$NVO GLP-1's are a (the) big growth area, my understanding is they're like a combo insulin + weight regulator, and also more expensive/higher margin, but fill a big need for diabetics. Novo's consolidated topline masks the growth in this area.
Some of this growth is COVID stocking, however $NVO has ~50% market share in this very valuable area within the diabetes market.
They've outlined 2019/2020 as investment years, with numerous launches, stepped up R&D spending and investing behind sales.

As launches get out there, you start seeing some leverage on SG&A, so that is a positive for earnings.
My guess as well is that as the US insulin becomes a smaller part of the business (now under 20% IIRC), pricing pressures there start to matter less, and mix benefits from new launches start to matter. That's slightly accretive to margins as well.
Put it all together and $NVO can likely do topline growth of 6-8% over the next 5 years, which should translate into 7-9% bottom line growth. At a constant multiple (~5% FCF yield), that gets you 12-14% IRR's on a 5 year hold.
CEO comp is partially based on EVA = after tax operating income less a WACC charge on invested capital. Not the worst ever.
NVO also points out that obesity today is not seen as a disease, and rates of obesity among youth are like 30% in South America (so it's a huge ex-US problem). Diabetes used to not be seen as a disease, but that's changed, so there is huge white space for them in the obesity mkt
So conceivably, if health care systems start to place more emphasis on the treatment of obesity as a way of lowering cost (as tons of related diseases cost us trillions a year), then NVO is placed to win as an already dominant supplier of insulin, GLP's etc. to the entire world.
More broadly speaking, one wonders if obesity will affect EM's as it does the US as they develop due to the shift from scaricty to "excess" and abundance of food/sugar etc.
One thing worth noting as well. $NVO has not done an acquisition since 2005, and focuses mostly on organic development. That's very unusual for a large pharma. CEO comp is also partially based on achieving R&D milestones (unique comp structure).
As an example, $NVO revenues have doubled since 2011 and they spent $0 on M&A. $JNJ revenues are up 30% since 2011, and they spent $58.6 billion on M&A. Similar story for $PFE, etc. etc.

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More from @PythiaR

17 Sep
$ENTG's annual report is sort of a cool place to go to learn a bit about semiconductor manufacturing. investor.entegris.com/static-files/7…
Shit (I know it's basic semi bros, don't hate me) I didn't know!

Gonna use planarization more in conversation.
Staying on the right side of a potential split of the US/China semi manufacturing business/ecosystem seems important.
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12 Sep
actually buys back more of its stock when the share price is low. Image
Not a semi expert, but presumably things can't keep shrinking forever. Image
I *might* see a competitive advantage/barrier to entry here: "there's absolutely no tolerance for any variation."

Brings to mind what someone said about modern semi-manufacturing being indistinguishable from magic. cc Image
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12 Sep
Now that I'm getting more involved in running our wealth management business, I agree wholeheartedly with Buffett's take that being a business owner made him a better investor and vice versa.

It should be mandatory training for PM's to try running a business.
Having to wrestle with things like initial ROIC for a new business line vs. what ROIC could be if we executed, leveraged high fixed costs w/ very high incremental margins, determining TAM, growth prospects (ie is this even worth our time), our competitive advantage there etc.
Having an understanding of what makes a great company helps me filter opportunities in our own business much more effectively. But having to help run a business gives me a greater sense of the struggles but also opportunities facing the businesses we invest in.
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2 Jul
Interesting take by $WCN on human vs. physical vs. financial capital. The last 2 are commodities, the first one is not.
Another great quote.
Pretty cut and dry evidence of $WCN effectiveness on culture.
Read 9 tweets
24 May
1/n When I graduated high school, I went into Political Science and Economics instead of business to learn to study systems and people.

Initially, I started to think that was a mistake. In my 1st summer, I took Damodaran's MBA valuation course. I taught myself accounting.
2/n I was always worried about being not technically up to snuff with the b-school kids. So outside of school, I taught myself excel. I drilled investment banking prep. I read every finance book I could find. I ended up teaching business school kids finance.
3/n I focused my schoolwork on the intersection of economics and politics. I wrote a paper on derivatives regulation. The last paper I wrote for a seminar was using $FMCC and $FNMA as examples of how a judiciary was needed to rectify niche cases of minority rights infringement
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The oldest hotel in the world is 1315 years old (Nishiyama Onsen). The oldest pub (Sean's bar) is 1100 years old. Many vineyards in Europe are 3-400 years old. Oldest jeweler (Mits de Meller) is 400 years old. Jim Beam was founded in 1795.
Makeup has been with humanity for ~8,000 years. Alcohol was first drank during funeral celebrations over 10,000 years ago. Jewelry has been with us 30,000 years.

Betting on people needing to display status for mates, socializing, travelling, and getting intoxicated are solid.
The hard part is getting the company right. A local watering hole that is essential to a community (e.g Sean's pub) may be a better bet than a large restaurant chain.

A large global enterprise like Twinnings (300 years old) may do just as well as a local tea shop.
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