Interview: Novo Nordisk CFO Jesper Brandgaard

“TO BE or not to be…” may well have been the most pertinent question in Shakespeare’s most famous dramatic offering about the kingdom of Denmark. But there’s no uncertainty about the position of Danish pharma giant Novo Nordisk in the global insulin market where it reigns with an iron grip, unlike Hamlet’s more transient grasp of power.

And the man who sits astride its expanding fiscal empire is CFO Jesper Brandgaard. Having joined the company in 1999, Brandgaard has overseen the company’s market capitalisation grow from an already impressive £10bn in 2000 to an eye-popping £80bn in 2015 due to its position as the world’s biggest manufacturer of insulin.

Not bad for an FD who has, over the years, had the odd sojourn away from directing financial operations. But the football-loving Dane has always returned.
Much of the company’s growth can be reflected in the huge global surge in diabetes, a disease which now afflicts some 400 million people across the world – about 9% of the population, according to the World Health Organisation. Diabetes is set to become the planet’s seventh-biggest cause of death by 2030. Most of that explosion is in Type II diabetes – largely because of diet and lifestyle issues.

But just how did this 51-year-old, Coldplay-listening FD, come to steer Novo Nordisk – which now operates in 75 countries, manufactures in seven, and employs more than 40,000 staff – to its current successes?

Major learning curve

His career journey began at Arthur Andersen’s Denmark operation in 1986; Brandgaard had, within five short years, been posted to London, then Amsterdam, before returning home to take up a secondment with the Danish Financial Supervisory Authority (the body responsible for the regulation of its financial markets).

This coincided fortuitously with the outbreak of the Nordic region’s first banking crisis in 1993/94, which proved “very useful from a CFO perspective in learning how regulators think, how you approach a minister, and seeing how a government department operates”.

It proved to be a “fantastic time” and a “major learning curve” because of all the lessons to be gleaned from a catalogue of problems with the country’s major insurance companies and banks.

And it was at this juncture – when he was already pursuing the exacting Danish chartered accountancy exams – that an Arthur Andersen partner pointed out to that he would “have to work his butt off” for a qualification that “only a third of those who take it pass” and “can only be used in Denmark”.

“He asked me if that really was so smart. It wasn’t, so I changed tack and embarked on the country’s first executive MBA programme at Copenhagen Business School. That was probably the best business advice I’ve ever had in my career,” says Brandgaard.

Armed with his new MBA, Brandgaard then decided to get out of finance: “I thought, ‘I understand strategy. I understand the full value chain. So I’m going to advise companies on strategy. That’s much cooler than finance.’”

And he did just that, enjoying a brief sojourn as chief controller at Kgl. Brand, a subsidiary of Skandia – then the largest Nordic insurance company – which was followed by a role as strategy consultant with Aarsø Nielsen just before it merged with global management consultancy behemoth, AT Kearney.

Singapore Sling

When the Asian financial crisis knobbled much of East Asia in 1997, leading to rising fears of global economic meltdown through virulent financial contagion, Brandgaard had already been working in Singapore for a year.

In 1996, newly divorced and with a punitive Danish tax rate of 65% eating into his hard-earned salary, he took up an offer to go to the city state as COO and CFO of EAC Nutrition, an infant formula milk product company and a subsidiary of the East Asiatic Company, a Danish-listed, Singapore-located holding company for a number of operations that all have an Asian business focus.

Partly seduced by the ‘Singapore package’ of ultra-low tax rates, the expat lifestyle and benign weather, Jesper realised it was also a great opportunity to further cut his global C-suite teeth.

He sees his three years there as “a blessing” – especially the time he spent in Singapore during the most turbulent days of the Asian currency crisis, where many local currencies fell to about half of their value against the dollar: the Indonesian rupiah fared the worst, collapsing by 83.2%.

“It was a really good learning experience. Our business model was the same as Nestlé or Abbot and Mead Johnson: essentially importing milk powder or infant formula – priced in hard currency – to local markets and selling in the local currency. All of us had this major problem of managing this significant currency fluctuation,” he explains.

Brandgaard and his team opted for a radical solution: swapping tin cans for aluminium pouches. Immediately, they enjoyed a 10% price advantage over their rivals in China, Malaysia, Thailand and Vietnam, at a time when “price was everything”. His brand, Dumex (now owned by Danone), quickly overtook key market competitor Nestlé.

Despite its many positives, the land of Raffles ultimately failed to convert seduction into a long-term relationship, and its often hierarchical nature and degrees of artificiality led Brandgaard back to home soil and a fresh set of challenges in the guise of VP of corporate finance at Novo Nordisk.

After demerging the CSE-listed global biotechnology company Novozymes and the private placement of pharmaceutical/biotechnology outfit ZymoGenetics, Brandgaard earned an internal promotion to CFO at Novo Nordisk, the country’s single biggest exporter and, as a company, responsible for 4% of Denmark’s GDP.
In the intervening years, Jesper has helped grow his company’s market capitalisation eightfold to £80bn, bigger than the combined GDPs of Mongolia (see page 40 for country profile), Zimbabwe, Uganda and Cyprus.

“When I started, half of the insulin we sold was Type I. It’s now just 5%. The growth has been in Type II,” he says.

Brandgaard ensures a healthy 15% is invested in R&D and is pleased with the news that the company’s anti-obesity drug Saxenda has successfully secured marketing authorisation from the European Commission. The intravenous drug – administered once daily – will now be launched in all 28 member EU states and is the first ever glucagon-like peptide-1 (GLP-1) approved in Europe for treating obesity.

And with obesity afflicting between 7% to 24% of EU adults and about 35% of US adults, it’s a growing market. About $200bn (£137bn) was spent treating it in North America in 2008 and that figure has been increasing steadily.

Away from the spreadsheets, Jesper, a confirmed fan of the socially responsible triple-bottomed line accounting principle, enjoys red wine, especially Bordeaux, and cycling jaunts around Denmark and the French Alps.

And for a Dane who’s clearly king of his financial empire, it’s deliciously fortuitous that he lives just moments away from Kronborg Castle in Helsingør, immortalised in Hamlet as Elsinore.

Twice a year he will watch a local football derby where the sole criterion is “the more they hate each other the better”. He’s already enjoyed the pugnacious clashes of Madrid’s Atlético vs Real, the North London hate-fest that is Arsenal vs Tottenham, the scouse skirmishes of Liverpool vs Everton – which he found “a bit disappointing” – and the Germanic ding-dong between Borussia Dortmund vs Schalke.

And with Novo Nordisk’s centenary fast approaching in 2023, the company seems destined to retain its top-flight market position and be the very antithesis of anything remotely resembling a tragedy. Shakespearean or otherwise. ?

IN BLACK & WHITE

2000 – present Chief financial officer, Novo Nordisk
1999 – 2000 Corporate vice president, corporate finance, Novo Nordisk
1996 – 1999 Chief operating officer & chief financial officer, EAC Nutrition
1996 Strategy consultant, A.T. Kearney / Aarsø Nielsen & Partners
1995 – 1996 Chief controller, Kgl. Brand – Skandia Denmark Group
1986 – 1994 Various roles, Arthur Andersen