Effective Approach to Increase the Novo Nordisk’s Profit Margin

Analysis Paper
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Analysis Paper
Description of the Client
Novo Nordisk is a pharmaceutical company located in Denmark. This organization operates multi-nationally with firms located in 8 countries. Novo Nordisk manufactures and markets pharmaceutical products and services, where it specializes in diabetes care medications and devices. The company was founded in 1923, with its primary purpose being to defeat diabetes and other serious chronic diseases. Over the years, Novo Nordisk has made outstanding breakthroughs, which have expanded access to medicine and improved the prevention and cure for diabetes. Among the core values of the Novo Nordisk is establishing a patient-centered business approach. Also, the organization is accountable for its financial, social, and environmental performance. Consequently, it strives to observe the regulation and code of ethics in its operations without jeopardizing the quality and value to the consumers and other important stakeholders.
Novo Nordisk is among the key players in insulin production and diabetes medication and management devices. As medical technology and strategies have developed over the years, the organization has gained the largest market share by specializing in insulin, among other products. The company has gained its reputation for its role in countering the high incidence and prevalence level of diabetes type 1 and 2 across the world. In addition to its high market share, Novo Nordisk’s reputation also stems from its affordable and favorable insulin prices. The high cost of insulin is among the factors undermining the strategies and approaches deployed to counter the prevalence of diabetes across the world. The majority of the key players in the insulin market, including Lily and Sanofi, have enjoyed a growing profit margin over the past few years. However, the high-profit margins do not reflect an increase in Insulin sale volume. Instead, the high margins are attributed to the increasing cost of insulin, a factor that has triggered an uproar from society and other players in public health. Consequently, Novo Nordisk’s steady prices place it in a more powerful position over its competitors.
Problem Statement: How can Novo Nordisk, a smaller pharmaceutical brand, increase profit margins while attempting to find a cost-effective insulin solution for those affected with diabetes?
Background Section
The invention of insulin is among the main milestones in health sectors in the management and cure of diabetes. Naturally, the human body produces insulin to regulate the amount of blood sugar. However, changes in lifestyle and diets have complicated this capacity, resulting in complications associated with poorly regulated blood sugar, such as diabetes and obesity. In recent decades, diabetes and deaths resulting from it have been on the rise; diabetes is among the leading causes of death across the world. The development of synthetic insulin dates back to the early 20th century, but a fully functional one was invented in 1975, while more modules were discovered in 1996 (Das & Shah, 2011). Novo Nordisk is among the key players involved in developing synthetic insulin. The innovation and mass production of artificial insulin have greatly revolutionized diabetes treatment and care, thereby alleviating its most negative implications. Organizations such as Novo Nordisk have ensured that the diabetes community has access to this essential drug.
Although Novo Nordisk’s products are crucial for the general health outcomes, the organization must promote its revenues because it is accountable for its finances and responsible to its shareholders. According to Novo Nordisk’s company announcement, insulin’s sales level and profit margin decreased significantly in 2020 (Novo Nordisk, 2020). The company relies on insulin and diabetes-related product as its primary source of income; thus, such a decrease is a major setback to its financials. While the Covid-19 pandemic partly influences the decrease in sales, other factors such as competition and expansion of the competitors play an important role. Currently, the insulin market is challenged by the issues of high prices, a factor that has jeopardized the reputation of main players, such as Lily and Sanofi. Consequently, price is an important factor when developing an effective strategy for improving Novo Nordisk’s profit margin. The main objective of this analysis is to identify an effective approach to increase the Novo Nordisk’s profit margin by finding a cost-effective insulin solution.
Landscape section
The pharmaceutical industry is highly regulated, with a myriad of stakeholders influencing most aspects of pharmaceutical companies’ operations. In the case of Novo Nordisk, str...