Investment letters

Against a backdrop of stubbornly high inflation and interest rates in Europe, some venerated companies are proving that age is a state of mind, and experience – especially in navigating choppy markets – is what really counts.

This year marks the 100th anniversary of Novo Nordisk, a Danish healthcare company whose diabetes remedies aim to treat the growing end market of around 400 million patients worldwide. Over their century of operation, the company has taken advantage of opportunities in adjacent markets that benefit from their drug therapies, moving from insulin to GLP-1 (a hormone which stimulates the body to produce more insulin) to obesity products. Thanks to their consistent innovation, this latter market has opened up an entirely new avenue of growth that has enabled them to become “Europe’s most valuable company in September 2023, overtaking luxury goods maker LVMH.”

While this sounds like a significant achievement, Novo Nordisk is not alone in this regard. Within our Comgest Pan Europe Large Cap Equity strategy (the "Comgest Pan Europe Large Cap portfolio" or "portfolio"), we have invested in a range of companies with substantial records of longevity. Thus far, as of the date of this publication, these “elder” companies have continued to achieve sustainable growth over extended periods of time with high visibility of earnings.

First, a structurally growing end user market is very important to a company having sustainable long-term growth. This can be seen in another of our portfolio companies, L’Oréal, whose beauty products were first brought to the French market in 1909. Given that beauty and cosmetics products have been used for thousands of years, it’s a relatively safe bet to say that they are likely to be used for many more.

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