Season 4, Post 37: Looking outwards

For a country with fewer than 6m inhabitants, it is impressive how many world-class and truly global businesses Denmark has produced: from Carlsberg in beer to Maersk in shipping via the wind turbines of Vestas and the diabetes treatments pioneered by Novo Nordisk. “We’re a small country; we’ve always had to look outwards” was one of the explanations provided for Denmark’s success. We recently spent a day on the Jutland Peninsula hearing what several of these businesses had to say about the world.

First up was a meeting with Vestas in their smart modern offices close to Copenhagen Airport. There, we learned that “for Vestas to succeed, the [wind] industry needs to succeed.” When translated, what this means is two things: more efficient planning processes and greater cooperation among the main players in certain areas. Begin with the former and have no doubt, “the appetite [for new projects] is definitely there.” The challenge, however, is to accelerate permitting, particularly in Europe, where there is a current gap of around four years from approval to installation. Visibility looks better in the US, where the recently passed Inflation Reduction Act is “extremely exciting” and could translate into meaningful orders from next year. In terms of cooperation, Vestas highlighted to us that the trend towards “scaling up” outsourcing projects with partners could be beneficial. Were third parties to make certain parts for many of the industry’s main players, then this could increase overall efficiency while, at the same time, reducing volatility.

Later in the day, we travelled 15km north of Copenhagen to Bagsvaerd, home of Novo Nordisk. The company’s campus comprises several streets while its head office is an impressive structure, whose interior is apparently shaped to resemble an insulin molecule. We were reminded that Novo will mark its 100^th anniversary next year. Throughout, its purpose has remained unchanged, “making a meaningful difference… by solving chronic disease.” Novo highlighted the large unmet need that remained to treat major problems including diabetes, obesity and other related comorbidities such as cardio-vascular disease. Take the second of these: while 764m people globally live with obesity, just 2% of these currently receive treatment, per Novo. Much of the focus at Novo is on “preparing for the next decade.” When asked to elaborate on this, the company highlighted to us that “we need to raise the bar on innovation to make a difference.” This has led to an acceleration in hiring in the R&D department, an increasing emphasis on partnerships with universities as well as specific in-licensing deals with other healthcare players. Looking forward, a recently announced partnership with Microsoft may also be helpful in bringing big data and artificial intelligence solutions to solving healthcare problems, combining bottom-up analysis with top-down challenges.

Before departing Denmark, there was also time to interact with Carlsberg, or at least review the merits of its beer at the airport.

22 September 2022

 ​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Heptagon Capital is an investor in Novo Nordisk and Vestas. The author of this piece has no personal direct investment in the business. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise. ​​​​​​

Alex Gunz, Fund Manager