The Two Insulin Houses of Copenhagen

Denmark had two insulin companies in Copenhagen because the first one dismissed an employee. In 1924 Hans Christian Hagedorn, who had founded Nordisk Insulinlaboratorium the year before, parted company with Thorvald Pedersen after a disagreement, and Thorvald's brother Harald resigned in loyalty to him. The brothers went off and began making insulin on their own. Out of that quarrel grew Novo Terapeutisk Laboratorium, and for sixty-five years or so the two firms competed to make the same hormone for the same patients 1.

The story is usually told as corporate lore, and the lore is flattering to both sides. The documented version is more interesting: a Nobel laureate whose wife had diabetes, a medical idea licensed on conditions, a chemist who found a way to slow insulin down, and a rivalry that made each company better before it ended in a merger of two foundations.

Toronto, 1922: a licence carried home

August Krogh was one of the best-known physiologists in Europe. He had won the Nobel Prize in Physiology or Medicine in 1920 for his work on how capillaries regulate blood flow, and his Copenhagen laboratory was a magnet for researchers. In 1922 he travelled to North America on a lecture tour. His wife, Marie, a physician herself, had diabetes, and the news from Toronto was already electrifying anyone who knew what the condition then meant 1.

Krogh made a detour to Toronto, where the team that had discovered insulin was working out how to produce it. He came away convinced that Scandinavia needed its own supply and, according to the Foundation's own history, returned to Copenhagen in December 1922 with permission to manufacture insulin in the Nordic countries. He had been given a licence, and with it a responsibility to do the job properly 1.

The timing is part of why the licence mattered. The Toronto discovery was less than two years old, and the Nobel Prize for it, awarded to Frederick Banting and John Macleod, was still a year away. Supply was the bottleneck everywhere: a hormone that could keep a person with severe diabetes alive was useless if it could not be made reliably, in standard strength, in quantity. A well-run Scandinavian producer was an obvious answer, and Krogh was the obvious person to ask.

Nordisk Insulinlaboratorium and the physician who ran it

Krogh was a researcher, not a manufacturer, and he turned to two people. Hans Christian Hagedorn was a Copenhagen physician with an unusual feel for the chemistry and measurement of insulin. August Kongsted could run the practical side. The three partnered to produce and sell insulin, and in 1923 Nordisk Insulinlaboratorium was founded 1.

The corporate form deserves attention, since it is what the story eventually turns on. Nordisk was placed inside a foundation structure from the outset, with its profits intended to fund scientific and humanitarian purposes. That was not charity bolted onto a business. It was the arrangement under which the company existed, and it shaped how it behaved: reinvestment into research was the default, and the ownership could not be sold off 1.

1924: the brothers who were shown the door

Harald and Thorvald Pedersen worked for Hagedorn's operation. Between them they knew the production process as well as almost anyone in the firm. The Foundation's history records that in 1924 Hagedorn dismissed Thorvald after a disagreement, and that Harald resigned in loyalty to his brother. The documents do not tell us the details of the disagreement, and this account does not guess at them 1.

The brothers began making insulin themselves. Company histories date the firm that became Novo Terapeutisk Laboratorium to the mid-1920s, although the Foundation's own timeline gives no founding date for it. What the record does say is that the new venture 'led to rivalry between the two companies'. It was a rivalry that would run, with intervals of cooperation on some matters, for six decades 1.

'We will show you!'

Two sentences are attached to the split, and both come to us from people who were involved rather than from documents. According to the Foundation's history, Harald Pedersen is recalled to have said, in 1924, that the brothers wanted to make insulin, and then, 'We will show you!'. Krogh's reply, in the same recollection, was that they would never manage it 1.

Protamine, 1936: a slower insulin from a fish

The first generation of insulin worked fast and wore off quickly, which was awkward for people who had to inject several times a day. In the 1930s the rivalry began to produce science. At Nordisk, Hagedorn and his colleagues found that mixing insulin with protamine, a small basic protein obtained from the sperm of fish, formed a complex that dissolved slowly after injection and prolonged the action of the hormone. Their 1936 report, 'Protamine insulinate', described the new preparation 2.

This was a different kind of innovation from the early work of purification and scale. It was formulation: changing not the molecule but how it was delivered into the body, and thereby its duration. The idea that a peptide's time profile could be engineered by how it was packaged was one that the entire insulin field, and later the wider peptide field, would develop for the next ninety years.

It is worth noting what the protamine work did to the competition. Once one house could offer a preparation that lasted longer, the other could not sell on price alone. The question for physicians and patients became which house offered the better time profile, and the answer changed from decade to decade. Each firm's advance became the other's target, and the history of insulin formulation in the middle of the twentieth century is largely a history of this exchange.

The Lente insulins and the long duel

Novo answered with chemistry of its own. Building on observations that zinc could affect how insulin behaves in solution, a group at Novo developed insulin-zinc suspensions in which the hormone formed crystalline or amorphous particles that dissolved at different rates. A paper in Science in 1952, 'Crystalline and amorphous insulin-zinc compounds with prolonged action', described the work, and the products that followed became known as the Lente series 3.

The effect of the competition was to push two firms of modest size into leading roles in insulin technology. Each had to match the other's advances, and each had the incentive to invest in better purification, better assays and better formulations. Neither could afford to relax. In a small country, with the same scientific community feeding both companies, the pressure was unusually intense.

1989: two foundations become one

The structure of the two rivals had diverged. The Novo Foundation was established in 1951 with Thorvald Pedersen as its chair, and it concentrated chiefly on the interests of the company. Novo Terapeutisk Laboratorium merged with its sister firm Novo Industri in 1973, and in 1974 Novo Industri A/S was listed on the Copenhagen Stock Exchange, with the Foundation keeping a controlling interest. Nordisk, meanwhile, had reorganised into a commercial arm, a research laboratory later named for Hagedorn, and the Steno Memorial Hospital 1.

By the mid-1980s both firms faced the same markets and the same researchers, and early merger overtures went nowhere. The change came in January 1989, when the boards of the Novo Foundation and Nordisk Insulinlaboratorium announced that they would merge the two foundations into the Novo Nordisk Foundation. The two operating companies followed. Sixty-five years after a dismissal in Copenhagen, the brothers' foundation and Hagedorn's were one 1.

What the foundation structure means now

The Foundation became independent, with its own management, around three years after the merger. At the turn of the millennium, in 1999 and 2000, the group split into Novo Nordisk A/S for health care and Novozymes A/S for enzymes, and the Foundation created Novo Holdings A/S to manage its interests 1. The pattern that had begun in 1923, a company owned by a foundation whose purpose was research and humanitarian work, was preserved through all of it.

That ownership model is the background assumption of recent accounts of the Danish economy and of the company's central role in it. It is easy to take for granted in a story about a modern company's market value. The history shows that it was not a recent invention. It was set up in a Copenhagen laboratory in 1923 and survived a feud, a stock-market listing and a merger. Where the economics article begins, with a drug class and a national balance sheet, this one stops.