Novo Nordisk tops IDEA Pharma's Innovation Index 2024

In this analysis, invention is the bringing together of ideas or technologies in a novel way to create something that did not exist before. In contrast, innovation is the creation of meaningful value from an invention. A company that is high in innovation but low in invention can be considered highly efficient in maximising the potential of what it invents (e.g. Novo Nordisk, see below). To achieve high returns on invention, we need a high probability of success through clinical development, which drives an efficient path to market. Then, once on the market, the ability to create more value for that invention than similar competitors.

With Novo at number 1 in the Innovation Index for the first time, we have an excellent example of an old invention creating enormous value after a long, steady investment of time and development budgets. This is because it has taken an established mechanism and molecule and found new markets for it. This is highly innovative, but it is not a brand new invention. Novo Nordisk is a specialist in taking a mechanism (insulin and now GLP-1) and perfecting the delivery, indication and markets for these products. But it has a narrow range of prior inventions, it just maximises what it has. In the next decade, as semaglutide comes off patent and the GLP-1 class faces competition, it has to find new inventions (i.e. mechanisms) to drive continued long-term shareholder value. We see the pipeline to do this.