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BOS Moves

Novo Nordisk

Novo Nordisk Blue Ocean Strategy Strategic Move

Novo Nordisk, the Danish insulin producer, created a blue ocean in the insulin industry by challenging an industry’s conventional wisdom about which buyer group to target.  By looking across buyer groups, it gained new insights into how to redesign their value curves to focus on a previously overlooked set of buyer needs.

Insulin is used by diabetics to regulate the level of sugar in their blood. Historically, the insulin industry, like most of the pharmaceutical industry, focused its attention on the key influencers: doctors. The importance of doctors in affecting the insulin purchasing decision of diabetics made doctors the target buyer group of the industry. Accordingly, the industry geared its attention and efforts to produce purer insulin in response to doctors’ quest for better medication.

Innovations in purification technology had improved dramatically by the early 1980s. Novo Nordisk itself had already created insulin that was a chemically exact copy of human insulin. As long as the purity of insulin was the major parameter upon which companies competed, little progress could be made further in that direction and competitive convergence was rapidly occurring.

Novo Nordisk, however, saw that it could break away from the competition by shifting the industry’s longstanding focus on doctors to the patients themselves. Novo Nordisk found that insulin, which was supplied to diabetes patients in vials, presented significant challenges in administering. This led Novo Nordisk to the blue ocean opportunity of NovoPen, launched in 1985. NovoPen, the first user-friendly insulin delivery solution, was designed to remove the hassle and embarrassment of administering insulin.  Patients could take the pen with them and inject insulin with ease and convenience without the complexity of syringes and needles.

NovoPen and the later delivery systems swept over the insulin market. To dominate the blue ocean it had unlocked, Novo Nordisk followed up by introducing NovoLet in 1989, a pre-filled disposable insulin injection pen with a dosing system that provided users with even greater convenience and ease of use. And in 1999 it brought out the Innovo, an integrated electronic memory and cartridge based delivery system. Novo Nordisk’s blue ocean strategy shifted the industry landscape and transformed the company from an insulin producer to a diabetes care company.

Sales of insulin in pre-filled devices or pens now account for the dominant share in Europe and Japan, where patients are advised to take frequent injections of insulin every day. Although Novo Nordisk itself has more than a 60 percent share in Europe and 80 percent in Japan, 70 percent of its total turnover comes from diabetes care, an offering that originated largely in the company’s thinking in terms of users rather than influencers.