NNIT Shows A Path to Growth in Pharma
We rarely talked about Denmark-based NNIT. The company is the former IT captive of Danish pharmaceutical firm Novo Nordisk. Thus, the name NNIT, which stands for Novo Nordisk IT. The company in on a reinvention: it suffers from the end of several contracts from its former parent. And in parallel, NNIT is aiming to become more specialized in pharma IT. We think NNIT shows a path to growth in pharma, staying on the IT side of the core functions of pharma.
NNIT’s Traditional IT Services Business Is Under Pressure
NNIT has a headcount of 3,000 and 2019 revenues of DKK 3.1bn (~USD 485m). The company is pursuing two goals in its multi-year battle to resume growth. One is growing in its domestic market, addressing clients across the public and private sectors. The company offers a traditional set of IT services, ranging from IT infrastructure to application services. NNIT aims to differentiate its portfolio in the country, notably through Microsoft Dynamics 365 (whose origins have Danish foundations). This side of the business has suffered from the pandemic and also from competitive pressure. NNIT lost an outsourcing contract from jewelry retailer Pandora, for instance.
NNIT Is Specializing its Pharma Capabilities
More relevant to the world of ER&D services is the work that NNIT is doing in the life science sector. The company is expanding its client base in Denmark and internationally, targeting Europe, the US, and China. NNIT’s expansion efforts in the life science industry are paying off, enjoying 16% and 22% revenue growth in, respectively, its Danish and international operations. The company is shifting its portfolio to specialized services. The company is pushing domain expertise to pharmaceutical firms. NNIT just announced the acquisition of a US firm Excellis, in this space. Excellis is a supply chain consulting and systems integration firm servicing pharma. Another acquisition was Halfmann Goetsch in the key Swiss market for life science. Halfmann Goetsch brought specialized skills such as risk management, and quality management, along with MES.
Finally, the company is pushing its clinical trials and CRM capabilities, mostly through Veeva Systems. The company has a small practice (~100 consultants). The practice was built on the acquisition of Valiance Partners, a US data migration specialist, complemented by NNIT’s own Veeva capabilities. This summer, NNIT won the Premiere Services Partner for Veeva Development Cloud.
The Next Step is Data and AI
We think the next step for NNIT will be around data. Pharmaceutical firms have a wealth of data in both production systems or clinical trials. We are seeing Capgemini and Altran investing in such offerings, combining IT analytics skills with domain knowledge. Hopefully, NNIT will also follow this path to growth.
NNIT: Recent Life Science Acquisitions
|Excellis Heath Solutions|
New Hope, PA, US
|Revenues: 2020 DKK 110m/USD 17m (2021: +15-20% growth) and an operating margin of 17%|
|A supply chain consulting and systems integration specialist firm servicing the US life science sector. Excelli is a systems integration partner of TraceLink, a pharma supply chain ISV.|
Price: USD 42m
|Halfmann Goetsch Partner|
|Revenues: FY18 revenues of CHF 9m (USD 10m) and an operating margin of 13.7%|
|Provides IT compliance and quality management services to pharma firms. Also has expertise in risk management, computer system validation, MES, GDPR, data integrity, track & trace, and audit readiness|
Price: CHF 12m
Baskin Ridge NJ, US
|FY17 revenues: USD 10m (FY18: +35%) and an operating margin of 20%|
|Specialized in data migration. Is a Veeva partner for the Vault product.|
Price: USD 36m