than just product oriented.

2. By understanding the core need of the customer rather than
what the customer is buying.
3. By increasing the switching cost for the customers.
How Novo Nordisk Handle Rivalry Among The Existing Competitors

1. By building a sustainable differentiation

2. By building scale so that it can compete better
3. Collaborating with competitors to increase the market size
rather than just competing for small market.
Novo Nordisk
C hi n e s e Ma r ke t
Chinese Market

 China => Huge market; strong market position on

treatment of Diabetes
 Chinese health reforms => Novo Nordisk expensive, strong
market position – 63% in volume
 Engaged in sustainable approach on market
 Identification Diabetes 2 as social issue => due to lifestyle
and high prevalence in China
 Trainings of doctors, prevention, National Diabetes
Program, producing locally to reduce the environmental
impact
Novo Nordisk
T r i p l e B ot t om L i n e
Novo Nordisk Triple Bottom Line

1. Benefiting People’s Health (Social)

 Educational programs to increase awareness and prevention

 Timely diagnosis

 Training of doctors to improve professional care (> 220,000 in China)

 Training of people to increase awareness )>280,000 in China)

 Working with policy-makers

2. Minimize Negative Impact on the Environment

 From production and use of products

 Converted the entire production to wind energy

 Investing in development of renewable energy sources

3. Balancing those Concerns Against Economic Goals

 Profits in the framework of transparency and secured growth.

Novo Nordisk International Strategy

Novo Nordisk
Current Strategy
High Global
Strategy
Novo Nordisk implement the
global strategy, but to enter
Benefits from the Chinese market, they need
global Transnational
Strategy to adjust its strategy to
integration & transnational strategy to
standardizaition accommodate the local culture
Novo Nordisk to
enter the Chinese
market
of Chinese people

Low Need for local High

responsiveness
Novo Nordisk
C on c l us i on
Conclusion

• Novo Nordisk has a global strategy, but to enter the

Chinese market, they need to change their strategy with
the transnational strategy (think globally, act locally).
• Using Porter’s Diamond, we conclude that Novo Nordisk
must adjust its strategy to adopt the China’s unique
demand conditions such as their believe in traditional
medicine.
Thank You