Strategic analysis and valuation of Novo Nordisk A/S

Casper Koll-Petersen

Studenteropgave: Kandidatafhandlinger


Novo Nordisk is a global leading pharmaceutical company producing treatments to variety of diseases. The market capitalization of Novo Nordisk has been increasing with more than 150bn DKK during 2010 this master thesis will investigate whether Novo Nordisk’s financial figures as well as their strategic position and their pipeline substantiate this increase in the market capitalization. Novo Nordisk are currently finding themselves in a good position in the market, with several blockbusters in their product portfolio. This along with a promising pipeline, that potentially can produce two or three blockbusters more, is creating a firm ground for Novo Nordisk to build, and continue, a high-­‐growth company. Within diabetes care alone, Novo Nordisk has three blockbusters (Levemir, NovoRapid and NovoMix), and the haemophilia product NovoSeven has also been a blockbuster for previous years selling for more than 8bn DKK in 2010. The financial figures of Novo Nordisk has also been improving significantly during the past years, and they have moved from being an average performing pharmaceutical company, to a company in top of the league. The fact that Novo Nordisk almost has doubled their sales from 2005 to 2010 is a good example of how well they have performed. I have chosen to use the DCF model as my primary method to price Novo Nordisk. I have in my thesis made a budget for the valuation, a budget that I have based on a strategic analysis and a financial statement analysis. I do it this way to get the most accurate fair value of Novo Nordisk. The DCF valuation results in a fair value of Novo Nordisk of 750 DKK per share, which is about 20% higher than the closing price of 611 DKK on the 4th of February 2011. A sensitivity analysis is conducted to see what impact the estimated variables in the valuation have on the share price. The findings are that the cost of capital and the chance of getting products approved have a high impact on the share price.

UddannelserCand.merc.aef Applied Economics and Finance, (Kandidatuddannelse) Afsluttende afhandling
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