EXECUTIVE INTERVIEW
As featured in The CEO Magazine
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Mindset Global healthcare company Novo Nordisk is leading the industry with a focus on marrying strong results with environmental and social sustainability. Images courtesy of Novo Nordisk
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orporate social responsibility is deeply engrained in the DNA of Novo Nordisk, with the company boasting an egalitarian and sustainable approach to global health care. With more than 90 years of experience in diabetes care, and leading positions in haemophilia care, growth-hormone therapy, and hormone-replacement therapy, Novo Nordisk is determined to help patients from all nations and socioeconomic brackets access affordable, smart health care. This inspiring company employs approximately 38,000 staff in 75 countries, and markets its products in more than 180 countries. The CEO Magazine recently spoke to Novo Nordisk’s CEO and President Lars Rebien Sørensen about the company’s dedication to ethical and affordable global health care. The CEO Magazine: Can you give our readers an overview of your professional background leading up to, and including, your current position? Lars: My background is quite unusual for a pharmaceutical
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executive as I have a Master of Science degree in forestry. I joined Novo Nordisk when it was still a conglomerate. We had an industrial chemicals business, which is now a separate company. I worked for them for 12 years until 1994, when I was appointed head of the pharmaceutical business, which included sales, marketing, and manufacturing. In 2000, I became CEO and the two companies were split up and we allowed shareholders to hold equity in those two separate companies. Since then I’ve been CEO of Novo Nordisk, and altogether I’ve been with the company for 32 years.
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we were sustainably focusing on areas where we could have leadership positions. We had to cut back on a number of focus areas to really realign ourselves with what we were good at, which is basically buying pharmaceutical drugs and specialist drugs in the area of diabetes, growth disorders, and haemophilia.
That’s a huge amount of time. What have been the key changes that you’ve seen at Novo Nordisk in your time there?
After having realigned the strategy, we also had another challenging situation on a global scale in that we were severely underrepresented in the United States. If we wanted to have aspirations of surviving as a global pharmaceutical company, we had to, some way or another, make a breakthrough in the US market. I have to admit this was done after a lot of trial and error from the year 2000 and onwards.
The main changes have been to realign our strategy to the changing pharmaceutical landscape. Our company had quite a broad-based strategy and we were involved in numerous areas. My first goal, and I think one of the reasons why I got the job, was that I pushed the fact that we needed to realign our strategy so that we could ensure
If you take the years from 2000 to 2010, there were a few main issues that I had to deal with. First of all, I had to ensure that we continued our global growth. We had, and we still have, a dominating position outside the US, so I had to support the expansion of our organisation in the US while still investing for the future in emerging markets, which are so important for our
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business due to the epidemic growth of people with diabetes in these markets.
If you look at your business in the long-term, social and environmental issues will eventually become business and financial issues. With the financial and economic situation in Europe, we need to be able to supply our customers with low-cost alternatives, otherwise they can’t get any treatment. If they can’t get treatment then we’ve completely lost our contract of trust with society. To me, corporate social responsibility is very easy.
With that comes a number of issues which actually, in a sense, all link together. The first one I put my head to was the excess issue, because in 2001 and 2002 it became clear that the world had started to focus much more on the proliferation of disease in the poorer parts of the world, including the emerging markets. This was clearly demonstrated by the controversy in South Africa over the access to HIV/ AIDS medication.
How do you collaborate with your key suppliers and partners to achieve success?
Following that very heated public debate, I realised that we perhaps had a similar issue in the field where we have expertise, mainly in diabetes. However, it wasn’t understood by the general public, so rather than staying on the back foot, I decided to create the World Diabetes Foundation and a differential pricing policy so that we could offer support for the poorest countries in the world to build up public awareness and healthcare infrastructure, and help the governments develop national health strategies to combat chronic disease. When we look at it today, it is well-understood that developing countries have a double burden of disease—namely infectious diseases; but also an increasing burden of chronic disease from cardiovascular disease, cancer, diabetes, and respiratory disease. However, 10 or 12 years ago this wasn’t well understood. By establishing the foundation, we managed to get ahead of that potential public backlash we would have seen had we not been foresighted enough to take that initiative. We offer support through this independent foundation, which is not managed by the company, but we do have representatives on the board. At the same time, as a company we are offering our drugs at cost to the 50 poorest nations in the
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We rely on collaborations with academia and small biotech companies, and in some instances larger pharmaceutical companies, for innovation and development. When we get to the development of our drugs, this is also done in collaboration with the public health systems because in our business, the people of the public are part of developing our drugs because they lend themselves to the clinical trials. Therefore, we need to be able to work with governments and public health systems, and in some cases, private health systems and private companies.
“I decided to create the World Diabetes Foundation and a differential pricing policy so that we could offer support for the poorest countries in the world to build up public awareness and healthcare infrastructure.” - Lars Rebien Sørensen
world. In the rest of the world we have a full-portfolio strategy, which means that we are selling both generic versions of our products, and the most advanced versions of our products. This allows us to ensure that we have an offering for people in very poor countries which typically have public healthcare systems and very few resources, so patients generally have to largely pay for their own medications and services. It’s an interesting situation because it looks like the whole world will eventually merge into having a system where there are certain parts of the population that can access no-cost services, which mainly means using generic
medication. In the US, Barack Obama is trying to introduce that for those without medical insurance, and this is largely the system that is being used in all the major emerging markets like Brazil, China, Vietnam, and many others. Through the years we have adopted our product strategy and our pricing strategy to ensure that we can offer all the alternatives, which are suitable for any income level which the countries or individuals may have, so we don’t end up in a situation where we’re just seen as a profit-hungry company trying to make money off patent-protected medicines. We want to offer our products to everybody.
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Corporate social responsibility is a very important duty for many European CEOs. Do you find it hard to balance the interests of all your different stakeholders? Yes and no. In reality, being Scandinavian and being a Dane, it’s not so difficult because this is the way we were brought up. I would say corporate social responsibility was in a way invented here in Scandinavia, and if not, then in Denmark, if I may be allowed to brag a bit. Our company was in the forefront of that development. It should not be seen as philanthropy. In my eyes, corporate social responsibility is maximising your business opportunities, but doing it with a long-term perspective, rather than a short-term one.
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When we get to the manufacturing, we tend to control most of that process ourselves. When part of our manufacturing is considered non-strategic, we align our partners with it. For instance, we make devices for the injection of insulin, and they are manufactured out of different types of plastic components. They are typically manufactured after we have debugged them and developed them so that they are commercially feasible. We will start to build up sub-suppliers, and these suppliers are now interestingly moving out globally with us when we establish our factories in China, and when we expand in Brazil and the US. This means that we need to have very close relationships with our suppliers. We need to ensure that they understand our mission and
“I have an aspiration of Novo Nordisk becoming one of the most valuable pharmaceutical companies in the world, and that’s why I continue to work because I think there’s more work to be done. There’s more value to create, both for society and our shareholders.” - Lars Rebien Sørensen
what we’re trying to achieve. They need to be willing to go with us into foreign emerging markets and establish themselves, because it’s only through being local manufacturers in all these markets that we can hope to supply these markets sustainably. Finally, what do you think have been the greatest challenges that you’ve overcome? What are you most proud of? This is a very difficult question. I think a few things have surprised me. My initial task was to adjust the strategy and create a focus on what we were good at and only that. Then, create a compelling vision, mission, and values for the company that we could communicate to all the people that make up Novo Nordisk all over the world. This was a very interesting and more challenging task than I had predicted. That’s also why I’m so clear in my mind about why we are the way we are and why it works, because of our Scandinavian heritage and background and all the thought that has gone into it. Another thing which has surprised me is that we’ve grown nearly double digits all the way throughout the 90 years that the company has existed. As you can imagine, growing double digits when you are a $15-billion company is different from when you are a $1-billion company. Managing growth in itself is a great challenge, but an exciting one. Novo Nordisk has become the most valuable company in Scandinavia and one of the most valuable companies in Europe, out of nowhere in a way, based on this great public-health need in the diabetes field. I have an aspiration of Novo Nordisk becoming one of the most valuable pharmaceutical companies in the world, and that’s why I continue to work, because I think there’s more work to be done. There’s more value to create, both for society and our shareholders.
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