Financial Planning and Analytics Case Study

Denmark has been facing Political and Economic Turmoil for quite some time now. The
pharmaceutical industry has been hit hard by various government measures that have been
brought in to limit healthcare expenditure, and notably drug expenditure.

Despite the fact that the government sets drug prices, pharmaceutical companies must give the
government discounts on the listed prices of their drugs. The discount is a percentage of
reduction on the manufacturer price – which serves as a basis for reimbursement by the
International Healthcare Insurance. End of the year 2013, the government ordained a price cut
of 20%. This will result many pharmaceutical companies to withdraw their products from the
market.

Novo Nordisk may resort to stop selling some of its leading products in Denmark as the 20%
price cuts will result in a loss to their business. The spokesperson of Novo Nordisk commented
that “A 20 percent price cut does not allow us to run a sustainable business in Denmark and
result in serious financial consequences for the company”. At the moment, nearly 50,000 people
suffering from diabetes in Denmark are dependent on Novo Nordisk’s insulin products for their
survival.

Question:

You are the business analyst of the company. And the CEO invited you to a meeting with the
board to discuss the pricing issue in Denmark. You need to present the above situation to the
CEO and suggest a pricing policy for Denmark based on the new prices.

You have been given data for five countries, please analyse sales, volume, price, Cost of Goods
Sold (COGS) across different brands. Please determine the following:

 Calculate new prices for all five countries.

 Calculate monthly COGS and Gross Profit for each country with old price.

 Calculate sales & gross profit with the new price for all brands for all five countries.

Please suggest suitable pricing strategy which Denmark can adopt to sustain in the market.

You are required to refer all the sheets in “Data for FPA Case Study” for better understanding.

Formulae:
 Gross Profit : Sales – Cost of Goods Sold (COGS)
 Sales : Price*Volume/1000

Disclaimer: The case study and data in the excel sheet are hypothetical & are meant for internal use only. The case
and data must be used only for recruitment purpose within Global Finance – GSC Bangalore.
 Supplementary Information

About Novo Nordisk : Headquartered in Denmark, Novo Nordisk is a global healthcare

company with 90 years of innovation and leadership in diabetes care. The company also has
leading positions within haemophilia care, growth hormone therapy and hormone replacement
therapy. We believe that a healthy economy, environment and society are fundamental to long-
term value creation. This is why we manage our business in accordance with the Triple Bottom
Line business principle and consider the financial, environmental and social impact of our
business decisions.

Triple Bottom Line : The Triple Bottom Line (TBL) business principle is a core commitment in
the Novo Nordisk Way of Management and the Articles of Association (by laws) of Novo Nordisk.
Under ‘objectives’, it says that Novo Nordisk ‘strives to conduct its activities in a financially,
environmentally and socially responsible way’. The TBL aims to create long-term value for our
business and for society by ensuring that we consider the impact of our actions for people,
communities and the environment when we make decisions.

Brands Overview

Insulatard® - Insulatard® is a intermediate acting human insulin suspension for injection and
it is part of basal segment. It is used for treatment of Diabetes by lowering blood glucose.

Levemir® - Levemir® is a long-acting modern insulin solution for injection and it is part of
basal segment.

Tresiba® - Tresiba® is the ultra-long-acting and flat basal insulin designed for performance &
better control for patients without the increased risk of hypoglycaemia.

All three brands are interchangeable and act as alternatives for patients.