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In the battle against diabetes, continued investment in R&D, and a business culture focused on driving change through innovation, education and collaboration is essential. Finance Director Europe talks to Jesper Brandgaard, the CFO of leading diabetes care company Novo Nordisk, about the current drug development pipeline and the technologies that his company is currently investing in to build a sustainable, efficient and effective operating model.

According to the International Diabetes Federation, 415 million adults were living with diabetes in 2015 and this number is expected to increase to around 642 million, or one in ten adults, by 2040. Lack of exercise, unhealthy eating, smoking and obesity are the key causes of type 2 diabetes, which represents 90% of diabetes cases worldwide.

Half the cases of type 2 diabetes are believed to be unknown by the sufferer and, if left undiagnosed, can result in a medical emergency. In many countries, diabetes is a leading cause of blindness, cardiovascular disease, kidney failure and lower-limb amputation. It is therefore unsurprising that many local healthcare authorities around the world are focused on prevention and early diagnosis.

A key date in the diabetes awareness calendar is 14 November, which is World Diabetes day and represents the birthday of Frederick Banting, the Canadian scientist who was instrumental in the discovery of insulin. The date is particularly meaningful to Jesper Brandgaard as on that date in 2000, he became CFO of Novo Nordisk. It was also the same year the company’s industrial enzymes business, Novozymes, was spun off.

Image result for Jesper Brandgaard
Jesper Brandgaard, CFO


Since Brandgaard became CFO, the company’s headcount has nearly tripled from 15,000 to 42,000 people – and turnover has quintupled. Today, the company is focused on driving change, and investing in new technology and research. In 2015 alone, the company spent over $2 billion on R&D as it endeavours to prevent, treat and ultimately cure diabetes, as well as tackling other serious chronic conditions like haemophilia and obesity.

In his role as CFO, Brandgaard continues to focus on ensuring the future financial stability of the company. Given Novo Nordisk’s expenditure on new drug development and the lengthy lead times before commercial release, he and his team must accurately gauge which projects to back and which to abandon.

“As a CFO, I know that when you enter the trials process, you have maybe a 5% chance of making it through to the market,” says Brandgaard. “I have to handle portfolio management prudently, making sure that the potential upside from going to market multiplied by the likelihood of doing so still provides a positive risk-adjusted overall NPV.”

On to something

Semaglutide, Novo Nordisk’s new GLP-1 diabetes drug candidate that offers convenient weekly dosing, is a great example of picking a winner. Semaglutide will sit alongside Novo Nordisk’s current blockbuster GLP-1 diabetes medication Victoza that has recently been losing market share to newer weekly dosing drugs like Jardiance and Trulicity in what is an increasingly competitive pharma sector.

In September, the company released results from the large cardiovascular SUSTAIN 6 trial showing that semaglutide is even more cardio-protective than Victoza. Compared with standard care, there is a 26% lower risk of a type 2 diabetes patient suffering from a severe cardiovascular event. Daily oral and injectable versions of the drug are also in development.

“Semaglutide is in the late stages of development and we remain very confident that the product will be filed by the end of this year,” says Brandgaard. The drug first entered the development pipeline in 2006, six years into his career as CFO.

“You see it come out of the other end, and it makes all the investment and waiting worthwhile,” he says. “It’s a relatively cumbersome process, but when you choose the right molecules, you have products with a sales potential of way above $1 billion.”

Sales are vital but Novo Nordisk also takes a responsible and ethical approach to its business, with original initiatives such as its Cities Changing Diabetes programme and its long-standing embrace of triple bottom-line accounting that includes social and environmental reporting as well as financials.

Novo Nordisk has delivered years of innovation in the fight against diabetes


“The triple bottom line came from a principle of transparency, of wanting to document the full impact of what we were doing,” says Brandgaard. “We came to recognise that providing environmental and social information earned us trust in society.”

That approach obviously works: sales grew by 8% and operating profit rose by 21% in 2015. Supported by the latest technology, through techniques like business partnering and exploiting the latest digital technology, its finance function makes sure this investment bears fruit.

“Technology has become increasingly important and integrated in what we do in a much more borderless set-up, and we are continually using it to either lever the effectiveness of the front line or increase efficiencies in the back office.”

A great support system

In terms of the back office, the company has built a substantial offshoring operation in Bangalore, India. It has ambitious targets to grow it further while taking full advantage of back-office automation tools.

“For the more administrative finance elements, we see ourselves moving at least a third of our total headcount offshore and we are making solid progress there,” says Brandgaard. “Using techniques like scheduling automated execution in our global shared services function in Bangalore has increased efficiency there by 4% year on year.”

Brandgaard points to his own championing of a single global ERP implementation as the vital enabler for the Bangalore initiative. This also allows finance to work, “in a much more borderless way than before, where you had clearly defined single country operations”.

“If there’s one key thing that enables efficient centralised administrative activities in a location with cheap labour costs, it’s a uniform system platform,” Brandgaard says. “We have continuously updated the ERP platform, and rolled it out into new functional areas like manufacturing and HR.”

Though Novo Nordisk’s ERP system is a conventional installed product, many of the applications integrated with the platform are cloud-based. Brandgaard certainly sees the cloud as offering some serious advantages.

“The challenge with an on-premise product is of course the substantial cost every time you upgrade to a newer version,” he says. “Having a cloud platform that is current at all times is appealing but given the size of our application, it’s not a project that’s at the top of my to-do list.”

In areas like indirect procurement, and specifically in the management of travel and entertainment expenses, with such a highly mobile and global salesforce, Brandgaard highlights the value of a cloud-based service delivered via a smartphone or tablet.

“It slashes the time needed to fill out expense claims from hours to minutes. We’re enabling our medical reps to fill in their expense forms while on the go in a standardised, simplified way,” he says. “It’s a significant improvement.”

He reveals that his internal audit team in Bangalore is using artificial-intelligence technology to weave through the maze of expenditures in Novo Nordisk to find patterns and items in order to uncover inconsistencies or maverick spend for example.

Novo Nordisk has also tapped cloud-based analytics to make better use of the vast amounts of clinical and other data that it holds. Formed in late 2015, a partnership with IBM’s Watson Health unit aims to leverage data on blood sugar levels, food intake and medicine use.

“Certainly, we have much more data at our disposal, though I think we are struggling a little in turning that data into knowledge,” says Brandgaard. “Our partnership in digital health is looking very promising in creating more real-world evidence on how patients are using our products.”

The results of the IBM analysis could allow care to be refined and improved, and will potentially be used to provide evidence of treatment effectiveness to healthcare payers. “We can collect data on patients’ experience and consolidate that into a form that is relevant for discussions with physicians on how our products are used in real life,” says Brandgaard.

Talent management

Managing the stellar talent that drives Novo Nordisk’s success is another area ripe for digital transformation. Spanning functional requirements like recruitment, performance management, training and compensation could help Novo Nordisk’s HR and management team ensure that only the very best people join – and stay with – the company.

“Our talent management systems are still more manually based than I would ideally like to see, and we will invest in better support from succession management and talent overview systems,” says Brandgaard. “But there’s no substitute for bringing the leadership team together.”

Novo Nordisk flies in its top 15 global finance leaders to meet four times a year. “The most innovative talent is often discovered when they sit around the table and discuss, for example, how they can fill a vacant position with the best possible talent and how they can do it in a way where they not only move one person, but they actually get a flow going where maybe six or seven other people also get an opportunity to move,” says Brandgaard.

Novo Nordisk’s finance team is certainly having no trouble attracting young talent via schemes like its Global Finance Graduate Programme – despite millennials’ reputed lack of interest in money. This demographic’s desire for job satisfaction, engagement and empowerment has a lot to do with it.

“First of all, we have a purpose; we are making a real difference in the lives of people with diabetes,” notes Brandgaard. “Second, we have constant feedback going in all directions between colleagues in finance. This constant feedback is very attractive to millennials rather than only getting a biannual assessment of your performance.”

This kind of free flow of information to, from and within finance is a top priority at Novo Nordisk. The company’s strong focus on finance partnering exemplifies this, with finance executives working alongside other functional areas to provide financial information, tools, analysis and insight that enable more-informed business decisions.

“I want the finance people to be business people and we’re progressing well with bringing the business knowledge of our people up,” says Brandgaard. “Being value-adding partners to Novo Nordisk means we must have a profound understanding of the entire value chain.”

Novo Nordisk uses modern education tools like elearning and video downloads to teach how best to adopt the partnering approach. Brandgaard himself features in the material, explaining how he has functioned as a partner to the CEO and other stakeholders. Novo Nordisk’s combination of social awareness, innovative research and financial rigour should see it continue to flourish over the coming decades.