Novo Nordisk: Denmark’s dominant drug maker

Novo Nordisk leads the global market in diabetes treatments and looks a solid long-term buy, says Dr Mike Tubbs.

R&D at Novo Nordisk
Novo Nordisk boasts around half of the global insulin market
(Image credit: © Novo Nordisk)

Markets are nervous now that a second wave of Covid-19 is sweeping across much of the world and US technology stocks, which have spearheaded the rally, are trading at eye-watering valuations. Tesla, for instance, is on a 2020 price/earnings (p/e) ratio of 240, which assumes everything will go right for a very long time. In this environment, it is sensible to consider market-leading companies with reasonable valuations and rising dividends.

Novo Nordisk (Copenhagen: NOVOB), the market leader in diabetes treatments, is a good example of this type of stock. Diabetes is the world’s fastest-growing major disease. There were 108 million people in the world with diabetes in 1980 but the figure had jumped to 422 million in 2014; by 2040 it is expected to have reached 642 million.

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Dr Mike Tubbs

Highly qualified (BSc PhD CPhys FInstP MIoD) expert in R&D management, business improvement and investment analysis, Dr Mike Tubbs worked for decades on the 'inside' of corporate giants such as Xerox, Battelle and Lucas. Working in the research and development departments, he learnt what became the key to his investing; knowledge which gave him a unique perspective on the stock markets.

Dr Tubbs went on to create the R&D Scorecard which was presented annually to the Department of Trade & Industry and the European Commission. It was a guide for European businesses on how to improve prospects using correctly applied research and development. He has been a contributor to MoneyWeek for many years, with a particular focus on R&D-driven growth companies.