Novo Resources Annual Report 2004

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FY2004 Annual Report · Novo Resources

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A N N U A L R E P O R T 2 0 0 4 FINANCIAL, SOCIAL AND ENVIRONMENTAL PERFORMANCE

REPORT

Getting on with
my life
Advances in insulin therapy
make the difference

Time to act
Diabetes is a time bomb
in the developing world
the de

velop
Movers and
shakers
Embracing the globe

Driving force
Innovation and balance
drive business success

a n d n o n - f i n a n c i a l
p e r f o r m a n c e d a t a p a g e s 4 1 – 1 0 5
I n c l u d i n g f i n a n c i a l

A N N U A L R E P O R T 2 0 0 4

REPORT

Defeating diabetes

02 CAN DIABETES REALLY BE DEFEATED?

Defeating diabetes demands social leadership and scientific
breakthroughs. It all comes down to prevention.

12 GETTING ON WITH MY LIFE

Diabetes is as complex and variable as people’s individual
personalities and lifestyles, which is why there is no one-
size-fits-all insulin therapy.

Innovation
20 WHEN TIME IS RUNNING OUT

NovoSeven® may save lives and prevent severe disabil-
ities in many life-threatening situations.

26 RESEARCH AND DEVELOPMENT PIPELINE

Competitive business results

10 DRIVING FORCE

Novo Nordisk answers questions on its short- and long-term
business strategy.

38 PERFORMANCE HIGHLIGHTS

41 FINANCIAL & NON-FINANCIAL PERFORMANCE DATA
The management report, Triple Bottom Line performance in-
dicators, financial, environmental and social highlights, review
of corporate governance and risk management, financial ac-
counts and notes, and non-financial accounting policies.

108 SHAREHOLDER INFORMATION

Challenging workplace

32 GLOBAL EXPANSION

With a worldwide sales organisation and customers in every
corner of the globe, Novo Nordisk is working towards be-
coming more international.

34 LEADING WITH PASSION

A strategy for developing talent and diversity is key for Novo
Nordisk’s future growth.

Values in action
18 AN INDUSTRY UNDER FIRE

The pharmaceutical industry is being challenged on every-
thing from access to medicine, drug pricing and marketing
to the conduct of clinical trials.

28 TIME TO ACT

For the developing world, diabetes is a future time bomb,
with two-thirds of future diabetes cases expected to occur in
this part of the world.

36 PREPARING FOR A LOW-CARBON FUTURE

Climate change is one of the serious environmental chal-
lenges facing humankind. If unaddressed, it can be a grow-
ing and costly business risk.

Front cover: Andrea Monjarás Taméz from Mexico knows that by taking care of
herself, she can live her life with all it has to offer – including skateboarding!
Andrea has type 1 diabetes. See page 14 for more information.

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Segments: sales
DKK billion

00 01 02 03 04

24%

growth in operating profit
in 2004.

operating profit margin
in 2004.

29,031

million DKK sales in 2004.

20.6%

85.3%

return on invested capital
in 2004.

cash to earnings ratio
in 2004.

Global challenges – global opportunities

D efeating diabetes is our passion and our business.

We have built our company on that aspiration,
and this is what defines our commitment as a re-
sponsible business. The diabetes epidemic travels
fast across the globe, and so we must be there at
its heels when it strikes – or even better: before it does. We will con-
tinue to develop better treatment options and to drive research into
what matters most: to find the cure. We will also be rallying for the
prevention of diabetes, with a special focus on children and youth –
our future.

Novo Nordisk is an increasingly active player in the global compe-
tition for resources, people, market shares and voice. In 2004 we
significantly expanded our sales organisation in key growth markets.
We have grown our business, especially in the US and in developing
countries. In Brazil, China and the US we have made large invest-
ments in new production facilities, building a global sourcing net-
work at competitive costs. And today, more than 40% of Novo
Nordisk’s people are employed outside Denmark.

In diabetes, Novo Nordisk has the broadest product portfolio in
the industry, and with the approval and launch of Levemir® in Europe,
we are the first company with a full range of insulin analogues. In
haemostasis management, we achieved proof of concept in stop-
ping serious bleeds in trauma and intracerebral
haemorrhage with NovoSeven®. And we believe
that our pipeline will prove that we can play a
key role in the discovery and development of
new biopharmaceuticals for the treatment of
other serious illnesses such as cancer and in-
flammatory diseases.

As a result of the growing demand for
better diabetes therapy, our competitive
portfolio of patent-protected new ana-
logues, and further penetration of the
usage of NovoSeven® both within haemo-
philia and for investigational use, we are
realising strong growth in our sales.

But no road is smooth. Competition is

tougher than ever, and healthcare reforms
across the globe and in particular in Europe
are impacting profit margins. In 2004 we also
saw yet another year with adverse currency
developments for European-based companies
which called for continued cost cautiousness.
In spite of this we are pleased to see very sat-
isfactory financial results for 2004. For this,
we thank the people of Novo Nordisk for
their commitment and efforts, as well as our

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partners and collaborators throughout the world. Also in 2004 we
saw an appreciation of Novo Nordisk’s share price and we are pleased
to see that our shareholders were rewarded for their support.

Novo Nordisk is well positioned to meet the challenges of the
future. We have built leadership positions in areas of huge unmet
medical needs. We are expanding our research network internation-
ally while building a global sourcing organisation. There will be chal-
lenges related to the transformation of jobs in developed countries
to jobs with increased knowledge content, while new jobs are created
in developing economies. We are rolling out a portfolio of new and
patent-protected products and are not like the rest of the pharma-
ceutical industry, which is exposed to patent expirations over the next
few years. We have a strong track record in the area of biopharma-
ceuticals, an area which we believe will represent significant growth
opportunities in the future. Therefore we see globalisation as an
opportunity.

In a highly competitive business environment there is a particular
challenge in taking a long-term, holistic perspective. Novo Nordisk
takes a multi-pronged approach to providing better access to health
through capacity building, a preferential pricing policy for the poor-
est nations and funding through the World Diabetes Foundation,
which is now reaching out to many millions of people with diabetes.
In terms of sustainability, Novo Nordisk demonstrates its
determination to play a leading role by setting a target
for an absolute reduction of CO2 emissions over the
next decade. When people can overcome the chal-
lenges of diabetes, we must as a company tack-
le the global challenges of social and sustain-

able stewardship.

The Novo Nordisk Annual Report 2004
provides a balanced presentation of the
company’s financial, social and environ-
mental performance – this year for the
first time in one inclusive report.

We hope you will enjoy reading it. E

LARS REBIEN SØRENSEN (L)
PRESIDENT AND CEO

MADS ØVLISEN (R)
CHAIRMAN OF THE BOARD OF DIRECTORS

Novo Nordisk Annual Report 2004

D I A B E T E S P R E V E N T I O N

58%

of diabetes cases worldwide are
linked to being overweight; in some
countries, it is as high as 90%.

400,000

people died in the US in 2000 from
obesity-related causes, making it the
second-leading cause of death.

Can diabetes
be defeated?

Defeating diabetes, one of the four chronic dis-
eases which account for 50% of global mortality,
demands social leadership as much as scientific
breakthroughs. It all comes down to prevention,
says Oxford University, Novo Nordisk and their
partners in a unique global alliance.

2
2

Novo Nordisk Annual Report 2004

194

50%

billion people worldwide are over-
weight or obese while 800 million
are hungry and underweight.

million people were estimated to
have diabetes in 2003; about two-
thirds live in developing countries.

of new cases of diabetes in children
in the US and Britain are type 2,
compared with just 4% in 1990.

90%

of children in China
with diabetes have
type 2 diabetes.

million deaths worldwide
were caused by chronic
diseases in 2002.

really

sugar and

T he bicycle paths in Shanghai are being

paved over for new highways. From New
York to Munich to São Paulo, people eat
salt.
fat,
food high
Conveniences like modern appliances, cars,
computers and television encourage people
to move less. There are too few parks and

playgrounds as much of the world gets around by car.

The traditional Western lifestyle, to which many in the developing
world aspire, puts human health at risk. The chronic diseases asso-
ciated with an unhealthy lifestyle, like heart disease and diabetes,
are striking not just the elderly but also the working-age population in
societies around the world. With growing rates of obesity, children are
developing type 2 diabetes – a disease formerly seen only in adults.

Chronic diseases are now the largest cause of death in the world.
But the developing world is fighting on two fronts: fighting infectious
diseases while also dealing with explosive rates of chronic disease.

Something has to change. And it means every sector of society
has to get involved. In 2003, Novo Nordisk, together with Oxford
University, founded Oxford Vision 2020. Its goal is to call attention
to the fact that three risk factors (tobacco, diet and lack of physical
exercise) cause four chronic diseases (cardiovascular disease, dia-
betes, chronic lung disease, and some types of cancer) which lead to
50% of deaths globally. It is dedicated to the cause of preventing
the pandemic growth of chronic diseases, especially in low- and
middle-income countries and the poorer segments of society in the
developed world. The intention is not simply to prevent or delay
illness or death but to create momentum for a healthier lifestyle and
a better quality of life. For more information, visit novonordisk.com/
annual-report-2004

In 2004, the more than 50 founding members met for the second
time in Oxford and agreed on a plan of action to start combating
these risk factors. The members include government and public health
agencies, universities, corporations such as Novo Nordisk, Johnson
& Johnson, Nestlé and Unilever, and organisations like the World Bank,
the World Health Organization and the World Heart Federation.

The members have pledged to develop further evidence for the
movement’s rallying call and will launch community-based demon-
stration projects to show that prevention works. With advocacy and
communication they aim to move chronic disease higher up the pol-
itical agenda.

Drugs alone not the answer

It is a challenging task, given that obesity is a worldwide epidemic
and that we live in an environment not always designed to encour-
age fitness and exercise. But turning away from the challenge is sim-
ply not an option, says John Bell, regius professor of Medicine at
Oxford University and one of the leaders of Oxford Vision 2020.

“Social leadership will be just as important as science in defeating
a disease like diabetes,” says Professor Bell. “Diabetes cannot be

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›

Novo Nordisk Annual Report 2004

D I A B E T E S P R E V E N T I O N

“When I ask people with diabetes ‘What is it you really expect from us?’, they don’t say
‘I want your latest insulin analogue in a device that can speak to my telephone.’ They
want to get rid of their disease and they want to prevent their relatives and friends
from getting the disease. So prevention for us is part of good diabetes care.”

Lars Rebien Sørensen, president and chief executive officer, Novo Nordisk

›

tackled by drugs alone. The scale of the problem is too big and most
people with the disease live in countries where they can’t afford the
enormous medical burden of treating this disease with drugs.”

That is a view echoed by Novo Nordisk, a world leader in diabetes
care with the vision of defeating diabetes. That might seem an un-
likely goal for a company whose success is based on treating dia-
betes. But according to Lars Rebien Sørensen, president and CEO of
Novo Nordisk, the vision is consistent with the company’s promise to
be there for its customers – people with diabetes.

“When I ask people with diabetes ‘What is it you really expect
from us?’, they don’t say ‘I want your latest insulin analogue in a de-
vice that can speak to my telephone.’ They want to get rid of their
disease and they want to prevent their relatives and friends from
getting the disease. So prevention for us is part of good diabetes
care,” says Mr Rebien Sørensen.

“We take our leadership in diabetes care seriously, and care means
more than selling products. I would be dishonest with my customers
if I only focused on the part of our interaction that made money,
rather than trying to meet their ultimate need – which is trying to de-
feat diabetes,” he adds.

Working in partnership

“While Novo Nordisk has not yet been able to identify a business
model based around prevention, given that its products and services
enter the picture only after people have developed diabetes, there
are other more indirect benefits from its involvement in efforts like
Oxford Vision 2020,” says Mr Rebien Sørensen.

“As a knowledge-based company, we know that type 2 diabetes
is caused largely by factors which can be prevented. If society is
moving in the direction of prevention, it makes sense for us to be in-
volved, not only because we have knowledge about how to poten-
tially postpone or prevent the disease, but also because we need to
be alert to changes in society that could affect our long-term activ-
ities,” he says. “It is about turning what could be considered a risk
into an opportunity.”

The company has also been working with scenarios to examine
key drivers of future change within the global economy, nutrition
and culture as well as healthcare delivery, diabetes care, corporate
social responsibility and the market. Such exercises inform the com-
pany’s thinking and future strategy, so that it is not taken by surprise
by developments in society. Oxford Vision 2020 is another way for
the company to keep its ear close to the ground.

“I believe through our involvement we earn respect as a partner
and collaborator that can work openly with other sectors of society.
I also believe it makes us more attractive as an employer. Young peo-
ple want to work for companies that dare to take a stand and fight
for it,” he adds.

With its 80-year history in treating diabetes, Novo Nordisk has
long collaborated with other stakeholders to improve diagnosis and
treatment as well as conduct some of the most advanced research
into a cure (see page 6). Spearheading a movement like Oxford
Vision 2020 became a natural outcome of a stakeholder approach
built on dialogue and alliances.

That is an argument that makes sense to Professor Bell. “As a

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Novo Nordisk Annual Report 2004

healthcare company, you have a commitment to improve health-
care, regardless of where the incentive comes from. And if a solu-
tion involves changing the environment rather than producing a
drug, a healthcare company should endorse that because it makes
people healthier and that’s why they’re in this business.”

Providing the right incentives

Both industry and government have incentives to take up preven-
tion as a business model, says Professor Bell. With rising healthcare
costs attributed to treating chronic diseases like diabetes and its
complications, governments have an economic incentive to focus
on prevention, as well as an obligation to improve people’s quality
of life, he says.

“Of course, in the end it is up to individuals to make choices but,
the question is, how can government, industry and other partners in
society help to make the healthy choices the easy choices?” asks
Professor Bell.

“Government can offer economic incentives for business and in-
dividuals to make healthier choices. In many countries, the un-
healthiest food choices are also the cheapest and most widely avail-
able, whereas fresh fruits and vegetables are often more expensive.
Cities and towns can be planned in a way that allows for more green
spaces and more bike paths,” says Professor Bell.

Getting kids to listen

That is a message that needs to be driven home to the generation
which will most benefit from a successful prevention movement
today: children and youth.

“If you really want to make an impact on society’s health, you
need to focus your attention on the future generation. You have to
make the investment in good health as a child and teenager. If your
health is already deteriorating at age 50, it is very hard to turn it
around. People will give up their wealth and their fortune
once they’ve had a heart attack if only they were able to re-
store a little bit of their health,” says Mr Rebien Sørensen.

It is a warning that came across loud and clear to the group
of young people who attended the Oxford Vision 2020
Summit in Oxford in September 2004. Members of
Kikass, a youth charity group based in the UK, told the
summit participants that kids need a movement like
Oxford Vision 2020 – but it has to speak in their language.
“Don’t tell us that 400 million people will die from diabetes
in 2020. Tell us that one in 10 of our friends will die an early
death from this terrible disease,” says Sarah Jarman, a stu-
dent at the Surrey Institute of Art and Design. “We’re a gen-
eration that’s willing to take a responsible approach to our
lifestyle choices but there has to be a reputable and trust-
worthy source of information,” adds Mark Harris, a student
at Oxford University.

So, can diabetes really be defeated? “It is entirely possi-
ble,” says Mr Rebien Sørensen, “but it won’t be through sci-
ence alone. I don’t think we can solve our societal problems
with a pill. It’s going to take more than that. Getting the
word out about these risk factors for type 2 diabetes has to
start with young people. That is how we will really make
progress towards defeating diabetes over the next

20 years.” E

An employee receives encouragement from a fitness instructor
at Novo Nordisk’s leisure centre in Bagsværd, Denmark.

Putting prevention
into practice

Awareness is the key to prevention. Novo Nordisk has long
had a business approach that focuses not only on selling its
products and devices, but also on educating people about
diabetes. Education efforts, in both the developed and de-
veloping world, are aimed at healthcare professionals, peo-
ple with diabetes and the general public. Examples include:
A In India, diabetes awareness exhibitions sponsored by

Novo Nordisk attracted 318,000 people in 2004.

A In China, Novo Nordisk and the Chinese Ministry of Health
have launched a project to bring extensive diabetes edu-
cation throughout China.

A Novo Nordisk also has programmes in sub-Saharan Africa
to educate doctors and nurses as well as people with dia-
betes (see page 28).

A The landmark study about the psychosocial aspects of dia-
betes, called DAWN, sponsored by Novo Nordisk (see
page 14), has prompted a series of educational activities
around the world in partnership with other organisations.

Knowing what it does about the risk factors for diabetes,
Novo Nordisk has also turned its attention to its own em-
ployees with a prevention programme aimed at improving
employees’ health, called NovoSund. It was launched in
Denmark in 2004, where 59% of the company’s employees
are based, but will go global. The programme offers com-
pany-sponsored stop-smoking courses and campaigns to
promote more exercise and better nutrition, such as health-
ier canteen food, company-sponsored sports activities or
ways to reduce stress. In a pilot programme at one of the
company’s facilities in Denmark, employees can test their risk
factors for diabetes and other chronic diseases, and consult
with a healthcare provider on how to make healthy changes
in their lives.

Novo Nordisk is also conducting a baseline study of the
health status of its employees in Denmark. The status will be
monitored over a period of years and the results made avail-
able to those who may be interested in efforts to improve
health in the workplace.

By creating a culture and working environment supportive
of healthy lifestyles, the idea is to put prevention into
practice.

Novo Nordisk Annual Report 2004

D I A B E T E S P R E V E N T I O N

Scientists around the world are working hard to defeat
diabetes, but a cure has proven elusive. Still, there
are encouraging signs of progress. Meanwhile,
advanced treatment makes it easier for
people to cope with diabetes today.

The search
for a cure
D avid Matthews is a relentless optimist. He concedes

that after more than 30 years of research, a cure for
diabetes is still not a reality. But he also points out
that the scientific community is closer than ever to
its goal – or at least some approximation of a cure
for diabetes by 2015. David Matthews should know. As professor at
Oxford University and the head of the Oxford Centre for Diabetes,
Endocrinology and Metabolism (OCDEM), he is at the centre of the
strides being made in the field of diabetes in the last decade.

“I believe we can look at diabetes the same way we look at can-
cer. In other words, as a disease that breaks out but can be sent into
remission, a stage without symptoms. If you consider type 2 dia-
betes like that, how would you define a cure? I would say a treat-

Different sources of stem cells

ment that prevents the insulin-producing beta cells from dying and
keeps blood sugar under control. The patient might have to be
treated several times in order to be symptom-free. But I believe it is
possible to develop that kind of treatment within the next 15 years.
The situation is different for type 1 diabetes. Here the body destroys
the beta cells through an immune reaction, and a cure thus involves
producing new, well-functioning beta cells – from stem cells, for ex-
ample – as well as developing drugs to stop attacks on the immune
system. Early results from various laboratories indicate that both are
possible in time,” says Professor Matthews.

OCDEM is a unique place in which to realise those possibilities. It
represents a partnership between the UK’s National Health Service,
Oxford University and Novo Nordisk. It opened in 2003 and is the

Fertilised egg (zygote)

Embryonic stem cells (blastocyst)

Embryo

‘Adult’

Stem cell research has raised hopes for a future treatment for people with type1
diabetes, using cell transplantation. Novo Nordisk’s research activities in this
area have to date concentrated on mouse embryonic stem cells.

The company actively participated in the scientific, public and political processes
leading up to the revised Danish laws Komitéloven and Patientretsstillings-
loven and the EU Cells and Tissue Directive. Novo Nordisk’s Bioethics Policy can
be found at novonordisk.com/annual-report-2004

Novo Nordisk Annual Report 2004

first diabetes centre in Europe to combine basic and clinical research
with patient care and medical training, all under one roof. Novo
Nordisk’s investment amounts to 4 million British pounds.

OCDEM is heading up a project within the European
Union to look for biomarkers for diabetes: molecules in
the body that can reveal how far developed the disease is
for the individual patient and provide guidelines for
optimal treatment.

Promise of stem cells

For type 1 diabetes, the search for a cure revolves around
being able to transplant islet cells from the pancreas into a
person with diabetes. Islet cells contain the beta cells that
regulate the blood sugar level. Currently, this type of trans-
plantation can only be done on a limited scale and with limited
success, through donor pancreases. People who undergo transplan-
tation also need to take immunosuppressant drugs, which can have
serious side effects. This is because type 1 dia-
betes is a chronic autoimmune disease, in which
the immune system attacks and destroys the
beta cells.

for the millions of people living with diabetes,” says Dr Krogsgaard
Thomsen.

That is why Novo Nordisk has developed the broadest and most
comprehensive diabetes portfolio on the market. “There is no one-
size-fits-all diabetes management,” says Dr Krogsgaard Thomsen.

Today’s insulin therapy strives to mimic the body’s exquisitely pre-
cise regulation of blood glucose by insulin-producing pancreatic
beta cells. When these cells are missing, as they are in type 1 dia-
betes, or depleted, as in type 2 diabetes, insulin analogues can pro-
vide the next-best alternative to Mother Nature.

These are designer insulins, which via chemical or protein engin-
eering take on a different action profile and hence mimic insulin
physiologically in the body.

Better control, healthier lives

There has been a great evolution in the development of insulin ana-
logues in the past decade. The research into new and better insulin
therapy was accelerated by the findings of two
landmark studies, the Diabetes Control and
Complications Trial (DCCT), which studied type
1 diabetes, and the UK Prospective Diabetes
Study (UKPDS), which examined type 2 dia-
betes.

However, advancements in stem cell research
hold the promise of creating a safe, stable and
widely available source of insulin-secreting cells
for transplantation. Stem cells are ‘blank’ cells
with the ability to grow into any other type of
cell, such as islets.

Novo Nordisk is at the forefront of stem cell
research. The Hagedorn Research Institute, an
independent basic research component of
Novo Nordisk, is the only industrial partner in
both the National Institutes of Health-supported
Beta Cell Biology Consortium and the Juvenile
Diabetes Research Foundation Centre for Beta
Cell Therapy in Europe. The company is current-
ly investing 17 million Danish kroner in stem cell
research at Hagedorn.

Both studies found that while intensive con-
trol of diabetes helped reduce complications by
as much as 50%, it heightened the risk of hypo-
glycaemia, which is serious and even life-
threatening, and caused weight gain, which for
people with type 2 diabetes is already a con-
tributing factor to their disease.

In 2004, Novo Nordisk added Levemir® to its
portfolio, the only insulin product in the world,
says Dr Krogsgaard Thomsen, that doesn’t make
you put on weight, and offers predictability in
regulating blood sugar. Also the GLP-1 analogue
under development, liraglutide, has proved in
clinical trials so far to produce less or no hypo-
glycaemia, since it is glucose-dependent, and
to help people manage their weight.

“In a decade we could
have a situation in
which diabetes is a dis-
ease, like cancer, that
goes into remission,
perhaps for years.”

Professor David Matthews, Oxford University

Meanwhile, scientists are pursuing many
other clues, such as the use of genetics to point
the way to new biological molecules that serve
as targets for drugs; biomarkers, to identify the
biological signs of impending diabetes or its
complications; or an artificial pancreas, a medical device that would
register blood glucose levels and in response deliver the right
amount of insulin.

Facing today’s challenges

“When and if a cure becomes reality, Novo Nordisk will have a strong
presence. But meanwhile the estimated 194 million people with dia-
betes need the best possible treatment today to control their disease
and avoid serious complications, such as blindness, nerve damage,
kidney failure, heart disease and stroke, and treatment-related hypo-
glycaemia (low blood sugar),” says Mads Krogsgaard Thomsen,
chief science officer of Novo Nordisk.

“While it is our vision to defeat diabetes, in reality we don’t know
if we will ever get there. But it is important to do everything we can

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While numerous studies have shown that
people with type 2 diabetes often benefit in
terms of better control and reduced complica-
tions by starting insulin therapy earlier, resistance to insulin therapy
can be strong, due to worries and fears over injection, as uncovered
by the Novo Nordisk study Diabetes Attitudes, Wishes and Needs
(DAWN) (see page 14). For such people, AERx® insulin Diabetes
Management System, now undergoing clinical trials by Novo
Nordisk, could be a motivating factor to start insulin therapy, as in-
sulin could be administered by inhalation.

“We believe that leadership is responding to patients’ needs,
whether it is for a more innovative range of insulins or more
convenient devices,” says Dr Krogsgaard Thomsen. “At the same
time, if we are serious about fulfilling our vision of defeating dia-
betes, then we must be present in the future when a cure moves
closer to reality. This is why we take a holistic approach to diabetes
care. The answers aren’t simple but they are within reach.” E

Novo Nordisk Annual Report 2004

A B O U T N O V O N O R D I S K

Novo Nordisk employees in China and the US.

The Novo Nordisk way

Novo Nordisk is a biotech-based healthcare company that strives to conduct
its activities in a financially, environmentally and socially responsible way.

T his commitment to sustainable development is an-

chored in the Novo Nordisk Way of Management.
The company is a world leader in diabetes care
and has the broadest diabetes product portfolio in
the industry, including the most advanced prod-
ucts within the area of insulin delivery systems. In addition, Novo
Nordisk has leading positions within areas such as haemostasis
management, growth hormone therapy and hormone replacement
therapy. Novo Nordisk manufactures and markets pharmaceutical
products and services that make a difference to patients, the medical
profession and society.

With headquarters in Denmark, Novo Nordisk has 20,725 em-
ployees, operates in 78 countries and markets its products in 179
countries.

THE TRIPLE BOTTOM LINE – A BROAD BUSINESS PRINCIPLE

Economically viable
Corporate growth, socio- and health economics

Diabetes
leadership

Patients

Haemostasis expansion

Socially responsible
Employees, patients, communities

Environmentally sound
Environment, use of animals, bioethics

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Company history

Novo Nordisk’s strong background in diabetes
care builds on more than 80 years’ experience
in this area. It began in 1922 when August
Krogh, Danish Nobel laureate in physiology,
and his wife Marie, who had type 2 diabetes,
visited the Canadian researchers Frederick
Banting and Charles Best. Banting and Best

had begun extracting insulin from
the pancreas of cows the previous
year. The Kroghs returned home
and the following year August
Krogh set up a company in Den-
mark called Nordisk Insulinlabora-
torium (Nordic Insulin Laboratory)
with Dr H C Hagedorn and began
producing insulin for the treat-

Novo Nordisk Annual Report 2004

Vision

Novo Nordisk’s Vision sets the company’s direction for the future. It
expresses what Novo Nordisk strives for, how the company will
work, and how it is guided by its values as it endeavours to find the
right balance between compassion and competitiveness. The Vision
is part of the Novo Nordisk Way of Management. This management
approach ensures that the company, in pursuit of its strategic
objectives, links financial, environmental, social and bioethical con-
siderations for the long-term benefit of its stakeholders. For more
information, visit novonordisk.com/about_us

Novo Nordisk’s Vision:

A We will be the world’s leading diabetes care company. Our aspira-
tion is to defeat diabetes by finding better methods of diabetes
prevention, detection and treatment. We will work actively to
promote collaboration between all parties in the healthcare sys-
tem in order to achieve our common goals.

A We will offer products and services in other areas where we can
make a difference. Our research will lead to the discovery of new,
innovative products, also outside diabetes. We will develop and
market such products ourselves whenever we can do it as well as,
or better than, others.

A We will achieve competitive business results. Our focus is our
strength. We will stay independent, and form alliances whenever
they serve our business purpose and the cause we stand for.

A A job here is never just a job. We are committed to being there for
our customers whenever they need us. We will be innovative and
effective in everything we do. We will attract and retain the best
people by making our company a challenging place to work.
A Our values are expressed in all our actions. Decency is what counts.
Every day we strive to find the right balance between compassion
and competitiveness, the short and the long term, self and com-
mitment to colleagues and society, work and family life.

Ownership structure

Novo Nordisk’s ownership is split between holders of A and B shares.
A shares are held by Novo A/S, the holding company, fully owned by
the Novo Nordisk Foundation and established in 1999 to manage the
Foundation’s assets and to actively invest in life science businesses.
The Novo Nordisk Foundation is a privately owned self-governing in-
stitution. Its objectives are to provide a stable basis for the commer-
cial and research activities undertaken by the companies in the Novo
Group and to support scientific, humanitarian and social purposes.
The majority of its grants go to medical and scientific projects. E

ment of diabetes. In 1925 two
former employees, the brothers
Harald and Thorvald Pedersen,
formed a competing insulin
company, Novo Terapeutisk
Laboratorium (Novo Therapeutic
Laboratory). In 1989, the two
Danish companies joined forces
to become Novo Nordisk A/S.

Vision

Values
Accountable, ambitious, responsible,
engaged with stakeholders, open and honest, ready for change

Commitments
Financial, environmental and social responsibility

Fundamentals

Policies

Methodology

Annual reporting

Balanced Scorecard

Facilitation

The Novo Nordisk Way of
Management

The Novo Nordisk Way of Management is the framework for
how the company does business. Internally, as well as to exter-
nal stakeholders, this governance framework defines the com-
mitments and puts them into context.

The Novo Nordisk Way of Management explicitly refers to
the Triple Bottom Line (TBL) – social, environmental and finan-
cial responsibility – as the company’s underlying business prin-
ciple. In order to serve the long-term interest of the share-
holders, in March 2004 Novo Nordisk amended its Articles of
Association to specify that the company will ‘strive to con-
duct its activities in a financially, environmentally and socially
responsible way’. For more information, see page 49.

To ensure performance to the highest standards, whether
they are legal or ethical, global or company-specific, the
Novo Nordisk Way of Management has built-in follow-up
methods that seek to ensure systematic and validated docu-
mentation of performance to the company’s values-based
management system:
A The Balanced Scorecard is employed as the management
tool for embedding and cascading corporate goals through-
out the organisation. The Balanced Scorecard outlines the
key priorities for Novo Nordisk in a short-term perspective.
A The annual reporting accounts for performance against
targets, strategies, activities, risk profile and new targets.
A Facilitations, undertaken by Novo A/S, measure Novo
Nordisk’s governance performance at unit level, facilitate
organisational learning and help align projects with busi-
ness targets. The facilitators are a global team of people
with long-standing managerial experience and expertise
in the business. They evaluate how well the practices and
understanding of the Novo Nordisk Way of Management,
including the company’s commitment to the Triple Bottom
Line, are embedded in the organisation. This involves re-
view of documentation, interviews with management and
employees, sometimes also external stakeholders, and
analyses of relevant business processes.

For further information about the Novo Nordisk Way of
Management, including the full list of Fundamentals, please
visit novonordisk.com

Novo Nordisk Annual Report 2004

B U S I N E S S S T R AT E G Y

When the leadership of a company is trying to navigate in a fast-paced world
surrounded by intense global competition, it’s essential to have a strategy for
staying focused on the road ahead.

Driving force
W hile the business strategy of Novo Nordisk

is based in the here and now, it is also for-
ward-looking. By working with future
scenarios of what the business of diabetes
care may look like 20 years from now,
Novo Nordisk is making sure it is well aware of signposts along the
road that could point the way to a smart detour – or a route best not
taken. In this Q&A, Kåre Schultz, chief operating officer of Novo
Nordisk, tells us what he sees from the driver’s seat – and what may
lie ahead.

care and quality of life. With the launch of Levemir® in 2004, we can
offer more predictable day-to-day control of blood glucose levels
than conventional insulins and competing basal insulin analogues.
We predict that NovoSeven® in its new indications for trauma and
intracerebral haemorrhage (ICH) will also be a key driver of growth.
We expect to see our products penetrate even further in the US,
which has become our largest and most rapidly growing single mar-
ket in recent years. But we are also making significant inroads in big
new markets like China and Latin America, where we’ve established
a solid presence as a leader in diabetes care over the past decade.

What is driving Novo Nordisk’s growth in the short term?
Strategically important products like insulin analogues continue to
drive sales growth as people increasingly recognise the bene-
fits of intensive insulin therapy in terms of better patient

What is driving Novo Nordisk’s growth in the long term?
We believe sales of insulin analogues in key markets will continue to
boost our long-term growth. In addition, new treatment con-
cepts in our pipeline such as inhaled insulin (AERx® iDMS)

will provide new treatment options for the growing number of peo-
ple with type 2 diabetes who fail to achieve satisfactory blood glu-
cose regulation by traditional blood glucose-lowering tablets. And
there are the opportunities for long-term growth inherent in new in-
dications for NovoSeven®, including its use for people undergoing
cardiac surgery and those with traumatic brain injury.

What are your key markets now and in the future, and why?
Currently Europe is our biggest market and, with our full insulin ana-
logue portfolio, we expect to see healthy growth in this market. As
the world’s biggest pharmaceutical market, the US is a key market
for us. We started to penetrate the US insulin and growth hormone
markets a few years ago and are now significantly increasing our
market share. The US has a large and growing population of people
with diabetes, many of whom would benefit greatly from improved
blood glucose control to avoid the complications associated with
diabetes. The US is also the biggest market for the current and fu-
ture uses of NovoSeven®. Then again, we are seeing encouraging
growth in key markets in our International Operations due to the in-
creasing number of people being treated for diabetes. Right now
half of the company’s total diabetes care production is for countries
in these markets, namely China, India, Korea, Turkey, Taiwan, Brazil,
Mexico, Egypt, Thailand and Argentina. In Europe and Japan, more
moderate growth is expected, hampered by healthcare reforms that
are becoming increasingly common as governments face pressure
to contain healthcare costs. This limits our ability to negotiate prices
that cover the cost of innovation. The sales growth in the US, how-
ever, offsets more modest growth in Europe.

What is the future strategy for diabetes care and will Novo
Nordisk become a major player in oral products?
We will remain strongly focused on insulin and other protein thera-
peutics which are our core competences. Within diabetes, our strat-
egy is not simply to deliver superior products and devices but also to
provide the services and education that make us the preferred part-
ner in diabetes care. As for oral products, we want to fulfil unmet
needs rather than make incremental improvements in what is already
available. Therefore, within oral antidiabetic research, we will only
focus on projects where we have a clear edge. This contributed to
our decision in 2004 to terminate the balaglitazone oral antidiabetic
project, since the preclinical results did not suggest a sufficient com-
petitive advantage for balaglitazone, compared to similar, marketed
products within this therapeutic category.

You have four therapy areas, but you only mention two of
them as business drivers. What about growth hormone thera-
py and HRT? What is your strategy for these areas?
We’ve seen nice growth in growth hormone this year, thanks in part
to our strategy of providing superior delivery systems for the com-
pany’s liquid growth hormone Norditropin® SimpleXx®. This product
has particularly taken off in the US market, where the first dispos-
able human growth hormone pen, NordiFlex®, received US Food &
Drug Administration (FDA) approval in 2004 for long-term treat-
ment of children. The market for hormone replacement therapy
(HRT) has been contracting due to negative media. But we still be-
lieve that HRT fills an important medical need for women with ser-

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Kåre Schultz, chief operating officer of Novo Nordisk.

ious menopausal symptoms, and our product line is well suited to
treatment recommendations for lowest possible dose.

You have been investing in several new production facilities
this year, most of which are outside Denmark. Can you outline
the strategy behind these investments?
Increased activities outside Denmark give us a more competitive
cost base and a more balanced exposure to risks such as currency
fluctuations. We also gain a strong presence in key markets, such as
the US, Brazil and China – globalisation of production will be a con-
tinuing focus of our future growth strategy. Internationalisation of
our manufacturing capacity enables us to stay cost-competitive and
offers us a favourable position in key segments and markets. But
Denmark will most likely continue to be an important ‘engine room’
of growth, where we can undertake productivity improvement
measures, using facilities in Denmark as ‘labs’ for upscaling and
fine-tuning production. The learnings can then be applied around
the world.

In October, when your American affiliate reached 1 billion dol-
lar sales, the president of the affiliate stated that the success
you have enjoyed in the US is due to your Triple Bottom Line
(TBL) approach. How is that?
First you need the right products and the right strategy and organ-
isation. When you have these things, the TBL approach is important.
We have been in the business of diabetes care for more than 80
years. For Novo Nordisk, diabetes is both a business and a passion.
We want to do more to improve diabetes care in the US than simply
provide products. By offering services and education for people with
diabetes and the healthcare professionals who treat them, we try to
live up to our commitment to the Triple Bottom Line, where social
and environmental responsibility is as important as the financial re-
sults. With an estimated 17 million people with diabetes in the US,
almost 6 million of them undiagnosed, there is clearly a need for this
type of approach.

For more information, visit novonordisk.com/annual-report-2004 E Õ

Novo Nordisk Annual Report 2004

D I A B E T E S T R E AT M E N T

Getting

on with

my life

As people with diabetes know all too well, there is no one-
size-fits-all insulin therapy. Diabetes is as complex and
variable as people’s individual personalities and lifestyles,
whether you are an extreme adventurer like Will Cross or
an active mother like Beverley Munroe.

Will Cross on his NovoLog® Peaks and Poles Challenge. Mr Cross hopes to be the first person
with diabetes to reach both poles and scale the world’s highest mountains.

W hen Will Cross was diagnosed with

diabetes at age nine, his doctor dis-
couraged him from any rigorous or
demanding physical activity. But he
didn’t listen. Will Cross, a high school
principal from Pennsylvania, US, in-
tends to become the first person with diabetes to reach both of the
Earth’s poles and scale the world’s highest mountains. He’s already
walked to both the South and North Poles and climbed five of the
seven highest peaks. He’s doing it to raise money for research into
diabetes and to make people aware that diabetes doesn’t have to
stop people from getting on with their lives – in both big ways and
small.

Novo Nordisk is the sponsor of Mr Cross’ NovoLog® Peaks and
Poles Challenge. The company is providing the NovoLog® (called
NovoRapid® in the rest of the world) rapid-acting insulin that Mr
Cross will need to master his challenge, as well as covering the
costs of the adventure.

“I want to complete the NovoLog® Peaks and Poles Challenge
to show the tens of millions of people with diabetes that they
don’t have to be defined by their disease. I want to prove that
there are no diabetics, only people who happen to have dia-
betes,” says Mr Cross. “Those of us with diabetes can man-
age the disease successfully and accomplish anything.”

While tackling the punishing Antarctic environment and
climbing some of the world’s tallest mountains, Mr Cross
has the added task of giving himself insulin shots that he needs
to control his blood sugar level. For the climbs, he consumes
5,000 calories a day on a diet consisting of stews, energy bars,
chocolate, cheese and a lot of coffee to keep him focused and
able to withstand the cold and altitude. “Sometimes I have to
force myself to eat, whereas other climbers can just say, ‘Oh, I’ll
eat in the morning.” says Mr Cross. While on Mount Everest
this past summer, he drank four to six litres of water each day,
about a litre more than a climber with a normal metabolism
would need.

While he has to make some adjustments to suit his body’s
specific physiology, Mr Cross says his diabetes has never once
stopped him from seeking a physical challenge.

“I want to inspire kids. I don’t expect them to walk to the South
Pole, but I do want to motivate them to go out and play, kick a ball
and get on a soccer team,” he says. “I have lived all my life in de-
fiance of the common misperception that people with diabetes
must restrict their physical activities.”

Never able to plan ahead

Beverley Munroe of Canada, who has type 2 diabetes, says she felt
“total disbelief” when she was diagnosed with diabetes 10 years
ago, even though her grandmother had diabetes. “My grandmother
didn’t take any medication and she lived to be 92! I thought, ‘If she
survived that long, so can I!’ At the beginning I just took tablets but
my blood sugar level was still high. I couldn’t plan ahead –

I didn’t know how I would feel when I woke up in the morning. So I ›

D I A B E T E S T R E AT M E N T

›

could never arrange to go on a trip too much in advance.” That
changed when Ms Munroe began using insulin.

“I didn’t want to take insulin because I thought that would be the
beginning of the end. It was just too much – too serious. So I avoid-
ed taking it as long as I could. Looking back, I wish I hadn’t been so
stubborn because now I’m on insulin and I’ve never felt so good. I’m
raring to go. I enjoy riding my bike, swimming in my pool, garden-
ing, going out with friends, making porcelain dolls… I’m never
bored, that’s for sure,” she says.

Staying active means regularly monitoring her blood sugar levels and
controlling her diet. “Even though I feel so good,” she says, “I wish
there was a cure for diabetes, so that children didn’t have to suffer.”

When choice is limited

Novo Nordisk does not offer its full range of insulin analogues in all
parts of the world, as there is not a sufficiently profitable market in
all countries for these products. But the company does make human
insulin available in most countries of the world, and in 49 of the 50
Least Developed Countries, as defined by the United Nations, Novo
Nordisk offers preferential pricing for its human insulin at 20% of its
price in the Western world (see page 29).

As markets and economies develop, and knowledge about the
best diabetes care becomes more widespread, it is hoped that the
latest advances in insulin therapy can be made available to all who
can benefit from them. That would make getting on with life just a
little bit easier.

When fear blocks treatment

When Ray ka Msenga’s doctor told him that he was to change from
tablets to insulin therapy to treat his type 2 diabetes, he felt shocked.

As far as he knew, an early death was the only possible outcome for
people who need insulin injections to live. He felt guilt and anger,
and retreated from his closest relationships. Finally, a doctor friend
calmly explained why the doctor had recommended insulin, and Mr
ka Msenga saw that his fears were exaggerated.

Had his doctor responded to his fears in the same way, Mr ka
Msenga, a former president of the South African Red Cross Society
and a member of the International Red Cross, feels he would not
have suffered as he had.

He is not alone. According to the DAWN (Diabetes Attitudes,
Wishes and Needs) stakeholder innovation programme initiated by
Novo Nordisk in 2001, people with diabetes experience emotional
distress and poor psychological well-being, a major contributing
factor to impaired diabetes health outcomes. Healthcare profes-
sionals acknowledge a lack of resources to identify and care for the
many psychosocial problems as well as a major gap with regard to
team-based patient-centred communication.

As the largest study of its kind in diabetes ever conducted, DAWN
involved more than 5,400 people with diabetes and more than
3,800 healthcare professionals from 12 countries in collaboration
with the International Diabetes Federation (IDF) and an internation-
al expert advisory board.

The main conclusion drawn from the multitude of learnings was
that to improve health outcomes in diabetes, the total healthcare
system must focus more on the psychological and social issues at-
tached to managing the condition; in other words, address the
people behind the disease.

The ongoing DAWN programme, led by Novo Nordisk in collabora-
tion with the IDF and an expert advisory board, provides a business
case for stakeholder innovation and concerted action at national,

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Advances in insulin
therapy

Novo Nordisk has the broadest portfolio of insulin products and de-
vices on the market, including a full range of insulin analogues.
These are designed to mimic more closely the body’s own physio-
logical insulin regulation of blood glucose levels than human insulin
and offer better meal-time glucose control, less hypoglycaemia and
increased convenience for all types of people with diabetes.

Levemir®, launched in many countries in Europe in 2004, is the
latest of the insulin analogues developed by Novo Nordisk. Levemir®
is a long-acting insulin analogue that provides more consistent day-
to-day control of blood glucose levels compared to conventional in-
sulin preparations. Among the benefits for people with diabetes, it

“I know I have something called diabetes, but I have always had it! I don’t think
about it much; I just do what I have to do to take care of myself,” explains
Andrea, who has had type 1 diabetes since she was four years old. Andrea’s
story features in Young Voices, a book about the lives of 13 young people liv-
ing with diabetes. For more information on the book, visit novonordisk.com

Novo Nordisk Annual Report 2004

“I want to inspire kids. I don’t expect them to walk to the South Pole, but I do want to
motivate them to go out and play, kick a ball and get on a soccer team. I have lived all
my life in defiance of the common misperception that people with diabetes must
restrict their physical activities.” Will Cross

regional and international level to improve diabetes care by increasing
the availability of psychosocial support for people with the condi-
tion. A worldwide call to action emerged from the 2nd International
DAWN Summit in 2003 with participation from 31 countries.

The DAWN message was published in 2004 in more than 140
countries by the IDF and featured in international and national sci-
entific and lay journals to reach millions of people with diabetes,
diabetes caregivers and decision-makers. Also in 2004, the DAWN
call to action and resulting tools and strategies were used in more
than 20 countries to increase awareness of the importance of the
psychosocial aspects to optimise treatment. This included updating
national diabetes care guidelines to reflect DAWN, holding scientific

symposia on the topic and holding training programmes for health-
care professionals.

In total 33 countries sent in submissions for the 2004 DAWN
award to recognise innovative projects aimed at implementing the
DAWN call to action.

In 2005 and 2006, DAWN will include a new focus on the atti-
tudes, wishes and needs of young people and ethnic minorities with
diabetes, through new research and dialogue aimed at improving
the health and quality of life of these groups and reducing health
disparities.

For more information on DAWN, visit novonordisk.com/annual-

report-2004 E

has been demonstrated that Levemir® reduces fasting blood glucose
and the risk of hypoglycaemia, especially at night-time. In addition,
studies have shown that people using Levemir® do not experience
the undesirable weight gain often associated with conventional in-
sulin preparations.

Another

insulin analogue developed by Novo Nordisk

is
NovoRapid® (called NovoLog® in the US), which gives tighter blood
glucose control at meal-times without risk of increased hypo-
glycaemia. The shorter duration of action leads to less
hypoglycaemia at other times, including at night. The
more rapid onset of action also means that it can be
injected just before a meal, increasing convenience
and quality of life.

Increased convenience is also an advantage of

NovoMix® 30 (called NovoLog® Mix 70/30 in the
US and NovoRapid® Mix in Japan), a dual-release
insulin analogue, which means that rather than
having two injections of one rapid- and one in-
termediate-acting insulin, people get both types
of insulin in one injection.

Devices that offer convenience and discretion are also part of im-
proved control of diabetes and better quality of life. Novo Nordisk
produces a range of devices for insulin therapy, including FlexPen®,
an easy-to-use, prefilled injection pen.

Advances in insulin therapy in the Novo Nordisk pipeline include
NovoMix® 50 and 70. These are premixed formulations of the rapid-
acting insulin analogue, insulin aspart. These products are expected
to offer better glycaemic control with only three daily injec-

tions for both type 1 and type 2 diabetes.

Another substance under development is GLP-1 or li-
raglutide. GLP-1 is a hormone produced in the intes-
tine. It stimulates the pancreas to secrete insulin,
and also tells the brain to reduce appetite. Novo
Nordisk’s researchers have turned the natural
hormone into a drug by stabilising it so that,
instead of breaking down within a couple of
minutes, its effect is sustained for 24 hours,
so that it can be taken once daily for the
treatment of type 2 diabetes. For more in-
formation, visit novonordisk.com/diabetes

Novo Nordisk Annual Report 2004

We’re one step ahead in diabetes care

Novo Nordisk has the first, and only, full insulin analogue

portfolio, offering a range of benefits. Analogues mimic the

body’s physiological insulin regulation of blood glucose levels,

providing better mealtime glucose control, less hypoglycaemia

and increased convenience for all types of people with diabetes.

NovoMix® is a dual-release insulin analogue with both rapid-

and intermediate-acting insulin in one administration.

NovoRapid® is a rapid-acting insulin analogue. Levemir® is our

new long-acting insulin analogue. For more information visit

novonordisk.com/diabetes

C O R P O R AT E G O V E R N A N C E

Governance rules!

Stakeholders state it simply: to earn our trust, be trustworthy. To earn our
confidence, show strategic direction and management oversight. And to help
us make decisions, disclose business risks and opportunities. Taking up this
invitation, Novo Nordisk steps up its governance practices.

G ood governance is the system by which companies

are directed and controlled,” said Sir Adrian Cad-
bury in the report on financial aspects of corporate
governance, commissioned by the UK government
in 1992. Since then, the intense debate has brought
new dimensions to the table: the Danish Nørby Committee calls for
accountability towards stakeholders. The US Sarbanes–Oxley Act im-
poses stricter requirements to financial reporting, internal control and
auditing. And the OECD guidelines, updated in 2004, recognising
the links between the mainstream financial agenda and broader
corporate responsibility, demand insights into the role of stakehold-
ers and shareholder rights.

These initiatives evolve around essential principles: transparency,
accountability, openness, integrity and responsibility put into prac-
tice by a combination of statutory requirements and self-regulation.

Committee, established in November 2004. It is chaired by the chief
financial officer, with the mandate to consider the materiality of in-
formation, determine disclosure obligations and oversee the publi-
cation of stock exchange announcements.

A key role for stakeholders

The company values open and transparent communication.
Without sufficient insight, stakeholders have little chance of assess-
ing the company’s performance. That is why the company pro-
actively engages in dialogues with rating agencies, analysts, investors
and others with an interest in Novo Nordisk’s business. The aim is
twofold. First, to better address stakeholders’ concerns, align with
different views and focus on the issues that matter to the company’s
ability to pursue its vision. And second, to candidly convey the com-
pany’s positions and rationale for its decisions. E

Beyond compliance

Novo Nordisk is generally in compliance with the codes of good cor-
porate governance designated by the stock exchanges in Copenha-
gen (Nørby Committee recommendations on Corporate Governance),
New York (NYSE Corporate Governance Standards) and London
(Combined Code), where Novo Nordisk is listed. A full overview can
be found at novonordisk.com/about_us

Based on a review of business practices against current and up-
coming requirements, the company has taken steps to further im-
prove its corporate governance. These improvements address four
key issues: putting principles into action, shareholder rights, board
and management accountability, and risk management.

Audit and Disclosure Committees

In March 2004, Novo Nordisk’s Board of Directors set up an Audit
Committee, chaired by Kurt Anker Nielsen. Its two other members
are Niels Jacobsen and Ulf J Johansson. All qualify as independent
under the US Securities and Exchange Commission Rules. This move
follows international trends and meets the requirements of the US
Sarbanes–Oxley Act. The Audit Committee assists the Board of
Directors in overseeing for example external and internal auditors,
accounting and internal controls.

Employees and other stakeholders can, via the ‘whistleblower’
system, anonymously bring to the attention of the Audit Committee
any issues or concerns they might come across pertaining to ac-
counting malpractices or irregularities.

Another step to formalise internal procedures is the Disclosure

Strengthening the stand
on corporate governance

In 2004, Novo Nordisk’s Board and Executive Management
took steps to ensure that the company maintains its position
as a trustworthy business:
A Putting principles into action

Formalised ‘whistleblower’ function established under
the remit of the Audit Committee. Also, employees can
bring to the Novo Nordisk Ombudsman any personal and
organisational issues which conflict with the company’s
values and fundamental management systems.

A Shareholder rights

Equal access to information: simultaneous translation into
English at the Annual General Meeting in March 2005.

A Board and management accountability

Audit Committee (board), Disclosure Committee (man-
agement), improved disclosure and current updates at
novonordisk.com/about_us

A Risk management

Systematic and integrated risk management approach
(see page 56).

Novo Nordisk Annual Report 2004

I N D U S T R Y N E W S

The pharmaceutical industry is being challenged on everything from access
to medicine, drug pricing and marketing, to the conduct of clinical trials. With
calls for transparency, earning society’s trust becomes a business imperative.

An industry under fire:
credibility at risk
P harmaceutical companies are in the business of de-

dilemmas and find common ground for more sustainable solutions.
It also helps the company’s monitoring of trends that can affect its
future business.

“If all the different groups involved in the healthcare sector are to
trust each other, a partnership concept is essential. We all have our
own values. If we put them all on the table, we could perhaps find
some that we share,” says Lise Kingo, executive vice president of Novo

veloping and manufacturing healthcare products
for the good of humankind. This entails a particular
social responsibility. But there is a growing percep-
tion that the industry is failing to help solve real
health challenges and instead is too focused on its own profitability.
Other issues on the agenda are the degree to which it funds public
research and engages in the post-graduate
education of healthcare providers, the full and
timely disclosure of clinical trial results, per-
ceived overzealous marketing and unhealthy
political influence. The public, government
authorities and others are demanding more
transparency.

Nordisk for people, reputation and relations.

For more information on Novo Nordisk’s
stakeholder engagement, see novonordisk.com/
annual-report-2004

Investors look for leadership

How well a company responds to non-financial
risks is sparking interest among some large in-
vestors who are beginning to evaluate com-
panies based on their strategies to address so-
cial, environmental and governance risks.

“At a time of intense
scrutiny of the indus-
try, investors are look-
ing for companies that
stand out because
they perform well in
social, environmental
and ethical areas.”

Stewart Adkins
Senior analyst at Lehman Brothers

“Public authorities and NGOs have sharp-
ened their tone, and we must take them ser-
iously,” says President and CEO of Novo
Nordisk, Lars Rebien Sørensen. “It is important
to be open and honest about our stand and
our actions. Trust has to be earned.”

The Novo Nordisk way

As one response to the increased focus on eth-
ical business conduct, the Board of Directors
has endorsed that a Novo Nordisk policy on
business ethics be added to the existing set of policies and that op-
erational procedures are conveyed to employees. Furthermore, in
2005 the current policies in the Novo Nordisk Way of Management
will be reviewed to ensure that business ethics are sufficiently ad-
dressed in each policy.

“At a time of intense scrutiny of the industry,
investors are looking for companies that stand
out because they perform well in social, envir-
onmental and ethical areas,” says Stewart
Adkins, senior analyst for the pharmaceutical
industry at Lehman Brothers. “Investors feel
greater trust in such companies, finding that
they are less likely to be subject to litigation or have difficult relation-
ships with key stakeholders. And that makes a better long-term in-
vestment.”

Facing the critics

Novo Nordisk also participated in The UN Global Compact Leaders
Summit, where the 10th principle on fighting bribery and corruption
was endorsed. The company has committed to this principle.

In 2004, Novo Nordisk was put to the test with legal challenges of its
own. Lars Rebien Sørensen, president and CEO of Novo Nordisk, re-
sponds below to general industry criticism as well as specific issues.

Working in partnership

Novo Nordisk works with many partners to address key areas of cor-
porate responsibility. Reaching out to stakeholders helps reconcile

Critics say that the industry is not doing enough to increase
access to medicine in developing countries.
There’s no doubt that the industry was late in getting its act together

Novo Nordisk Annual Report 2004

when it comes to increasing access to medicine, but I think today
many companies are doing a lot. Our own approach is based on the
priorities of the World Health Organization for improving access to
medicine [see page 28].

reimbursement prices for three products, which led to allegedly in-
flated Medicaid payments to the pharmacies that dispensed these
products. To the best of our knowledge Novo Nordisk correctly cal-
culated the reimbursement prices for the products in question.

Over the past few years, several thousand women have filed
lawsuits against pharmaceutical manufacturers and sellers for
alleged injuries arising from their use of hormone replacement
therapy (HRT) products.
Novo Nordisk Inc., together with the majority of hormone therapy
product manufacturers, is a defendant in 16 product liability lawsuits.
Since the initiation of the lawsuits in July 2004, three cases against
Novo Nordisk Inc. have been dismissed by the courts. Novo Nordisk’s
hormone therapy products (Activella® and Vagifem®) have been sold
and marketed in the US since 2000. Until July 2003, the products
were sold and marketed exclusively in the US by Pharmacia & Upjohn
Corporation (now Pfizer). The proceedings are in their preliminary
stages and at this point we can’t provide further information. E

The industry is charged with suppressing negative clinical trial
results and not making all results publicly available.
I will not engage in a discussion about the cases which have trig-
gered the debate, because I don’t know the cases well enough. But
speaking about the issue in general, I’m strongly in favour of in-
creasing transparency when it comes to clinical trials – we cannot
live with the perception that the industry is hiding important infor-
mation from the public.

Starting in 2005 we will publish the results of all our clinical trials
of marketed compounds in a public database in accordance with
the principles laid out by the pharmaceutical manufacturers’ associ-
ations. Likewise we will publicly report the initiation of all new phase
2, 3 and 4 clinical trials at a public trial registry in accordance with
the specifications and requirements from the
International
Committee of Medical Journal Editors. In addition, we adhere to in-
ternational as well as internal ethical standards on the conduct of
clinical trials, and are committed to making the results publicly avail-
able regardless of the outcome of the trial.

The industry is accused of having doctors under its thumb by
funding most post-graduate medical education and sponsor-
ing most clinical trials.
I hate to see doctors portrayed as the pharmaceutical industry’s mar-
ionettes. It’s not the picture I get. Most doctors I know – and I meet
many in my job – are people who hold themselves to high moral
standards, who are not under anyone’s thumb and whose first
priority is to meet the needs of their patients. Having said that, I
would like to see increased public funding of research and post-
graduate medical education, so doctors have more sources of
funding to choose from. That’s in everybody’s interest.

Novo Nordisk is one of several pharmaceutical com-
panies under investigation for illegal activities relat-
ed to public tenders in Brazil in which it is alleged
that businesses conspired with Health Ministry offi-
cials and others to inflate the prices of ministry pur-
chases, including insulin.
Novo Nordisk does participate in tenders in Brazil, but an
independent investigation that we conducted through an
international law firm concluded, based on available inform-
ation, that no individuals at the Novo Nordisk affiliate had
done anything wrong. We will support our employees in their
defence in these cases.

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Novo Nordisk is one of 44 pharmaceutical companies named
in a lawsuit filed by New York City that claims the city was
overcharged on drugs used for its Medicaid programme, the
government health insurance programme for needy people.
The claim against Novo Nordisk is that we artificially inflated

Novo Nordisk Annual Report 2004

NovoSeven® may save lives and prevent
severe disabilities in many life-threatening
situations. Novo Nordisk must research
this prospect while developing
the product responsibly
and ethically.

When time is
running out

N O V O S E V E N ®

T he 60 minutes following a car crash is what emergency

crews aptly call ‘the golden hour’, when doctors have
the best chance of saving a life. But many people suf-
fering trauma injuries from a car crash literally bleed to
death before a surgeon can intervene. Stopping that
bleeding could make the critical difference to the mil-
lions of people who experience serious trauma every
year. About five million people are killed by traumatic injuries each year world-
wide, such as motor vehicle accidents, gunshots, knife wounds or falls. That
number is expected to reach 8.4 million by 2010, according to the World Health
Organization. That’s close to 10% of all deaths worldwide.

“Most trauma deaths are due to blood loss or the complications of fighting
that blood loss,” says Dr Carl J Hauser, professor of surgery at the New Jersey
Medical School, who specialises in critical care.

He was among the doctors who were excited by the news at the 6th World
Congress on Trauma, Shock, Inflammation and Sepsis in Munich, Germany, in
March 2004 that recombinant factor VIIa, marketed by Novo Nordisk to people
with haemophilia with inhibitors under the name NovoSeven®, could have a fu-
ture in the treatment of critically bleeding trauma patients.

Also promising were early clinical trial results during 2004 for the use of
NovoSeven® in intracerebral haemorrhage (ICH) – the most dangerous and least
treatable form of stroke.

NovoSeven® is currently approved for treatment of the estimated 3,400 peo-
ple with haemophilia with inhibitors in the developed world, as well as in
Europe for people with acquired haemophilia, and the rare bleeding disorders
Glanzmann’s thrombasthenia and factor VII deficiency.

Hope for stroke victims

Dr Stephan Mayer, a neurologist who heads an intensive care unit at Columbia
University Medical Center in New York City, often sees the devastating impact
of ICH – for which there is no proven treatment.

An intracerebral haemorrhage occurs when a blood vessel inside the brain rup-
tures, leaking blood directly into the brain tissue. Studies indicate that around
250,000 people in North America, Europe and Japan experience ICH each year.
“I’ve sat many times with ICH patients in the intensive care unit, unable to do
anything but watch them gradually sink into a coma. It is as if they are drown-
ing on the inside. It is terrible to watch,” says Dr Mayer, who was lead trial in-
vestigator in the phase 2 trial of NovoSeven® as a treatment for ICH.

People who survive intracerebral haemorrhages are left with more severe dis-
abilities than survivors of other forms of stroke, including loss of movement,
speech and mental capability. About 50% of people who experience an intra-
cerebral haemorrhage die within 30 days.

Dr Mayer has worked with ICH patients for 10 years; the results of the phase 2

trial, announced in June 2004, were more than he hoped for.

The ICH trial showed that use of NovoSeven® could reduce the volume of
blood leaking into the brain during intracerebral haemorrhage when adminis-
tered within four hours of onset.

Next steps

“I was thinking that maybe if we reduced bleeding a bit we could improve the
lives of patients; what we found was that we reduced bleeding and had incred-
ible reductions in poor outcomes,” Dr Mayer says.

According to Dr Mayer, with the use of NovoSeven®, mortality appeared to
be reduced by a third and the number of patients in the trial who survived with
none or limited disability tripled.

Some 400 patients in 20 countries worldwide participated in the trial, making

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Novo Nordisk Annual Report 2004

3,400

50%

10%

person, Professor Ulla Hedner,
and her team, discovered
NovoSeven® in 1981.

people with haemophilia also have
inhibitors (antibodies) to replacement
therapy in the developed world.

of people who experience
intracerebral haemorrhage
die within 30 days.

million people worldwide each year are
killed by traumatic injuries such as car
accidents, gunshots, knife wounds or falls.

of all deaths worldwide
will be caused by trau-
matic injuries by 2010.

›

The 60 minutes following a car crash is what emergency crews aptly call ‘the golden hour’, when doctors have the best chance of saving a life. But
many people suffering trauma injuries from a car crash literally bleed to death before a surgeon can intervene. Based on the results of clinical trials
for the blunt trauma indication, NovoSeven® was submitted for the treatment of blunt trauma in Europe in January 2005.

it the largest ever ICH-focused clinical trial with a biopharmaceutical
agent. Following regulatory consultations in Europe, Novo Nordisk
expects to file an application for marketing approval in Europe for
the use of NovoSeven® in connection with ICH by mid-2005.

Mads Krogsgaard Thomsen, chief science officer of Novo Nordisk,
underlines the implications for the future. “I think we’ll see much less
disability and mortality in the long term when NovoSeven® comes to
ICH patients. We now have what we think is a major breakthrough
in the management of a hitherto intractable disease.”

283 patients who were treated at trauma centres around the world.
All were in danger of bleeding to death; on a random basis, each re-
ceived either NovoSeven® or placebo plus standard therapy. In those
receiving NovoSeven®, the study found that:
A NovoSeven® reduced the need for red blood cell transfusion
A NovoSeven® has the potential to reduce complications such as
multiple organ failure and acute respiratory distress syndrome
A adverse events such as thromboembolic events showed no higher

rate of incidence than for placebo.

Saving lives from trauma

“When it comes to trauma,” says Dr Hauser, “we’re talking about the
possibility of saving thousands of lives, perhaps tens of thousands.”
Based on the results of clinical trials for the blunt trauma indica-
tion, NovoSeven® was submitted for the treatment of blunt trauma
in Europe in January 2005. “We hope approval of NovoSeven® for
the blunt trauma indication in Europe could come in 2005,” says
Dr Krogsgaard Thomsen.

It is particularly important to note that a massive transfusion can it-
self put a trauma patient at risk of infection, multiple organ failure
and hypothermia, which inhibits normal coagulation. Thus, reduc-
ing the need for transfusion reduces other risks.

A study on the use of NovoSeven® in trauma patients in the US

will start in 2005.

Weighing the ethical issues

The trial for the trauma indication was conducted on a group of

Novo Nordisk has undertaken an internal ethical review of

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Novo Nordisk Annual Report 2004

250,000

people in North America, Europe
and Japan experience intracerebral
haemorrhage each year.

years of research was undertaken
before NovoSeven® was launched
in Europe in 1996.

NovoSeven® to explore any potential issues so that they can be ad-
dressed proactively.

Ethical dilemmas exist around any pharmaceutical product, most
often relating to access and price, and NovoSeven® is no exception,
says Lars Rebien Sørensen, president and CEO of Novo Nordisk.

The key dilemma concerning NovoSeven® is how to price it in its
new indications to reach the most people who need it, while main-
taining a profitable and healthy business.

“While we don’t yet have all the answers, pricing is an issue we
take seriously and intend to address as regards these new indica-
tions,” says Mr Rebien Sørensen. The potential cost of using
NovoSeven® in Europe for the treatment of ICH is approximately
3,000–3,800 euros per patient and for trauma in the range of
7,500–19,000 euros per patient (average body weight of 70 kg) de-
pending on how fast the bleeding can be stopped (depending on its
severity). “I think Novo Nordisk has priced NovoSeven® appropriate-
ly for catastrophic or rescue use for the developed world. But that
pricing structure is not sustainable in the developing world. If there
is a price differentiation between the wealthier and poorer parts of
the world, it must be with the understanding that the developed
world will foot the research bill.”

According to Dr Mayer, the cost of NovoSeven® should be viewed
in terms of overall medical costs. Stopping or slowing life-threatening
bleeding during trauma, surgery or ICH can, for example, reduce
the need and cost of blood transfusions and medical intervention in
the hospital or trauma centre.

In addition, use of NovoSeven® has the potential to prevent future
disabilities or deaths, which are extremely costly to society, he adds.
“The use of NovoSeven® gives us the chance to avert disaster –
the subsequent deterioration that leads people to bleed and die, or
end up so physically and mentally impaired that they must spend the
rest of their lives in a nursing home,” says Dr Mayer.

According to the National Institute of Neurological and Stroke
Statistics of the National Institutes of Health in the US, the national
cost of lost productivity due to stroke (that is, lost family income)
runs into billions of dollars a year. Many persons who suffer stroke
end up in chronic care facilities such as nursing homes, which, in the
US, cost thousands of dollars a year. “So from a socio-economic
point of view, we believe the potential cost of using NovoSeven® is
appropriate,” explains Mr Rebien Sørensen.

Bleeding in surgery

In addition to trauma and ICH, there are other potential indications
for NovoSeven® currently being tested in clinical trials. Some of
those relate to bleeding that occurs during surgery, which can cause
complications during or after surgery, such as cardiac surgery, spinal
surgery and liver transplantation, as well as for upper gastrointes-
tinal bleeding in people with cirrhosis.

Those are just a few of the ways NovoSeven® could begin to serve

as the world’s first general haemostatic agent for critical bleeding.
For more information, visit novonordisk.com/therapy_areas E

Top: Scanning electron micrograph of human red blood cells. Red
blood cells have no nucleus and contain haemoglobin pigment. Their
primary function is to transport oxygen from the lungs to the rest of
the body, and carbon dioxide from the body back to the lungs for ex-
pulsion. Bottom: Scanning electron micrograph of a blood clot. Red
blood cells enmeshed in fibrin, a protein. A clot is triggered by contact
of blood with a foreign surface or damaged tissue, thereby preventing
bleeding.

Recombinant factor XIII:
stabilising blood clots

Another interesting new opportunity within haemostasis
management has emerged with new insight into protein re-
combinant factor XIII (rFXIII), which has been in-licensed
from ZymoGenetics, Inc. rFXIII has a known mechanism for
stabilising blood clots alone or in combination with other
therapy.

With its leadership within proteins, Novo Nordisk expects
initially to bring rFXIII to market for the benefit of people
with FXIII deficiency. However, various settings of critical
bleeding in other patient groups as well as combination ther-
apy with rFXIII and NovoSeven® add to the potential of rFXIII.

Novo Nordisk Annual Report 2004

reflections

Novo Nordisk cancer research
moves forward

Novo Nordisk has begun clinical testing in humans of a potential cancer
drug, interleukin-21 (IL-21). The phase 1/2 study, which is being conducted
in Australia, is part of what could become a new therapy area for the
company.

Renal cell carcinoma qualifies for this designation because,
in addition to its life-threatening nature, it affects relatively few
patients (3.21 cases per 10,000 persons in the EU); moreover,
there is at present little possibility of effective treatment.

Peter Kurtzhals, senior vice president of Discovery, explains: “We cannot
say that we have a new therapy area until we have an approved product.
But we have previously stated that our research strategy is aimed at max-
imising the value of our competences in therapeutic proteins – and if
this goes well, it will invariably result in a new therapy area.”

The drug is being tested on people with malignant melanoma

– in the Western world around 90,000 new cases of this aggres-
sive, life-threatening form of skin cancer are diagnosed per
year and around 15,000 die every year from this disease. The
clinical testing, which began in September 2004,
will be conducted on a maximum of 40 persons.

Kidney cancer

Another possible indication for IL-21 which
Novo Nordisk plans to investigate is renal cell
carcinoma, a cancer affecting the kidney. The
company has applied for and received orphan
drug status for IL-21 in the European Union.
Orphan drug status can speed up the develop-
ment process for a drug and allows its develop-
ers certain financial and marketing advantages.
However, the designation is only given by the
authorities to drugs being developed for
the treatment of serious, rare diseases
for which little financial return is expect-
ed and where few other treatment op-
tions are available.

Orphan drug status for IL-21 was approved by the EU
Commission on 2 September, based on a recommendation by
the European Medicines Agency’s Committee for Orphan

Medicinal Products.

Peter Kurtzhals notes that, as research proceeds,
other indications such as colorectal cancer and ovar-
ian cancer may be developed for the drug.

Suppressing the tumour

IL-21 is a novel protein which appears to stimulate

the immune system to kill cancer cells.

The protein was discovered by scientists at the
American biopharmaceutical company Zymo-
Genetics; Novo Nordisk has been investigating
IL-21 in collaboration with this firm. In March
2004, this collaboration became a clinical data-
sharing agreement in which the two companies
make results available to each other, says Global
Regulatory Affairs Project Manager Anita Osborne
of the IL-21 team.
According to the terms of the agreement,
ZymoGenetics has commercialisation rights for IL-21 in
North America, while commercialisation rights in the

rest of the world are licensed to Novo Nordisk.

Making growth disorder treatment easier

For people with growth disorders, administering growth hormone
by injection is part of daily life. Norditropin NordiFlex®, the world’s
first liquid growth hormone in a disposable pen, makes that way
of life easier and simpler.

The product was first introduced by Novo Nordisk in Denmark in
2003 and launched in Japan and several European countries in 2004.
In 2004, it received US Food and Drug Administration approval for
the long-term treatment of children who have growth failure due
to inadequate secretion of endogenous growth hormone and for
the long-term treatment of growth hormone deficient adults.

Since Norditropin NordiFlex® is prefilled, there is no loading of

cartridges. Other key features include:
A ease of use: no loading, no mixing (reconstitution)
A ease of training – for the healthcare professional to teach, and

the caregiver and patient to use

A easy dial-back reset
A disposable – made of environmentally friendly materials that

when burned release only water and carbon dioxide.

Norditropin NordiFlex® is based on FlexPen®, the successful pre-
filled delivery device for insulin for the treatment of diabetes.

Novo Nordisk first produced biosynthetic growth hormone in
1985. In 1999, Novo Nordisk introduced a premixed liquid growth
hormone and a new pen system to Europe and Japan. The pre-
mixed Norditropin® cartridge and NordiPen® delivery system were
introduced in the US in 2000, and the NordiPenMate® auto-inser-
tion device became available in 2001.

For more information, visit novonordisk.com/therapy_areas

Novo Nordisk Annual Report 2004

“Living with diabetes for a week at
the diabetes camp has totally
changed my perception.”

Marta Wielondek, Novo Nordisk

Children teach life lessons
in TakeAction! project

Marta Wielondek, senior product manager in the Region
Europe office of Novo Nordisk, thought she knew all about dia-
betes after three years with the company. But spending a week
at a summer camp for children with diabetes in Poland
as part of the company’s TakeAction! programme
made her realise how much she still has to
learn.

“Living with diabetes for a week at the

diabetes camp has totally changed my per-
ception,” says Ms Wielondek.

Marta Wielondek is one of 21 Novo
Nordisk employees from Region Europe
who volunteered to spend part of their
summer working hours at a summer camp
for children with diabetes. The idea was to
give employees an insight into the lives of chil-
dren with diabetes, develop relationships with local
diabetes associations to promote future collaboration,
and to offer extra help in the camps free of charge to the camp
organisers.

The TakeAction! programme, launched in 2003, encourages
employees to carry out individual or team activities in the name
of sustainable development. This includes working at diabetes
clinics in developing countries, participating in walkathons to
raise money for diabetes, and taking steps to improve the envir-
onment. For more information on the TakeAction! programme,
visit novonordisk.com/annual-report-2004

Afghan construction workers toss mud onto the roof being built at the Rabia
Balkhi Women’s Hospital in Kabul, Afghanistan.

When war takes a toll
on health

In war-ravaged countries, getting medicines and treatment to people
in desperate need of healthcare is a considerable challenge. Novo
Nordisk is doing what it can to help people with diabetes in two
such countries: Afghanistan and Iraq.

An estimated 917,000 people in Afghanistan have diabetes, most
of them undiagnosed and untreated. To begin to address this critical
gap in care, in October 2004 the World Diabetes Foundation, an in-
dependently governed foundation established by Novo Nordisk in
2001, and the Afghan Ministry of Health initiated a new project: the
Diabetes Control and Treatment Programme for Afghanistan. The
agreement provides 400,000 US dollars to renovate and equip four
diabetes centres in Kabul over the next two years.

In addition, the company arranged a training seminar in June
2004 for 20 Afghan doctors, including three directors from the
Ministry of Health. A follow-up session was held in November. Novo
Nordisk also established the Afghan Medical Relief Foundation. The
goal of this new non-profit organisation is to bring life-saving medi-
cines to Afghanistan. The foundation will raise money through
fundraising, buy life-saving medicines including insulin, antibiotics,
vaccines and other medicines, and donate these to hospitals and dia-
betes centres throughout Kabul and eventually, when security and
infrastructure allows, throughout the country.

In Iraq, the current prevalence of diabetes is unknown but it is be-
lieved to be a large-scale problem. The International Diabetes Feder-
ation estimated in 2003 that 7.7% of the population has diabetes.
Novo Nordisk has been supplying insulin to Iraq since 1972 and,
since 1991, the company has been virtually the sole supplier of in-
sulin to the Iraqi people.

Beyond meeting the immediate needs of Iraqi patients, Novo
Nordisk also arranges for the training of Iraqi doctors and nurses in
diabetes care, in cooperation with the Iraqi Diabetes Association. It
is working with the Ministry of Health to create a national diabetes
programme that will include the development of diabetes centres
and public clinics, continuous education for doctors and nurses, and
patient awareness programmes.

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Novo Nordisk Annual Report 2004

R & D P I P E L I N E

Looking to
the future

Diabetes care

Levemir® (insulin detemir)
Indication Type 1 and 2 diabetes
Description A weight-neutral soluble basal insulin analogue with
neutral pH and a unique mechanism of protraction providing a
smooth and more predictable action profile and offering a longer
duration of action compared to conventional NPH insulin
Phase Approved in the EU, Switzerland and Australia; approv-
able letter obtained in the US; phase 3 in Japan

NovoMix® 50 and 70
Indication Type 1 and 2 diabetes
Description Premixed formulations of the rapid-acting
insulin analogue, insulin aspart. Provide a combined
rapid- and intermediate-acting insulin effect (at the
ratio of 50/50 or 70/30)
Phase NovoMix® 50 filed in EU and Japan, phase
3 in the US; NovoMix® 70 filed in the EU, phase
3 in the US and Japan

AERx® iDMS (NN1998)
Indication Type 1 and 2 diabetes
Description The AERx® insulin Diabetes
Management System is a delivery sys-
tem for administering insulin to
people with type 1 and 2 diabetes
by inhalation
Phase Phase 2

Liraglutide (NN2211)
Indication Type 2 diabetes
Description A once-daily,
long-acting derivative of the
natural human hormone GLP-1
for treatment of type 2 diabetes. In
studies so far liraglutide has been
shown to lower blood glucose with little
or no risk of inducing hypoglycaemia, and
is expected to affect appetite regulation
leading to weight management. Liraglutide

may also have beta-cell regenerative capacity

Phase Phase 2

NN344

Indication Type 1 and 2 diabetes

Description A soluble, long-acting human insulin analogue for
treatment of diabetes, which seems to have a long duration of

action and a very predictable response

Phase Phase 1

NN2501

Indication Type 2 diabetes

Description An oral tablet for the treatment of type 2 diabetes, which inhibits

excessive hepatic glucose production

Phase Phase 1

Novo Nordisk Annual Report 2004

Biopharmaceuticals

Activelle® low dose

Indication Oestrogen deficiency symp-
toms in women more than one year after
menopause. Prevention of osteoporosis in
postmenopausal women at high risk of future
fractures who are intolerant of, or contraindicated
for, other medicinal products approved for the pre-

vention of osteoporosis

Description Low-dose continuous combined HRT within

the ultra low-dose class

Phase Phase 3

NovoSeven®: intracerebral haemorrhage
Indication Bleeding in emergencies, intracerebral haemorrhages
Description Phase 2b studies of NovoSeven® as a general haemo-
static agent for treatment of intracerebral haemorrhages have been
completed. Filing in the EU is anticipated in mid-2005. A second
study will be initiated in the US
Phase Not applicable

NovoSeven®: trauma
Indication Bleeding in emergencies, trauma
Description Phase 2 studies of NovoSeven® as a general haemo-
static agent for bleedings related to traumatic injuries have been
completed. Filing for blunt trauma in the EU took place in January
2005. A study in the US will be initiated in 2005
Phase Not applicable

NovoSeven®: variceal bleedings
Indication Bleeding in emergencies, upper gastrointestinal bleeds in
cirrhotic patients
Description NovoSeven® is being tested as a general haemostatic
agent for treatment of bleedings from oesophageal varices in con-
nection with liver cirrhosis
Phase Phase 2

From idea to treatmentêP H A S E 1

Industry estimates that out of 10,000 ideas that begin in the lab,
just 10 will ever reach the stage where they are tested on people.
Out of those, one may reach the market. The entire process repre-
sents some of the largest investments Novo Nordisk makes, both
in terms of capital and manpower.

Phase 2 studies test a drug with
known dose and side effects with
a larger number of volunteers,
usually between 50 and 300, to
learn more about side effects, how
the body uses the drug, and how
the drug helps the condition.

In the healthcare industry, the road from idea to treatment for a
new product is highly complex and time-consuming.

Phase 1 studies test a potential
new drug with a small number of
volunteers, usually between 10
and 100, for best dosage and
potential side effects.

P H A S E 2

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NovoSeven®: cardiac surgery
Indication Cardiac surgery
Description NovoSeven® is being tested as a general haemostatic
agent for treatment of bleedings in connection with cardiac surgery
Phase Phase 2

NovoSeven®: traumatic brain injury
Indication Bleeding in emergencies, traumatic brain injury
Description Traumatic brain injury (TBI) occurs as a result of a sudden
injury to the head. TBI is most commonly caused by road traffic acci-
dents and is primarily affecting younger men
Phase Exploratory phase 2

NovoSeven®: spinal surgery
Indication Critical bleeding in surgery, spinal surgery
Description NovoSeven® is being tested as a general haemostatic
agent for treatment of bleedings in connection with spinal surgery
Phase Exploratory phase 2

rFXIII
Indication Haemostasis management
Description FXIII stabilises blood clots, indicating that FXIII alone or
in combination with other therapy might become an interesting
new opportunity within haemostasis management
Phase Phase 2 is in planning

IL-21
Indication Cancer (malignant melanoma)
Description A study testing interleukin 21 (IL-21) for the treatment
of the cancer malignant melanoma
Phase Phase 1/2

The process typically takes 10 to 13 years from initial work in the
lab until a product is launched on the market. The further a prod-
uct is developed, the greater the loss if suspended due to adverse
events.

The purpose of a clinical trial is to find out whether a medication
or treatment regimen is safe and effective for the treatment of a
specific condition or disease.

P H A S E 3

PHASE 4

Phase 3 studies compare the new
drug with a commonly used drug
for both safety and efficacy.
The trials typically involve between
1,500 and 4,000 people who have
the disease. If phase 3 results are
successful, a New Drug Application
is submitted and reviewed by the
various government regulatory
agencies.

Phase 4 studies, which are con-
ducted after a drug is approved
and launched, continue to evalu-
ate a drug’s long-term effects.
We involve 500–3,000 patients
or more, depending on scope.

Novo Nordisk Annual Report 2004

A C C E S S T O H E A LT H

80%

of all people with diabetes in
2025 will be in areas that today
have limited access to health.

During her visit to Tanzania, Clare Rosenfeld visited the Morogoro hospital and met a 17-year-old boy who had been newly diagnosed with diabetes.

Time to act

For the developing world, diabetes is not just a present-day misery. It’s a future
time bomb as well. With two-thirds of future diabetes cases expected to occur
in this part of the world, Novo Nordisk believes it has a responsibility to act.

C lare Rosenfeld considers herself lucky. While she has

had type 1 diabetes since the age of seven, the
18-year-old from Eugene, Oregon in the US, has al-
ways had access to the medicine and the doctors she
needs to cope with her condition. But as Ms
Rosenfeld, who is the founder of the International Diabetes Youth
Advocacy Group, found out on a Novo Nordisk-sponsored tour of its
projects in Tanzania, El Salvador and Bangladesh in 2004, that kind
of access is rare for children and adults with diabetes in the develop-
ing world.

“There is no reason why people who by all rights should be living
normal, healthy, productive lives should die when treatment is avail-
able. Something must be done,” Ms Rosenfeld writes, after meeting
many children, young people and adults who struggled – and some-

times failed – to cope with their diabetes because of lack of access
to treatment.

A complex challenge

Seeing the world in a new context can be an eye-opening experi-
ence. For Novo Nordisk, the challenging state of diabetes care in the
developing world has long been apparent.

Meeting this challenge is complicated. Low- and middle-income
countries often lack the healthcare infrastructure to meet the needs
of a growing number of people with diabetes. Lack of awareness and
education about diabetes is a serious problem. Many experts believe
that the only way to fight diabetes, in the developing world as else-
where, is by taking an approach that combines increased awareness,
education and prevention with improved access to treatment.

Novo Nordisk Annual Report 2004

213

50,000

million people with
diabetes are diagnosed.
Just as many are not.

of the 50 Least Developed Countries
buy insulin from Novo Nordisk under
its best possible pricing scheme.

activities under Novo Nordisk’s
National Diabetes Programmes reach
out to stakeholders in 46 countries.

doctors in eight developing countries have been
trained by Novo Nordisk to diagnose and treat
people with diabetes.

“There is no reason why people who by all rights should be living normal, healthy,

productive lives should die when treatment is available. Something must be done.”

Clare Rosenfeld

“By working together with governments, pa-
tient organisations and other partners to im-
prove diabetes care in poorer countries, we can
use our expertise and competence in diabetes to
address some of these issues,” says Lise Kingo, ex-
ecutive vice president for people, reputation and
relations at Novo Nordisk. “At the same time, we
build a long-term sustainable business advantage as a
leader in diabetes care.”

Investors are increasingly paying attention to how
companies act to address the public health crisis in the de-
veloping world because they fear that not acting will damage
companies’ societal licence to operate – and thus, profitable
returns in both the short and long term.

“I think investors do care about a company’s social, ethical

and environmental performance because it is an indicator of
two things: the quality of management and the risk profile. If
a company responds to these issues, it will probably have
less risk associated with it,” says Analyst Benjamin Yeoh of
ABN-AMRO, a major investment bank.

Bridges to better care

Since 2001, Novo Nordisk has had a four-pronged strategy
to addressing access to health in the developing world that
builds on the WHO’s four major focus areas for improving ac-
cess to healthcare.

Building national healthcare capacity and developing national
disease strategies is at the heart of the National Diabetes
Programme (NDP), a collaborative approach to improving diabetes
care globally. Today there are 213 separate activities carried out by
Novo Nordisk affiliates in 46 countries, in both the developed and
the developing world. Activities include educating nurses, doctors
and patients, supporting diabetes patient organisations, equipping
diabetes clinics and working with governments to design national
diabetes strategies.

The NDP is setting up diabetes activities in eight developing or
emerging economies: India, Bangladesh, China, Costa Rica, El
Salvador, Malaysia, Tanzania and Zambia. As a result, there has been
an increase in the number of people reporting to diabetes clinics, a
greater proportion being treated, and more newly diagnosed per-
sons with diabetes reporting early; that is, before they have started
developing severe complications. It is estimated that 50–80% of
people with diabetes in the developing world are undiagnosed.

More affordable pricing

2001 Novo Nordisk has offered insulin to the public
health systems in the 50 Least Developed Countries
(LDCs), as defined by the United Nations, at prices not
to exceed 20% of the average price in the industri-
alised countries of North America, Europe and Japan.
In 2004, Novo Nordisk offered this pricing scheme to
49 countries and sold insulin to a total of 33 LDCs at or
below this price, compared to 16 in 2003. In several cas-
es, the government has not responded to the offer; either
because there are no private wholesalers or other partners
with whom to work; or wars or political unrest sometimes

make it impossible to do business.
Unfortunately, there is no way to guarantee that the price at
which Novo Nordisk sells the insulin will be reflected in the final
price on the pharmacist’s shelf. Novo Nordisk therefore works
with governments to encourage tenders, so that there is a greater
chance that the preferential price will benefit the patient for whom
it is intended.

The affordability of medicine is just one of the many problems
that Clare Rosenfeld encountered on her trip. Just as serious was the
widespread ignorance about diabetes among the general popula-
tion, lack of knowledge among doctors, and the lack of clinics and
equipment to treat diabetes.

“The answer seems clear to me: collaboration,” Ms Rosenfeld
writes. “Collaboration between patient associations, healthcare
professionals, the government and the pharmaceutical com-
panies can tackle all the problems in these
countries. I saw a lot of tough things, but I
also saw the potential and the passion to
make a difference.” For more information,
visit novonordisk.com/annual-report-2004 E

STRATEGIES FOR ACCESS TO HEALTH

WHO priorities

Novo Nordisk response

Development of national
healthcare strategies

Building national
healthcare capacity

Best possible pricing

Additional funding

N
N
N
N

National Diabetes Programme and DAWN

Best possible pricing scheme in LDCs

World Diabetes Foundation

Improving the affordability of essential drugs like insulin is also part
of the solution to better access to care. In recognition of this, since

Novo Nordisk has built its strategy for improved access to diabetes care on
WHO’s recommendations.

Novo Nordisk Annual Report 2004

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reflections

Sustainable supply chain management
benefits bottom line

Working with suppliers on social and envir-
onmental issues can benefit a company’s
financial bottom line, according to a model
commissioned by Novo Nordisk. The model
indicates that the return on investment for
sustainable supply chain management is
created through financial and reputational
benefits for both parties.

The model concludes that there are both
direct and indirect implications which can
be identified if not yet quantified. According
to the model, effective sustainable supply
chain management can affect the bottom
line in two ways: through costs and through
turnover. Total costs, in turn, are affected by
production costs and cost of capital.

Benefits include higher product quality
and reduced risk as well as a positive impact
on the company brand. In a broader per-
spective there are benefits to society, such as
reduced pollution and fewer work-related
injuries and accidents. Suppliers can meas-
ure the effects of improving labour stand-
ards and environmental management in
terms of fewer costs related to compensa-

Like ripples in the water: Novo Nordisk is encourag-
ing its suppliers to look at their own supply chains.

tion, reduced pollution charges, etc. As im-
portant, perhaps, is closer collaboration and
sharing of better practices between Novo
Nordisk and its suppliers, and better self-
regulation and documentation towards reg-
ulatory authorities.

Novo Nordisk has had a comprehensive
supply chain management programme since
2001, when it began requiring its suppliers
to complete a self-evaluation questionnaire
regarding their environmental and social
performance. The latter deals with treating
employees fairly in terms of wage and ben-
efits, working hours, child labour, collective
bargaining and other issues described in
The United Nations Universal Declaration of
Human Rights and the International Labour
Organisation’s Core Conventions.

The programme, which now includes
audits, is expected to cover all major areas
of purchase by 2005.

Now reaching out to second-tier suppliers,
Novo Nordisk has developed a new toolbox
for its suppliers and other companies who
intend to engage in a programme with
is available at
their suppliers which
suppliertoolbox.novonordisk.com

Read more, and see the research behind
the model of the financial impacts, at
novonordisk.com/annual-report-2004

A catalyst for business’ role in human rights

The observance of human rights is interwoven in the daily fabric
of a company’s operations – in everything from ensuring safe fac-
tories to fostering equal opportunities and guaranteeing basic
labour rights for employees. But when a company is multinational,
its obligation to protect human rights extends around the globe.
Defining the boundaries of a company’s sphere of influence in
protecting human rights is the task that Novo Nordisk and nine
other companies have undertaken in the Business Leaders
Initiative in Human Rights (BLIHR). The aim of the three-year initia-
tive, launched in 2003, is to serve as a catalyst to further integrate
human rights in business policies and practices.

The first item of business on BLIHR’s agenda is for business to
identify opportunities for action based on the United Nations
Norms on the Responsibilities of Transnational Corporations and
Other Business Enterprises with Regard to Human Rights.

The Norms suggest the introduction of global binding stand-
ards and external monitoring to ensure that companies observe
basic human rights in all their operations worldwide.

Novo Nordisk regards the Norms as a positive challenge to the

company’s approach to addressing human rights. With the other
members of BLIHR, it has agreed to ‘road test’ the Norms.

“As a result of our involvement with BLIHR, we expect to have
an operational standard that will enable us to strengthen our
work with human rights. We also wish to contribute to a broader
understanding of the role of business in human rights by sharing
our experiences with other companies,” says Lise Kingo, executive
vice president, people, reputation and relations, Novo Nordisk.

Novo Nordisk has worked closely with human rights since 1998
as part of its commitment to support the United Nations Universal
Declaration of Human Rights. It is also a signatory to the UN
Global Compact.

The company’s approach to human rights has been to focus on

key stakeholders and run projects on strategic issues.

Current focus areas are the right to health, equal opportunities

and diversity, and privacy.

The Novo Nordisk position on human rights, and more informa-
tion on its approach to human rights, can be found at
novonordisk.com/annual-report-2004

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Novo Nordisk Annual Report 2004

Novo Nordisk supports the principle of the three R’s: to reduce, refine and replace animal
experiments.

Lise Holst, Bioethics Management at Novo Nordisk

Improving standards for
experimental animals

A balanced view of
HRT therapy

Novo Nordisk actively practises a principle known collectively as
the three R’s – which means that the company attempts to re-
duce, refine and replace animal experiments with alternative
procedures whenever possible. Novo Nordisk considers experi-
ments on living animals to be a necessary component of the re-
search and development process for new medicines for both
scientific and mandatory reasons, and to satisfy expectations of
drug regulatory authorities. In the past decade, Novo Nordisk
has set new standards for housing, training and socialisation of
laboratory animals and significantly reduced the number of ani-
mals used. Due to a higher research activity in early phases, this
positive trend could not be maintained in 2004, as 10% more
animals were purchased.

In 2004, both an approval by the US Food and Drug Adminis-
tration (FDA) and the development and approval of a new test
method will enable Novo Nordisk to reduce the number of ani-
mals used by the company even further:
A In the fourth quarter of 2004, the FDA approved a reduction
in the numbers of animals required to test insulin-based
products, resulting in a considerable reduction of rabbits
used for this purpose.

A Novo Nordisk has developed a novel test for glucagon that
utilises isolated cells in vitro rather than living animals, which
was approved for use by the FDA in October 2003. Imple-
mentation of this new test was completed in the third quar-
ter of 2004 and rabbits are no longer used for this purpose.

Novo Nordisk has committed itself to investigate further ap-
proaches to practising the three R’s and, therefore, to reduce
the use of living animals in the future, as and when this
becomes possible due to establishment of newly emerging
regulations and technologies. For more information, visit
novonordisk.com/annual-report-2004

Menopause can have a severe adverse impact on the
quality of life for some women. Despite this, use of
hormone replacement therapy (HRT) medicine
has declined since the release of the Women’s
Health Initiative (WHI) study in 2002 and the
Million Women Study in 2003. Both studies
reported potential health risks following
long-term HRT use, and HRT sales worldwide
declined. The controversy also resulted in
some HRT users filing lawsuits against pro-
ducers of HRT drugs, including Novo Nordisk
(see page 19).

Novo Nordisk produces the low-dose HRT
drugs Activelle® and Vagifem®. The results of
the studies, as is true of all studies involving HRT
medicines produced by other companies, were of
interest to Novo Nordisk. Specifically, these two stud-
ies found that HRT should not be initiated 10 years after
menopause for prevention of cardiovascular diseases.
Unfortunately, the study did not explore the cardiovascular effect
of HRT in women in early menopause, when HRT is most commonly
initiated. For example, the majority of women in the WHI study were
well beyond menopause and experienced no climacteric symptoms.
“These and other questions need further study,” says Camille Lee,
vice president of Global HRT at Novo Nordisk. “But I feel that WHI
and other studies support our position on HRT: that women needing
HRT should start when they first experience severe menopausal
symptoms and use the therapy for the shortest possible time in the
lowest possible doses.”

Research reported in 2004 has shown that HRT may save lives
when taken by women under age 60 – but that the risks may out-
weigh the benefits for older women (according to the results from
30 clinical trials involving more than 26,000 women in a study led by
Dr Shelley Salpeter at Santa Clara Valley Medical Center in San Jose,
California). Also in 2004, a research team from the University of
California led by Dr Judith L Turgeon found that the results of the
WHI study, which only studied one product, should not be gener-
alised to all forms of HRT therapy. Dr Turgeon’s team found that
knowledge of hormones and their effects has more than doubled in
the last 10 years. This increase in knowledge over time and with ad-
ditional experience is true for virtually all medicines.

Since the publication of the results of the WHI and Million
Women Study, most health authorities recommend that the lowest
effective dose is used to relieve symptoms of the menopause. Ms
Lee adds: “Novo Nordisk offers a full low-dose HRT range and we
also have even lower-dose compounds in our research and develop-
ment pipeline.” (See page 27.)

Novo Nordisk Annual Report 2004

I N T E R N AT I O N A L I S AT I O N

41%

of Novo Nordisk’s
employees work outside
Denmark.

179

countries carry Novo Nordisk’s
products.

With offices or affiliates in 78 countries, a worldwide sales organisation, an
increasingly international pool of employee talent and customers in every
corner of the globe, Novo Nordisk is no longer solely a ‘Danish’ company. Yet
the company has ambitions to further internationalise in the coming years.

Global expansion
M ore than 99% of our sales are in countries

such as currency fluctuations,” notes Jesper Brandgaard. Novo
Nordisk has already taken steps to outsource production of needles
and plastic components for the pen systems. By choosing global
partners when outsourcing, Novo Nordisk will ensure competitive-
ness and ‘insource’ knowledge from these key performers in the
market.

outside Denmark,” observes Chief Financial
Officer Jesper Brandgaard. “Yet only 41% of
our employees are working outside the coun-
try. We must internationalise to fulfil our

vision and stay competitive in the pharmaceutical industry.”

Supporting the markets

Making the most of the US market is vital: sales in North America are
expected to overtake Europe within the next 5–10 years, making it
Novo Nordisk’s largest region. To support US growth, Novo Nordisk
will invest 100 million US dollars in expanding its insulin manufac-
turing plant in North Carolina (see box opposite) and has transferred
some major development responsibilities from Danish headquarters
to the US affiliate. Actions also include recruiting more US partici-
pants into its global trainee programmes.

Other efforts have targeted the International Operations region,
where the growth potential is generally regarded to be greater than
in Europe. Actions include major investments in new manufacturing
facilities in Brazil and China which also comprises intensified talent
recruitment.

Costs, risks and innovation

Chief Science Officer Mads Krogsgaard Thomsen adds that inter-
nationalisation also potentially benefits the Novo Nordisk pipeline:
“We need to increase our access to research and development con-
ducted outside Denmark. To find all the skills needed for future de-
velopment, it is essential that we recruit even more new, interna-
tional talent,” he says.

Mads Krogsgaard Thomsen is also convinced that international
partnerships with companies outside Novo Nordisk will become in-
creasingly important to the R&D pipeline – particularly in view of the
company’s growing focus on proteins outside the established therapy
areas. Through agreements with partners including ZymoGenetics,
Biostratum, Transition Therapeutics, Innate Pharma and Neose,
Novo Nordisk currently has an exciting early-stage pipeline of eight
projects targeting cancer or inflammatory diseases. As of September
2004, Novo Nordisk had established 26 discovery and early develop-
ment partnerships and the company is seeking even more.

But internationalisation is not just about sales growth.

New employment patterns

“Increased activities outside Denmark provide Novo Nordisk with
a more competitive cost base and a more balanced exposure to risks

One area which has been at the forefront of internationalisation is
Product Supply, which comprises all manufacturing in Novo Nordisk.

Novo Nordisk Annual Report 2004

1,000

20,725

100

200

new jobs are expected to be created outside
Denmark in the next five years through expan-
sion of Novo Nordisk’s production facilities.

people work for Novo Nordisk
around the world (20,285 full-
time equivalents).

million US dollars will be invested by
Novo Nordisk in expanding its insulin
manufacturing plant in North Carolina.

million US dollars will be invested
by Novo Nordisk in the Montes Claros
production plant in Brazil.

Expansion of production facilities is already taking place in
Montes Claros, Brazil; Chartres, France; Tianjin, China; and Clayton,
US. “We expect that the expansions will create approximately 1,000
new jobs outside Denmark in the coming five-year period,” explains
Senior Vice President Per Valstorp from Product Supply.

However, he continues: “While new jobs will
be established abroad, employee numbers will
most likely decrease in Denmark in the same
period. To embrace the changes in employment
patterns in Denmark, Product Supply has estab-
lished a Job Transfer Centre which is operating
in Denmark only. The system allows employees
at downsized Danish production sites to regis-
ter their skills and preferences at the centre,
which can then refer them to jobs and relevant
training within Novo Nordisk.”

“We must internation-
alise to fulfil our vision
and stay competitive in
the pharmaceutical
industry.”

Jesper Brandgaard, chief financial officer,
Novo Nordisk

To better prepare the company for its international growth, the
People Strategy now focuses on mobility: the ability to recruit and
develop international talent.

“We want to put the best person into any job, regardless of
where they come from; we also want to reduce the geographical
barriers to talent movement,” says Ginger
Gregory, senior vice president of People and
Organisation at Novo Nordisk.

To facilitate this, the new unit is developing a
global system of job descriptions, remuneration
and talent evaluation. This will ensure that mo-
bility across Novo Nordisk’s operating units
globally becomes much smoother and that di-
versity increases across the organisation.

For more information, visit novonordisk.com/

annual-report-2004

“The alternative to this would have been lay-
offs. So I think this is a good example of social
responsibility on the part of the company,” remarks union represen-
tative Jan Carstensen, who represents unskilled and semi-skilled
workers at a number of Danish production sites.

A strategy for people

In the company’s philosophy, Novo Nordisk is its people. Its People
Strategy supports the objectives of being an attractive and challeng-
ing workplace focused on high performance and equal opportunities
for each to develop and grow.

Fulfilling a vision

When all else has been said, one final observation remains: Novo
Nordisk must continue to increase its presence around the world to
fulfil its vision of being the world’s leading diabetes company.

Jesper Brandgaard sums it up: “The fulfilment of this aspiration
will require Novo Nordisk to be present. Present with our customers
where they live and work, present with regulators and other author-
ities, present with business partners, universities, investors and other
stakeholders.” E

Investing in the future

China Novo Nordisk is expanding its production facilities in Tianjin, China. The new
plant will be built on Novo Nordisk’s existing 40,000 square metres site in Tianjin,
which has been designated Novo Nordisk’s primary production base in the Asia
Pacific region. Creating more than 100 new jobs in China, the plant will be oper-
ational in 2006 and will supply both the domestic and export markets.

US Novo Nordisk’s insulin manufacturing plant in Clayton, North Carolina, will be
expanded to more than double its insulin-filling capacity, as well as include assembly
and packaging facilities for FlexPen®, administration and storage space. This expan-
sion will provide around 200 new jobs at the plant in Clayton for a total of 600
when fully operational.

Brazil One of Novo Nordisk’s major international investments is a new production
facility in Montes Claros, Brazil. The new facility will focus on formulation, filling
and packaging of various insulin products, and is expected to create around 600
new jobs.

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Novo Nordisk Annual Report 2004

P E O P L E

1,484

new positions were created
in 2004 in Novo Nordisk.

122

of Novo Nordisk’s senior
managers are members of the
company’s talent pools.

49.1%

of Novo Nordisk’s employees
are female.

Leading with
passion

A company’s commitment to sustainability starts with its people. For Novo
Nordisk, that means developing talent and encouraging diversity in such a
way that employees actually live the Triple Bottom Line.

O f course I know what the Triple Bottom Line

means. But today, I really experienced it. And I
know why Novo Nordisk has embraced it,” re-
marks Finn Benned Hansen following his partici-
pation in the Lighthouse Programme’s visit to

Brazil in December 2004.

The Lighthouse Programme is an innovative way in which Novo
Nordisk is developing the next generation of the company’s leader-
ship. ‘Destination Brazil’ brought 32 of the company’s top talents
together for seven days to experience economic, social and environ-
mental conditions in Brazil – an important emerging market for the
company. The main goal was to build a sense of community among
a group of executives to enhance their understanding of one another,
their ability to work together and their sense of the world around
them. The journey was led by Lars Rebien Sørensen, president and

Visit to GRAACC, a children’s cancer centre in São Paulo.

Community work at a paediatric clinic in São Paulo.

CEO of Novo Nordisk, and addressed global business and health
challenges, doing business in emerging markets, sustainability as a
business factor and leading with passion.

In this first Lighthouse journey, the ‘classroom’ stretched from
crowded urban streets to the rainforest, and teachers included local
business leaders, government ministers and representatives of in-
digenous peoples. The journey took employees from the relative
comfort of their corporate jobs to the heart of the company’s stra-
tegic agenda: globalising the business, improving access to health
and dealing with thorny dilemmas posed by fulfilling its commit-
ment to the Triple Bottom Line.

Developing talent is a top priority for Novo Nordisk if it is to con-
tinue to succeed in a highly competitive market. In March 2004, the
company established a new centre of excellence called Global Talent
Development to facilitate identification and development of talent
throughout the organisation. This global oversight is a business

Novo Nordisk Annual Report 2004

20%

69%

6.5

32%

of the employees in Novo Nordisk’s
talent pools are female.

of new positions in Novo Nordisk in
2004 were based outside Denmark.

years is the average seniority in Novo Nordisk.

of Novo Nordisk managers are female.

In Denmark the affiliates NNE and NNIT are working to improve
their ability to attract and develop talent from an increasingly di-
verse society. Both have broadened the recruitment base by focus-
ing on values which appeal to different types of applicant. NNIT has
found new channels of communication to reach new groups of po-
tential candidates, and recruitment tests are now available in 80 lan-
guages. In 2004 NNE recruited an increased number of women
compared to previous years.

Women in management

Another focus area during 2004 was increasing the number of
women in management, based on an analysis conducted in 2003.
One initiative was the formation of a Sounding Board of women and
men to discuss issues and coordinate activities relating to women in
management.

Other activities launched in 2004 include:

A the formation of women’s networks, in which women identified
as leaders are invited to participate in network groups on women
in management

A a mentoring programme in which women identified as potential
leaders in the organisation are invited to be mentored by a mem-
ber of senior management

A a review of the performance and succession management sys-
tems to achieve greater transparency, including looking at leader-
ship competences from a gender perspective.

“Women often face informal rather than formal barriers in the work-
place,” says Kirstine Brown Frandsen, vice president of International
Medical Affairs at Novo Nordisk and a member of the Sounding
Board. “Women may have different ways of working, communicat-
ing and leading than men, and it is important that we talk about it
openly so that these differences are understood and appreciated.”
For more on equal opportunities and diversity, visit

novonordisk.com/ annual-report-2004 E

Visit to indigenous tribe in Iguassu.

‘Life Line session’ with Lars Rebien Sørensen, president and CEO of
Novo Nordisk.

imperative at a time when the company is expanding internationally.
Talent is managed across Novo Nordisk in a number of talent
pools that have been established during 2003 and 2004 to give peo-
ple opportunities to develop their skills towards the next level in the
organisation. This might take the form of opportunities to discuss
strategic business issues with other company leaders, including top
management, or taking on a challenging assignment with a real
impact on the business. The Lighthouse Programme is just one of
many initiatives to develop talent.

Lise Kingo, executive vice president for people, reputation and re-
lations at Novo Nordisk, says: “It is too early to say how the Light-
house journey will shape the next generation of Novo Nordisk lead-
ers. But we expect that the participants will be driven to carry out
their jobs with even greater passion and be able to cascade their
new sense of vision throughout the organisation.”

A strategy for diversity

For companies to tap talent, the greatest opportunities are in diversi-
ty. Novo Nordisk operates in 78 countries and comprises a wide range
of different nationalities. To achieve the full potential in talent man-
agement, it is important to ensure a level playing field. With its strat-
egy for equal opportunities (EO) and diversity, Novo Nordisk is creating
sound diversity in the organisation that can support international-
isation of business and spark continued innovation.

Novo Nordisk has made diversity an integral part of management
training and incorporated targets on diversity into the corporate
management tool, the Balanced Scorecard, and evaluates the per-
formance on EO and diversity in the organisation each year.

Based on this evaluation, in 2004, Novo Nordisk began to see the
first results of this strategy being embedded in the organisation. For
example, in South Africa Novo Nordisk increased the diversity of its
medical representative staff to better reflect the community it serves.
In the US there were targeted efforts to reach out to minorities dis-
proportionately affected by diabetes. Brazil is collaborating with
organisations that work with disadvantaged sections of society.

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Novo Nordisk Annual Report 2004

C L I M AT E C H A N G E

253,000 92%

tons of CO2 were emitted from
Novo Nordisk in 2004.

of the energy produced
at Novo Nordisk is based
on natural gas.

The environmental team is discussing the future product design of Novo Nordisk’s insulin delivery devices.

Preparing for a low

Immediate and concerted action is required to combat climate change.
Recognising that there are opportunities as well as challenges in that call for
action, Novo Nordisk is preparing for a carbon-constrained future.

C limate change is one of the serious environmental

challenges facing humankind. The rising level of
greenhouse gases in the atmosphere is changing
global climatic patterns, resulting in increased inci-
dences of floods, storms and droughts, affecting
habitats, biodiversity, food systems, economies and human life.
Tackling an issue as complex as climate change requires a concerted
effort from government, business and civil society.

The environmental strategy of Novo Nordisk, which determines
the priorities and long-term strategic focus areas, has highlighted
climate change, use of natural resources and management of pollu-
tion as the key long-term environmental challenges for its business.
As a business committed to addressing climate change, Novo
Nordisk is developing a strategy to reduce its emissions of CO2. In
2004 Novo Nordisk entered into a partnership with the WWF
whereby it has committed to reduce its CO2 emissions. During 2005,
WWF will work with Novo Nordisk in setting a below stabilisation
target for achieving an absolute reduction of CO2 by 2014. Such a
commitment will enable Novo Nordisk to become part of the WWF’s
Climate Savers initiative.

“We are initiating an assessment to identify our reduction oppor-
tunities and the measures we can undertake to reduce the carbon
intensity of our products and the way we manufacture them. The
Climate Savers partnership is an opportunity for us to go beyond
regulation and be well prepared for a low-carbon future. This will

benefit both our company and the environment,” says Per Valstorp,
senior vice president of Product Supply, Novo Nordisk.

Installations for energy production at two Novo Nordisk sites in
Denmark, Bagsværd and Hillerød are covered by the EU Emission
Trading Scheme (ETS), which allocates allowances to emit CO2. As of
1 January 2005, installations whose CO2 emissions exceed their
allowances will have to purchase additional allowances from the
market. Novo Nordisk’s financial exposure to the ETS in the first pe-
riod (2005–2007) is rather limited. In fact, the company will have a
net surplus of allowances during the first ETS period.

Energy efficiency and beyond

Novo Nordisk has a history of successfully optimising energy effi-
ciency. Yet these initiatives have not resulted in an absolute reduction
of its CO2 emissions. A new approach to energy efficiency is re-
quired where the focus shifts: from optimising individual compo-
nents of operations to taking the entire production operations as a
whole system. Identifying new energy conservation measures using
this approach can reveal opportunities for achieving significant CO2
reductions, capturing synergies between different measures and
obtaining multiple benefits from a single investment. Implementing
these potential projects will also require that investments take into
account both the financial and environmental benefit, thereby en-
abling the company to overcome the traditional investment barriers
such as pay-back and ROIC.

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Novo Nordisk Annual Report 2004

2.408 82%

million GJ of energy
was consumed by
Novo Nordisk in 2004.

of Novo Nordisk’s CO2
emissions come from
purchase of energy.

improvement in
energy efficiency
in 2004.

Novo Nordisk sites in Denmark
are covered by the EU
Emission Trading Scheme.

0.7%

of the total Danish elec-
tricity consumption is
used by Novo Nordisk.

0.06

MJ, equivalent to 0.11 litres of
petrol, is the energy consumed
over the life of a FlexPen® device.

Climate change is already happening in the Arctic, and puts polar bears at risk.

-carbon future

Reducing emissions over a 10-year period will also require innova-
tion in the way the company procures energy. In 2004, 82% of Novo
Nordisk CO2 emissions were associated with the external purchase
of energy. During 2005, Novo Nordisk will investigate the possibili-
ties of purchasing credible certified electricity from renewable
sources and also enter into a dialogue with its utility providers on
their fuel choices and emission factors.

This translates into use of fewer raw materials such as sugar, water
and energy and less waste per produced unit. In addition, to enhance
safe use of gene technology, the NN2000 process has also elimin-
ated the use of antibiotic resistance genes from the yeast cells,
thereby reducing the risk of transfer of resistance genes to other or-
ganisms. Achieving reductions of CO2 will require that the company

“The only solution to
the global climate
problem is a conversion
of our energy sources
so that in the long run
we do not emit CO2
at all.”

Achieving absolute reductions of CO2 pres-
ents both challenges and opportunities for a
rapidly growing company. Given the expected
rise in the number of people with diabetes,
Novo Nordisk has to expand production to
meet this increasing demand. The challenge lies
in decoupling the direct link between volume
growth and energy use and making energy less
carbon intensive. Novo Nordisk’s focus on im-
plementing optimisation measures such as
cLEAN™ – lean manufacturing principle – will
definitely assist in the process but a more sus-
tained decoupling will require the company to
look beyond efficiency. This would include a
shift to cleaner fuels, purchase of renewable energy and an even
greater emphasis on environmentally sound design and develop-
ment of future processes and products.

Kim Carstensen, WWF Denmark

Gene technology saves resources

Novo Nordisk uses gene technology and genetically modified or-
ganisms in biomedical research and pharmaceutical production.
Safe use of gene technology can benefit both the environment and
the financial bottom line. A new insulin production process,
NN2000, based on genetic engineering, produces five times higher
yield per cell compared to the existing production process.

develops and replicates similar processes.

This increased efficiency directly impacts the
financial bottom line. That is the philosophy be-
hind the Environmental Management Account-
ing used to assess the economic value of nat-
ural resources, and the business and financial
value of good environmental performance.

Sound product design

Rethinking product design is yet another way to
prepare for a low-carbon future. Novo Nordisk
recognises that its influence on the environmen-
tal impact of its products decreases throughout
the product life cycle. Therefore it has initiated
a project to systematically embed environmen-
tal considerations in discovery, development and major support
projects. In 2004 it established an environmental team in the device
development area to develop a tool for systematic environmental
evaluation of raw materials, components and processes of future
devices. This team will work closely with the Environmental Devices
and Packaging Group responsible for integrating environmental
considerations in Novo Nordisk’s devices and packaging strategies.
Only by taking such a holistic approach from development to dis-
posal, and systematically undertaking a mix of options, can Novo
Nordisk prepare itself for a carbon-constrained future.

For more information, visit novonordisk.com/annual-report-2004 E

Novo Nordisk Annual Report 2004

P E R F O R M A N C E H I G H L I G H T S

Financial performance

In 2004, Novo Nordisk’s sales were 29,031
million Danish kroner (DKK), up 11% from
DKK 26,158 million in 2003. Measured in
local currencies this is an increase of 15%.
Operating profit in 2004 increased by 9% from
2003 to DKK 6,980 million. A lower level of non-
recurring income reduced operating margin in 2004
to 24.0% from 24.6% in 2003. Return on invested cap-
ital increased by 21% in 2004 from 20% in 2003.
The cash to earnings ratio for 2004 ended at 85%
up from 80% in 2003. Earnings per share
(diluted) increased by 5% in 2004 to DKK
14.83 from DKK 14.15. For more information,
see the full discussion on page 41.

Environmental performance

Novo Nordisk continued to produce ‘more with less’
in 2004. The eco-productivity indices, which express the
ability to utilise resources effectively, showed an improve-
ment of 7% for water and 8% for energy, and thereby
reaching the targets for 2004. The implementation of
certified environmental management in Japan is pro-
gressing according to plan. Detailed accounts for per-
formance can be found at novonordisk.com/annual-
report-2004

Social performance

In 2004 Novo Nordisk created 1,484 new full-time posi-
tions, mainly outside Denmark. The year-end number of
employees in 2004 was 20,725. The employee turnover
rate for 2004 was 7.3%. The frequency of occupational
injuries was 5.6 per million working hours, compared to
5.4 in 2003. Detailed accounts for performance can be
found at novonordisk.com/annual-report-2004

Segments: sales
DKK billion

Geographical areas: sales
DKK billion

Business review 2004

Europe
North America
International Operations
Japan & Oceania

Diabetes care:
Insulin analogues
Human insulin and insulin-related
products
Oral antidiabetic products (OAD)
Biopharmaceuticals:
Haemostasis management (NovoSeven®)
Growth hormone therapy
Hormone replacement therapy
Other

Product news
A Novo Nordisk’s long-acting insulin analogue Levemir® was
launched in Switzerland, the UK, Ireland, Denmark, Sweden,
Norway, Finland, the Netherlands, Austria and Germany in 2004.
A Norditropin NordiFlex®, the world's first liquid growth hormone in
a disposable pen, was rolled out across Europe and received FDA
approval in the US.

A In February, NovoSeven® was approved to treat factor VII defi-

ciency and Glanzmann’s thrombasthenia.

Research and development
A The results of a phase 2 study of NovoSeven® in the treatment of
critically bleeding multi-trauma patients were announced in March.
A Novo Nordisk announced the results from the phase 2b study of
NovoSeven® in the treatment of intracerebral haemorrhage in June.
A NovoMix® 50 and 70 files were sent to the European Medicines

Agency (EMEA) in July.

A In October, Novo Nordisk announced its decision to initiate an
additional clinical study for its human GLP-1 analogue, liraglutide.

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Novo Nordisk Annual Report 2004

Long-term financial targets defined and communicated to the stock market in 2001:

Operating profit (EBIT) growth of 15% per annum

Operating margin (EBIT margin) of 25%

Return on invested capital (ROIC) of
25% per annum

Cash to earnings ratio of 60%
as a three-year average

The study will delay the start of phase 3 trials by approximately
one year.

Stakeholder innovation
A At the Oxford Vision 2020 Summit in September, Novo Nordisk
pledged 3 million British pounds to the ongoing global fight
against chronic diseases, including diabetes.

Agreements
A Novo Nordisk entered a licensing agreement with Transition
Therapeutics Inc in August to develop Islet Neogenesis Therapy
for the treatment of diabetes.

A Novo Nordisk signed an agreement in September that gave the
company expanded licensing rights to the AERx® iDMS inhaled
insulin programme from Aradigm, and obtained full development
and manufacturing rights.

A Novo Nordisk and Sumitomo Pharmaceuticals, Co, Ltd concluded
a licence agreement in September for repaglinide, which enables
Sumitomo to develop and market the type 2 diabetes tablet in
Japan.

A Novo Nordisk and Medtronic, the world’s leading manufacturer
of insulin pumps, announced an agreement in November to
develop prefilled insulin cartridges containing the rapid-acting
insulin analogue NovoLog® (NovoRapid® outside the US).

Investments
A It was announced in October that Novo Nordisk’s insulin manu-
facturing plant in Clayton, North Carolina, will be expanded (see
page 32).

A Novo Nordisk announced in November that it is expanding its pro-

duction facilities in Tianjin, China (see page 32).

Environment
A In 2004, Novo Nordisk had two accidental releases of materials
containing GMOs at the production site in Bagsværd, Denmark.
The incidents caused no harm to humans or the environment.
A Novo Nordisk and the WWF have entered into an agreement that
will help Novo Nordisk to reduce its CO2 emissions over a period of
10 years (see page 36).

Novo Nordisk Annual Report 2004

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(cid:66)(cid:89)(cid:0)(cid:79)(cid:85)(cid:82)(cid:0)(cid:87)(cid:79)(cid:82)(cid:75)(cid:14)

(cid:55)(cid:69)(cid:0)(cid:67)(cid:65)(cid:78)(cid:0)(cid:65)(cid:76)(cid:76)(cid:0)(cid:66)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:85)(cid:68)(cid:0)(cid:79)(cid:70)(cid:0)(cid:79)(cid:85)(cid:82)(cid:0)(cid:82)(cid:69)(cid:83)(cid:85)(cid:76)(cid:84)(cid:83)(cid:0)
(cid:83)(cid:79)(cid:0)(cid:70)(cid:65)(cid:82)(cid:14)(cid:0)(cid:55)(cid:69)(cid:0)(cid:80)(cid:82)(cid:79)(cid:77)(cid:73)(cid:83)(cid:69)(cid:0)(cid:84)(cid:79)(cid:0)(cid:75)(cid:69)(cid:69)(cid:80)(cid:0)(cid:85)(cid:80)(cid:0)(cid:84)(cid:72)(cid:69)(cid:0)
(cid:71)(cid:79)(cid:79)(cid:68)(cid:0)(cid:87)(cid:79)(cid:82)(cid:75)(cid:14)

(cid:52)(cid:72)(cid:65)(cid:78)(cid:75)(cid:0)(cid:89)(cid:79)(cid:85)(cid:0)(cid:70)(cid:79)(cid:82)(cid:0)(cid:89)(cid:79)(cid:85)(cid:82)(cid:0)(cid:83)(cid:85)(cid:80)(cid:80)(cid:79)(cid:82)(cid:84)(cid:14)

(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)(cid:202)(cid:220)(cid:220)(cid:220)(cid:176)(cid:220)(cid:156)(cid:192)(cid:143)(cid:96)(cid:96)(cid:136)(cid:62)(cid:76)(cid:105)(cid:204)(cid:105)(cid:195)(cid:118)(cid:156)(cid:213)(cid:152)(cid:96)(cid:62)(cid:204)(cid:136)(cid:156)(cid:152)(cid:176)(cid:156)(cid:192)(cid:125)

Novo Nordisk Annual Report 2004

M A N A G E M E N T R E P O R T

Management report and discussion 2004

N ovo Nordisk is pleased to report satisfactory financial

results for 2004, in spite of experiencing yet another
year with adverse currency exposure. Looking to the
future, the increasing demand for the company’s
products – especially insulin analogues and NovoSeven® – underpins
our expectations for solid growth in 2005 also.

Business performance and discussion

A Sales in 2004 increased by 15% measured in local currencies.

Sales of insulin analogues increased by 84%
Sales of NovoSeven® increased by 19%
Sales in North America increased by 32%

A Measured in Danish kroner sales increased by 11%.
A Underlying operating profit increased by more than 20%, and
measured in Danish kroner operating profit increased by 9% to
DKK 6,980 million.

A Net profit increased by 4% to DKK 5,013 million and earnings per

share (diluted) increased by 5% to DKK 14.83.

A In 2005, the underlying operating profit is expected to grow by
15% in local currencies. Measured in Danish kroner the growth in
operating profit is expected to be around 5%, reflecting a signifi-
cant, negative currency impact and no major non-recurring in-
come in 2005.

Operating profit increased by 9% to DKK 6,980 million from DKK
6,422 million in 2003, thereby exceeding the expectations for oper-
ating profit as expressed earlier in the financial year – despite a more
challenging currency environment than anticipated. The main rea-
son for exceeding expectations is better operational performance in
terms of stronger sales growth, and improved product mix and
lower cost consumption.

Measured in local currencies and excluding the impact from non-
recurring items operating profit increased more than 20% – thereby
exceeding the long term financial target of 15%, which formed the
basis for the operating profit growth expectations to 2004.

Reported sales of DKK 29,031 million correspond to a sales
growth of 11% over 2003 of DKK 26,158 million. Measured in local
currencies sales increased 15%, thereby leaving the negative impact
from depreciating foreign exchange rates at 4 percentage points.

Operating margin for 2004 was realised at 24.0% down from
24.6% in 2003. The lower operating margin reflects both a lower
level of non-recurring income as well as a negative impact from de-
preciating foreign currencies. The foreign exchange rate develop-
ment has impacted operating margin negatively by approximately 1
percentage point.

Novo Nordisk continuously hedges the cash flows for the main in-
voicing currencies to limit the short term negative impact on both
earnings and cash flow arising from fluctuations in foreign ex-
change rates. As a consequence the negative impact from the de-
creasing value of the foreign exchange rates on operating profit is to
a large extent countered by net financial hedging gains. With the

exchange rates prevailing in the beginning of February 2004 it was
expected that a net financial income of DKK 250 million would be
realised, including Novo Nordisk’s share of the profit & loss from
associated companies. As a result of the decreasing value of the US
dollar and related currencies, net finance was realised at DKK 477
million in 2004.

The effective tax rate decreased to 33% from 34% in 2003, net
profit increased to DKK 5,013 million up 4% compared to 2003 of
DKK 4,833 million. Earnings per share (diluted) thereby increased
from DKK 14.15 to DKK 14.83 in 2004, corresponding to a growth
of 5%.

Return on invested capital (ROIC) ended at 21% up from 20% in
2003. A large proportion of Novo Nordisk’s assets are denominated
in Danish kroner or Euro and ROIC is very sensitive to fluctuations in
foreign exchange rates. An increase in ROIC has been realised de-
spite a continued depreciation in the key foreign exchange rates, es-
pecially the US dollar, impacting ROIC negatively by approximately 2
percentage points.

The cash to earnings ratio for 2004 ended at 85% up from 80%
in 2003. The three-year average for cash to earings ratio for 2004
increased from 32.3% in 2003 to 59.0% (see page 98). The free cash
flow for 2004 was expected around DKK 3 billion, but was realised
at a significantly higher level of DKK 4.3 billion, reflecting the high-
er realised result for 2004 and a continued reduction in the average
number of credit days for trade debtors.

Long-term financial targets

The long-term financial targets of Novo Nordisk were defined and
communicated to the stock market in 2001. Below we have illus-
trated the reported average performance for the five year period
2000–2004 compared to the long-term financial targets:

Financial target

5 years’ average
2000–2004

Long-term
financial targets

Operating profit growth per annum
Operating margin
Return on invested capital per annum
Cash to earnings ratio as a three-year average

15% 15%
24% 25%
21% 25%
54% 60%

The targets were selected to ensure management focus on long-
term growth of the business, transformation of results into cash and
a significant improvement in return on invested capital. The pursuit
of these long-term targets will support the creation of a competitive
shareholder return. As demonstrated by the moderate growth in
operating profit in 2002, 2003 and 2004, the development in the
exchange rates can have significant impact on the reported growth
in operating profit in an individual year. In fact, if Novo Nordisk’s
main invoicing currencies remain at their current level throughout
2005, it is probable that in 2005 Novo Nordisk will also be unable to
meet its 15% operating profit growth target. The company’s view is,
however, that the 15% growth target is a realistic target which Novo

Novo Nordisk Annual Report 2004

M A N A G E M E N T R E P O R T

Nordisk will be able to meet in most years, based on the perform-
ance of the recurring business and assuming that currencies are rel-
atively stable. In other words, the company’s ability to deliver on the
target in a particular year will be impacted by significant changes in
currency exchange rates or events of a non-recurring nature.

Sales development by segments

Sales increased by 15% measured in local currencies. Growth was
realised both within diabetes care and biopharmaceuticals – primar-
ily driven by strategically important products such as the insulin ana-
logues NovoRapid® and NovoMix® 30 as well as NovoSeven®.

Sales growth was realised in all regions, with the primary growth
driver being North America, constituting 26% of total sales, but also
International Operations, constituting 17% of total sales, showed
solid growth rates.

Diabetes care

Sales of diabetes care products grew by 15% measured in local cur-
rencies compared to 2003 and by 11% measured in Danish kroner
to DKK 20,533 million. Novo Nordisk remains the global market
leader in diabetes care (insulin and oral antidiabetic products) with
an overall market share of 20%.

Insulin analogues, human insulin
and insulin-related products
Sales of insulin analogues, human insulin and insulin-related products
increased by 14% measured in local currencies and by11% measured
in Danish kroner to DKK 18,890 million. All regions contributed to
growth both measured in local currencies and in Danish kroner.

Novo Nordisk is the global leader in the insulin market with a
worldwide insulin volume market share of 50%, and within the ana-

Segments: sales
DKK billion

Geographical areas: sales
DKK billion

Diabetes care:
Insulin analogues
Human insulin and insulin-related products
Oral antidiabetic products (OAD)
Biopharmaceuticals:
Haemostasis management (NovoSeven®)
Growth hormone therapy
Hormone replacement therapy
Other

Europe
North America
International Operations
Japan & Oceania

logue segment Novo Nordisk continues to gain market share, now
holding close to 30% of the world market.

Sales of insulin analogues increased by 84% measured in local
currencies and by 77% in Danish kroner to DKK 4,507 million in
2004. Solid growth rates were realised in all regions, and North
America continues to be the primary growth driver. Sales of insulin
analogues contribute with 55% of the overall growth in local cur-
rencies and now constitute 24% of Novo Nordisk’s total sales of all
insulin products.

Levemir®, Novo Nordisk’s long-acting insulin analogue, continues
to gain market share in Europe and now holds 9% of the market for
long-acting insulin analogues, less than a year after introduction in
the first market. A continued roll-out of Levemir® in additional coun-
tries in 2005 is expected to underpin the solid development seen in
the early launch phase.

Europe
Sales in Europe increased by 6% measured in both local currencies
and in Danish kroner, with growth being driven by the portfolio of
insulin analogues, including Levemir®. Growth in insulin sales con-
tinues to be negatively impacted by price-focused healthcare re-
forms in some countries, while insulin sales in Germany in the fourth
quarter were positively affected by an acceleration of purchasing by
patients, primarily motivated by reimbursement considerations.

North America
Sales in North America increased by 34% in local currencies in 2004
and by 22% measured in Danish kroner. The solid sales growth re-
flects underlying market growth and market share gains. The in-
creased market share is driven by a solid penetration of the insulin
analogues NovoLog® and NovoLog® Mix. Novo Nordisk now holds
more than one-third of the US insulin market and 20% of the ana-
logue market.

In December, Novo Nordisk’s US affiliate Novo Nordisk Inc, was
again awarded a national contract to provide the US Veterans
Administration and Department of Defense (VA/DoD) with human
insulin, now also including analogue insulin in both vials and deliv-
ery devices. The new contract is initially for one year with an option
of prolongation for four additional option years, at the discretion of
the VA/DoD. The VA/DoD announced the potential five-year value
of the contract at just under USD 250 million.

International Operations
Sales within International Operations increased by 20% in local cur-
rencies and by 14% measured in Danish kroner. The key growth
driver continues to be sales of human insulin, driven especially by
China. However, insulin analogues also continue to add to growth,
driven especially by Turkey, and Novo Nordisk remains the overall
market leader in the analogue segment in the International
Operations region.

Japan & Oceania
Sales in Japan & Oceania increased by 11% in local currencies and
by 9% measured in Danish kroner. Growth is primarily due to in-
creased sales of NovoRapid® and NovoRapid® Mix 30, supported by
a continued conversion from durable to prefilled devices, with Novo
Nordisk now holding more than 80% of the prefilled device market.

Novo Nordisk Annual Report 2004

Oral antidiabetic products
Sales of oral antidiabetic products increased in all regions and in to-
tal by 21% measured in local currencies and 15% measured in
Danish kroner to DKK 1,643 million, with growth primarily driven by
North America but also by International Operations.

Biopharmaceuticals

Sales of biopharmaceutical products increased by 15% in local cur-
rencies compared to 2003 and by 11% measured in Danish kroner
to DKK 8,498 million.

NovoSeven®
Sales of NovoSeven® increased by 19% in local currencies compared
to 2003. Measured in Danish kroner sales increased by 13% to DKK
4,359 million, with all regions contributing to growth, but with
North America, Europe and International Operations as the major
growth drivers. In the fourth quarter, sales were positively affected
by a timing-related increase in sales to a number of countries in
International Operations.

The sales growth of NovoSeven® was driven by several factors in
2004. Due to the high penetration within spontaneous bleeds in
congenital inhibitor patients, the predominant part of the growth
within the inhibitor segment has been generated by treatment of
acquired haemophilia patients and usage of NovoSeven® in connec-
tion with elective surgery. Furthermore, the marketing approval in
Europe in the first quarter of 2004 of NovoSeven® for the control of
bleeding in patients with factor VII deficiency and Glanzmann’s
thrombasthenia added to growth. Treatment of spontaneous bleeds
for congenital inhibitor patients remains the largest area of use. In
addition, sales are perceived to have been positively affected by in-
creased investigational use of NovoSeven® influenced by data from
clinical trials from the NovoSeven® expansion programme.

Growth hormone therapy (Norditropin® and Norditropin®
SimpleXx®)
In local currencies sales of Norditropin® and Norditropin® SimpleXx®
products increased by 11% compared to 2003. Measured in Danish
kroner sales increased by 9% to DKK 2,317 million and were driven

US dollar

Japanese yen

Months

Rate

Months

Rate

725

675

625

575

525

6.00

5.75

5.50

5.25

5.00

12/03 3/04 6/04 9/04 12/04

Cover (left)
Rate (right)

by Europe and North America. The prefilled delivery device
NordiFlex® was launched in Japan and selected European countries
during 2004 as well as in the US market in January 2005.

In Japan, the launch of NordiFlex® in July 2004 contributed to the
positive development in Novo Nordisk’s market share during the
second half of 2004; however, the government-mandated reduction
in reimbursement prices in April 2004 impacted sales negatively.

Other products
Sales of other products within the biopharmaceuticals segment,
which predominantly consists of hormone replacement therapy
(HRT) related products, grew by 11% in local currencies and by 7%
in Danish kroner to DKK 1,822 million.

The sales growth in 2004 was positively impacted by the change
in July 2003 of the US distribution set-up for Novo Nordisk’s HRT
products and by the continued market penetration of the low-dose
continuous-combined product Activella® and the topical oestrogen
product Vagifem®. However, global sales in 2004 were negatively
impacted by the overall contraction of the HRT market.

Costs, licence fees and other operating income

The cost of goods sold increased by 9% to DKK 8,050 million, repre-
senting a gross margin of 72.3%, an increase from 71.7% in 2003.
Gains from an improved product mix as well as productivity increas-
es, totalling slightly above 1 percentage point, were only partially
offset by a negative currency impact.

Total non-production-related costs increased by 9% to DKK
14,576 million. The increase reflects especially costs related to sales
and distribution, which increased in line with the growth in sales.
The main drivers of sales and distribution costs in 2004 were, re-
spectively, launch activities for Levemir® in Europe; an increased US
sales force, primarily focusing on promotion of insulin products but
also related to the changed set-up for HRT products; and costs relat-
ed to an impairment charge on intangible assets in Brazil.

As a consequence of the implementation of IFRS 2 ‘Share-based
payment’, Novo Nordisk in 2004 expensed costs related to share-
based programmes amounting to DKK 104 million. The comparable
expense included in the IFRS-based statements for 2003 was DKK
76 million.

Total costs related to depreciation, amortisation and impairment
losses in 2004 were DKK 1,892 million compared to DKK 1,581 mil-
lion in 2003. The costs for 2004 include DKK 326 million in non-re-
curring impairment charges, compared to DKK 178 million in 2003.
Total income related to licence fees and other operating income
was DKK 575 million in 2004 compared to DKK 1,036 million in
2003, primarily reflecting a lower level of non-recurring income in
2004.

Net financials and tax

Net financials showed a net income of DKK 477 million in 2004
compared to DKK 954 million in 2003, reflecting a lower level of
hedging income in 2004. The foreign exchange hedging gains, pri-
marily related to the hedging of the US dollar, were DKK 663 million
compared to DKK 1,195 million in 2003. Foreign exchange hedging
gains in the fourth quarter of 2004 were positively impacted by un-

Novo Nordisk Annual Report 2004

M A N A G E M E N T R E P O R T

realised gains from the mark-to-market valuation of foreign ex-
change options, primarily related to the US dollar.

Novo Nordisk has as per 27 January 2005 hedged expected net
cash flows in relation to US dollars, Japanese yen and British pounds
for 14, 11 and 8 months, respectively.

The effective tax rate for 2004 was 33%, down from 34% in 2003,
corresponding to a total tax expense of DKK 2,444 million in 2004.

pliers have been introduced to the company and its standards. To fo-
cus on key impacts, the triviality limit has been raised. During 2004
suppliers accounting for 20% of the total value of Novo Nordisk’s
purchases were evaluated. Of these, 72% reported a satisfactory
performance. All suppliers with an unsatisfactory rating receive a
feedback letter from Novo Nordisk, and when needed an action
plan is agreed upon. In 2004, nine key suppliers were audited, fol-
lowing similar processes as Novo Nordisk’s regular quality audits.

Capital expenditure

Access to health

Net capital expenditure for property, plant and equipment for 2004
was realised at DKK 3.0 billion, compared to DKK 2.3 billion for
2003. The main investment projects in 2004 were the expansion of
purification capacity for Levemir®, as well as expansion of filling ca-
pacity for insulin products, including FlexPen®.

Free cash flow and financial reserves

Free cash flow for 2004 was realised at DKK 4,278 million compared
to DKK 3,846 million for 2003. This is higher than previously antici-
pated and is primarily related to a reduction in the average number
of credit days for trade receivables.

Novo Nordisk’s financial resources at the end of 2004 were DKK
10.2 billion compared to DKK 11.4 billion in 2003. Included in the
financial resources are undrawn committed credit facilities of close
to DKK 6.7 billion.

Non-financial performance:
Progress towards sustainability

In managing its business with a Triple Bottom Line approach, Novo
Nordisk is linking a set of key targets to sustainability goals. Twenty
top-level indicators help track performance over time in regard to
environmental, social and socio-economic goals. They relate to six
areas of strategic importance: living our values, access to health, our
employees, our use of animals, eco-efficiency and compliance, and
economic contribution. The indicators have been defined through
consultation with stakeholders, while methods of measuring and
targets are set by Novo Nordisk’s management. For details and com-
parative data, see page 50–51 and novonordisk.com/annual-report-
2004

Living our values

The employee survey, eVoice, is conducted annually and systemati-
cally measures the working climate. This includes a measure of the
organisational support for and understanding of responsible busi-
ness practices. In 2004, the average of respondents’ answers – on a
scale from 1–5, with 5 being the highest score – was 4.2. Regular in-
dependent facilitations assess compliance with the Novo Nordisk
Way of Management. In 2004, 96% of identified corrective actions
were accomplished. Performance on these indicators is stable over
time and better than targets.

Novo Nordisk’s commitment to social and environmental good
practices extends throughout the supply chain. Suppliers are evalu-
ated with respect to basic labour rights and environmental manage-
ment. Due to the company’s expanding global production, new sup-

Novo Nordisk has built its strategy for improved access to diabetes
care on the World Health Organization’s (WHO) key priorities: na-
tional healthcare strategies, national healthcare capacity, best possi-
ble pricing and additional funding. Novo Nordisk serves around
20% of the global diabetes care market, supplying insulin to 11–13
million people. The global health programmes, providing awareness,
education or treatment of diabetes, are reaching out to at least 21
million people.

The best possible pricing scheme, offered by Novo Nordisk to 49
of the least developed countries (LDCs) in the world, was monitored
closely in 2004 to ensure that sales offers were followed up and re-
alised purchase prices were at or below the level at 20% of average
prices in the industrialised countries. As a result, 33 LDCs chose to buy
insulin under this pricing scheme, as compared with 16 LDCs in 2003.

Our employees

Since 2003 efforts to improve health and safety have focused on
prevention. As a result, the frequency of occupational injuries per
million working hours has gone down; from 8.9 in 2002 to 5.6 in
2004. Regrettably, Novo Nordisk had one fatal accident in 2004 in
connection with a social team event. Steps have been taken to en-
sure that employees’ safety is properly considered before embarking
on such activities.

Employee turnover at Novo Nordisk was 7.3% in 2004, which is

satisfactory compared to the industry.

Our use of animals

Novo Nordisk sets goals to reduce, refine and replace animal experi-
ments and to improve animal welfare. Hence, despite a significantly
higher research activity in early phases, when animal experimenta-
tion is required, the number of animals purchased in 2004 only rose
by 10% to 47,311 animals, of which 96% are mice, transgenic mice
and rats.

The goal to totally remove animal test types for biological product
control by 2004 had to be postponed until 2005. An FDA approval,
obtained in 2004, enables Novo Nordisk to considerably reduce (by
approximately 80%) the number of animals used for biological
product control in one of the two remaining tests. A 60% reduction
in the use of rabbits has already been achieved by the end of 2004.
A novel test for glucagon was fully implemented in the third quarter
of 2004. The test uses isolated cells in vitro rather than living ani-
mals, and rabbits are therefore no longer used for this purpose.

Eco-efficiency and compliance

The 2003–2008 environmental strategy identified eight focus areas,
of which climate change has key priority. Novo Nordisk has agreed

Novo Nordisk Annual Report 2004

to set the goal for absolute reductions of its net CO2 emission by
2014. The year 2004 will serve as the basis for evaluation of the tar-
get achievement.

In 2004, CO2 emissions were 253,000 tons. This is a significant in-
crease from previous years. There are two reasons: First, the emis-
sion factors from electricity purchased in Denmark have increased
by approximately 15%. Secondly, Novo Nordisk no longer purchas-
es green electricity certificates for its site in Kalundborg. The compa-
ny is currently investigating in detail the renewable energy market,
product offerings and the possibilities to purchase credible certified
electricity from renewable sources.

Eco-productivity is a means of measuring the ability to ‘produce
more with less’. The medium-term targets for 2001–2005 are a 5%
annual improvement in water efficiency and a 4% annual improve-
ment in energy efficiency. In 2004 the achieved improvements were
7% and 8% respectively.

Compliance with regulatory requirements is a key indicator for
the standards of environmental management at local production
sites. In 2004, there were 76 breaches of regulatory limits, which is
a marked improvement compared with 2003, with a record number
of 105.

In 2004 there were 30 incidents of accidental releases, as com-
pared with 20 in 2003. Immediate measures are taken to mitigate
future events, including retraining of personnel. In August 2004,
Novo Nordisk had two accidental releases of materials containing
genetically modified organisms (GMOs) at the production site in
Bagsværd. The affected areas were disinfected immediately, and no
harm was done to humans or the environment.

However, since the goal remains to be zero breaches and zero
accidental releases, this performance is not satisfactory. Steps are
taken to improve compliance.

Economic contribution

The ‘footprint’ model provides an understanding of Novo Nordisk’s
local and global contributions to society. In the reports from the
largest production sites, the company’s contribution to socio-eco-
nomic growth is assessed and quantified. This includes job creation,
local taxes paid and local procurement.

Knowledge assets

Being a research driven and knowledge intensive company, know-
ledge is considered a key asset for further exploration. Novo Nordisk
takes a strategic and systematic approach, viewing knowledge
from a holistic approach that seeks to balance three perspectives:
behaviour/culture, technology/communication and performance
economics.

To ensure progress and report on the knowledge base, knowl-
edge assets are defined as stakeholder resources (employees, cus-
tomers, relationships and partnerships) and structural resources
(technology and processes).

Novo Nordisk’s exposure to patent expiry is significantly lower
than that of industry peers. No major patents expire within a 5-year
period. In 2004 Novo Nordisk had a total of 778 active patent fami-
lies, as compared with 701 in 2003.

Two key elements of the patent strategy are to raise patent
awareness internally, through training and the appointment of

‘patent champions’ in the R&D organisation, and to improve the
intellectual asset management.

Research and development update

Diabetes care

In December, Novo Nordisk filed the amended New Drug Applica-
tion related to Levemir® with the US regulatory authorities (FDA),
and Novo Nordisk expects a US marketing approval around mid-
2005, following an expected six months’ review period by the FDA.
The liraglutide phase 2b study was, as expected, initiated in
January 2005 and Novo Nordisk still expects to initiate the phase 3
clinical trial around the turn of the year 2005/6.

Novo Nordisk and the diabetes business unit of Medtronic Inc en-
tered into an agreement in November, covering the US and Puerto
Rico, to develop the world’s first prefilled cartridge for use with
Paradigm®, Medtronic’s external insulin pumps. Prefilled cartridges
containing NovoLog® are expected to offer a convenient treatment
option for people using Paradigm® pump therapy.

Novo Nordisk has completed the restructuring transaction with
Aradigm Corporation related to the AERx® insulin Diabetes Manage-
ment System (iDMS), giving Novo Nordisk full development and
manufacturing rights to the programme as of 26 January 2005.
Following the fulfilment of closing conditions, including approval by
the US competition authorities as well as approval by Aradigm’s
shareholders, Novo Nordisk’s wholly-owned affiliate Novo Nordisk
Delivery Technologies, Inc now employs approximately 130 former
Aradigm employees who have been dedicated to the AERx® iDMS
programme.

In November, The University of Oxford Diabetes Trials Unit, in col-
laboration with Novo Nordisk, initiated the 4-T study (Treating To
Target in Type 2 Diabetes). The study compares safety and efficacy of
three different insulin treatment regimens in patients with type 2
diabetes, who are inadequately controlled with oral antidiabetic
agents. The objective of this three-year study is to provide evidence
and guidance on ‘how best to treat people with type 2 diabetes with
insulin’, with the aim of preventing long-term complications and
preserve quality of life. Initial results from the study, which includes
approximately 700 patients, are expected during 2006, with final
results expected during 2008.

Biopharmaceuticals

Novo Nordisk submitted the regulatory dossier for marketing ap-
proval of the use of NovoSeven® for treatment of blunt trauma to
the European Medicines Agency in early January 2005. The applica-
tion is a supplemental new drug application with an expected six
months’ review time. Novo Nordisk still expects to initiate a US trau-
ma trial in the second quarter of 2005. The study is expected to
comprise some 600 blunt and penetrating trauma patients.

Following recent consultations with the FDA, Novo Nordisk ex-
pects to initiate a confirmatory clinical trial in the US and Europe as
well as in other countries for the use of NovoSeven® in intracerebral
haemorrhage (ICH) mid-2005, involving some 450 patients. Novo
Nordisk expects this trial to generate further clinical documentation
for filing with the FDA for regulatory approval in the US of
NovoSeven® in connection with ICH. Novo Nordisk still expects to

Novo Nordisk Annual Report 2004

M A N A G E M E N T R E P O R T

file an application by mid-2005 for marketing approval in Europe for
the use of NovoSeven® in connection with ICH.

In November, the Japanese Ministry of Health, Labour and
Welfare granted approval of NovoSeven® for treatment of bleeding
episodes in patients with acquired haemophilia, in addition to the
existing approval for treatment of congenital haemophilia patients
with inhibitors.

Also in November, Novo Nordisk was granted marketing authori-
sation in the US for Norditropin® for treatment of severe growth hor-
mone deficiency in adults.

Following analysis of the phase 2 data on the use of human growth
hormone in complicated fractures, further clinical development has
been discontinued. The phase 2 data showed a significant accelera-
tion of fracture healing; however, pharma-economic analysis did not
justify further clinical development. Novo Nordisk will continue to de-
velop human growth hormone for other new therapeutic indications.

Equity

Total equity was DKK 26,504 million at the end of 2004, equal to
70.8% of total assets, compared to 71.7% at the end of 2003.

Proposed dividend

At the Annual General Meeting on 9 March 2005, the Board of
Directors will propose a 9% increase in dividend to DKK 4.80 per
share of DKK 2, corresponding to a pay-out ratio of 31.8%, com-
pared to 30.8% for the financial year 2003. No dividend will be paid
on the company’s holding of own shares.

Treasury shares and share repurchase programme

As per 28 January 2005, Novo Nordisk A/S and its wholly-owned af-
filiates owned 22,585,129 of its own B shares, corresponding to
6.37% of the total share capital. During 2004, Novo Nordisk pur-
chased 6,480,000 B shares at a cash value of DKK 2 billion, which is
in line with the share repurchase programme as announced in April
2004. Novo Nordisk still expects to purchase additional B shares dur-
ing 2005 equivalent to a cash value of DKK 2 billion, with the re-
maining shares under the total DKK 5 billion share repurchase pro-
gramme to be acquired during 2006.

Long-term share-based incentive programme

As from 2004, Novo Nordisk’s Executive Management and Senior
Management Board (26 in total) participate in a performance-based
incentive programme where Novo Nordisk B shares are annually al-
located to a bonus pool when certain predefined business-related
targets have been achieved. The annual maximum allocation of
shares to the bonus pool is capped at the equivalent of eight
months of salary per participant. The shares in the bonus pool are
locked up for a three-year period before they are transferred to the
executives at the expiry of the three-year lock-up period. Based on
an assessment of the economic value generated in 2004 as well as
the performance of the R&D portfolio and key sustainability proj-
ects, the Board of Directors on 27 January 2005 approved the estab-

lishment of a bonus pool for 2004 by allocating a total of 126,344
Novo Nordisk B shares, corresponding to a cash value of DKK 33.7
million. This allocation amounts to seven months of salary on aver-
age per participant.

Audit Committee

The Audit Committee, which was established by the Board of
Directors in March 2004, continues to be responsible, on behalf of
the Board, for a number of predefined tasks. These include oversee-
ing the internal and external auditors, accounting policies and inter-
nal controls, as well as procedures for handling complaints regard-
ing financial reporting matters.

Legal issues

As of 27 January 2005, Novo Nordisk Inc, together with the majori-
ty of hormone therapy product manufacturers, is a defendant in 16
product liability lawsuits. Since the initiation of the lawsuits in July
2004, three cases against Novo Nordisk Inc have been dismissed by
the courts. Novo Nordisk’s hormone therapy products (Activella®
and Vagifem®) have been sold and marketed in the US since 2000.
Until July 2003, the products were sold and marketed exclusively in
the US by Pharmacia & Upjohn Corporation (now Pfizer). The pro-
ceedings are in their preliminary stages; however, Novo Nordisk is
not expecting the claims to impact Novo Nordisk’s financial outlook.
In January 2005, Novo Nordisk, Teva and Savient (formerly known
as Bio-Technology General) have agreed to a partial settlement of
their disputes over human growth hormone (hGH) intellectual prop-
erty. Under the terms of the agreement, the three parties have
granted each other cross-licences to any patents covering the hGH-
active ingredient. An appeal of a District Court judgment regarding
one portion of the dispute will continue, as will an interference pro-
ceeding in the US Patent and Trademark Office. The financial terms
of the agreement are not disclosed, but the financial impact has
been included in this annual report.

Outlook 2005

Novo Nordisk expects a 10–15 percentage-point growth in sales for
2005 measured in local currencies based on expectations of a strong
market for insulin products in general and the continued market
penetration of Novo Nordisk’s insulin analogue portfolio, combined
with expectations of increasing NovoSeven® and Norditropin®
SimpleXx® sales. However, as a consequence of the continued chal-
lenging currency environment, primarily related to the US dollar and
related currencies, the sales growth measured in Danish kroner is
expected to be around 10%.

For 2005, operating profit growth measured in local currencies
and excluding the impact from non-recurring items is expected to
be in line with Novo Nordisk’s long-term target of growing operat-
ing profit by 15%. Measured in Danish kroner the growth in operat-
ing profit is expected to be around 5%, reflecting a significant, neg-
ative currency impact and no major non-recurring income in 2005.
Novo Nordisk expects a net financial expense of DKK 100 million,

reflecting:

Novo Nordisk Annual Report 2004

A a financial income, net of around DKK 100 million (excluding
Novo Nordisk’s share of loss & profit in associated companies), pri-
marily related to expected gains from foreign exchange hedging
contracts; and

A a negative impact from losses in associated companies of around
DKK 200 million, primarily reflecting Novo Nordisk’s share of the
expected loss in ZymoGenetics, Inc.

Given the prevailing Danish corporation tax regime, Novo Nordisk
expects the tax rate to be 32%, 1 percentage point lower than the
tax rate realised for 2004.

Novo Nordisk plans capital expenditures of close to DKK 4 billion
in 2005, primarily related to the construction of production plants
for Levemir® as well as additional filling capacity for insulin products.
Capital expenditure will include purchase of fixed assets from
Aradigm Corporation of approximately DKK 300 million related to
the transfer of the AERx® iDMS project to Novo Nordisk.
Depreciation, amortisation and impairment losses are expected to
be around DKK 1.9 billion and the free cash flow to be more than
DKK 2 billion.

All of the above expectations are provided that currency ex-
change rates remain at the current level for 2005. All other things
being equal, movements in key invoicing currencies will impact
Novo Nordisk’s operating profit in 2005 as illustrated below. E

Invoicing currency

Annual impact on Novo Nordisk’s operating profit
in 2005 of a 5% movement in currency

USD
JPY
GBP
USD-related

DKK 280 million
DKK 130 million
DKK 80 million
DKK 70 million

Note: USD-related currencies include CNY, CAD, ARS, BRL, MXN, CLP, SGD, TWD and INR.

Forward looking
statement

This management report contains forward-looking state-
ments as the term is defined in the US Private Securities
Litigation Reform Act of 1995. Forward-looking statements
provide current expectations or forecasts of events such as
new product introductions, product approvals and financial
performance.

Such forward-looking statements are subject to risks, un-
certainties and inaccurate assumptions. This may cause
actual results to differ materially from expectations. Factors
that may affect future results include interest rate and cur-
rency exchange rate fluctuations, delay or failure of develop-
ment projects, production problems, unexpected contract
breaches or terminations, government-mandated or market-
driven price decreases for Novo Nordisk’s products, introduc-
tion of competing products, Novo Nordisk’s ability to suc-
cessfully market both new and existing products, exposure
to product liability and other lawsuits, changes in reimburse-
ment rules and governmental laws and related interpretation
thereof, and unexpected growth in costs and expenses.

Risks and uncertainties are further described in reports
filed by Novo Nordisk with the US Securities and Exchange
Commission (SEC) including the company’s Form 20-F,
which was filed on 27 February 2004. Please also refer to
the article ‘Risk Management’ on page 56. Novo Nordisk is
under no duty to update any of the forward-looking state-
ments or to conform such statements to actual results, un-
less required by law.

Novo Nordisk Annual Report 2004

F I N A N C I A L H I G H L I G H T S

SALES

2000

2001

2002

2003

2004

2003–2004

2003

2004

DKK million DKK million DKK million DKK million DKK million

Change EUR million EUR million

Diabetes care:
Insulin analogues
Human insulin and insulin-related products
Oral antidiabetic products (OAD)

142
13,161
1,080

459
14,533
1,392

1,187
14,651
1,620

2,553
14,492
1,430

4,507
14,383
1,643

77%
(1%)
15%

344
1,950
192

606
1,933
221

Diabetes care total

14,383

16,384

17,458

18,475

20,533

11%

2,486

2,760

Biopharmaceuticals:
Haemostasis management (NovoSeven®)
Growth hormone therapy
Hormone replacement therapy
Other products

Biopharmaceuticals total

2,252
2,008
1,298
544

6,102

3,071
2,055
1,426
449

7,001

3,593
2,061
1,333
421

7,408

3,843
2,133
1,322
385

7,683

4,359
2,317
1,488
334

8,498

Total sales by segments

20,485

23,385

24,866

26,158

29,031

Europe
North America
International Operations
Japan & Oceania

9,093
4,028
2,869
4,495

10,562
5,167
3,395
4,261

10,889
5,786
4,099
4,092

11,697
6,219
4,227
4,015

12,411
7,478
4,844
4,298

Total sales by geographical areas

20,485

23,385

24,866

26,158

29,031

13%
9%
13%
(13%)

517
287
178
52

586
311
200
45

11%

6%
20%
15%
7%

11%

1,034

1,142

3,520

3,902

1,574
837
569
540

1,668
1,005
651
578

3,520

3,902

Price and volume/mix
Currency

Total growth

KEY FIGURES

Operating profit
Net financials
Profit before income taxes
Net profit

Equity
Total assets
Capital expenditure (net)
Free cash flow

16%
11%

27%

17%
(3%)

14%

11%
(5%)

15%
(10%)

15%
(4%)

11%

DKK million DKK million DKK million DKK million DKK million

Change EUR million EUR million

4,703
181
4,884
3,154

16,620
24,597
2,123
2,712

5,410
285
5,695
3,620

19,700
28,662
3,829
186

5,927
401
6,328
4,116

22,477
31,612
3,893
497

6,422
954
7,376
4,833

24,776
34,564
2,273
3,846

6,980
477
7,457
5,013

26,504
37,433
2,999
4,278

9%
(50%)
1%
4%

7%
8%
32%
11%

DKK

Change

14.17
14.15
4.40
241

14.89
14.83
4.80
299

5%
5%
9%
24%

864
129
993
650

3,328
4,643
305
517

EUR

1.90
1.90
0.59
32

938
64
1,002
674

3,563
5,033
403
575

EUR

2.00
1.99
0.65
40

PER SHARE/ADR OF DKK 2

Earnings per share
Earnings per share diluted
Proposed dividend
Quoted price at year-end for B shares

RATIOS

Growth in operating profit
Growth in operating profit, three-year average
Operating profit margin
Return on invested capital (ROIC)
Cash to earnings
Cash to earnings, three-year average
Net profit margin
Return on equity
Equity ratio
Change in market capitalisation

DKK

9.03
9.03
2.65
285

32.6
24.1
23.0
22.3
86.0
66.3
15.4
19.6
67.6
56.2

10.47
10.45
3.35
342

15.0
22.7
23.1
22.7
5.1
56.2
15.5
19.9
68.7
20.4

11.87
11.85
3.60
205

9.6
19.1
23.8
20.5
12.1
34.4
16.6
19.5
71.1
(40.4)

Long-term financial target in %

25
25

8.4
11.0
24.6
19.5
79.6
32.3
18.5
20.5
71.7
15.4

8.7
8.9
24.0
20.6
85.3
59.0
17.3
19.6
70.8
21.9

Key figures and per share data are translated into EUR as supplementary information – the translation is based on the currency rate at 31 December 2004 (EUR 1=DKK 7.4381).

Novo Nordisk Annual Report 2004

E N V I R O N M E N TA L A N D S O C I A L H I G H L I G H T S

ENVIRONMENTAL

Resources

Wastewater

By-products (biomass)

Waste

Emissions to air

Water consumption
Energy consumption
Raw and packaging materials

Volume
COD
Nitrogen
Phosphorus

Volume
Nitrogen
Phosphorus

Waste (total)
Non-hazardous waste
Hazardous waste
Recycling percentage of total waste

Organic solvents
Ozone-depleting substances
CO2
SO2
NOx

Environmental Impact Potentials Global warming

Eco-productivity indices (EPIs)

Compliance

SOCIAL

Basic employee statistics

Ozone layer depletion
Acidification
Eutrophication

EPI for water
EPI for energy

Breaches of regulatory limit values
Accidental releases
Complaints

Employees (total)3)
Female
Male
Rate of absence4)
Rate of employee turnover4)

1,000 m3
1,000 GJ
1,000 tons

1,000 m3
Tons
Tons
Tons

1,000 m3
Tons
Tons

2000

2001

2002

2003

2004

1,429
1,732
76

1,121
723
63
11

141
1,167
353

1,790
1,838
88

1,424
830
86
15

147
1,415
423

2,044
2,083
93

1,714
971
111
17

155
1,649
504

2,621
2,299
110

2,169
1,187
122
21

181
1,846
555

2,756
2,408
111

2,226
1,448
121
21

155
1,876
530

Tons
Tons
Tons
%

10,551
–
–
45

14,866
7,300
7,566
50

12,935
7,032
5,903
41

21,356
9,370
11,986
41

21,855
9,203
12,652
40

Tons
Kg
1,000 tons
Tons
Tons

1,000 tons CO2-eqv
Kg CFC11-eqv
Tons SO2-eqv
Tons NO3-eqv

%
%
%
%

78
1,561
139
270
272

142
153
460
1,040

110
111

9
2
2

75
915
143
245
251

145
41
421
1,291

102
114

68
5
32

149
1,351
149
162
283

152
83
360
1,417

116
115

30
12
7

1371)
1,047
153
158
291

155
43
361
1,598

110
124

105
20
11

115
1,176
253
288
452

255
60
604
1,803

107
108

762)
30
13

13,752
50.8
49.2
4.0
10.6

8.4
1.7
–

16,693
50.7
49.3
3.8
7.7

8.2
2.2
–

18,372
49.7
50.3
2.7
6.4

8.9
1.1
–

19,241
49.4
50.6
3.1
7.1

5.4
1.1
0

20,725
49.1
50.9
3.2
7.3

5.6
1.3
1

Health & safety

Frequency of occupational injuries
per million working hours
Frequency of occupational illnesses per million working hours
Fatalities

Training costs

Annual training per employee5)

DKK

8,393

8,201

8,189

7,518

8,992

OTHER

Purchased animals

Number of animals purchased

61,512

55,876

48,128

42,869

47,311

Patent families

Active patent families to date
New patent families (first filing)

Environmental costs and
investments

Environmental costs
Environmental investments

Economics7)

as share of total investments in tangible assets7)

R&D as share of sales
Total corporate tax as share of sales
Employee income taxes
Novo Nordisk exports as share of Danish exports

526
85

93.2
30.1
1.4

16.6
8.4
–
3.4

590
107

129.7
44.3
1.2

16.6
8.9
1,597
4.1

654
114

139.1
14.4
0.4

15.9
8.9
1,853
4.4

701
140

151.46)
23.0
1.0

15.5
9.7
2,010
4.4

778
145

155.3
54.0
1.8

15.0
8.4
2,065
3.9

DKK million
DKK million
%

%
%
DKK million
%

1) Was reported as 140. Reporting error now corrected.
2) Includes breaches that are also registered as accidental releases. Two of them are accidental releases of GMOs.
3) Headcount at the end of 2004. The full-time equivalent is 20,285.
4) 2002–2004 figures cover all employees, whereas figures for 2000–2001 comprise only employees in Denmark and employees at production sites outside Denmark.
5) Average spent on training costs per employee based on headcount.
6) Was reported as 149.8. Reporting error now corrected.
7) Financial figures 2001–2004 have been changed due to adoption of IFRS. See Note 1 on page 64.

Novo Nordisk Annual Report 2004

T R I P L E B O T T O M L I N E P E R F O R M A N C E I N D I C AT O R S

STRATEGIC AREAS

Living our values

INDICATORS

Two indicators show how we live up to the company’s values, as per-
ceived by employees. This is measured as part of the climate survey,
eVoice, conducted annually. Responses are given on a scale from 1 to 5,
with 5 being the highest score. One indicator shows follow-up on the
facilitation process.

Average of respondents’ answers as to whether social and environmental issues are
important for the future of the company.

Average of respondents’ answers as to whether management demonstrates in words
and action that they live up to our Values.

Access to health

Two indicators measure progress on one of the programmes for global
access to health, the best possible pricing scheme in Least Developed
Countries (LDCs). In 2004 there were 50 LDCs.

Our employees

Percent of fulfilment of action points planned arising from facilitations of the Novo
Nordisk Way of Management and Values.

Number of LDCs where Novo Nordisk operates.

Number of LDCs which have chosen to buy insulin under the best possible pricing
scheme.

Four indicators measure standards of health and safety in the work-
place, employee development and equal opportunities. Responses in
the eVoice climate survey are given on a scale from 1 to 5, with 5 being
the highest score.

Frequency of occupational injuries.

Employee turnover rate.

Average of respondents’ answers as to whether their work gives them an opportun-
ity to use and develop their competences/skills.

Average of respondents’ answers as to whether people from diverse backgrounds
have equal opportunities (for example in terms of hiring, promotion and training) at
Novo Nordisk, regardless of gender, race, ways of thinking etc.

Our use of animals

Two indicators track efforts to reduce the number of experimental ani-
mals and improve their welfare.

Percent of animal test types removed from external and internal specification.

Housing conditions for experimental animals, considering the needs of the animals.

Eco-efficiency and compliance

Two environmental indicators, eco-productivity indices (EPIs), are based
on eco-efficiency thinking and reflect internationally adopted views.
Full compliance with local laws and regulations is a company policy.
Certification of production facilities is instrumental to that end.

Annual improvement in water efficiency.

Annual improvement in energy efficiency.

Compliance.

ISO 14001 implementation.

Economic contribution

Five financial measures for reporting to shareholders and the financial
markets serve as indicators for economic contribution.

Operating profit margin.

Growth in operating profit.

Total corporate tax as share of sales
(corporation tax in profit and loss/sales).

Return on invested capital (ROIC).

Cash to earnings (three-year average).

Novo Nordisk Annual Report 2004

IMPACT

20011)

2002

2003

2004

TARGETS 2004 –2007

Organisational support for and understanding of
responsible business practices.

Integration of corporate values in all decisions.

4.3

3.6

4.1

3.5

4.0

3.5

4.22)

3.82)

>– 3.5

Corrective actions on values following facilitations.

90%

95%

99%

96%

80%

Access to essential medicines.

Affordability of essential medicines.

Increased quality of life for employees, improved work
flow and productivity, and less absence due to illness.

Influx and outflux of knowledge.

Increased competence level for employees and
increased competence capital in the company.

Increased diversity in the workplace.

N/A

8.2

7.7

3.8

3.9

8.9

6.4

3.7

3.8

5.4

7.1

3.7

333)

Best possible pricing scheme in all LDCs.

5.6

Continuous decrease.

7.3

3.84)

Reduction of turnover.

>– 3.5

Reduction and replacement of experimental animals.

18%

64%

73%

82%

Total removal of animal test types for
biological product control by 2005.5)

Improved welfare of experimental animals.

Housing
prototypes

New housing
standards

New facilities
in use

Full implementation of new Novo
Nordisk standards for optimal housing.

Water use efficiency.

Energy use efficiency.

Compliance with regulatory requirements.
Accidental releases.

Pollution prevention through decreased use of
raw materials, water and energy, and decreased
environmental impact per produced unit.

14%

68
5

16%

15%

30
12

10%

24%

105
20

76
30

5% improvement per annum 2001–2005

4% improvement per annum 2001–2005

Zero breaches.
Zero accidental releases.

System
described

6
facilities

0
facilities

ISO 14001 certification of all production
facilities worldwide by 2007. The next is
planned for 2005.

Contribution to company efficiency, growth and
investors’ economic capacity.

Contribution to company growth and
investors’ economic capacity.

23.1%

23.8%

24.6%

24.0%

25%6)

15.0%

9.6%

8.4%

8.7%

15% per annum6)

Contribution to national economic capacity.

8.9%

9.7%

8.4%

Efficiency of invested capital, contribution to asset
base and investors’ economic capacity.

Contribution to the company’s degree of freedom
in terms of available cash funds (resources).

22.7%

20.5%

19.5%

20.6%

25% per annum6)

56.2%

34.4%

32.3%

59.0%

60% as a three-year average6)

1) Comparable data for 2000 do not exist, as this set of indicators was defined in 2001.
2) The survey population was 21% of all employees. The population was small as the questions were not mandatory.
3) In 2004 a margin of +10% to the realised sales price (ie 20–22%) is permitted where exchange rates fluctuate. This occurred for three countries.
4) The survey population was 76% of all employees.
5) Target revised in 2004.
6) Long-term growth target. Financial figures have been changed due to adoption of IFRS. See Note 1 on page 64.

E C O N O M I C F O O T P R I N T

Measuring contributions to society

N ovo Nordisk’s business strategy aims to contribute to

society in those areas where the company has out-
standing knowledge and expertise. Access to health,
ethical business practice, supply chain management
and environmental management at all production sites are import-
ant for the institutional framework within which the markets work.
The footprint model and the cash value distribution on the opposite
page illustrate the relationship between Novo Nordisk and its eco-
nomic stakeholders and their roles as drivers of economic activity in
society.

The principles of economics have been justified by the success of
the market economy, growth and societal wealth creation. Economic
growth and trade combined with foreign investments that create
employment are important factors in capacity building globally.
Social indicators, though, show that the created wealth is unevenly
distributed. In poor communities, investments and tax contributions
are but one aspect of responsible business. Market failure, inad-
equate information and lack of societal institutions impede the
workings of economic stakeholder mechanisms, in particular in the
developing world. Performance-based principles, such as those
developed by the Global Reporting Initiative, in conjunction with
government regulation may be a way to ensure that the market
economy is working for everyone.

Direct and indirect local and global impact

To show the indirect impact of Novo Nordisk in Denmark (2004), we
have estimated the indirect employment created by our production
and by employees’ consumption in Denmark and globally. The indir-
ect effects are estimated by using production multipliers for the
pharmaceutical industry and consumption multipliers from Statistics
Denmark. A total of 11,839 direct jobs in Denmark translated into
42,673 global jobs in the supply chain due to production needs and
the private consumption of employees in Denmark. The value of the
jobs in Denmark is DKK 9.9 billion and DKK 3.9 billion in income
taxes.

Key indicators of the company’s direct economic and geograph-
ical impact are reported on page 53. Measured by sales, Novo
Nordisk is the 11th largest Danish company. Most production facil-
ities, 58% of the employees measured in full-time equivalents (FTE)
and 88% of tangible assets are in Denmark. From 2003 to 2004,
sales grew by 11%. 99% of sales are outside Denmark: 43% in

IMPACTS (2004)

Jobs

Income

Tax

DKK billion

Direct impact in Denmark
Indirect impact: suppliers
Indirect impact: employees

Impact in Denmark

Impact globally

11,839
17,501
3,476

32,816

42,673

5.0
4.1
0.8

9.9

–

2.1
1.5
0.3

3.9

–

Europe, 26% in North America, 15% in Japan & Oceania and 16%
in International Operations. 36% of the cash from customers goes
to suppliers, who are primarily located in Denmark: The employee
base (FTE) grew by 8%, primarily in North America (23%) followed
by International Operations (19%) and Japan & Oceania (8%). 34%
of the cash-added value was remuneration, mainly in the developed
world, and particularly in Denmark. In 2004, total corporate taxes
constituted 8% of sales. In Denmark 13% is paid as local taxes and
87% as state taxes. Most investors are Danish (59%), North
American (25%) or British (13%). An estimated 60% of employees
own a total of 1% of the shares.

Value of knowledge and investments

Novo Nordisk’s greatest value is societies’ expectations of future prod-
ucts and solutions. This value originates from the skills, expertise
and competences of the people at Novo Nordisk and is, although
difficult to measure, of benefit to individuals as well as society. A
rough measure of current values is wage share (54%) of the value
added per employee (DKK 908,772 or USD 151,666). Expenditure
on R&D is an important capacity builder for society and source of in-
novation creating future wealth for Novo Nordisk. The wage share
(39%) of R&D is an indication of the company’s impact as a capacity
builder in the community. The level of investment is a measure of
the company’s future economic capacity. In 2004 Novo Nordisk
invested DKK 3 billion in new production facilities, primarily in
Brazil, Denmark, France and the US, as compared with DKK 2.3 bil-
lion in 2003.

Contribution to society locally and impact globally

Measured as a share of Danish GDP, turnover in 2004 accounted for
2%, a rise from 1.9% in 2003. In 2004 economic contribution to over-
all economic wealth for society through the value added was 1.5%
of Gross Value Added (GVA), 3.9% of Danish exports and 0.5% of
Danish employment. In 2004 Novo Nordisk accounted for 4.3% of
Danish corporate taxes and Novo Nordisk’s employees accounted for
0.6% of total Danish income tax.

The company’s impact on society through the value of products
may be illustrated through the number of people reached globally.
Novo Nordisk serves 20% of the diabetes care market and with an
insulin market share of 51%, supplies insulin to 11–13 million people
globally. These are primarily people with diabetes in the developed
world, but Novo Nordisk is also supplying 3–5 million people in the
developing world, in many countries as the only provider of insulin.
The burden of diabetes is forecast to worsen in the future. It is not
enough for companies to contribute to access to health in the devel-
oping world; products must be affordable and income must be gen-
erated in the local economies to generate funds for a sustainable
healthcare system. During 2004 Novo Nordisk created new jobs and
income opportunities both in China (118) and Brazil (253).

See the indicators of current and future global health at
novonordisk.com/annual-report-2004 and read more about the
effect of creating jobs and income in the developing world. E

Novo Nordisk Annual Report 2004

Novo Nordisk’s economic stakeholder model

This model illustrates Novo Nordisk and its economic stakeholders and the interactions that drive economic growth in well-developed societies. When, for instance,
investors provide risk capital so that Novo Nordisk can develop new products, it will benefit customers, employees and suppliers. For customers, in turn, the prod-
ucts from Novo Nordisk improve their ability to contribute to society. When employees, suppliers and investors spend their income to buy goods and services and
make investments, they too contribute to wealth generation in society. And in their capacity as citizens in the local and global community, all economic actors pay
taxes to the public sector in return for services. Our sustainable business practices are mechanisms that improve the outcome of the market economy model. The
interactions and multiplier effects are illustrated by the green circle linking the stakeholders.

Investors/funders
Risk capital for development and production
of new products is rewarded through
dividend and share prices
(20% are private investors).

Society
A As a business, Novo Nordisk impacts through sustainable business practices, investment,

employment (42,673 jobs globally), environmental impact and contribution to GVA/export
(2%/3.9% in Denmark).

A As a pharmaceutical company, Novo Nordisk provides knowledge, R&D and healthcare
products (insulin for 11–13 million people) and outreach through improved awareness,
diagnosis or treatment of diabetes (for at least 21 million people).

K K

K K K K K K K

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Employees
Employees’ knowledge and
productivity are a major
part of the company’s
intangible value. 42%
of employees work
outside Denmark.
54% of value added
is remuneration.

h Remuneration
Productivity f

Novo Nordisk
provides products and quality of life
to customers, dividend and return
on investment to investors,
income and profit to suppliers,
wage income to employees and
taxes to the public sector.

h Profits
M aterials f

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K K K K K K K K

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h Profits
Products f

K K K K K K K

Customers
Our products provide health
for customers in interaction
with the healthcare sector.
Novo Nordisk has 51% of
the global insulin market
and 20% of the global dia-
betes care market.

Public sector
Stakeholders and companies pay tax to fund
public activities in society. In return they
receive services. Novo Nordisk’s tax payments
are 8% of corporate taxes in Denmark.
Novo Nordisk’s employees in Denmark pay
0.6% of the country’s total income tax.

Suppliers
Suppliers profit from the
location of Novo Nordisk facilities in their communities
locally and from the company’s need for long-term
stable supply partnerships globally. 17,501 jobs are
created at suppliers in Denmark and 26,294 globally.

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:
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P

CASH VALUE DISTRIBUTION (2004)

DKK million

Cash received

Cash-added value

Customers
Suppliers
Company cash
Employees
Investors/funders
Public sector
Management

a: Cash received for products and services (from sales)
b: Cash payments for materials, facilities and services1)

Cash-added value (a minus b)

c: Remuneration
d: Dividend and interest payments
e: Taxes
f: Future growth

28,754
10,320
18,434
9,872
3,560
2,866
2,136

100%
36%

34%
13%
10%
7%

1) Cash payments outside Novo Nordisk. The figure includes cash received from licence fees, realised exchange rate gains and interest income.

Novo Nordisk Annual Report 2004

100%
54%
19%
16%
11%

C O R P O R AT E G O V E R N A N C E

Corporate governance on the agenda

I n 2004 a number of new national and international guidelines

emerged. In Denmark, the Nørby Committee II set up by the
Copenhagen Stock Exchange published a draft revision of its
recommendations for good corporate governance. The
European Commission continued to launch initiatives under the
Corporate Governance action plan.

As a company organised under Danish law and with a primary list-
ing on the Copenhagen Stock Exchange, Novo Nordisk is guided by
the Nørby recommendations and the EU initiatives. As an interna-
tional company listed in New York and London, Novo Nordisk is in
compliance with the US Sarbanes–Oxley Act as a foreign private
issuer and will seek inspiration from internationally recognised
standards.

Organisational structure

Novo Nordisk is a public limited liability company. Within that
framework, shareholders have the ultimate authority over the com-
pany, and they exercise their right to make decisions regarding Novo
Nordisk at general meetings. The company has a two-tier board
structure consisting of the Board of Directors and Executive
Management. The Board of Directors supervises the performance of
the company, its management and organisation on behalf of the
shareholders. It also participates in determining the company strat-
egy. Executive Management, in turn, has responsibility for the com-
pany’s daily operations. The two bodies are separate, and no person
serves as a member of both.

Shares and voting rights

The share capital in Novo Nordisk is divided into A shares and B
shares. The A shares, which are solely owned by the Novo Nordisk
Foundation via Novo A/S, have 10 votes per DKK 1 of the A share
capital, whereas the B shares have one vote per DKK 1 of the B share
capital. According to the Articles of Association of the Foundation,
the A shares cannot be divested by Novo A/S or the Foundation. The
A shares represent 15.2% of the capital and 64.1% of the entire
voting power in the company. The A shares are not listed, whereas
the B shares are listed on the Copenhagen and London Stock
Exchanges, and on the New York Stock Exchange in the form of
ADRs. There are no transferability restrictions on the B shares. Novo
Nordisk is of the opinion that the current ownership structure is ap-
propriate and preferable for the long-term development of the
company. A revocation of the current voting rights differentiation
cannot be implemented as this would violate the Articles of
Association of the Foundation as approved by the Danish author-
ities. For further information on shares, see page 104.

The Novo Nordisk Foundation

The objective of the Foundation is to provide a stable basis for the
commercial and research activities of Novo Nordisk and support sci-
entific, humanitarian and social purposes. The Foundation may, in
connection with a capital increase in Novo Nordisk or a merger of
Novo Nordisk with other companies, waive its controlling interest in

Novo Nordisk if it is necessary to uphold and develop the commer-
cial and research activities of Novo Nordisk as an internationally
competitive business. However, the Foundation shall strive to main-
tain material influence in Novo Nordisk through Novo A/S.

The Foundation supports Novo Nordisk in achieving its vision, en-
suring competitive financial results and adhering to the Charter for
Companies in the Novo Group. All strategic and operational matters
are solely decided by the Board and the management of Novo
Nordisk. Overlapping board memberships ensure
the
Foundation and Novo Nordisk share a common vision and strategy.

that

Shareholders’ general meeting

General meetings are called with approximately three weeks’ no-
tice, and the agenda is accompanied by proxy forms enabling the
shareholder to vote specifically on each item. The annual general
meeting approves the annual report.

The general meeting elects 4–10 directors, and the auditor(s). All
shareholders may ask questions at the general meetings. Proposals
for resolutions at the Annual General Meeting must be submitted in
writing to the Board no later than 1 February of any given year.

The Board of Directors

The Board currently consists of 10 directors. Seven are elected by
shareholders at general meetings, and three are Novo Nordisk em-
ployees from Denmark, elected by Danish employees.

Shareholder-elected directors serve for a one-year term and can
be re-elected at the general meeting. Directors must retire at the
first general meeting after having reached the age of 70. The chair-
manship recommends to the Board whether directors should be
nominated for re-election – among other things on the basis of an
evaluation of their performance. The aim is to compose a board
consisting of persons who have such knowledge and experience
that the Board can, in the best possible way, attend to the interests
of the shareholders, the employees and other stakeholders.
Descriptions of the candidates’ qualifications accompany the agen-
da of the general meeting.

According to Danish law, Novo Nordisk employees in Denmark are
entitled to be represented by half of the total number of directors
elected at the general meeting. Thus, employees have among them-
selves elected three directors, each of whom serves for a four-year
term as per the current legislation. Directors elected by the employ-
ees have the same rights and obligations as the directors elected by
the shareholders. For information on each director, see page 106.

All directors receive induction on joining the Board, and regularly
update and refresh their competences and knowledge. The Board
ordinarily meet seven times a year including a 2–3 day strategic ses-
sion. All directors attended all board meetings in 2004. The Board
ensures via a fixed annual calendar that it addresses the main tasks
in a timely manner. With the exception of agenda items reserved for
the Board’s internal discussion, executives attend and may speak at
the board meetings ensuring that the Board is sufficiently informed
of the operations of the company. Executives’ regular feedback

Novo Nordisk Annual Report 2004

from meetings with investors enables directors to have insight into
major shareholders’ views of Novo Nordisk.

Chairmanship

The chairman and the deputy chairman form the chairmanship of
the Board. They carry out administrative tasks, such as the planning
of board meetings to ensure a balance between determination of
strategy and the financial and managerial supervision of the com-
pany. Other tasks include recommending the remuneration of
directors and executives, and suggesting candidates for election by
the general meeting.

with Executive Management. This process is directed by the chair-
manship and may be facilitated by an external consultant. Written
questionnaires form the basis for the process that evaluates whether
each director and executive participates actively in the Board discus-
sions and contributes with independent judgement within, for ex-
ample, organisation and management as well as financial and oper-
ational strategy. Further, assessment is made as to whether the
director is inspirational and whether the environment supports open
discussion at board meetings. The Board continuously assesses, for-
mally once a year, the performance of each executive. The chairman
also conducts an annual interview with each executive.

The Audit Committee

Risk management

The Board established an Audit Committee in March 2004, with
three members. All members qualify as independent as defined by
the US Securities and Exchange Commission (SEC). One member is
designated as chairman and two members have been designated as
Audit Committee Financial Experts.

The Audit Committee assists the Board with the oversight of a)
the external auditors, b) the internal auditors, c) the procedure for
handling complaints regarding accounting, internal controls, audit-
ing or financial reporting matters (‘whistleblower’ system), d) the
accounting policies, and e) the systems of internal controls.

Executive Management

Executive Management is responsible for the day-to-day manage-
ment of the company. It consists of the president and CEO, and five
other executives. The Board appoints Executive Management and
determines their remuneration. The chairmanship reviews the per-
formance of the executives. As part of the Organisational Audit
process, the chairmanship identifies successors to executives and
presents the names of such candidates to the Board for approval.
Executives must retire having reached the age of 62. For information
on each executive, see page 107.

Remuneration Policy

Policy. The Remuneration Policy is designed to attract, retain and
motivate the directors and executives.
Directors. Each director receives a fixed fee per year at a competitive
level. The chairmanship recommends to the Board the amount,
which is reported in the annual report. The total remuneration of
the directors is approved by the annual general meeting in connec-
tion with the approval of the annual report. Directors are not
offered stock options, warrants or participation in other incentive
schemes.
Executives. Executive remuneration is evaluated against a Danish
benchmark of large companies with international activities. The re-
muneration package consisting of a base salary, cash bonus, pen-
sions, non-monetary benefits and a long-term incentive is deter-
mined by the Board, and should align the interests of the executive
with those of the shareholders.

For further information on remuneration, see Note 35 on page 87.

Assessment of the Board of Directors and
Executive Management

The Board of Directors annually conducts a self-assessment proce-
dure to improve the performance of the Board and the cooperation

Executive Management is responsible for the risk management
process, including risk identification, assessment of probability and
potential impact, and initiation of risk-mitigating actions. Major risks
are systematically identified and regularly reported to Executive
Management and the Board of Directors. For details on risk man-
agement, see page 56.

Internal control

The Board of Directors has overall responsibility for Novo Nordisk’s
system of internal controls and the Audit Committee reviews the
adequacy of the internal controls over financial reporting. Among
other things the review is based on reports from the organisation,
internal audit function as well as the external auditors.

Audit

The Annual General Meeting in 2004 elected two independent au-
diting firms, who act in the interest of the shareholders, as well as
the public in general. The Board proposes at the Annual General
Meeting 2005 to elect only one auditor, in line with the amended
requirements for listed Danish companies. The auditors report any
significant findings regarding accounting matters, internal control
deficiencies etc via the Audit Committee to the Board and in the au-
ditor’s long-form report. A more detailed management report on
internal controls and accounting issues is provided to Executive
Management. The Audit Committee supervises the annual audit
process, which includes meetings with the auditors. In order to safe-
guard independence and objectivity, the Audit Committee pre-
approves services to be provided by the principal auditor. The princi-
pal auditor is restricted from providing certain non-audit services
and, as from 2004, the lead partner is required to rotate every five
years.

Corporate governance codes and practices

Novo Nordisk is in general in compliance with the codes of good
corporate governance designated by stock exchanges in Copen-
hagen, New York and London. For a detailed review of Novo
Nordisk’s compliance with the applicable codes and a more exten-
sive review of Novo Nordisk’s corporate governance practices, see
novonordisk.com E

Novo Nordisk Annual Report 2004

R I S K M A N A G E M E N T

Managing risks

E xploiting business opportunities relies on effective man-

agement and mitigation of risks. With a formalised gov-
ernance structure on risk management and disclosure in
place, Novo Nordisk is better positioned to respond
promptly to events that may have a significant negative impact on
the company’s ability to meet its objectives, both short term and
long term.

There’s a fine balance between taking calculated, entrepreneurial
risks and being overly precautious. This is particularly true for com-
panies in the pharmaceutical industry, where the pipeline from hy-
pothesis to successful market penetration typically runs over more
than a 10-year period. To Novo Nordisk, risk management is about
identifying and reducing risk to an acceptable level. Novo Nordisk
defines risk as ‘any event that could have a significant negative im-
pact upon our ability to meet our objectives’. Not just in terms of
pursuing the Vision and meeting long-term financial targets, but
also to protect employees and reputation. Hence, risk management
considers both financial and non-financial risks, and reports on key
risks through one integrated and systematic approach.

Risk alert

In the wake of Enron, companies were alerted to improving not only
their disclosure of business risks, but also internal control procedures.
Novo Nordisk generally complies with current national and interna-
tional codes of good corporate governance and also works to im-
prove internal processes to identify risks, monitor trends and respond
to emerging issues. However, in 2002 the Board of Directors and
Executive Management took the opportunity to proactively address
the emerging requirements on managing and reporting on risks.
Against that background, the company established a process to
standardise and optimise the company’s risk management system.

Risk reporting

Today, a common, systematic risk reporting approach is in place which

identifies and assesses material risks associated with Novo Nordisk’s
business. In quarterly reports to Executive Management and the
Board of Directors, long-term and short-term risks are assessed and
quantified in terms of reputational damage and financial impact.
For each risk factor the potential impact is detailed, as are mitigating
actions. This is being aligned with long-existing management
processes such as the annual strategic planning, balanced score-
cards and budgeting.

A Financial Corporate Governance and Risk Office has been estab-
lished to handle implementation of the Sarbanes–Oxley requirements
in Novo Nordisk and improve risk management. Reporting to the
CFO and with links to the legal Corporate Governance function and
Group Internal Audit, this office drives and consolidates risk report-
ing from each of the five business areas: discovery and development;
manufacturing, sales and marketing; quality, regulatory and busi-
ness development; finance, legal and IT; and people, reputation and
relations. This is done in a process of consultation with internal risk
stakeholders to ensure monitoring, measuring and reporting of
risks, as well as implementation of mitigating actions. Moreover, a
thorough risk assessment is included in all major projects.

Risk Management Group

Executive Management has established a dedicated Risk Manage-
ment Group of senior executives, representing all key business ar-
eas, and reporting to Executive Management and the Board of
Directors. It sets the strategic direction and challenges, and analyses
the risk and control information generated by the individual business
areas. This challenger function helps eliminate blind spots and that
potential cross-functional impacts are considered.

Current risk profile

Key risks are mapped throughout the value chain of primary activ-
ities: from discovery and development, through manufacturing and
logistics, and to marketing and sales. In addition, risks related to

Risk management process

Examples of risk areas:
1 Development of new drugs: strategic candidates
1 in pipeline
2 Manufacturing and quality: insufficient capacity
3 Competition: new and stronger competitors
4 Financial risks: foreign exchange rates
5 Business ethics: reputational damage

Novo Nordisk’s risk reporting matrix is updated on a quar-
terly basis. Two factors are considered: what is the likelihood
of a negative event occurring, and what is the calculated
impact on the business. Impacts are quantified and as-
sessed in terms of potential financial loss and reputational
damage.

1 Gross risk
1 Net risk

Catastrophic

t
c
a
p
m

Major

Moderate

Minor

2
1

53
435

Unlikely

Possible

Likely

Very likely

Likelihood

Executive
Management

Risk Management Group

Financial Corporate
Governance and Risk Office

Organisation

Novo Nordisk Annual Report 2004

support activities such as quality, regulatory and business develop-
ment, finance, legal, IT and human resources are included. Below
are examples of current key risks.

Development of new drugs

Delays in the development of new drugs or failure to obtain ap-
proval from regulatory authorities could have a significant negative
impact on Novo Nordisk’s ability to maintain its position as a market
leader in diabetes care and to reach its long-term financial targets.
On the other hand, drug development requires taking calculated
risks; statistically the industry must carry a 45% risk that drugs test-
ed as far as into phase 3 studies will never reach the market.

An example of a current risk in this area is Novo Nordisk’s invest-
ments in the development of the new pulmonary delivery system
AERx®. To mitigate this risk, Novo Nordisk has expanded its licensing
rights to AERx® iDMS inhaled insulin programme from Aradigm, and
obtained full development and manufacturing rights. Under the
agreement, Novo Nordisk has assumed all further responsibilities for
AERx® iDMS development and funding.

Manufacturing and quality

The major part of Novo Nordisk’s manufacturing capacity is concen-
trated at a few sites in Denmark. While this entails a relatively low
risk in terms of access to a skilled people base, natural disasters and
political instability, the geographical concentration in itself poses a
potential risk. Contingency planning includes preventive measures
against major exposures, for example alternative stock facilities. In
2004 Novo Nordisk announced new investment projects in produc-
tion facilities outside Denmark – in the US and China. This will not
only reduce exposure in terms of production capacity, but will also
facilitate better access to strategic markets and reduced currency
risk exposure.

Based on the samples taken during internal quality audits and in-
spections by health authorities in 2004, Novo Nordisk’s production
is found to be in general compliance with international standards
for good manufacturing practice (cGMP). In 2004 Novo Nordisk re-
ceived four inspections by the FDA; only one of these resulted in
written observations. Regulatory approval of production sites as
well as of products for the market is a precondition for the com-
pany’s long-term ability to supply medicines to the market. A global
strategy to obtain and maintain market authorisation will mitigate
risks in this area, for example in relation to approvals for Levemir®
and future indications of NovoSeven®.

Competition

The diabetes market is highly competitive and increasingly so. On
the one hand, Novo Nordisk is facing increased competition with
strong entrants to the market, while on the other hand the com-
pany is gaining market shares in the attractive US market. In addi-
tion, there is government-mandated pressure on prices, particularly
in Europe. Here, current healthcare reforms are putting pressure on
the industry’s ability to produce pharmacoeconomic assessments.

Security, litigation and financial risks

Non-compliance with international and local legislation is also a risk
factor. One example is the ongoing dispute with Polish customs au-
thorities, who have claimed that pharmaceutical companies that have

imported products to Poland in the period 1999–2001 have misstat-
ed customs values. This dispute concerns a number of pharmaceuti-
cal importers, including Novo Nordisk. Another example would be
the tax risk related to fixing and approval of transfer pricing.

Novo Nordisk is involved in some legal proceedings, and risks re-
lated to these are closely monitored. One such example is claims on
alleged product liability on HRT. Novo Nordisk Inc., together with
the majority of hormone therapy product manufacturers, is a defen-
dant in 16 product liability lawsuits. Since the initiation of the law-
suits in July 2004, three cases against Novo Nordisk Inc. have been
dismissed by the courts (see page 92).

Foreign exchange risk is the principal financial risk factor for Novo
Nordisk, as a major part of costs are being paid in euro and significant
income in non-euro currencies, primarily US dollars and Japanese
yen. To mitigate this exposure, financial hedging instruments are
used (see Note 36 on page 90 and management report on page 41).
In addition, the company’s global expansion strategy entails carrying
a higher share of production costs in foreign currencies.

Business ethics and people

In a highly competitive business environment, protecting employees
and reputation is vital. Novo Nordisk relies on its ability to attract
and retain talented individuals, and this is known to be a function of
the company’s external reputation and stakeholder trust.

In 2004, Novo Nordisk’s ethics were challenged on a number of
occasions (see page 18). However, none of these constitute major
financial or reputational issues. The introduction of a business ethics
policy and guidelines for employees will serve as mitigation of such
risks. There have been no incidents of problematic relationships with
key non-financial stakeholder groups that posed any significant risk
to the company. E

Quantitative and
qualitative measures

The assessment of risks to financial stakeholders involves in-
depth financial analysis of earnings, cash flows, balance sheets
and off balance sheet risk exposures. Much of this analysis is
quantitative in nature. At the same time a more qualitative
analysis is often conducted, which focuses on other aspects of
company performance, including country influences, industry
factors, competitive dynamics, and company management
and policy – all with regard to their impact on the quality and
sustainability of a company’s operating and financial
performance.

Novo Nordisk’s qualitative risk analysis aims to maximise
shareholder value and enhance the quality of the company’s
transparency and disclosure. However, the company acknow-
ledges that despite systematic risk identification, reporting,
monitoring and mitigation, unforeseen adverse events can
still occur. See page 47.

Novo Nordisk Annual Report 2004

A C C O U N TA B I L I T Y

Reporting against global standards

N ovo Nordisk holds itself accountable to stakeholders

for the company’s performance and seeks to report in
a transparent way about the challenges and oppor-
tunities for its business today and in the longer term.
In terms of reporting on social, environmental, ethical and econom-
ic issues Novo Nordisk has contributed to developing and driving
emerging international standards and codes and continues its sup-
port to promote corporate responsibility and global sustainable de-
velopment. In 2004 Novo Nordisk became engaged in the process
of developing an international standard for social responsibility un-
der the auspices of the ISO.

AA1000 Framework

Novo Nordisk’s non-financial reporting follows the AA1000
Framework, an accountability standard designed to improve ac-
countability and performance by learning through stakeholder en-
gagement. It states that reporting must provide a complete, accur-
ate, relevant and balanced picture of the organisation’s approach to
and impact on society. To the best of our knowledge, this Annual
Report 2004 complies with these requirements.

Global Reporting Initiative Guidelines

Novo Nordisk reports – and has done so since 2002 – in accordance
with The Global Reporting Initiative’s (GRI’s) 2002 Sustainability
Reporting Guidelines. The Guidelines require reporting in accord-

ance with 11 principles and against a list of 97 sustainability per-
formance indicators, of which 50 are core indicators that must be
reported on. On the website is a GRI index with an overview of the
full ‘in accordance’ reporting. See more at novonordisk.com/annual-
report-2004

Global Compact

Novo Nordisk is a signatory to the United Nations Global Compact,
a platform for encouraging and promoting good corporate principles
and learning experiences in the areas of human rights, labour, envir-
onment and bribery & corruption. Novo Nordisk is working actively
to implement the Global Compact principles in our business and
within our sphere of influence. Reporting on actions taken during
2004 to implement the 10 principles of the Global Compact in a
Communication on Progress, including performance metrics aligned
with the GRI Guidelines, can be found at novonordisk.com/
annual-report-2004

Assurance after AA1000AS

The information provided in Novo Nordisk’s annual reporting for
2004 and the underlying data sets have been assured according to
the AA1000 Assurance Standard. This includes an assessment of
Novo Nordisk’s reporting ‘in accordance’ with the GRI Guidelines
and Global Compact. See the Assurance statement on page 105. E

REPORTING IN ACCORDANCE WITH GLOBAL REPORTING INITIATIVE 2002 SUSTAINABILITY REPORTING GUIDELINES

Themes

Level of reporting

Vision and strategy

Profile

Governance structure
and management systems

Section

1.1, 1.2

2.1– 2.22

3.1– 3.20

GRI Content Index

Performance indicators

4.1

Company activities, report scope, report profile

Structures and processes at board and executive level, stakeholder
engagement policies and management systems

Economic performance

EC1– EC13

Direct impacts on: customers, suppliers, employees, providers of capital,
public sector; Indirect economic impacts

Environmental performance

EN1– EN35

Materials, energy, water, biodiversity, emissions, effluents and waste
suppliers, products and services, transport

Social performance

LA1– LA17

Employment, labour/management relations, health and safety, training
and education, diversity and opportunity

HR1– HR14

Human rights

SO1– SO7

Society

PR1– PR11

Product responsibility

+ / 8 * / 3 - / 2

+ /16 * / 5 - /14

+ / 8 * / 5 - / 4

+ /12 * / 2

+ / 2 * / 1 - / 4

+ / 5 * / 6 - / 6

+ Fully reported / Number of indicators * Partially reported / Number of indicators - Not reported / Number of indicators

Novo Nordisk Annual Report 2004

C O N S O L I D AT E D F I N A N C I A L S TAT E M E N T S – C O N T E N T S L I S T

Consolidated income statement
Consolidated balance sheet
Consolidated cash flow statement and financial resources
Consolidated statement of changes in equity

Notes – Accounting policies

1 Changes in accounting policies – Adoption of IFRS
2 Summary of significant accounting policies
3 Changes in the scope of consolidation
4 Critical accounting estimates and judgements

Notes – Consolidated income statement

5 Segment information
6 Sales
7 Employee costs
8 Depreciation, amortisation and impairment losses
9 Fees to statutory auditors

10 Licence fees and other operating income (net)
11 Financial income
12 Financial expenses
13 Income taxes
14 Earnings per share
15 Appropriation of net profit incl proposed dividends

Notes – Consolidated balance sheet

16 Intangible assets
17 Property, plant and equipment
18 Financial assets
19 Inventories
20 Trade receivables
21 Other receivables
22 Marketable securities
23 Share capital
24 Long-term debt
25 Deferred tax liabilities
26 Provisions for pensions
27 Other provisions
28 Short-term debt
29 Other liabilities

Notes – Consolidated cash flow and financial resources

30 Other reversals with no effect on cash flow
31 Cash flows from divestment of subsidiaries
32 Cash flows from acquisition of subsidiaries
33 Cash and cash equivalents

Notes – Additional information

34 Share-based payment schemes
35 Management‘s remuneration, share options and shareholdings
36 Derivative financial instruments
37 Commitments and contingencies
38 Related party transactions
39 Reconciliation to US GAAP

Companies in the Novo Nordisk Group
Summary of financial data 2000 – 2004
Accounting policies for non-financial data
Quarterly figures 2003 and 2004 (unaudited)
Management Statement
Auditors‘ reports

This Annual Report does not include the Financial State-
ments of the Parent Company, Novo Nordisk A/S. These
have been prepared in a separate document, which can
be obtained upon request from Novo Nordisk A/S and is
available at novonordisk.com

The Financial Statements of the Parent Company,
Novo Nordisk A/S, form an integral part of the complete
Annual Report. The complete Annual Report including
the Financial Statements of the Parent Company, Novo
Nordisk A/S, will be filed with the Danish Commerce and
Companies Agency where a copy also can be obtained.
In note 15, page 76, the Appropriation of net profit incl
proposed dividends of the Parent Company Novo Nordisk
A/S is included.

The accounting policies of Novo Nordisk have been
changed as of 1 January 2004 to comply with Inter-
national Financial Reporting Standards (IFRS).

In note 1 – ‘Changes in accounting policies – Adoption

of IFRS’ the effect of adopting IFRS is shown.

Definitions

Page

60
61
62
63

64
67
71
71

72
74
74
74
74
74
75
75
75
75
76

76
77
78
79
79
79
79
80
80
81
82
83
83
83

84
84
84
84

85
87
90
92
93
93

96
98
100
102
103
104

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 59

C O N S O L I D AT E D I N C O M E S TAT E M E N T

DKK million

Sales
Cost of goods sold

Gross profit

Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income (net)

Operating profit

Share of profit/(loss) in associated companies
Financial income
Financial expenses

Profit before income taxes

Income taxes

Net profit

Basic earnings per share (DKK)
Diluted earnings per share (DKK)

Note

2004

2003

2002

6
7, 8

7, 8
7, 8
7, 8, 9
10

8, 18
11
12

14
14

29,031
8,050

20,981

26,158
7,409

24,866
6,598

18,749

18,268

8,280
4,352
1,944
575

6,980

(117)
898
304

7,457

2,444

5,013

14.89
14.83

7,451
4,055
1,857
1,036

6,422

(59)
1,482
469

7,376

2,543

4,833

14.17
14.15

7,187
3,952
1,960
758

5,927

72
1,046
717

6,328

2,212

4,116

11.87
11.85

60 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

DKK million

ASSETS

Intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Other financial assets

Total long-term assets

Inventories
Trade receivables
Tax receivable
Other receivables
Marketable securities
Cash at bank and in hand

Total current assets

Total assets

EQUITY AND LIABILITIES

Share capital
Treasury shares
Share premium account
Retained earnings
Other comprehensive income

Total equity

Long-term debt
Deferred tax liabilities
Provision for pensions
Other provisions

Total long-term liabilities

Short-term debt
Trade payables
Tax payables
Other liabilities
Other provisions

Total current liabilities

Total liabilities

Total equity and liabilities

C O N S O L I D AT E D B A L A N C E S H E E T

Note

31 Dec 2004

31 Dec 2003

16
17
18
25
18

19
20

21
22
33

24
25
26
27

29
27

314
17,559
883
769
159

19,684

7,163
4,062
710
1,855
526
3,433

331
16,342
1,040
579
80

18,372

6,531
3,785
134
2,652
1,828
1,262

17,749

16,192

37,433

34,564

709
(45)
2,565
22,671
604

26,504

1,188
1,853
250
358

3,649

507
1,061
631
3,721
1,360

7,280

10,929

709
(33)
2,565
20,925
610

24,776

753
1,510
222
271

2,756

975
1,008
643
3,366
1,040

7,032

9,788

37,433

34,564

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 61

C O N S O L I D AT E D C A S H F L O W S TAT E M E N T
A N D F I N A N C I A L R E S O U R C E S

DKK million

Net profit

Reversals with no effect on cash flow:

Income taxes
Depreciation, amortisation and impairment losses
Interest income and interest expenses
Other reversals with no effect on cash flow

Income taxes paid
Interest received and interest paid (net)

Cash flow before change in working capital

Change in working capital:
(Increase)/decrease in trade receivables and other receivables
(Increase)/decrease in inventories
Increase/(decrease) in trade payables and other liabilities

Cash flow from operating activities

Investments:
Divestment of subsidiaries
Acquisition of subsidiaries
Purchase of intangible assets and long-term financial assets
Sale of property, plant and equipment
Purchase of property, plant and equipment
Net change in marketable securities (over three months)

Cash flow from investing activities

Financing:
New long-term debt
Repayment of long-term debt
Purchase of treasury shares
Sale of treasury shares
Dividends paid

Cash flow from financing activities

Net cash flow

Unrealised gain/(loss) on exchange rates and marketable securities
included in cash and cash equivalents

Net change in cash and cash equivalents

Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

Bonds with original term to maturity exceeding three months
Undrawn committed credit facilities

31
32

22
28

Note

2004

2003

2002

5,013

4,833

4,116

2,444
1,892
(128)
1,018
(2,866)
109

7,482

211
(623)
519

2,543
1,581
(101)
365
(1,804)
67

7,484

(721)
(571)
(43)

2,212
1,293
(54)
291
(2,266)
120

5,712

312
(1,131)
(26)

7,589

6,149

4,867

–
–
(312)
140
(3,139)
1,310

(2,001)

505
(574)
(1,982)
87
(1,488)

(3,452)

–
10
(40)
185
(2,458)
(1,516)

(3,819)

476
(23)
(1,619)
15
(1,243)

(2,394)

52
(448)
(81)
50
(3,943)
1,085

(3,285)

–
(18)
(386)
39
(1,161)

(1,526)

2,136

(64)

(14)

2,122

841

2,963

508
6,694

(14)

(78)

919

841

1,810
8,701

(22)

885

919

301
7,961

9,181

Financial resources at the end of the year

10,165

11,352

Free cash flow

4,278

3,846

497

62 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

C O N S O L I D AT E D S TAT E M E N T O F C H A N G E S I N E Q U I T Y

Share
capital

Treasury
shares

Share
premium
account

Retained
earnings

DKK million

2004

Balance at the beginning of the year

709

(33)

2,565

20,925

Exchange rate adjustment of investments in subsidiaries
Deferred (gain)/loss on cash flow hedges at the beginning of
the year recognised in the Income statement for the year
Deferred gain/(loss) on cash flow hedges at the end of the year
Other adjustments

Net income recognised directly in equity

Net profit for the year

Total income for the year

Cost of share-based payment
Purchase of treasury shares
Sale of treasury shares
Dividends

Balance at the end of the year

–

(13)
1

–

5,013

–

5,013

104
(1,969)
86
(1,488)

Other comprehensive income

Total

Exchange

Deferred
rate gain/loss on
cash flow
hedges

adjust-
ments

Other
adjust-
ments

(79)

513

176

24,776

(513)
461

(52)

(513)
461
7

(6)

5,013

(52)

5,007

104
(1,982)
87
(1,488)

At the end of the year proposed dividends of DKK 1,594 million are included in retained earnings. No dividend is declared on treasury shares.

709

(45)

2,565

22,671

(40)

461

183

26,504

2003

Balance at the beginning of the year

709

(19)

2,565

18,849

Net income recognised directly in equity

Net profit for the year

Total income for the year

Cost of share-based payment
Purchase of treasury shares
Sale of treasury shares
Dividends

Balance at the end of the year

(85)

391

22,477

(391)
513

122

109

(391)
513
109

237

4,833

122

109

5,070

76
(1,619)
15
(1,243)

–

(14)
–

–

4,833

76
(1,605)
15
(1,243)

709

(33)

2,565

20,925

(79)

513

176

24,776

At the end of the year proposed dividends of DKK 1,488 million are included in retained earnings. No dividend is declared on treasury shares.

2002

Balance at the beginning of the year

709

(16)

2,565

16,200

Net income recognised directly in equity

Net profit for the year

Total income for the year

Cost of share-based payment
Purchase of treasury shares
Sale of treasury shares
Dividends

Balance at the end of the year

116

126

19,700

–

(85)

(116)
391

–

(85)

275

(59)

(85)

(116)
391
(59)

131

4,116

(85)

275

(59)

4,247

38
(386)
39
(1,161)

–

(4)
1

4,116

38
(382)
38
(1,161)

709

(19)

2,565

18,849

(85)

391

22,477

At the end of the year proposed dividends of DKK 1,243 million are included in retained earnings. No dividend is declared on treasury shares.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 63

N O T E S – A C C O U N T I N G P O L I C I E S

1 CHANGES IN ACCOUNTING POLICIES – ADOPTION OF IFRS

As of 1 January 2004, the accounting policies have been changed to comply
with International Financial Reporting Standards (IFRS). The date of transi-
tion is 1 January 2002 and all comparative figures for 2000 –2003 have been
restated. Following IFRS 1 all standards and interpretations effective at 31
December 2004 have been applied.

The following standards with effective date after 31 December 2004 have
also been applied:
A IFRS 2 ‘Share-based Payment’ (issued February 2004). IFRS 2 has been
applied retrospectively to all grants of employee shares and share options
from 1997 to 2004.

A The revised standards IAS 32 ‘Financial Instruments: Disclosure and Pre-
sentation’ and IAS 39 ‘Financial Instruments: Recognition and Measure-
ment’

A All the revised standards in the IASB‘s improvement project, ie: IAS 1,
IAS 2, IAS 8, IAS 10, IAS 16, IAS 17, IAS 21, IAS 24, IAS 27, IAS 28, IAS 31,
IAS 33 and IAS 40.

The standard IFRS 5 ‘Non-current Assets Held for Sale and Discontinued
Operations’ with effective date 1 January 2005 has not been applied. IFRS 5
will be applied in accordance with the effective date 1 January 2005. The
standard will be applied prospectively and only affects future transactions.
The impact of application is not expected to be significant.

The adoption of IFRS results in changes to the accounting policies in the
following areas:

a) Accounting for associated R&D companies – Novo Nordisk’s share
of profit or loss in associated research and development companies,
including impairment losses, is included in share of profit and loss in
associated companies and is therefore no longer included in research
and development costs. Novo Nordisk’s capital gains on dilution or sale
of investments in associated research and development companies is
included in share of profit or loss in associated companies and therefore
no longer in Licence fees and other operating income (net). The method
of calculating Novo Nordisk’s share of profit or loss in an associated com-
pany is slightly changed.

b) Market value of currency options – currency options hedging future
cash flow are measured at market value at the balance sheet date. As a
consequence of the detailed IFRS requirements for allowing hedge ac-
counting for currency options, the current use does not qualify for cash
flow hedge accounting. Value adjustments are therefore recognised in
the Income statement under financial income or financial expenses.

c) Share-based payment – in accordance with IFRS 2 ‘Share-based pay-
ment’ the fair value of employee services received in exchange for the
grant of share-based compensation plans is recognised as an expense,
and allocated over the vesting period.

Ratios

Growth in operating profit
Operating profit margin
Return on invested capital (ROIC)
Cash/earnings, three-year average
Basic earnings per share (DKK)
Diluted earnings per share (DKK)

d) Provision for pensions – provisions for pension commitments and
similar obligations are calculated in accordance with IAS 19. All actuarial
gains and losses are recognised in the balance sheet at 1 January 2002 in
accordance with IFRS 1.

e) Borrowing costs – all interest expenses are recognised as an expense
in the period in which they are incurred. Interest expenses on loans
financing construction of major investments are no longer included in
the cost of the assets.

f) Cash discounts – in line with the development in international practice,
cash discounts are now classified as a deduction from sales. Previously,
cash discounts were reported as Sales and distribution costs.

g) Long-term bonds – cash and cash equivalents consist of cash and
marketable securities which at the date of acquisition had a maturity not
exceeding three months. The cash flow from marketable securities,
which at the date of acquisition had a maturity exceeding three months,
is included in cash flow from investing activities.

h) Deferred tax assets are presented as long-term assets and are no

longer offset in provisions for deferred tax.

Software – development costs of software in relation to major IT
projects for internal use are reclassified from property, plant and equip-
ment to intangible assets.

In the income statement gains and losses on derivative financial
instruments are no longer offset in the gains and losses of the hedged
items. This has the effect that a foreign exchange loss of DKK 229 million
in 2003 (DKK 510 million in 2002) is reclassified from financial income
to financial expenses.

k) Long-term employee benefits – provisions are recognised for certain

long-term employee benefits.

l) Diluted earnings per share – are calculated in accordance with IAS 33,

which causes a change in the calculation of the dilutive effect.

m) Other minor effects from adopting IFRS.

The changes regarding share-based payment, cash discounts and long-term
employee benefits were not included in the unaudited reconciliations to
IFRS included in the Annual Financial Report 2003 and the Stock Exchange
Announcement for the first three quarters of 2004.

To illustrate the effect of adopting IFRS in the Novo Nordisk Group, the
following reconciliations of the reported figures for 2002 and 2003 under
previous Danish GAAP to the IFRS figures have been prepared.

The letters a) to m) in the tables below refer to descriptions of the changes in
accounting policies due to IFRS adoption mentioned above.

2003

2002

Previous
GAAP

6.8%
24.1%
19.1%
32.0%
14.24
14.14

IFRS

8.4%
24.6%
19.5%
32.3%
14.17
14.15

Previous
GAAP

6.5%
23.7%
20.1%
34.9%
11.81
11.72

IFRS

9.6%
23.8%
20.5%
34.4%
11.87
11.85

64 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A C C O U N T I N G P O L I C I E S

1 CHANGES IN ACCOUNTING POLICIES – ADOPTION OF IFRS (CONTINUED)

Consolidated income statement

DKK million

Sales
Cost of goods sold

Gross profit

Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income (net)

Operating profit

Share of profit/(loss) in associated companies
Financial income
Financial expenses

Profit before income taxes

Income taxes

Net profit

Previous
GAAP

26,541
7,439

2003

IFRS
effect

IFRS

(383)
(30)

26,158
7,409

Previous
GAAP

25,187
6,633

2002

IFRS
effect

IFRS

(321)
(35)

24,866
6,598

19,102

(353)

18,749

18,554

(286)

18,268

7,799
4,193
1,847
1,121

6,384

12
1,214
227

7,383

2,525

4,858

(348)
(138)
10
(85)

7,451
4,055
1,857
1,036

6,422

(71)
268
242

(7)

(59)
1,482
469

7,376

2,543

(25)

4,833

7,479
4,139
1,951
994

5,979

27
475
181

6,300

2,205

4,095

(292)
(187)
9
(236)

7,187
3,952
1,960
758

(52)

5,927

45
571
536

72
1,046
717

6,328

2,212

4,116

DKK million

2003

2002

DKK million

2003

2002

Operating profit – previous GAAP

6,384

5,979

Net profit – previous GAAP

4,858

4,095

a) Accounting for associated R&D companies
– reclassification of share of profit or loss
– reclassification of capital gain

c) Share-based payment
d) Provisions for pensions
e) Borrowing costs – depreciation
m) Other

150
(85)
(76)
10
38
1

194
(236)
(38)
(11)
38
1

Operating profit – IFRS

6,422

5,927

a) Accounting for associated R&D companies

– increased share of profit or loss
b) Market value of currency options
c) Share-based payment
d) Provision for pensions
e) Borrowing costs – depreciation
e) Borrowing costs – interest expenses as incurred
m) Other

(9)
30
(69)
6
38
(10)
(11)

(9)
50
(28)
(7)
38
(14)
(9)

Net profit – IFRS

4,833

4,116

Consolidated balance sheet

DKK million

Intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Other financial assets
Inventories
Trade and other receivables
Marketable securities
Cash at bank and in hand

Total assets

Equity
Total liabilities

Previous
GAAP

220
16,828
1,009
–
80
6,531
6,636
1,828
1,262

2003

IFRS
effect

111
(486)
31
579
–
–
(65)
–
–

IFRS

331
16,342
1,040
579
80
6,531
6,571
1,828
1,262

Previous
GAAP

240
16,205
1,202
–
77
5,919
6,115
315
1,423

2002

IFRS
effect

123
(524)
47
559
2
–
(91)
–
–

IFRS

363
15,681
1,249
559
79
5,919
6,024
315
1,423

34,394

170

34,564

31,496

116

31,612

25,224
9,170

(448)
618

24,776
9,788

22,928
8,568

(451)
567

22,477
9,135

Total equity and liabilities

34,394

170

34,564

31,496

116

31,612

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 65

N O T E S – A C C O U N T I N G P O L I C I E S

1 CHANGES IN ACCOUNTING POLICIES – ADOPTION OF IFRS (CONTINUED)

Consolidated balance sheet (continued)

DKK million

2003

2002

DKK million

2003

2002

1 Jan
2002

Total assets – previous GAAP

34,394

31,496

Equity – previous GAAP

25,224

22,928

20,137

a) Accounting for associated R&D companies
d) Provisions for pensions
e) Borrowing costs
h) Deferred tax assets
m) Other

31
–
(382)
548
(27)

47
(43)
(410)
559
(37)

Total assets – IFRS

34,564

31,612

Total liabilities – previous GAAP

h) Deferred tax assets

Changes to deferred tax as a result of the
other changes to accounting policies

d) Provisions for pensions
k) Long-term employee benefits
m) Other

9,170

8,568

548

559

(201)
52
211
8

(234)
14
211
17

Total liabilities – IFRS

9,788

9,135

a) Accounting for associated

R&D companies

b) Market value of currency options

– deferred tax effect
c) Share-based payment
– deferred tax effect
d) Provisions for pensions
e) Borrowing costs
k) Long-term employee benefits
m) Other

(35)

100
(36)
(268)
(211)
(29)

(22)

92
(42)
(287)
(211)
(28)

(22)

82
(15)
(297)
(211)
(31)

Equity – IFRS

24,776

22,477

19,700

Consolidated cash flow statement

DKK million

Cash flow from operating activities
Cash flow from investing activities *)
Cash flow from financing activities

Previous
GAAP

6,159
(2,313)
(2,394)

2003

IFRS
effect

(10)
(1,506)
–

IFRS

6,149
(3,819)
(2,394)

Previous
GAAP

4,881
(4,384)
(1,526)

2002

IFRS
effect

(14)
1,099
–

IFRS

4,867
(3,285)
(1,526)

Net cash flow

1,452

(1,516)

(64)

(1,029)

1,085

Net change in cash and cash equivalents
Cash and cash equivalents at the beginning of the year

Cash and cash equivalents at the end of the year

1,435
1,234

(1,513)
(315)

2,669

(1,828)

(78)
919

841

(1,053)
2,287

1,087
(1,402)

1,234

(315)

34
885

919

Free cash flow **)

3,846

–

3,846

497

–

497

DKK million

2003

2002

DKK million

2003

2002

Cash flow from operating activities – previous GAAP

6,159

4,881

e) Borrowing costs

Cash and cash equivalents at the end of the year
– previous GAAP

2,669

1,234

– cash flow effect of interest expenses

(10)

(14)

g) Long-term bonds – at the end of the year

(1,828)

(315)

Cash flow from operating activities – IFRS

6,149

4,867

Cash flow from investing activities – previous GAAP

(2,313)

(4,384)

e) Borrowing costs

– cash flow effect of interest expenses

g) Long-term bonds
g) Long-term bonds – unrealised gains/losses

10
(1,513)
(3)

14
1,087
(2)

Cash flow from investing activities – IFRS

(3,819)

(3,285)

Cash and cash equivalents
at the end of the year – IFRS

841

919

*) According to IFRS the cash flow from investments in long-term bonds (more than
three months) is included in cash flow from investing activities. Excess liquidity is
primarily invested in non-callable, high-rated, liquid bonds with solid credit rating.
**) Free cash flow is not included as a subtotal in the cash flow statement according to
IFRS. Free cash flow is calculated as the sum of Cash flow from operating activities
and investing activities excluding Net change in marketable securities (more than
three months). This leaves Free cash flow unaffected by the IFRS adoption.

66 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Consolidated financial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS). The Consolidated
financial statements are prepared in accordance with the historical cost con-
vention, as modified by the revaluation of available-for-sale financial assets,
and financial assets and financial liabilities (including derivative financial
instruments) at fair value through profit or loss.

To facilitate the reading of the Annual Report, part of the information

required by IFRS has been included in the Management Report.

CRITICAL ACCOUNTING POLICIES
Novo Nordisk’s management considers the following to be the most im-
portant accounting policies for the Group.

Principles of consolidation
The Consolidated financial statements include the financial statements of
Novo Nordisk A/S (the Parent Company) and all the companies in which
Novo Nordisk A/S directly or indirectly owns more than 50% of the voting
rights or in some other way has a controlling influence (subsidiaries). Novo
Nordisk A/S and these companies are referred to as the Group.

Companies that are not subsidiaries, but in which the Group holds 20%
to 50% of the voting rights or in some other way has a significant influence
on the operational and financial management, are treated as associated
companies.

The Consolidated financial statements are based on the financial state-
ments of the parent company and of the subsidiaries and are prepared by
combining items of a uniform nature and eliminating intercompany trans-
actions, share-holdings, balances and unrealised intercompany profits and
losses. The Consolidated financial statements are based on financial state-
ments prepared by applying the Novo Nordisk Group’s accounting policies.
The purchase method of accounting is used to account for the acquisition
of businesses by the Group. The cost of an acquisition is measured as the fair
value of the assets given and liabilities incurred or assumed at the date of
exchange, plus costs directly attributable to the acquisition. Identifiable as-
sets acquired and liabilities and contingent liabilities assumed in a business
combination are measured initially at their fair values at the acquisition date,
irrespective of the extent of any minority interest. The excess of the cost of
acquisition over the fair value of the Group’s share of the identifiable net
assets acquired is recorded as goodwill.

Newly acquired and divested companies are included in the Income state-
ment during the period of Novo Nordisk’s ownership. Comparative figures
are not adjusted for disposed or newly acquired companies.

Sales and revenue recognition
Sales represent the fair value of the sale of goods excluding value added tax
and after deduction of provisions for returned products, trade discounts and
allowances.

Provisions and accruals for rebates to customers are provided for in the
period the related sales are recorded. Historical data are readily available and
reliable, and are used for estimating the amount of the reduction in sales.

Revenue is recognised when it is realised or realisable and earned. Re-
venues are considered to have been earned when Novo Nordisk has sub-
stantially accomplished what it must do to be entitled to the revenues.

Revenue from the sale of goods is recognised when all the following

specific conditions have been satisfied:
A Novo Nordisk has transferred to the buyer the significant risk and rewards

of ownership of the goods

A Novo Nordisk retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the
goods sold

A The amount of revenue can be measured reliably
A It is probable that the economic benefits associated with the transaction

will flow to Novo Nordisk; and

A The costs incurred or to be incurred in respect of the transaction can be

measured reliably.

N O T E S – A C C O U N T I N G P O L I C I E S

These conditions are usually met by the time the products are delivered to
the customers.

A reliable measurement of the amount of revenue requires that reliable

estimates of discounts, rebates and product returns can be made.

Licence fees are recognised on an accrual basis in accordance with the

terms and substance of the relevant agreement.

As a principal rule sale of intellectual property is recorded as income at the
time of the sale. Where the Group assumes an obligation in connection with
a sale of intellectual property, the income is recognised in accordance with
the term of the obligation. On the sale of intellectual property where the
final sale is conditional on future events, the amount is recorded as income
at the occurrence of such future events.

Revenue is measured at the fair value of the consideration received or

receivable.

Research and development
All internal research and development costs are expensed in the Income
statement as incurred. Due to the long development period and significant
uncertainties relating to the development of new products, including risks
regarding clinical trials and regulatory approval, it is concluded that the
Group’s internal development costs in general do not meet the capitalisation
criteria in IAS 38 ‘Intangible Assets’. Thus the technical feasibility criteria of
IAS 38 are not considered fulfilled before regulatory approval is obtained.

For acquired in-process research and development projects the effect
of probability is reflected in the cost of the asset and the probability
recognition criteria are therefore always considered satisfied. As the cost
of acquired in-process research and development projects can often be
measured reliably, these projects fulfil the criteria for capitalisation. Please
refer to the section ‘Intangible assets’ regarding the accounting treatment
of intangible assets.

Property, plant and equipment used for research and development pur-
poses are capitalised and depreciated in accordance with the Group’s de-
preciation policy.

Derivative financial instruments
The Group uses forward exchange contracts, currency options and interest
swaps to hedge forecasted transactions in foreign currencies.

Novo Nordisk applies hedge accounting under the specific rules of IAS 39
to forward exchange contracts and interest rate swaps. Upon initiation of
the contract, the Group designates each derivative financial contract that
qualifies for hedge accounting as a hedge of a specific hedged transaction:
either i) a recognised asset or liability (fair value hedge), ii) a forecasted
financial transaction or firm commitment (cash flow hedge), or iii) a hedge
of a net investment in a foreign entity.

All contracts are initially recognised at cost and subsequently re-
measured at their fair value at the balance sheet date. The value adjust-
ments on forward exchange contracts, and interest rate swaps designated
as hedges of forecasted transactions are recognised directly under equity,
given hedge effectiveness. The cumulative value adjustment of these con-
tracts is removed from equity and included in the Income statement under
financial income and expenses when the hedged transaction is recognised
in the Income statement.

Currency options are initially recognised at cost and subsequently re-
measured at their fair value at the balance sheet date. While providing
effective economic hedges under the Group’s risk management policy, the
current use of currency options does not meet the detailed requirements
of IAS 39 for allowing hedge accounting. Currency options are therefore
recognised directly in the Income statement under Financial income (or
expenses).

Forward exchange contracts and currency swaps hedging recognised
assets or liabilities in foreign currencies are measured at fair value at the
balance sheet date. Value adjustments are recognised in the Income state-
ment under Financial income or Financial expenses, along with any value
adjustments of the hedged asset or liability that is attributable to the
hedged risk.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 67

N O T E S – A C C O U N T I N G P O L I C I E S

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Currency swaps used to hedge net investments in subsidiaries are
measured at fair value based on the difference between the swap exchange
rate and the exchange rate at the balance sheet date. The value adjustment
is recognised in equity.

All fair values are based on marked-to-market prices or standard pricing

models.

The accumulated net fair value of derivative financial instruments is

presented as Other receivables if positive or Other liabilities if negative.

OTHER ACCOUNTING POLICIES

Translation of foreign currencies
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are
measured using the currency of the primary economic environment in which
the entity operates. The Consolidated financial statements are presented in
Danish kroner (DKK), which is the functional and presentation currency of
the parent company.

Translation of transactions and balances
Foreign currency transactions are translated into the functional currency
using the exchange rates prevailing at the dates of the transactions. Foreign
exchange gains and losses resulting from the settlement of such trans-
actions and from the translation at year-end exchange rates of monetary
assets and liabilities denominated in foreign currencies are recognised in the
Income statement, except when deferred in equity as qualifying cash flow
hedges and qualifying net investment hedges.

Translation differences on non-monetary items, such as equities held
at fair value through profit or loss, are reported as part of the fair value gain
or loss. Translation differences on non-monetary items, such as equities
classified as available-for-sale financial assets, are included in the fair value
reserve in equity.

Translation of group companies
Financial statements of foreign subsidiaries are translated into Danish kroner
at exchange rates ruling at the balance sheet date for assets and liabilities
and at average exchange rates for Income statement items.

All exchange rate adjustments are recognised in the Income statement

with the exception of exchange gains and losses arising from:
A The translation of foreign subsidiaries‘ net assets at the beginning of the

year translated at the exchange rates at the balance sheet date.

A The translation of foreign subsidiaries‘ income statements using average
exchange rates whereas balance sheets are translated using the exchange
rates ruling at the balance sheet date.

A The translation of long-term intercompany receivables which are con-

sidered to be an addition to net assets in subsidiaries.
A The translation of investments in associated companies.

The above exchange gains and losses are recognised in Other compre-
hensive income under equity.

Segment information
Novo Nordisk operates on a worldwide basis in two business segments,
diabetes care and biopharmaceuticals, constituting the primary reporting
format. Business segment information is disclosed in note 5. Within the
business segments Novo Nordisk has more areas for which sales are dis-
closed in note 6.

Novo Nordisk operates in four main geographical areas: Europe, North
America, International Operations and Japan & Oceania, constituting the
secondary reporting format. Geographical segment information is disclosed
in note 5.

The segment information is prepared applying the accounting policies of

the Group.

Licence fees and other operating income (net)
Licence fees and other operating income (net) comprise licence fees and
income (net) of a secondary nature in relation to the main activities of the
Group. The item also includes one-off income items (net) in respect of sale
of intellectual property.

Intangible assets
Goodwill
Goodwill represents any cost in excess of identifiable net assets, measured
at fair value, on the acquired company. Goodwill recorded under Intangible
assets is related to subsidiaries. Goodwill on acquisitions of associates is
included in Investments in associated companies.

Goodwill is measured at historical cost less accumulated impairment
losses. Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.

Goodwill is allocated to cash-generating units for the purpose of impair-

ment testing.

Patents, licences, and other intangibles
Patents and licences, and other intangibles are carried at historical cost less
accumulated amortisation and any impairment loss.

Amortisation is provided under the straight-line method over the estim-

ated useful life of the asset (up to 10 years).

Internal development costs and the related software in connection with

major IT projects for internal use are capitalised under Other intangibles.

Property, plant and equipment
Property, plant and equipment are measured at historical cost less accumu-
lated depreciation and any impairment losses. The cost of self-constructed
assets includes costs directly attributable to the construction of the assets.
Interest on loans financing construction of major investments is recognised
as an expense in the period in which it is incurred

Land is not depreciated. Depreciation is provided under the straight-line

method over the estimated useful lives of the assets as follows:
A Buildings: 12– 50 years.
A Plant and machinery: 5 –16 years.
A Other equipment: 3 –16 years.
A Minor fixed assets below DKK 100,000 and fixed assets with limited
expected useful lives are charged to the Income statement in the year of
acquisition.

The assets’ residual values and useful lives are reviewed, and adjusted if
appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable
amount if the asset’s carrying amount is higher than its estimated recover-
able amount.

Leases
Leases of assets whereby the Group assumes substantially all the risks
and rewards of ownership are capitalised as finance leases under Property,
plant and equipment and depreciated over the estimated useful lives of the
assets, according to the periods listed above. The corresponding finance
lease liabilities are included in liabilities.

Operating lease costs are charged to the Income statement on a straight-

line basis over the period of the lease.

Investments in associated companies
Investments in associated companies are accounted for under the equity
method of accounting, ie at the respective share of the associated com-
panies‘ net asset value applying Group accounting policies.

Goodwill relating to associated companies is recorded under Investments

in associated companies.

Impairment of assets
Property, plant and equipment, long-term financial assets and intangible
assets, including goodwill, are reviewed for impairment losses when there is
an indication that the carrying amount may not be recoverable. Goodwill is
furthermore reviewed for impairment annually. An impairment loss is recog-
nised for the amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of an asset’s net selling price and
value in use.

For the purpose of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows (cash-
generating units).

68 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A C C O U N T I N G P O L I C I E S

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

Financial assets
The Group classifies its investments in the following categories: ‘Marketable
securities’ (financial assets at fair value through the Income statement),
Loans and receivables, and ‘Long-term financial assets’ (available-for-sale
financial assets). The classification depends on the purpose for which the
investments were acquired. Management determines the classification of its
investments on initial recognition and re-evaluates this designation at every
reporting date.

Marketable securities
Marketable securities consists of financial assets designated at fair value
through profit or loss on initial recognition. Assets in this category are
classified as current assets if they are expected to be realised within 12
months of the balance sheet date.

Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or deter-
minable payments that are not quoted in an active market. Loans and
receivables are included in Trade receivables and Other receivables in the
balance sheet.

Trade receivables and Other receivables are stated at amortised cost less
allowances for doubtful trade receivables. The allowances are based on an
individual assessment of each receivable, which also include an assessment
of payment risk associated with individual countries.

Available-for-sale financial assets
Available-for-sale financial assets are non-derivatives that are either design-
ated in this category or not classified in any of the other categories. They
are included in Long-term financial assets unless Management intends to
dispose of the investment within 12 months of the balance sheet date.

Recognition and measurement
Purchases and sales of investments are recognised on settlement date.
Investments are initially recognised at fair value plus transaction costs for all
financial assets not carried at fair value through profit or loss.

Investments are derecognised when the rights to receive cash flows from
the investments have expired or have been transferred, and the Group has
transferred substantially all risks and rewards of ownership.

Available-for-sale financial assets and financial assets at fair value
through profit or loss are subsequently carried at fair value. Loans and
receivables are carried at amortised cost using the effective interest method.
Realised and unrealised gains and losses arising from changes in the fair
value of the ‘Marketable securities’ category are included in the Income
statement in the period in which they arise. Unrealised gains and losses
arising from changes in the fair value of securities classified as available-for-
sale are recognised in equity. When securities classified as available-for-sale
are sold or impaired, the accumulated fair value adjustments are included in
the Income statement as gains and losses from investment securities.

The fair values of quoted investments are based on current bid prices. If
the market for a financial asset (and for unlisted securities) is not active, the
Group establishes fair value by using valuation techniques. These include
the use of recent arm’s length transactions, reference to other instruments
that are substantially the same, discounted cash flow analyses, and option
pricing models refined to reflect the issuer’s specific circumstances.

The Group assesses at each balance sheet date whether there is objective
evidence that a financial asset or a group of financial assets has been
impaired. In the case of equity securities classified as available-for-sale, a
significant or prolonged decline in the fair value of the security below its cost
is considered in determining whether the securities are impaired. If any such
evidence exists for available-for-sale financial assets, the cumulative loss –
measured as the difference between cost and the current fair value, less
any impairment loss on that financial asset previously recognised in Income
statement – is removed from equity and recognised in the Income state-
ment. Impairment losses recognised in the Income statement on equity
instruments are not reversed through the Income statement.

Inventories
Raw materials and consumables are measured at cost assigned by using the
first-in, first-out method.

Work in progress and finished goods are stated at cost assigned by using
the first-in, first-out method. Cost comprises direct production costs such as
raw materials, consumables, energy and labour, and production overheads
such as employee costs, depreciation, maintenance etc. The production
overheads are measured based on a standard cost method which is re-
viewed regularly in order to ensure relevant measures of utilisation, produc-
tion lead time etc.

If the expected sales price less completion costs and costs to execute sales
(net realisable value) is lower than the carrying amount, a write-down is
recognised for the amount by which the carrying amount exceeds its net
realisable value.

Tax
Income taxes in the Income statement include tax payable for the year with
addition of the change in deferred tax for the year.

Deferred income taxes arise from temporary differences between the ac-
counting and tax balance sheets of the individual consolidated companies
and from realisable tax-loss carry-forwards, using the liability method. De-
ferred income tax is furthermore provided for re-taxation of tax-deductible
losses realised in non-Danish affiliated companies, if the re-taxation is
expected to be realised by the withdrawal of affiliated companies from the
Danish joint taxation scheme. The tax value of tax-loss carry-forwards will be
included in deferred tax assets to the extent that the tax losses and other tax
assets are expected to be utilised in the future taxable income. The deferred
taxes are measured according to current tax rules and at the tax rates
expected to be in force on the elimination of the temporary differences.
Measurement of deferred taxes in Denmark is based on a tax rate of 30%.

Tax payable/receivable includes tax payable computed on the basis of the
expected taxable income for the year and adjustments for tax payable for
previous years.

Employee benefits
Wages, salaries, social security contributions, paid annual leave and sick
leave, bonuses, and non-monetary benefits are accrued in the year in which
the associated services are rendered by employees of the Group. Where the
Group provides long-term employee benefits, the costs are accrued to
match the rendering of the services by the employees concerned.

Pensions
The Group operates a number of defined benefit and defined contribution
plans throughout the world.

The costs for the year for defined benefit plans are determined using the
projected unit credit method. This reflects services rendered by employees
to the dates of valuation and is based on actuarial assumptions primarily
regarding discount rates used in determining the present value of benefits,
projected rates of remuneration growth, and long-term expected rates of
return for plan assets. Discount rates are based on the market yields of high-
rated corporate bonds in the country concerned.

Differences between assumptions and actual events, and effects of
changes in actuarial assumptions are allocated over the estimated average
remaining working lives of employees, where these differences exceed a
defined corridor.

Past service costs are allocated over the average period until the benefits

become vested.

Pension assets and liabilities in different defined benefit schemes are not
offset unless the Group has a legally enforceable right to use the surplus in
one plan to settle obligations in the other plan. Pension assets are only
recognised to the extent that the Group is able to derive future economic
benefits in the way of refunds from the plan or reductions of future con-
tributions.

The Group’s contributions to the defined contribution plans are charged

to the Income statement in the year to which they relate.

Share-based compensation
The Group operates equity-settled, share-based compensation plans. The
fair value of the employee services received in exchange for the grant of the
options or shares is recognised as an expense, and allocated over the vesting
period.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 69

N O T E S – A C C O U N T I N G P O L I C I E S

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The total amount to be expensed over the vesting period is determined by
reference to the fair value of the options or shares granted, excluding the
impact of any non-market vesting conditions. The fair value is fixed at grant
date. Non-market vesting conditions are included in assumptions about
the number of options that are expected to become exercisable. At each
balance sheet date, the Group revises its estimates of the number of options
that are expected to become exercisable. Novo Nordisk recognises the
impact of the revision of the original estimates, if any, in the Income state-
ment, and a corresponding adjustment to equity over the remaining vesting
period. Adjustments relating to prior years are included in the Income state-
ment in the year of adjustment ‘truing up’.

Provisions
Provisions are recognised where a legal or constructive obligation has been
incurred, as a result of past events, and it is probable that it will lead to an
outflow of resources that can be reliably estimated. Provisions are recog-
nised for the estimated ultimate liability that is expected to arise, taking into
account foreign currency effects and the time value of money.

Provisions for product returns cover expected lost contribution because
of expected future returns and are measured at selling price value. The
provisions have been calculated based on statistical measures of historical
returns.

Liabilities
Generally, liabilities are stated at amortised cost unless specifically men-
tioned otherwise.

Treasury shares
Treasury shares are deducted from share capital at their nominal value of
DKK 2 per share. Differences between this amount and the amount paid for
acquiring, or received for disposing of, treasury shares are deducted from
retained earnings.

Dividends
Dividends are recognised as a liability in the period in which they are de-
clared at the Annual General Meeting.

Consolidated statement of cash flows and financial resources
The Consolidated statement of cash flows and financial resources is pre-
sented in accordance with the indirect method commencing with net profit.
The statement shows cash flows for the year, the net change in cash and
cash equivalents for the year and cash and cash equivalents at the beginning
and the end of the year.

Cash and cash equivalents consist of cash and marketable securities, with
original maturity of less than three months, less short-term bank loans.
Besides cash and cash equivalents, undrawn committed credit facilities
expiring after more than one year are included in financial resources.

United States Generally Accepted Accounting Principles (US GAAP)
The Group prepares a reconciliation of the effect on sales, net profit, equity
and balance sheet of the application of US Generally Accepted Accounting
Principles (US GAAP) in lieu of International Financial Reporting Standards.
Note 39 discloses the US GAAP reconciliation.

D E F I N I T I O N S

ADRs: American Depositary Receipts.

Net profit margin: Net profit as a percentage of sales.

Basic earnings per share (EPS): Net profit divided by the average number
of shares outstanding.

Number of shares outstanding: The number of shares outstanding is the
total number of shares excluding the holding of treasury shares.

Cash/earnings: Free cash flow as a percentage of net profit.

Operating profit: Earnings before tax, financial items and share of profit/
loss in associated companies.

Diluted earnings per share: Net profit divided by the sum of average
number of shares outstanding including the dilutive effect of share options
‘in the money’ in accordance with IAS 33. The dilutive effect of share
options in the money is calculated as the difference between the following:
1) the number of shares that could have been acquired at fair value with
proceeds from the exercise of the share options and
2) the number of shares that would have been issued assuming the exercise
of the share options.
The difference (the dilutive effect) is added to the denominator as an issue of
shares for no consideration.

Operating profit margin: Operating profit as a percentage of sales.

Payout ratio: Total dividends for the year as a percentage of net profit.

Price/earnings: The quoted (closing) price at year-end for Novo Nordisk’s
B shares on the Copenhagen Stock Exchange divided by earnings per share.

Quoted price at year-end for ADRs: The quoted (closing) price at year-
end for Novo Nordisk’s ADRs on the New York Stock Exchange.

Effective tax rate: Income taxes as a percentage of profit before income
taxes.

Quoted price at year-end for B shares: The quoted (closing) price at year-
end for Novo Nordisk’s B shares on the Copenhagen Stock Exchange.

Equity ratio: Equity at year-end as a percentage of the sum of total lia-
bilities and equity at year-end.

Return on equity: Net profit as a percentage of average equity (the sum
of equity at the beginning of the year and at year-end divided by two).

Free cash flow: The sum of Cash flow from operating activities and Cash
flow from investing activities excluding Net change in marketable securities.

Gross margin: Gross profit as a percentage of sales.

Market capitalisation: Total number of shares outstanding at year-end
multiplied by the quoted (closing) price at year-end for Novo Nordisk’s B
shares on the Copenhagen Stock Exchange.

ROIC (return on invested capital): Operating profit after tax (using the
effective tax rate) as a percentage of average inventories, receivables,
property, plant and equipment and as well as intangible assets less non-in-
terest bearing liabilities including provisions (the sum of above assets and
liabilities at the beginning of the year and at year-end divided by two).

Weighted Average Cost of Capital (WACC): WACC states the company’s
average cost of capital considering the capital structure.

70 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

3 CHANGES IN THE SCOPE OF CONSOLIDATION

In 2004, no changes in the scope of consolidation occurred.

In 2003, Novo Nordisk acquired 55% of the Algerian company Aldaph
SpA for DKK 0. There is no goodwill related to the acquisition. Until the
acquisition of these shares, Aldaph SpA was an associated company of Novo
Nordisk and Novo Nordisk owned 45% of the share capital.

In 2002, Novo Nordisk acquired the Brazilian diabetes care company
Biobrás (Novo Nordisk Produsao Farmacêutica Do Brasil). Novo Nordisk

4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

The preparation of financial statements in conformity with generally ac-
cepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date(s) of the financial
statements and the reported amounts of revenues and expenses during the
reporting period(s). Management bases its estimates on historical experi-
ence and various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the reported carrying amounts of assets and liabilities and
the reported amounts of revenues and expenses that may not be readily ap-
parent from other sources. Actual results could differ from those estimates.
Novo Nordisk believes the following are the significant accounting estimates
and related judgments used in the preparation of its consolidated financial
statements.

Accruals and provision for sales rebates
Accruals and provisions for sales rebates are established in the same period
as the related sales. The accruals and provisions for sales rebates are re-
corded as a reduction in sales and are included in Other provisions and
Other liabilities.

The accruals and provisions are based upon historical rebate payments.
They are calculated based upon a percent of sales for each product as de-
fined by the contracts with the various customer groups.

Factors that complicate the rebate calculations are identification of which
products have been sold subject to a rebate, which customer or government
price terms apply, and the estimated lag time between sale and payment of
a rebate.

Novo Nordisk believe that the accruals established for sales rebates are
reasonable and appropriate based on current facts and circumstances. How-
ever, actual amount of rebates and discounts may differ from the amounts
estimated by Management.

Indirect Production Costs (IPC)
Work in progress and finished goods are stated at cost assigned by using the
first-in, first-out method. Cost comprises direct production costs such as raw
materials, consumables, energy and labour, and IPC such as employee costs,
depreciation, maintenance etc.

The IPC with a carrying amount of DKK 3,240 million at 31 December
2004 are measured based on a standard cost method which is reviewed
regularly in order to ensure relevant measures of utilisation, production lead
time and other relevant factors. Changes in the method for calculation of
IPC, including utilisation levels, production lead time etc in the calculation of
IPC, could have an impact on the gross margin and the overall valuation of
inventories.

N O T E S – A C C O U N T I N G P O L I C I E S

Produsao Farmacêutica Do Brasil was included in the consolidation as from
February 2002. Novo Nordisk Produsao Farmacêutica Do Brasil was acquired
for DKK 423 million in cash (including transaction costs).

In April 2002, Novo Nordisk sold the Dutch wholesaler of medical devices

Hermedico BV for DKK 63 million.

Allowances for doubtful trade receivables
Trade receivables are stated at amortised cost less allowances for potential
losses on doubtful debts.

Novo Nordisk maintains allowances for doubtful trade receivables for
estimated losses resulting from the subsequent inability of the customers to
make required payments. If the financial conditions of the customers were
to deteriorate, resulting in an impairment of their ability to make payments,
additional allowances may be required in future periods. Management
specifically analyses trade receivables and analyses historical bad debt,
customer concentrations, customer credit-worthiness, current economic
trends and changes in the customer payment terms when evaluating the
adequacy of the allowance for doubtful trade receivables.

Based on actual losses in the last three years, the uncertainty connected
with the allowance for doubtful trade receivables is considered limited. The
carrying amount of allowances for doubtful trade receivables is DKK 369
million at 31 December 2004.

Deferred taxes
Management judgment is required in determining the Company’s provision
for income taxes, deferred tax assets and liabilities and the extent to which
deferred tax assets can be recognised. Novo Nordisk recognises deferred tax
assets if it is probable that sufficient taxable income will be available in the
future against which the temporary differences and unused tax losses can
be utilised. Management has considered future taxable income in assessing
whether deferred tax assets should be recognised.

The carrying amount of deferred tax assets (net) and deferred tax lia-

bilities is DKK 769 million and 1,853 respectively at 31 December 2004.

Provisions and contingencies
As part of normal business Novo Nordisk issues credit notes for expired
goods. Consequently a provision for future returns is made, based on
historical statistical product returns. The pattern in returns in the future may
be different from previous patterns.

The carrying amount of provision for returned products is DKK 403

million at 31 December 2004.

Management of the Company makes judgments about provisions and
contingencies, including the probability of pending and potential future
litigation outcomes that in nature are dependent on future events that are
inherently uncertain. In making its determinations of likely outcomes of
litigation and tax matters etc, management considers the evaluation of out-
side counsel knowledgeable about each matter, as well as known outcomes
in case law. See note 37 for a description of the significant litigation.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 71

N O T E S – C O N S O L I D AT E D I N C O M E S TAT E M E N T

SEGMENT INFORMATION

Primary reporting format – BUSINESS SEGMENTS

At 31 December 2004, the Novo Nordisk Group operates on a worldwide
basis in two business segments (the primary reporting format):

Diabetes care:
The business segment includes discovery, development, manufacturing and
marketing of products within the areas of insulin and delivery systems and
oral antidiabetic products (OAD).

Biopharmaceuticals:
The business segment includes discovery, development, manufacturing and
marketing of products within the therapy areas haemostasis management
(NovoSeven ®), growth hormone therapy, hormone replacement therapy and
other products.

The segments and regions are the same as those used for internal reporting,
allowing a reliable assessment of risk and returns. There are no sales or
other transactions between the business segments. Costs have been split
between business segments based on a specific allocation with the addition
of a minor number of corporate overheads allocated systematically to the
segments. Segment assets comprise the assets which are applied directly to
the activities of the segment, including intangible assets, property, plant and
equipment, long-term financial assets, inventories, trade receivables and
other receivables. Segment liabilities comprise liabilities derived from the
activities of the segment, including provisions, trade payables and other
liabilities.

Comparative figures for 2002 are presented even though in 2002 and pre-
vious years, Novo Nordisk comprised only one segment. The comparative
figures for 2002 have been prepared based on allocations consistent with
methods applied for 2003 and 2004.

BUSINESS SEGMENTS RESULTS

DKK million

Segment results

Sales

Change in DKK (%)
Change in local currencies (%)

Operating profit

Share of profit in associated companies
Finance income net
Profit before income taxes
Income taxes

Net profit

Other segment items

Research and development costs
Depreciation and amortisation
Impairment losses in the income statement
Additions to property, plant and equipment and intangible assets (net)
Investments in associated companies (net)
Long-term assets
Total assets
Total liabilities

2004

2003

2002

Diabetes care

20,533
11.1%
14.7%
3,404

18,475
5.8%
16.0%
3,142

17,458
6.6%
–
2,346

(81)
–
–
–

–

2,932
1,312
320
2,652
–
15,270
24,997
4,788

(59)
–
–
–

–

2,805
1,125
143
1,930
–
14,405
23,911
4,241

(1)
–
–
–

–

3,064
959
97
3,497
35
13,793
22,747
4,323

GEOGRAPHIC SEGMENTS RESULTS

2004

2003

2002

2004

2003

2002

DKK million

Sales

Change in DKK (%)

Additions to property, plant and equipment and intangible assets (net)
Property, plant and equipment
Total assets

Europe

11,697
7.4%
2,137
15,510
29,166

12,411
6.1%
2,831
16,519
31,198

North America

10,889
3.1%
3,883
14,777
26,266

7,478
20.2%
133
425
2,725

6,219
7.5%
63
366
2,270

5,786
12.0%
74
425
2,423

72 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D I N C O M E S TAT E M E N T

SEGMENT INFORMATION (CONTINUED)

Secondary reporting format – GEOGRAPHIC SEGMENTS

The Novo Nordisk Group operates in four main geographical areas (the
secondary reporting format):

Europe: EU, EFTA
North America: USA and Canada
Japan & Oceania: Japan, Australia and New Zealand
International Operations: All other countries

Sales are attributed to geographical segments based on the location of the
customer. There are no sales between segments. Total assets and additions
to property, plant and equipment and intangible assets are based on the
location of the assets.

2004

2003

2002

2004

2003

2002

2004

2003

2002

Biopharmaceuticals

Corporate/unallocated

Total

8,498
10.6%
15.4%
3,576

7,683
3.7%
14.0%
3,280

7,408
5.8%
–
3,581

(25)
–
–
–

–

1,420
254
6
583
–
3,185
5,644
1,581

(12)
–
–
–

–

1,250
278
35
388
–
3,020
5,495
1,416

46
–
–
–

–

888
230
7
787
–
3,226
5,519
1,362

–
–
–
–

(11)
594
–
2,444

–
–
–
–

12
1,013
–
2,543

–
–
–
–

27
329
–
2,212

29,031
11.0%
14.9%
6,980

(117)
594
7,457
2,444

26,158
5.2%
15.0%
6,422

(59)
1,013
7,376
2,543

24,866
6.3%
–
5,927

72
329
6,328
2,212

–

5,013

4,833

4,116

–
–
–
–
18
1,229
6,792
4,560

–
–
–
–
–
947
5,158
4,131

–
–
–
–
18
912
3,346
3,450

4,352
1,566
326
3,235
18
19,684
37,433
10,929

4,055
1,403
178
2,318
–
18,372
34,564
9,788

3,952
1,189
104
4,284
53
17,931
31,612
9,135

2004

2003

2002

2004

2003

2002

2004

2003

2002

International Operations

Japan & Oceania

4,844
14.6%
252
376
2,387

4,227
3.1%
83
184
2,260

4,099
20.7%
315
150
2,086

4,298
7.0%
19
239
1,123

4,015
(1.9%)
35
282
868

4,092
(4.0%)
12
329
837

29,031
11.0%
3,235
17,559
37,433

Total

26,158
5.2%
2,318
16,342
34,564

24,866
6.3%
4,284
15,681
31,612

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 73

N O T E S – C O N S O L I D AT E D I N C O M E S TAT E M E N T

SALES

DKK million

2004

2003

2002

8 DEPRECIATION, AMORTISATION AND

IMPAIRMENT LOSSES

DKK million

2004

2003

2002

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)

4,507
14,383
1,643

2,553
14,492
1,430

1,187
14,651
1,620

Diabetes care total

20,533

18,475

17,458

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy
Other products

4,359
2,317
1,488
334

3,843
2,133
1,322
385

3,593
2,061
1,333
421

Biopharmaceuticals total

8,498

7,683

7,408

Total sales

29,031

26,158

24,866

Included in the Income statement
under the following headings:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses
Share of profit in associated companies

Total depreciation, amortisation
and impairment losses

1,322
226
218
126
–

1,076
116
197
188
4

810
94
191
130
68

1,892

1,581

1,293

FEES TO STATUTORY AUDITORS

DKK million

2004

2003

2002

EMPLOYEE COSTS

DKK million

2004

2003

2002

Wages and salaries
Share-based payment costs
(refer to note 34)
Pensions – defined contribution plans
Pensions – defined benefit plans
(refer to note 26)
Other contributions to social security
Other employee costs

8,119

7,657

7,199

104
592

100
488
660

76
516

91
483
554

38
401

90
444
517

Total employee costs

10,063

9,377

8,689

PricewaterhouseCoopers:
Statutory audit
Audit-related services
Tax advisory services
Other services

Total

Ernst & Young:
Statutory audit
Other services

Total

17
5
18
3

1
3

15
4
16
4

1
–

14
5
13
14

1
2

Included in the Income statement
under the following headings:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses

3,219
2,868
1,713
1,523

2,951
2,756
1,516
1,479

2,636
2,545
1,394
1,458

9,323

8,702

8,033

Included in the Balance sheet as:
Capitalised employee costs related to
assets in course of construction etc
Change in employee costs included
in inventories

598

142

524

151

482

174

Total employee costs

10,063

9,377

8,689

For information on remuneration to the Board of Directors and
Executive Management please refer to note 35.

Average number of full-time positions
Year-end number of full-time positions

19,520
20,285

18,381
18,756

17,073
18,005

2004

2003

2002

10 LICENCE FEES AND OTHER OPERATING INCOME (NET)

DKK million

2004

2003

2002

Licence fees and settlements
Net income from IT, engineering and
other services
Other income

382

58
135

901

43
92

559

55
144

Total licence fees and other operating
income (net)

575

1,036

758

74 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D I N C O M E S TAT E M E N T

11 FINANCIAL INCOME

12 FINANCIAL EXPENSES

DKK million

2004

2003

2002

DKK million

2004

2003

2002

Interest income
Capital gain on investments etc (net)
Foreign exchange gain on derivative
financial instruments (net)

Total financial income

235
–

663

898

285
2

1,195

164
–

882

Interest expenses
Capital loss on investments etc (net)
Foreign exchange loss
Other financial expenses

1,482

1,046

Total financial expenses

107
12
130
55

304

184
–
229
56

469

110
53
510
44

717

13 INCOME TAXES

DKK million

Current tax on profit for the year
Deferred tax on profit for the year

Tax on profit for the year
Adjustments related to previous years (net)

Income taxes in the Income statement

Tax on entries in equity related to current tax
Tax on entries in equity related to deferred tax

Tax on entries in equity

Computation of effective tax rate:
Statutory corporate income tax rate in Denmark
Deviation in foreign subsidiaries‘ tax rates compared to Danish tax rate (net)
Non-tax deductible expenses less non-taxable income
Other

Effective tax rate

14 EARNINGS PER SHARE

2004

2003

2002

2,293
125

2,418
26

2,541
(17)

2,524
19

2,317
(185)

2,132
80

2,444

2,543

2,212

–
8

(150)
44

(106)

15
(2)

30.0%
3.8%
(0.5%)
(0.5%)

30.0%
5.7%
(0.2%)
(1.0%)

30.0%
5.7%
(0.6%)
(0.1%)

32.8%

34.5%

35.0%

2004

2003

2002

Net profit

DKK million

5,013

4,833

4,116

Average number of shares outstanding
Dilutive effect of outstanding options ‘in the money’

in 1,000 shares
in 1,000 shares

336,628
1,482

341,173
422

346,685
544

Average number of shares outstanding incl dilutive effect of options ‘in the money’

in 1,000 shares

338,110

341,595

347,229

Basic earnings per share
Diluted earnings per share

DKK
DKK

14.89
14.83

14.17
14.15

11.87
11.85

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 75

N O T E S – C O N S O L I D AT E D I N C O M E S TAT E M E N T

15 APPROPRIATION OF NET PROFIT INCL PROPOSED DIVIDENDS

DKK million

2004

2003

2002

Proposed appropriation of net profit in the Parent Company, Novo Nordisk A/S:
Dividends
Net revaluation reserve according to the equity method
Retained earnings

Net profit

Total equity in the Parent Company, Novo Nordisk A/S:
Share capital
Share premium account
Net revaluation reserve according to the equity method
Retained earnings
Exchange rate adjustments

Total equity

Dividends per share

1,594
3,377
35

5,006

709
2,565
6,562
16,701
(40)

1,488
166
3,179

4,833

709
2,565
3,185
18,396
(79)

1,243
2,688
185

4,116

709
2,565
3,019
16,269
(85)

26,497

24,776

22,477

4.80

4.40

3.60

As the financial statements of the Parent Company Novo Nordisk A/S are prepared in accordance with Danish GAAP, including amortisation of goodwill, the
net profit and equity in 2004 of Novo Nordisk A/S is DKK 7 million lower than the net profit and equity of the Group.

16 INTANGIBLE ASSETS

DKK million

2004
Cost at the beginning of 2004
Additions during the year
Disposals during the year
Exchange rate adjustments

Cost at the end of 2004

Amortisation and impairment losses at the beginning of 2004
Amortisation for the year
Impairment losses for the year
Exchange rate adjustments

Amortisation and impairment losses at the end of 2004

Carrying amount at the end of 2004

2003
Cost at the beginning of 2003
Additions during the year
Disposals during the year
Exchange rate adjustments

Cost at the end of 2003

Amortisation and impairment losses at the beginning of 2003
Amortisation for the year
Impairment losses for the year
Amortisation reversed on disposals during the year
Exchange rate adjustments

Amortisation and impairment losses at the end of 2003

Carrying amount at the end of 2003

Goodwill

Patents and
licences

Other
intangible
assets

Total

318
–
–
(4)

314

103
–
188
(2)

289

302
8
–
8

318

67
–
36
–
–

103

215

8
170
(1)
–

177

3
5
–
–

169

23
–
(15)
–

17
1
–
(15)
–

264
66
–
(3)

327

153
56
–
(2)

207

120

263
37
(31)
(5)

264

126
54
–
(24)
(3)

153

111

590
236
(1)
(7)

818

259
61
188
(4)

504

314

588
45
(46)
3

590

210
55
36
(39)
(3)

259

331

In 2004, Novo Nordisk recognised an impairment loss of DKK 175 million related to goodwill recognised in connection with the acquisition of the Brazilian
diabetes care company Biobrás (Novo Nordisk Produsao Farmacêutica Do Brasil) in 2002. The impairment loss is caused by a decrease in market share for oral
antidiabetic products due to generic competition, increased insulin competition and increased prices on raw materials.

76 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

17 PROPERTY, PLANT AND EQUIPMENT

DKK million

2004
Cost at the beginning of 2004
Additions during the year
Disposals during the year
Transfer from/(to) other items
Exchange rate adjustments

Cost at the end of 2004

Land and
buildings

Plant and
machinery

Other
equipment

Total

Payments on
account and
assets in
course of
construction

8,597
63
(239)
643
(34)

10,058
384
(410)
1,153
(23)

2,550
135
(314)
(85)
(14)

3,156
2,557
–
(1,711)
(5)

24,361
3,139
(963)
–
(76)

9,030

11,162

2,272

3,997

26,461

Depreciation and impairment losses at the beginning of 2004
Depreciation for the year
Impairment losses for the year
Depreciation and impairment losses reversed on disposals during the year
Exchange rate adjustments

2,247
344
8
(122)
(10)

4,211
931
127
(355)
(17)

1,561
230
3
(242)
(14)

Depreciation and impairment losses at the end of 2004

2,467

4,897

1,538

–
–
–
–
–

–

8,019
1,505
138
(719)
(41)

8,902

Carrying amount at the end of 2004

6,563

6,265

734

3,997

17,559

2003
Cost at the beginning of 2003
Changes in consolidation
Additions during the year
Disposals during the year
Transfer from/(to) other items
Exchange rate adjustments

Cost at the end of 2003

7,410
4
72
(200)
1,373
(62)

6,886
–
329
(181)
3,051
(27)

2,477
4
247
(258)
116
(36)

5,896
4
1,810
–
(4,540)
(14)

22,669
12
2,458
(639)
–
(139)

8,597

10,058

2,550

3,156

24,361

Depreciation and impairment losses at the beginning of 2003
Changes in consolidation
Depreciation for the year
Impairment losses for the year
Depreciation and impairment losses reversed on disposals during the year
Exchange rate adjustments

2,016
–
313
16
(86)
(12)

3,517
–
795
66
(149)
(18)

1,470
2
240
56
(184)
(23)

Depreciation and impairment losses at the end of 2003

2,247

4,211

1,561

–
–
–
–
–
–

–

7,003
2
1,348
138
(419)
(53)

8,019

Carrying amount at the end of 2003

6,350

5,847

989

3,156

16,342

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 77

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

18 FINANCIAL ASSETS

DKK million

Cost at the beginning of the year
Additions during the year
Disposals during the year

Cost at the end of the year

Value adjustments at the beginning of the year
Net profit/(loss)
Impairment of goodwill
Exchange rate adjustments
Revaluation surplus transfer to equity
Other adjustments

Value adjustments at the end of the year

Carrying amount at the end of the year

Investments
in associated
companies

Other financial assets

Amounts
owed by
affiliated
companies

Other
securities and
investments

2004
Total

2003
Total

1,251
19
(1)

1,269

(211)
(212)
–
(53)
–
90

(386)

883

39
5
(7)

–
–
–
–
–
–

–

216
88
(1)

303

(175)
–
–
–
13
(19)

(181)

1,506
112
(9)

1,609

(386)
(212)
–
(53)
13
71

(567)

1,492
16
(2)

1,506

(173)
(140)
(4)
(143)
–
74

(386)

122

1,042

1,120

Carrying amount of investments in associated companies includes net capitalised goodwill of DKK 13 million at the end of the year (DKK 13 million in 2003).

In 2004, Other adjustments includes unrealised capital gains amounting to DKK 95 million net related to ZymoGenetics Inc and Aradigm Corporation
(DKK 94 million in 2003).

DKK million

2004

2003

Aggregated financial information of associated companies:
Sales
Net profit
Total assets
Total liabilities

Market values of shareholdings in listed associated companies:
– ZymoGenetics Inc
– Aradigm Corporation

Please refer to page 96 – 97 for a list of Novo Nordisk‘s associated companies.

Other securities and investments include the following:
Listed shares
Unlisted shares

Total Other securities and investments

2,687
(590)
5,350
2,765

2,627
74

37
85

122

2,571
(560)
5,326
2,252

1,929
80

31
10

78 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

21 OTHER RECEIVABLES

2004

2003

DKK million

2004

2003

Prepayments to public authorities
Prepayments
Interest receivable
Market value of financial instruments
(refer to note 36)
Amounts owed by affiliated companies
Other receivables

–
458
23

815
101
458

750
323
72

1,051
110
346

Total other receivables

1,855

2,652

The carrying amount of Other receivables approximate their fair value.

22 MARKETABLE SECURITIES

DKK million

Bonds
Unit trusts and shares

Total marketable securities

2004

2003

508
18

526

1,810
18

1,828

At original acquisition cost

592

1,902

Bonds with maturity exceeding 12 months
from the balance sheet date

Duration of the Group‘s bond portfolio (years)

508

1.0

1,108

0.7

Redemption yield on the Group‘s bond portfolio

2.5%

2.6%

Interest rate risk management
Novo Nordisk is mainly exposed to interest rate risk through interest-bearing
assets and liabilities. The overall objective of the interest rate risk manage-
ment is to limit the negative impact on earnings and on the balance sheet
from interest rate fluctuations. Excess liquidity is primarily invested in short-
term, credit-rated, liquid bonds denominated in DKK or EUR or in money
market deposits likewise in DKK or EUR. The interest rate risk of the invest-
ments is managed based on duration measured against a predefined bench-
mark. The Investment Policy forms part of Novo Nordisk‘s Treasury Policy,
which is approved by the Board of Directors.

19 INVENTORIES

DKK million

Raw materials and consumables
Work in progress
Finished goods

Total inventories

1,130
4,127
1,906

1,128
3,563
1,840

7,163

6,531

Indirect production costs included in work
in progress and finished goods

3,240

2,780

Amount of write-down of inventories
recognised as expense during the year

Amount of reversal of write-down
of inventories during the year

327

784

20 TRADE RECEIVABLES

DKK million

Trade receivables (gross)

Allowances for doubtful trade receivables:
Balance at the beginning of the year
Change in allowances during the year
Realised losses during the year

Balance at the end of the year

2004

2003

4,431

4,183

398
(3)
(26)

369

456
(28)
(30)

398

Total trade receivables

4,062

3,785

Trade receivables (net) are equal to an
average credit period of (days)

The carrying amount of Trade receivables approximate their fair value.

Credit risk management
Novo Nordisks principal financial assets are Trade and Other receivables,
Marketable securities and Cash at bank and in hand. The credit risk is pri-
marily attributable to Trade and Other receivables. The amounts presented
in the balance sheet are net of allowances for doubtful trade receivables,
estimated based on prior experience and assessment of the current eco-
nomic environment.

The credit risk on Marketable securities is limited as investments are made in
liquid bonds with solid credit-rating. The credit risk on bank balances and
derivative financial instruments is limited as Novo Nordisk only uses banks
with solid credit-ratings assigned by international credit-rating agencies.
Novo Nordisk has no significant concentration of credit risk, with exposure
spread over a large number of counterparties and customers. The Novo
Nordisk Treasury Policy, which is approved by the Board of Directors covers
credit risk.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 79

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

23 SHARE CAPITAL

DKK million

Development in share capital:
A share capital
B share capital

At the end of the year

2004

2003

107
602

709

107
602

709

The A share capital remained DKK 107 million from 2000 to 2004. The B share capital was DKK 647 million in 2000. In 2001 the B share capital was reduced by
DKK 45 million to DKK 602 million and remained that amount in 2002, 2003 and 2004.

At the end of 2004 the share capital amounted to DKK 107,487,200 in A share capital (equal to 53,743,600 shares of DKK 2) and DKK 601,901,120 in B share
capital (equal to 300,950,560 shares of DKK 2).

Treasury shares:
Holding at the beginning of the year
Purchase during the year
Sale during the year
Value adjustment

Holding at the end of the year

Number of B
shares of DKK 2

In % of share
capital

Market value
DKK million

16,542,841
6,480,000
(437,712)

4.66%
1.83%
(0.12%)

22,585,129

6.37%

3,987
1,982
(87)
871

6,753

Acquisition of treasury shares during the year is part of the share buy-back programme of up to DKK 5 billion worth of Novo Nordisk B shares announced in April
2004, which was initiated in order to align the capital structure with the expected development in free cash flow. Sale of treasury shares primarily relates to
exercised share options.

Of the treasury B share holding at the end of the year 4,445,651 shares are regarded as hedge for the share options issued, please refer to note 34.

24 LONG-TERM DEBT

DKK million

Mortgage debt and other secured loans with terms to maturity between 2007– 2016
and a weighted average interest rate of 2.3% to 5.1%

Unsecured loans and other long-term loans with terms to maturity between 2007– 2011
and a weighted average interest rate of 0.5% to 3.4%

At the end of the year

The debt is payable within the following periods as from the balance sheet date:
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years

The debt is denominated in the following currencies:
DKK
EUR
USD
JPY
Other currencies

2004

2003

659

529

1,188

26
13
153
–
996

1,188

3
655
492
37
1

1,188

661

753

46
34
16
153
504

753

3
655
3
75
17

753

Adjustment of the above loans to market value at year-end 2004 would result in a cost of DKK 2 million (a cost of DKK 1 million in 2003).

80 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

25 DEFERRED TAX LIABILITIES

Deferred income taxes arise from temporary differences between the accounting and tax balance sheets of the individual consolidated companies and from
realisable tax-loss carry-forwards, using the liability method. The deferred taxes are measured according to current tax rules and at the tax rates expected to be in
force on the elimination of the temporary differences. Measurement of deferred taxes in Denmark is based on a tax rate of 30%.

Unremitted earnings have been retained by subsidiary companies for reinvestment. No provision is made for income taxes that would be payable upon the
distribution of such earnings. If the earnings were remitted, an immaterial income tax charge would result, based on the tax statutes currently in effect.

No deferred tax has been calculated on differences associated with investments in subsidiaries, branches and associates, as the differences by nature are
permanent differences. However, deferred tax has been calculated, if the differences are tax deductible.

DKK million

At the beginning of the year
Deferred tax on profit for the year
Adjustment relating to previous years
Tax on entries on equity
Exchange rate adjustments

Total deferred tax liabilities (net)

DKK million

Assets

Liabilities

Specification
The deferred tax assets and liabilities are allocable
to the various balance sheet items as follows:
Property, plant and equipment
Indirect production costs
Unrealised profit on intercompany sales
Allowances for doubtful trade receivables
Tax-loss carry-forward
Other

Offset of deferred tax assets and deferred tax liabilities
related to income taxes levied by the same tax authority

(100)
–
(908)
(83)
(1)
(1,237)

(2,329)

1,443
998
–
–
–
972

3,413

2004

2003

931
125
(8)
8
28

1,084

2004
Total

1,343
998
(908)
(83)
(1)
(265)

1,084

Assets

Liabilities

(67)
–
(854)
(77)
(15)
(816)

1,586
834
–
–
–
340

(1,829)

2,760

887
(17)
(36)
44
53

931

2003
Total

1,519
834
(854)
(77)
(15)
(476)

931

–

931

1,560

(1,560)

–

1,250

(1,250)

(769)

1,853

1,084

(579)

1,510

Tax-loss carry-forward
Deferred tax assets are recognised on tax loss carry-forwards that represent income likely to be realised in the future. The deferred tax of a tax loss of DKK 70
million has not been recognised in the Balance sheet. This tax-loss expires after more than five years.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 81

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

26 PROVISIONS FOR PENSIONS

Most employees in the Novo Nordisk Group are covered by retirement plans
in the form of primarily defined contribution plans or alternatively defined
benefit plans. Group companies sponsor these plans either directly or by
contributing to independently administered funds. The nature of such plans
varies according to legal regulations, fiscal requirements and economic
conditions of the countries in which the employees are employed, and the
benefits are generally being based on the employees’ remuneration and
years of service. The obligations relate both to existing retirees’ pensions
and to pension entitlements of future retirees. Other post-employment
benefits consist mostly of post-retirement healthcare plans, principally in the
United States.

Post-employment benefit plans are usually funded by payments from Group
companies and by employees to funds independent of the Group. Where a
plan is unfunded, a liability for the retirement obligation is recognised in the
Group’s Balance sheet. The costs recognised for post-employment benefits
are included in production costs, sales and distribution costs, research and
development costs or administrative expenses.

DKK million

2004

2003

DKK million

2004

2003

The amounts recognised in the Income
statement regarding post-employment
defined benefit plans are as follows:
Current service cost
Interest cost
Expected return on plan assets
Amortisation of actuarial gains/losses recognised
Past service cost

Total expenses included in employee costs

84
19
(9)
(3)
9

100

67
17
(3)
6
4

The actual return on plan assets was a gain of DKK 11 million in 2004
(a gain of DKK 4 million in 2003).

The liability (net) include non-pension
post-retirement benefit plans, principally
medical plans as follows:
Actuarial present value of obligations
due to past and present employees
Unrecognised actuarial (gains)/losses

Net recognised (assets)/liabilities

171
(49)

122

125
(49)

Amounts recognised in the Balance sheet for post-employment defined
benefit plans are predominantly non-current and are reported as either
long-term assets or long-term liabilities.

The actuarial assumptions used in the actuarial
computations and valuations vary from
country to country due to local economic and
social conditions. The range of assumptions
used is as follows:
Discount rate
Projected return on plan assets
Projected future remuneration increases
Healthcare cost trend rate
Inflation rate

2.0% to 5.8%
3.0% to 4.8%
2.0% to 3.0%
5.5% to 11.0%
2.3% to 5.5%

For all major defined benefit plans actuarial computations and valuations
are performed annually.

The movements in the net (assets)/liabilities
recognised in the Balance sheet for post-
employment defined benefit plans are as follows:
At the beginning of the year
Total expenses included in employee costs
Employer contributions to plan assets
Benefits paid to employees
Exchange rate adjustments

At the end of the year

Amounts recognised in the Balance sheet
for post-employment defined benefit plans
are as follows:
Present value of funded obligations
Fair value of plan assets

Present value of unfunded obligations
Unrecognised actuarial (gains)/losses
Unrecognised past service costs

Liability in the balance sheet (net)

222
100
(46)
(10)
(16)

250

364
(313)

245
(39)
(7)

250

291
91
(180)
(9)
29

222

314
(246)

186
(6)
(26)

222

82 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – C O N S O L I D AT E D B A L A N C E S H E E T

27 OTHER PROVISIONS

DKK million

At the beginning of the year
Additional provisions
Unused amounts reversed
Used during the year
Exchange rate adjustments

At the end of the year

Specification of other provisions:
Long-term
Current

Provisions
for returned
products

Other
provisions

2004
Total

1,311
1,666
(3)
(1,200)
(56)

940
1,458
(3)
(1,024)
(56)

1,315

1,718

358
957

1,315

358
1,360

1,718

2003
Total

1,163
404
(6)
(159)
(91)

1,311

271
1,040

1,311

371
208
–
(176)
–

403

–
403

403

Provision for returned products:
Novo Nordisk issues credit notes for expired goods as a part of normal business. Consequently, a provision for future returns is made based on historical
statistical product returns, which represents management‘s best estimate.

Other provisions:
Other provisions consist of various different types of provisions, which represents managements‘ best estimate. The majority relates to certain pricing provisions.
In some countries the actual rebates depend on which customers the products are sold to. Factors that complicate the rebate calculations are identification of
which products have been sold subject to a rebate, which customer or government price terms apply, and the estimated lag time between sale and payment of
the rebate.

28 SHORT-TERM DEBT

29 OTHER LIABILITIES

DKK million

2004

2003

DKK million

Employee costs payable
Taxes and duties payable
Accruals and deferred income
Amounts owed to affiliated companies
Other payables

Total other liabilities

Bank loans and overdrafts
Long-term debt, amounts falling due within one year

Total short-term debt

The debt is denominated in the following currencies:
DKK
EUR
USD
JPY
Other currencies

Total short-term debt

470
37

507

5
87
373
34
8

507

421
554

975

68
455
158
254
40

975

At year-end the Group had undrawn committed credit facilities amounting
to DKK 6,694 million (DKK 8,701 million in 2003). The undrawn committed
credit facilities consist of a EUR 500 million and a EUR 400 million facility
which are committed by a number of Danish and international banks. The
facilities mature in 2007 and 2009 respectively.

2004

1,513
317
110
65
1,716

3,721

2003

1,321
197
810
53
985

3,366

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 83

N O T E S – C O N S O L I D AT E D C A S H F L O W A N D F I N A N C I A L R E S O U R C E S

30 OTHER REVERSALS WITH NO EFFECT ON CASH FLOW

32 CASH FLOWS FROM ACQUISITION OF SUBSIDIARIES

DKK million

2004

2003

2002

DKK million

2004

2003

2002

Share-based payment costs
Increase/(decrease) in provisions
Loss from sale of tangible fixed assets
Allowances for doubtful trade receivables
Unrealised (gain)/loss on shares
and bonds etc
Unrealised foreign exchange (gain)/loss
Share of (profit)/loss in associated
companies
Unrealised capital gain on investments
in associated companies
Other

104
501
104
(10)

(8)
204

212

(95)
6

76
56
35
(28)

8
207

149

(94)
(44)

38
256
48
(29)

36
25

(239)
57

Other reversals with no effect
on cash flow

1,018

365

291

Property, plant and equipment
Current assets
Long-term liabilities
Current liabilities

Net assets acquired

Goodwill on acquisition

Consideration paid

Acquired cash and cash equivalents

Net cash flow

–
–
–
–

–

(10)
(54)
–
64

–

(104)
(178)
103
102

(77)

(346)

(423)

(25)

(448)

31 CASH FLOWS FROM DIVESTMENT OF SUBSIDIARIES

DKK million

2004

2003

2002

DKK million

2004

2003

2002

Cash at the end of the year

3,433

1,262

1,423

33 CASH AND CASH EQUIVALENTS

Property, plant and equipment
Current assets
Long-term liabilities
Current liabilities

Net assets divested

Divestment gains

Consideration received

Less divested cash and cash equivalents

Net cash flow

–
–
–
–

–

–
–
–
–

–

4
31
(2)
(8)

(11)

Short-term bank loans and overdrafts
at the end of the year

(470)

(421)

(504)

Cash and cash equivalents
at the end of the year

2,963

841

919

At the end of 2004, 2003 and 2002 there were no marketable securities
with original maturity of less than three months.

84 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

34 SHARE-BASED PAYMENT SCHEMES

Employee shares
In 2004 there has been no employee share programme.

Share options
Novo Nordisk has established share option schemes with the purpose of
motivating and retaining qualified management and to ensure common
goals for management and the shareholders. Each option gives the right
to purchase one Novo Nordisk B share, and in total approximately 400
employees in Novo Nordisk hold share options. All share options are hedged
by treasury shares.

Ordinary share option plans
The granting of share options under the Group‘s ordinary share option plans
is subject to the achievement of shareholder value-based goals decided by
the Board of Directors aligned with the Group‘s long-term financial targets.
The options are exercisable three years after the issue date and will expire
after eight years. For options granted based on performance targets for the
financial years 1997–1999, the exercise price was equal to the market price
of the Novo Nordisk B share at the time of issuance. The exercise price for
options granted based on performance targets for the financial years
2000 –2004 was equal to the market price of the Novo Nordisk B share at
the time when the plan was established. The options can only be settled in
equity.

For 2004 the maximum number of options was granted. The exercise
price is 267. The exercise price is fixed during the lifetime of the share option
plan.

Launch-share option plan
In connection with the demerger of Novozymes A/S, a specific share option
plan was established for Executive Management and Senior Management
Board, where the granting of the options was subject to the successful and
timely completion of the demerger. The options are exercisable three years
after the issue date and will expire after six years. The exercise price cor-
responds to the market price for the Novo Nordisk B share at the time when
the plan was established.

As a prerequisite to receiving the options, each participant had to
establish an investment in Novo Nordisk B shares equal to one year‘s gross
salary. For each Novo Nordisk share invested under the scheme, four options
were received and the Novo Nordisk B share investment must be maintained
at least until the end of the vesting period for the options, ie 31 January
2004. After this date the investment in Novo Nordisk B shares was no longer
required and the Novo Nordisk B shares could be sold by the individual
launch-share option plan participant, whereas the launch-share options may
be exercised within a period of three years.

The participants in the launch-share option plan held 149,740 shares. Of

these 86,880 were sold during 2004.

The launch scheme was mandatory for members of Executive Manage-
ment and voluntary for Senior Management Board. In 2001 and 2002 a
launch-option incentive programme was also offered to newly appointed
members of Senior Management Board.

Share options on Novozymes share
Options granted prior to the demerger of Novozymes A/S in 2000 have been
split into one Novo Nordisk option and one Novozymes option. At the end
of the year the Group‘s outstanding Novozymes options amount to 189,758
with an average exercise price of DKK 97 per share of DKK 10 and a market
value of DKK 34 million. These options are hedged by the Group‘s holding
of Novozymes A/S B shares.

Assumptions
The market value of the share options has been calculated using the Black-
Scholes option pricing model.

The assumptions used are shown in the table below:

2004

2003

2002

Expected life of the option in years
(average)

Expected volatility
(based on four years‘ historical volatility)

35%

39%

Expected dividend per share
(in DKK)

4.80

4.40

3.60

Risk-free interest rate
(based on Danish government bonds)

3.5%

3.8%

Novo Nordisk B share price
at the end of the year

299

241

205

Long-term share-based incentive programme
As from 2004, the six members of Executive Management and twenty
members of the Senior Management Board are no longer included in Novo
Nordisk’s share option plan. The option plan has been replaced by a share-
based incentive programme. This incentive programme is based on an an-
nual calculation of shareholder value creation compared to the planned
performance for the year.

In line with Novo Nordisk’s long-term financial targets, the calculation of
value creation is based on reported operating profit after tax reduced by a
WACC-based return requirement on average invested capital. A proportion
of the marginal value creation will be transferred to a bonus pool for partici-
pating executives. The calculated bonus pool may, subject to the Board of
Directors’ assessment, be reduced by a lower than expected performance
on significant research and development projects and key sustainability
projects.

The bonus pool will operate with a maximum contribution per participant
equal to eight months of salary. Once the performance-based bonus pool
has been approved by the Board of Directors, the bonus pool is converted
into Novo Nordisk A/S B shares at the market price prevailing when the
financial results for the year prior to the bonus year were released. The
bonus pool of shares will be established when approved by the Board of
Directors, but will be locked-up for three years before it is transferred to the
participants at the end of the three-year period.

In the lock-up period, the bonus pool may potentially be reduced due to
lower than planned value generation in subsequent years. The participant
will have to be employed by Novo Nordisk at the end of the lock-up period
to be eligible for the transfer of shares from the bonus pool. In 2004, the
allocation to the bonus pool amounts to DKK 33.7 million, corresponding to
7 months of salary. This amount was expensed in 2004. The cash amount
has been converted into 126,344 Novo Nordisk B shares using a share price
of DKK 267, equal to the average trading price for Novo Nordisk B shares on
the Copenhagen Stock Exchange from 6 to 20 February 2004. Based on the
split of participants at the establishment of the bonus pool, approximately
40% of the pool will be allocated to the members of Executive Management
and 60% to the members of the Senior Management Board.

As the long-term share-based incentive programme is evaluated by the
Board of Directors to have worked successfully in 2004, it will continue in
2005 with an unchanged structure.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 85

Average exercise
price per option
DKK

Market value
per option
DKK

Market
value
DKK million

N O T E S – A D D I T I O N A L I N F O R M AT I O N

34 SHARE-BASED PAYMENT SCHEMES (CONTINUED)

Outstanding share options in Novo Nordisk

Outstanding at the end of 2001
Launch-share options granted in 2002 (issued 7 February 2003)
Exercised in 2002
Expired/cancelled in 2002
Value adjustment

Outstanding at the end of 2002

Granted in respect of 2003 (issued on 6 February 2004)
Exercised in 2003:

of 1998 Ordinary share option plan
of 1999 Ordinary share option plan

Expired/cancelled in 2003
Value adjustment

Outstanding at the end of 2003

Granted in respect of 2004 (issued on 31 January 2005)
Exercised in 2004:

of 1997 Ordinay share option plan
of 1998 Ordinay share option plan
of 1999 Ordinary share option plan
of 2000 Ordinary share option plan
of Launch-share option plan

Expired/cancelled in 2004
Value adjustment

Outstanding at the end of 2004

Share options

3,125,094
26,024
(51,750)
(45,415)

3,053,953

1,092,500

(20,000)
(51,000)
(37,750)

4,037,703

809,416

(5,500)
(55,083)
(99,166)
(143,083)
(92,280)
(6,356)

4,445,651

227

Exercisable and outstanding
share options in Novo Nordisk

1997 Ordinary share option plan
1998 Ordinary share option plan
1999 Ordinary share option plan
2000 Ordinary share option plan
2000 Launch-share option plan

Issued
share options

Exercised
share options

Expired/
cancelled

Outstanding/
exercisable
share options

Exercise price
DKK

104,500
355,000
687,500
763,000
718,600

(54,500)
(126,833)
(150,166)
(143,083)
(92,280)

(27,000)
(51,917)
(81,334)
(25,793)
–

23,000
176,250
456,000
594,124
626,320

Exercisable at the end of 2004

2,628,600

(566,862)

(186,044)

1,875,694

2001 Ordinary share option plan
2001 Launch-share option plan
2002 Launch-share option plan
2003 Ordinary share option plan
2004 Ordinary share option plan

684,980
10,764
26,024
1,092,500
809,416

–
–
–
–
–

(37,394)
–
–
(16,333)
–

647,586
10,764
26,024
1,076,167
809,416

Outstanding at the end of 2004

5,252,284

(566,862)

(239,771)

4,445,651

Average market price of Novo Nordisk B shares per trading period in 2004

February
May
August
November

Total exercised options

220
322
125
220

223

195

125
198
223

216

267

190
125
198
198
198
216

190
125
198
198
198

332
332
322
195
267

163
60
163
163

58
58
58

104

75
75
75
75
75
75

509
2
(8)
(7)
(319)

177

(1)
(3)
(2)
42

307

(1)
(4)
(7)
(11)
(7)
(1)
79

439

Exercise period

19/2 2001 – 18/2 2006
25/3 2002 – 24/3 2007
24/3 2003 – 23/3 2008
22/2 2004 – 21/2 2009
1/2 2004 – 31/1 2007

8/2 2005 – 7/2 2010
8/2 2005 – 7/2 2010
7/2 2006 – 6/2 2011
6/2 2007 – 5/2 2012
31/1 2008 – 30/1 2013

Average
market price
DKK

267
288
322
299

Exercised
share
options

88,376
123,958
121,860
60,918

395,112

86 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

35 MANAGEMENT‘S REMUNERATION, SHARE OPTIONS AND SHAREHOLDINGS

For information on the Board of Directors, the members of Executive Management and of Senior Management Board, please refer to pages 106–107.

Remuneration
It is the policy of Novo Nordisk that remuneration to the Board of Directors (ten in total), Executive Management (six in total) and Senior Management Board
(twenty in total) must be at a competitive level compared to other major Danish companies and similar international pharmaceutical companies.

Fee to the Board of Directors and the Audit Committee
The fee to the Board of Directors and the Audit Committee is a fixed annual fee. Directors receive a fixed amount while the chairmanship receives a multiplier
thereof: The Chairman (2.5 times) and the Vice Chairman (1.5 times). The Audit Committee also receives a multiplier thereof in addition to the director fee:
The audit Committee chairman (1.25 times) and an Audit Committee member (0.5 times). In 2004, the base fee was DKK 300.000. In addition to the fee the
members‘ costs in connection with participation in the meetings, such as travel and hotel expenses etc, are refunded. Besides this, no other amounts or benefits
are paid to the Board members or Audit Committee members.

DKK million

Chairman
Vice chairman
Other Board of Directors/Audit Committee members

Total

Board of Directors

Audit Committee

2004

2003

2004

2003

0.8
0.4
2.4

3.6

0.6
0.4
1.9

2.9

0.4
–
0.3

0.7

–
–
–

–

Executive Management and Senior Management Board
The remuneration to Executive Management and Senior Management Board is based on a fixed salary, a potential cash bonus of up to four months‘ salary, pen-
sion contributions of 20% to approx 30% of the cash salary including bonus and non-monetary benefits in the form of car and phone. Additionally, Executive
Management and Senior Management Board participate in a long-term share-based incentive programme. The performance-based incentive programme is
based on long-term value creation where Novo Nordisk B shares will annually be allocated to a shared bonus pool when predefined overall business-related
targets have been achieved. The maximum annual allocation is capped. Subject to satisfactory subsequent performance, the bonus pool of shares may be paid
out to the executives following a three year lock up period. The size of the cash bonus depends on the achievement of individual performance targets whereas
the incentive from the long term share based programme is based on an annual calculation of shareholder-value creation compared to planned performance for
the year for the group.

The remuneration package for members of Senior Management Board employed in foreign subsidiaries differ from the general package in respect of other
benefit and bonus schemes included in the package in order to ensure an attractive package compared to local conditions. In addition, Executive Management
and Senior Management Board members receive ordinary allowances in connection with business travelling, conferences and education etc, which are based on
refunding of actual costs.

DKK million

2004
Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lars Almblom Jørgensen
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

Executive Management in total

Fixed salary

Cash bonus

Pensions

Non-monetary
benefits

Share-based
payment

Total
remuneration

5.3
2.6
2.6
2.6
2.9
2.6

18.6

1.5
0.9
0.6
0.9
0.9
0.4

5.2

1.6
0.8
0.9
0.8
1.0
0.8

5.9

0.1
0.2
0.3
0.2
0.2
0.2

1.2

5.3

–
–
–
–
–
–

–

33.7

8.5
4.5
4.4
4.5
5.0
4.0

30.9

67.1

33.7

Senior Management Board in total

39.4

11.3

11.1

Share bonus pool *)

*) The share bonus pool is locked up for three years before it is transferred to the participants employed at the end of the three-year period. The value is the cash amount of the share
bonus granted in 2004. Based on the split of participants at the establishment of the bonus pool, approximately 40% of the pool will be allocated to the members of Executive
Management and 60% to the members of the Senior Management Board. In the lock-up period, the bonus pool may potentially be reduced due to lower than planned value gene-
ration in subsequent years.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 87

N O T E S – A D D I T I O N A L I N F O R M AT I O N

35 MANAGEMENT‘S REMUNERATION, SHARE OPTIONS AND SHAREHOLDINGS (CONTINUED)

DKK million

2003
Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lars Almblom Jørgensen
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

Executive Management in total

Senior Management Board in total

Fixed salary

Cash bonus

Pensions

Non-monetary
benefits

Share-based
payment

Total
remuneration

4.6
2.5
2.5
2.0
2.5
2.5

16.6

29.1

0.9
0.6
0.4
0.3
0.6
0.4

3.2

9.3

1.2
0.6
0.9
0.5
0.8
0.7

4.7

8.6

0.1
0.2
0.3
0.2
0.2
0.2

1.2

4.5

1.7
0.9
0.9
0.9
0.9
0.9

6.2

6.6

8.5
4.8
5.0
3.9
5.0
4.7

31.9

58.1

In relation to severance payment, the members of Executive Management are, in the event of termination by the Company or by the individual due to a merger,
acquisition or takeover by an external company, entitled to a severance payment of up to 36 months‘ salary plus pension contribution. This equals amounts
between DKK 10.2 million and DKK 20.7 million.

Lars Rebien Sørensen serves as a member of the Board of Directors of Scandinavian Airlines and ZymoGenetics Inc and retains the remuneration received from
Scandinavian Airlines which amounts to SEK 0.3 million in 2004 (SEK 0.3 million in 2003) and has declined compensation from ZymoGenetics Inc.

Management‘s share options

Share options in Novo Nordisk

Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lars Almblom Jørgensen
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

Former members of Executive Management **):
Mads Øvlisen
Kurt Anker Nielsen ***)

At the beginning
of the year

Exercised
during the year

Additions
during the year

At the end of Market value*)
DKK million

the year

115,500
65,280
66,780
37,520
67,280
65,280

417,640

98,580
37,840

136,420

–
–
–
–
–
–

–

–
–

–

–
–
–
–
–
–

–

–
–

–

115,500
65,280
66,780
37,520
67,280
65,280

11.9
6.8
6.9
3.9
7.0
6.8

417,640

43.3

98,580
37,840

136,420

10.4
4.0

14.4

60.8

Senior Management Board in total ****)

601,724

(81,970)

66,000

585,754

Total

1,155,784

(81,970)

66,000

1,139,814

118.5

Calculation of market values at year-end has been based on the Black-Scholes option pricing model applying the assumptions shown in note 34.

*)
**) Mads Øvlisen and Kurt Anker Nielsen are now members of the Board of Directors.
***)
****) Additions during the year covers the holdings of share-options by Senior Management Board members appointed in 2004.

In addition, Kurt Anker Nielsen has share options in Novo Nordisk, issued by Novo A/S. At the end of 2004, 26,000 of these options were outstanding.

88 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

35 MANAGEMENT‘S REMUNERATION, SHARE OPTIONS AND SHAREHOLDINGS (CONTINUED)

Management‘s holding of Novo Nordisk shares
The internal rules on board members, executives and certain employees‘ trading in Novo Nordisk securities only permit trading in the 15-calendar-day period
following each quarterly announcement.

Shares in Novo Nordisk

Board of Directors:
Mads Øvlisen
Sten Scheibye
Kurt Anker Nielsen
Kurt Briner
Johnny Henriksen
Niels Jacobsen
Ulf J Johansson
Anne Marie Kverneland
Stig Strøbæk
Jørgen Wedel

Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lars Almblom Jørgensen
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

At the beginning
of the year

Purchased
during the year

Sold
during the year

At the end of Market value *)
DKK million

the year

51,525
400
33,440
2,400
300
11,000
–
1,600
400
5,555

–
–
3,172
–
–
–
–
–
–
–

(34,195)
–
(9,000)

–
–
–
–
–
–
–

17,330
400
27,612
2,400
300
11,000
–
1,600
400
5,555

5.2
0.1
8.3
0.7
0.1
3.3
–
0.5
0.1
1.7

106,620

3,172

(43,195)

66,597

20.0

12,800
8,545
8,775
4,355
8,690
8,835

52,000

–
–
–
–
–
–

–

(9,000)
(3,000)
(4,085)
(2,800)
(3,690)
(8,735)

3,800
5,545
4,690
1,555
5,000
100

(31,310)

20,690

1.1
1.7
1.4
0.5
1.5
–

6.2

Senior Management Board in total

83,276

6,257

(33,029)

56,504

16.9

Share bonus pool 2004 for Executive Management
and Senior Management Board **)

–

126,344

–

126,344

Total

241,896

135,773

(107,534)

270,135

37.8

80.9

The requirement for share ownership for Executive Management and former members of Executive Management linked to the participation in demerger-launch
incentives expired in January 2004. The reduced holding of shares should be seen in this context.

*) Calculation of the market value is based on the quoted share prices at the end of the year.
**) The share bonus pool is locked up for three years before it is transferred to the participants employed at the end of the three-year period. The value is the cash amount of the share
bonus granted in 2004. Based on the split of participants at the establishment of the bonus pool, approximately 40% of the pool will be allocated to the members of Executive
Management and 60% to the members of the Senior Management Board. In the lock-up period, the bonus pool may potentially be reduced due to lower than planned value gene-
ration in subsequent years.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 89

N O T E S – A D D I T I O N A L I N F O R M AT I O N

36 DERIVATIVE FINANCIAL INSTRUMENTS

The major part of Novo Nordisk‘s sales are in EUR, USD, JPY and GBP while a predominant part of production, research and development costs are carried in DKK.
As a consequence Novo Nordisk‘s foreign exchange risk is most significant in USD, JPY and GBP, leaving out EUR for which the exchange risk is regarded as low.
Novo Nordisk hedges existing assets and liabilities in major currencies, as well as future expected cash flow up to 24 months forward. During the year the
hedging levels have been relatively high and at year-end Novo Nordisk had covered the foreign exchange exposure on the balance sheet together with 15 months
of expected future cash flow in USD. For JPY and GBP the similar cover was 12 months and 8 months of future expected cash flows respectively. Novo Nordisk has
centralised management of the Group‘s financial risks. The overall objectives and policies for Novo Nordisk‘s financial risk management, including foreign
exchange risk management are outlined in the Novo Nordisk Treasury policy which is approved by the Board of Directors. Novo Nordisk hedges commercial
exposure only. All financial positions are recognised at mark to market basis and financial risk is assessed using generally accepted standards. Novo Nordisk‘s
currency hedging activities are categorised into hedging of forecasted transactions (cash flow hedges), hedging of assets and liabilities (fair value hedges) and
hedging of net investments.

Hedging of forecasted transactions
The table below shows the fair value of cash-flow hedging activities for 2004 and 2003 specified by hedging instrument and major currencies. The fair value of
the financial instruments qualifying for hedge accounting under IAS 39 are recognised directly under equity until the hedged items are recognised in the Income
statement. At year end DKK 461 million are deferred via equity (DKK 513 million in 2003). The fair value of the financial instruments not qualifying for hedge
accounting under IAS 39 are recognised directly in the Income statement.

Financial instruments hedging forecasted transactions qualifying for hedge accounting under IAS 39:

2004

2003

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

DKK million

Forward contracts, net sales:
USD
JPY
GBP
Other

Interest rate swaps:
DKK/DKK
EUR/EUR
JPY/JPY

–
–
–
–

–

22
–
–

–
–

–

4,526
1,382
567
201

6,676

310
501
422

1,233

375
65
14
7

461

–
–
–

–

–
–
–
–

–

34
6
–

5,362
1,510
599
283

7,754

310
501
445

1,256

450
49
5
9

513

–
–
–

–

9,010

513

Total hedging of forecasted transactions
qualifying for hedge accounting under IAS 39

7,909

461

Financial instruments hedging forecasted transactions, but not qualifying for hedge accounting under IAS 39:

Currency options:
EUR/USD (purchased USD put)
EUR/JPY (purchased JPY put)

Total hedging of forecasted transactions not
qualifying for hedge accounting under IAS 39

Total hedging of forecasted transactions

1,424
372

1,796

9,705

84
12

557

2004

–
–

–

2,675
1,381

4,056

13,066

The financial contracts existing at the end of the year cover expected
cash flow of key currencies in the following number of months:
USD
JPY
GBP

15 months
12 months
8 months

At the end of the year the financial contracts (cash flow hedges) are expected to
be recognised in the Income statement within the following number of months:
USD
JPY
GBP

15 months
12 months
10 months

161
24

185

698

2003

20 months
15 months
8 months

17 months
9 months
11 months

The term to maturity of the swaps existing at the end of 2004 is September 2006 and December 2012 (December 2007 and December 2012 at the end of 2003)
and the interest margins are (3.20%) to (0.27%) ((3.19%) to (0.26%) at year-end 2003).

90 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

36 DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Hedging of assets and liabilities
The table below shows the fair value of fair-value hedging activities for 2004 and 2003 specified by hedging instrument and the major currencies. All changes in
fair values are recognised in the Income statement which amounts to a gain of DKK 284 million in 2004 (a gain of DKK 285 million in 2003).

DKK million

Forward contracts:
USD
JPY
GBP
Other

Currency swaps:
EUR/USD
JPY/DKK

2004

2003

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

1,687
485
268
88

2,528

492
314

806

180
20
10
–

210

–
87

–
–
–
3

10
–

1,648
26
161
233

2,068

–
314

314

202
1
9
12

224

–
61

2,382

285

–
–
–
–

–

–
–

–

Total hedging of assets and liabilities

3,334

297

The term to maturity of the swaps existing at the end of 2004 is December 2011 (December 2011 at the end of 2003) and the interest margins are (0.90%) to
4.05% (4.05% at year-end 2003).

The financial contracts existing at the end of the year hedge the currency exposure on assets and liabilities in the Group‘s major currencies other than DKK and
EUR, ie assets and liabilities in USD, JPY and GBP.

Hedging of net investments in foreign subsidiaries
The table below shows the fair value of hedging activities relating to net investments in foreign subsidiaries for 2004 and 2003 specified by hedging instrument
and the major currencies. All changes in fair values relating to currency are recognised directly under equity amounting to DKK 13 million in 2004 (DKK 83 million
in 2003). All changes relating to interest rates are recognised in the Income statement amounting to DKK 1 million in 2004 (DKK 7 million in 2003).

DKK million

Currency swaps:
USD/DKK
JPY/DKK

2004

2003

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

–
145

145

–
14

–
–

–

216
294

510

69
21

–
–

–

The term to maturity of the swaps existing at the end of 2004 is September 2006 (June 2004 – September 2006 at the end of 2003) and the interest margin is
2.69% (0.68% to 2.93% at year-end 2003).

The financial contracts existing at the end of the year hedges the following share of the major net investments:

DKK million

USD
JPY
GBP
EUR *)
Other

2004

2003

Net investment

% covered

Net investment

% covered

1,126
544
141
2,380
1,477

5,668

0%
24%
0%
0%
0%

1,149
457
117
1,580
1,023

4,326

13%
61%
0%
0%
0%

*) including subsidiaries with EUR as functional currency regardless of the local currency in the subsidiary.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 91

N O T E S – A D D I T I O N A L I N F O R M AT I O N

37 COMMITMENTS AND CONTINGENCIES

DKK million

Commitments

Operating lease commitments
The operating lease commitments below are re-
lated to non-cancellable operating leases prima-
rily related to premises, company cars and office
equipment. Approximately 68% of the commit-
ments are related to leases outside Denmark. The
lease costs for 2004 and 2003 were DKK 662
million and DKK 586 million respectively.

Lease commitments expiring within
the following periods as from the
balance sheet date:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years

2004

2003

349
278
202
164
135
450

290
239
172
124
118
327

Business combinations after the balance sheet date
Novo Nordisk has completed the restructuring transaction with Aradigm
Corporation related to the AERx ® insulin Diabetes Management System
(iDMS), giving Novo Nordisk full development and manufacturing rights to
the programme as of 26 January 2005. Following satisfaction of closing
conditions, including approval by the US competition authorities as well as
approval by Aradigm’s shareholders, Novo Nordisk’s wholly owned affiliate,
Novo Nordisk Delivery Technologies, Inc, now employs approximately 130
former Aradigm employees who have been dedicated to the AERx ® iDMS
programme. Novo Nordisk acquired fixed assets and related intellectual
property from Aradigm Corporation of approximately DKK 300 million. No
goodwill arose from the business combination.

World Diabetes Foundation
At the Annual General Meeting of Novo Nordisk A/S in 2002 the share-
holders agreed on a donation to the World Diabetes Foundation obligating
Novo Nordisk A/S for a period of 10 years from 2002 to make annual dona-
tions to the Foundation of 0.25% of the net insulin sales of the Novo
Nordisk Group in the preceding financial year. However, annual donations
shall not exceed the lower of DKK 65 million or 15% of the taxable income
of Novo Nordisk A/S in the financial year in question. The donation of DKK
45 million in 2004 is recognised in the Income statement.

1,578

1,270

Contingencies

Purchase obligations

1,274

1,517

The purchase obligations primarily relate to con-
tractual obligations to investments in property,
plant and equipment including purchase agree-
ments regarding medical equipment and con-
sumer goods. Novo Nordisk expects to fund these
commitments with existing cash and cash flows
from operations.

Obligations relating to research and
development projects

674

604

Novo Nordisk has engaged in research and de-
velopment projects with a number of external
corporations. The major part of the obligations
include development obligations relating to the
AERx ® iDMS project; option fee on proteins
developed by ZymoGenetics Inc; fees on the
NovoSeven ® expansion programmes and fees on
the Levemir ® phase 3 clinical trials.

Other guarantees

224

153

Other guarantees primarily relate to guarantees
issued by Novo Nordisk in relation to rented pro-
perty.

Security for debt

1,722

1,713

Land, buildings and equipment etc at carrying
amount.

Pending litigation
In Poland the local customs authorities have investigated a number of inter-
national companies, alleging misstatement of customs values regarding the
period until April 2002 when new legislation came into effect. Regarding
Novo Nordisk the authorities have investigated 1999, 2000 and part of 2001
and claimed misstatement of approximately DKK 360 million. Including
potential penalties and interest, the total litigation may be up to DKK 900
million. Novo Nordisk has not received claims regarding the rest of 2001 and
2002. In the opinion of management, Novo Nordisk has acted in compliance
with Polish legislation. In spite of that, there is a risk of further legal actions
against Novo Nordisk from the Polish authorities. The outcome of possible
legal actions and consequences hereof are uncertain.

As of 31 December 2004, Novo Nordisk Inc, together with the majority
of hormone therapy product manufacturers, is a defendant in 16 product
liability lawsuits. Since the initiation of the lawsuits in July 2004, three cases
against Novo Nordisk Inc have been dismissed by the courts. Novo Nordisk’s
hormone therapy products (Activella ® and Vagifem ®) have been sold and
marketed in the US since 2000. Until July 2003, the products were sold and
marketed exclusively in the US by Pharmacia & Upjohn Corporation (now
Pfizer). The proceedings are in their preliminary stages; however, Novo
Nordisk is not expecting the claims to have a material impact on Novo
Nordisk’s financial position.

In addition, the Novo Nordisk Group is engaged in certain litigation
proceedings. In the opinion of management, settlement or continuation of
these proceedings will not have a material effect on the financial position of
the Group.

Liability for the debts and obligations of Novozymes following
the demerger of Novozymes in 2000.
Novo Nordisk A/S and Novozymes A/S are subject to joint and several
liability for any obligation which existed at the time of the announcement of
the demerger in 2000. At the end of the year the remaining part of the joint
and several liability in Novozymes A/S amounted to DKK 557 million.

Debts and obligations pertaining to the period before 1 January 2000,
which are recognised after 1 January 2000 and which cannot be clearly
attributed to either Novo Nordisk A/S or Novozymes A/S, will be distributed
proportionally between the two companies according to an agreement
established in connection with the demerger in November 2000.

92 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

38 RELATED PARTY TRANSACTIONS

39 RECONCILIATION TO US GAAP

Novo Nordisk A/S is controlled by Novo A/S (incorporated in Denmark),
which owns 26% of the shares in Novo Nordisk A/S. The remaining shares
are widely held. The ultimate parent of the Novo Nordisk Group is the Novo
Nordisk Foundation (incorporated in Denmark).

Other related parties are considered to be the Novozymes Group due to joint
ownership, associated companies, the directors and officers of these entities
and management of Novo Nordisk. Following the demerger, Novo Nordisk
has access to certain assets of and may purchase certain services from Novo
A/S and the Novozymes Group and vice versa. All agreements relating to
such assets and services are based on the list prices used for sales to third
parties where such list prices exist, or the price has been set at what is
regarded as market price. The main part of these agreements are for one
year.

The Novo Nordisk Group has had the following material transactions with
related parties:

DKK million

Novo A/S
Services provided by the Novo Nordisk Group
Facilitation and stakeholder relation services etc
provided by Novo A/S

The Novozymes Group
Services provided by the Novo Nordisk Group
Services provided by the Novozymes Group
Sales of assets to the Novozymes Group

Associated companies
Purchased intangible assets, fees and royalties etc
paid to associated companies by Novo Nordisk

2004
Purchase/
(sale)

2003
Purchase/
(sale)

(5)

(363)
158
(7)

(9)

(366)
155
–

415

356

There have not been any material transactions with the Novo Nordisk
Foundation, or with any director or officer of Novo Nordisk A/S, the
Novozymes Group, Novo A/S, the Novo Nordisk Foundation or associated
companies. For information on remuneration to management of Novo
Nordisk A/S, please refer to note 35.

Apart from the balances included in the Balance sheet under Other financial
assets, Other receivables and Other liabilities there are no unsettled trans-
actions with related parties at the end of the year.

As of 1 January 2004, the accounting policies have been changed from
Danish GAAP to comply with International Financial Reporting Standards
(IFRS). The impact on the Group’s assets, liabilities, equity and net profit is
illustrated in note 1 ‘Changes in accounting policies – Adoption of IFRS’. A
description of the Group‘s accounting policies is set out in notes 2, 3 and 4.

US GAAP differ within certain areas from the Group‘s accounting policies.
The principal areas for which US GAAP differ can be summarised as follows:

a) Borrowing costs – under IFRS an entity can choose whether to capitalise
or expense borrowing costs. Novo Nordisk has chosen to expense bor-
rowing costs, whereas according to US GAAP borrowing costs have to be
capitalised.

b) Financial instruments – as from 1 January 2004, Novo Nordisk complies
with both IFRS and US GAAP hedge accounting requirements regarding
forward contracts and swaps. However, historically Novo Nordisk has not
complied with US GAAP hedge accounting requirements.

c) Acquired in-process research and development projects – under
IFRS, acquired in-process research and development projects have to
be capitalised as intangible assets at the price paid given they meet
certain criteria. According to US GAAP, such projects always have to be
expensed.

d) Unrealised capital gain on investments in research and develop-
ment companies – according to IFRS, the gain on a capital injection,
where the shareholding of Novo Nordisk is diluted, is recognised in the
Income statement. Under US GAAP, the gain is recognised in equity
where the issued securities are not common stock or the main activity
of the investee is research and development.

e) Goodwill on investments in research and development companies –
according to IFRS, goodwill is capitalised irrespective of the nature of the
business acquired. Under US GAAP, costs in excess of net assets (good-
will) relating to acquired research and development companies are
considered to be in-process research and development costs, which are
expensed in the Income statement immediately.

f) Accounting for associated R&D companies – The method of calculat-
ing Novo Nordisk’s share of profit or loss in an associated company have
historically been slightly different between IFRS and US GAAP. The
methods have been aligned in 2004 and no difference exists.

g) Sale and lease back transactions on operating leases – under IFRS,
gains on assets sold in a sale and lease back transaction resulting in an
operating lease are recognised immediately, whereas US GAAP require
the gains to be amortised over the lease term.

h) Restructuring costs – under IFRS, costs in connection with the re-
structuring were taken to the Income statement when obligated. Under
US GAAP, such costs can only be charged to the Income statement when
the costs have been incurred.

Impairment of goodwill – the impairment test models under IFRS and
US GAAP are different, and can lead to different impairment losses.

j) Other minor differences – there are also differences between histori-
cally reported US GAAP figures and IFRS in relation to finance lease and
currency option premiums. Novo Nordisk has adjusted its accounting
policies in 2004 to eliminate differences between the Group’s IFRS ac-
counting policies and US GAAP accounting policies. None of the dif-
ferences mentioned are individually significant and they are therefore
shown as a combined total.

k) Effect of IFRS 1 one-time exemption – All actuarial gains and losses
relating to defined benefit plans are recognised in the balance sheet at
1 January 2002 in accordance with IFRS 1. Under US GAAP, such an
exemption does not exist.

l) Discontinued operations (Novozymes A/S) – under US GAAP, the
results of discontinued operations were included until the date of the
demerger. Consequently, the results of Novozymes were included until
13 November 2000. The income recorded during 2000 became part of
the net assets which were distributed in the form of dividend to share-
holders in connection with the demerger.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 93

N O T E S – A D D I T I O N A L I N F O R M AT I O N

39 RECONCILIATION TO US GAAP (CONTINUED)

The application of the US GAAP described would have resulted in the following adjustments:

DKK million

Sales (no adjustments)

2004

2003

2002

2001

2000

29,031

26,158

24,866

23,385

20,485

Adjustments to net profit:
Net profit in accordance with IFRS
a) Borrowing costs
b) Financial instruments
c) Acquired in-process R&D projects
d) Unrealised capital gain on investments in research and development companies
e) Goodwill on investments in research and development companies
f) Accounting for associated R&D companies
g) Sale and lease back transactions
h) Restructuring costs
i) Impairment of goodwill
j) Other minor differences
k) Effect of IFRS 1 one-time exemptions

Tax on the above-mentioned differences between IFRS and US GAAP

Net profit from continuing operations in accordance with US GAAP

l) Net profit from discontinued operations (Novozymes)

5,013
(2)
–
(170)
(96)
–
–
(26)
–
(53)
–
–

4,685

–

4,833
(28)
122
–
(85)
–
9
–
–
31
2
(10)

(30)

4,116
(25)
275
–
(236)
60
9
–
–
22
10
11

3,620
(20)
(175)
–
(48)
(60)
29
–
–
–
11
–

4,844

4,270

3,411

–

Net profit in accordance with US GAAP

4,685

4,844

4,270

3,411

Adjustments to equity:
Equity in accordance with IFRS
a) Borrowing costs
c) Acquired in-process R&D projects
e) Goodwill on investments in research and development companies
f) Accounting for associated R&D companies
g) Sale and lease back transactions
i) Impairment of goodwill
j) Other minor differences
k) Effect of IFRS 1 one-time exemptions
l) Net assets of discontinued operations according to US GAAP
l) Net assets of discontinued operations – dividend to shareholders

26,504
266
(170)
–
–
(26)
–
–
–
–
–

24,776
268
–
–
(31)
–
53
29
36
–
–

22,477
287
–
–
(47)
–
22
28
42
–
–

19,700
297
–
(60)
(57)
–
–
35
15
–
–

3,154
(20)
291
–
(19)
–
(151)
–
(125)
–
–
–

(33)

3,097

408

3,505

16,620
351
–
–
(151)
–
–
–
–
3,758
(3,758)

Tax arising from the difference between IFRS and US GAAP

(94)

Equity in accordance with US GAAP

26,582

25,155

22,826

19,948

16,726

The application of the described US GAAP would have resulted
in the following adjustments to balance sheet items:
According to IFRS:
Total assets
Total liabilities

In accordance with US GAAP:
Total assets
Total liabilities

37,433
10,929

37,643
11,061

34,564
9,788

31,612
9,135

28,662
8,962

24,597
7,977

35,004
9,849

32,077
9,251

29,043
9,095

24,920
8,194

94 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

N O T E S – A D D I T I O N A L I N F O R M AT I O N

39 RECONCILIATION TO US GAAP (CONTINUED)

DKK million

2004

2003

2002

2001

2000

US GAAP ratios:
Earnings per share/ADR from continued operations in accordance
with US GAAP in DKK
Earnings per share/ADR diluted from continued operations in accordance
with US GAAP in DKK

Earnings per share/ADR in accordance with US GAAP in DKK
Earnings per share/ADR diluted in accordance with US GAAP in DKK

Earnings per ADR from continued operations in USD *)
Earnings per ADR from continued operations diluted in USD *)
Earnings per ADR in accordance with US GAAP in USD *)
Earnings per ADR diluted in accordance with US GAAP in USD *)

Dividend per share/ADR in DKK
Dividend per ADR in USD **)

13.92

13.86

13.92
13.86

2.55
2.53
2.55
2.53

4.80
0.88

14.20

14.18

14.20
14.18

2.38
2.38
2.38
2.38

4.40
0.74

12.32

12.30

12.32
12.30

1.74
1.74
1.74
1.74

3.60
0.51

9.87

9.84

9.87
9.84

1.17
1.17
1.17
1.17

3.35
0.39

8.87

8.85

10.04
10.01

1.11
1.10
1.25
1.25

2.65
0.32

Impact on US GAAP of adopting IFRS and changes to US GAAP
Accounting polices
Novo Nordisk has, as part of the IFRS adoption, taken the opportunity to
change some of its IFRS accounting policies to also comply with US GAAP
in order to minimize the reconciliation items. The impact of adopting IFRS
and the changes in US GAAP accounting policies on historically reported
US GAAP figures are illustrated below. The changes to US GAAP accounting
policies shall be seen in conjunction with the convergence project between
the International Accounting Standard Board, which issues the IFRS stan-
dards, and the Financial Accounting Standard Board, which issues the
accounting principles generally accepted in the United States (US GAAP),
where these two bodies try to eliminate the differences between IFRS and
US GAAP. Novo Nordisk fully supports the convergence project.

I) Share-based payment – Novo Nordisk has previously used the option in
Statement of Financial Accounting Standards (SFAS) No. 123 on Share-
based payment to expense the intrinsic value of granted options and the
difference between market price and the sales price on employee shares
in the Income statement. In 2004 Novo Nordisk has chosen to use the
retroactive restatement method in SFAS No. 148 thereby bringing IFRS
and US GAAP in compliance.

II) Long-term employee benefits – Novo Nordisk has scrutinised its
employee benefits and recognised provisions for certain long-term
employee benefits.

The symbols I) to II) in the tables below refer to descriptions of the changes
in US GAAP previously reported figures mentioned above.

DKK million

2003

2002

2001

2000

Changes to historically reported US GAAP net profit and equity:

Net profit as historically reported
I) Share-based payment
Effect on reported tax figure

Net profit in accordance with US GAAP

Equity as historically reported
I) Share-based payment
II) Long-term employee benefits

Equity in accordance with US GAAP

4,865
(8)
(13)

4,844

25,266
100
(211)

4,245
38
(13)

3,492
(111)
30

3,556
(70)
19

4,270

3,411

3,505

22,945
92
(211)

20,077
82
(211)

16,876
61
(211)

25,155

22,826

19,948

16,726

*) For translation into USD, the exchange rate at 31 December is used.
**) Dividends are translated at Danmarks Nationalbank‘s (the central bank of Denmark) official exchange rates on the respective payment dates, for 2000 –2003. For 2004 proposed

dividend is translated using the exchange rates at 31 December 2004 (USD 1 = DKK 5.4676).

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 95

C O M PA N I E S I N T H E N O V O N O R D I S K G R O U P

Activity

Country

Year of
incorporation /
acquisition

Issued share capital /
paid-in capital

Percentage
of shares
owned

t
n
e
m
p
o
e
v
e
D
d
n
a
h
c
r
a
e
s
e
R

g
n
i
t
e
k
r
a
M
d
n
a

e
c
n
a
n
n
i
F
o
/
i
s
t
e
c
u
c
i
d
v
o
r
e
r
S
P
A A A A

s
e
a
S

Parent company
Novo Nordisk A/S

Subsidiaries by region

Europe
Novo Nordisk Pharma GmbH
S.A. Novo Nordisk Pharma NV
Novo Nordisk sro
Novo Nordisk Region Europe A/S
Novo Nordisk Farma OY
Novo Nordisk Pharmaceutique SAS
Novo Nordisk Production SAS
Novo Nordisk Pharma GmbH
Novo Nordisk Hellas Epe
Novo Nordisk Hungária Kft
Novo Nordisk Limited
Novo Nordisk Farmaceutici SpA
Novo Nordisk Farma BV
Novo Nordisk Scandinavia AS
Novo Nordisk Pharma Sp zoo
Novo Nordisk Comércio Produtos Farmacêuticos Ltda
Novo Nordisk Pharma SA
Novo Nordisk Scandinavia AB
Novo Nordisk Femcare AG
Novo Nordisk Health Care AG
Novo Nordisk Pharma AG
Novo Nordisk Holding Ltd
Novo Nordisk Limited

North America
Novo Nordisk Canada Inc
Novo Nordisk Region North America A/S
Novo Nordisk Holding Inc
Novo Nordisk of North America Inc
Novo Nordisk Pharmaceutical Industries Inc
Novo Nordisk Inc

Japan & Oceania
Novo Nordisk Pharmaceuticals Pty Ltd
Novo Nordisk Region Japan & Oceania A/S
Novo Nordisk Pharma Ltd
Novo Nordisk Pharmaceuticals Ltd

Denmark

1931

DKK

709,388,320

–

A A A A

Austria
Belgium
Czech Republic
Denmark
Finland
France
France
Germany
Greece
Hungary
Ireland
Italy
Netherlands
Norway
Poland
Portugal
Spain
Sweden
Switzerland
Switzerland
Switzerland
United Kingdom
United Kingdom

Canada
Denmark
United States
United States
United States
United States

Australia
Denmark
Japan
New Zealand

1974
1974
1997
2002
1972
2003
1959
1973
1979
1996
1978
1980
1983
1965
1996
1984
1978
1971
2003
2000
1968
1977
1978

1983
2003
2004
1988
1991
1982

1985
2002
1980
1990

EUR
EUR
CZK
DKK
EUR
EUR
EUR
EUR
EUR
HUF
EUR
EUR
EUR
NOK
PLN
EUR
EUR
SEK
CHF
CHF
CHF
GBP
GBP

CAD
DKK
USD
USD
USD
USD

36,336
69,000
14,500,000
100,500,000
420,470
5,821,140
57,710,220
614,062
1,050,000
371,000,000
635
516,500
61,155
250,000
29,021,000
250,000
1,502,500
100,000
1,100,000
159,325,000
50,000
2,802,130
2,350,000

200
500,000
50,000
283,835,600
55,000,000
2,000

AUD
500,001
15,500,000
DKK
JPY 2,104,000,000
1,000,000
NZD

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100

100
100
100
100

A A A

A A

96 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

C O M PA N I E S I N T H E N O V O N O R D I S K G R O U P

Activity

Country

Year of
incorporation /
acquisition

Issued share capital /
paid-in capital

Percentage
of shares
owned

t
n
e
m
p
o
e
v
e
D
d
n
a
h
c
r
a
e
s
e
R

g
n
i
t
e
k
r
a
M
d
n
a

e
c
n
a
n
n
i
F
o
/
i
s
t
e
c
u
c
i
d
v
o
r
e
r
S
P
A A A A

s
e
a
S

International Operations
Aldaph SpA
Novo Nordisk Pharma Argentina SA
Novo Nordisk Produsao Farmacêutica Do Brasil
Novo Nordisk Farmacêutica do Brasil Ltda
Novo Nordisk (China) Pharmaceuticals Co, Ltd
Novo Nordisk Croatia d.o.o.
Novo Nordisk Region International Operation A/S
Novo Nordisk Egypt
Novo Nordisk Hong Kong Limited
Novo Nordisk India Private Ltd
PT. Novo Nordisk
Novo Nordisk Ltd
Novo Nordisk Pharma (Malaysia) Sdn Bhd
Novo Nordisk Mexico
Novo Nordisk Pharmaceuticals (Philippines) Inc
Novo Nordisk Limited Liability Company
Novo Investment Pte Ltd
Novo Nordisk Asia Pacific Pte Ltd
Novo Nordisk Pharma (Singapore) Pte Ltd
Novo Nordisk (Pty) Ltd
Novo Nordisk Pharma Korea Ltd
Novo Nordisk Pharma (Taiwan) Ltd
Novo Nordisk Pharma (Thailand) Ltd
Novo Nordisk Tunisie Sarl
Novo Nordisk Saglik Ürünleri Tic Ltd Sti (in million)
Novo Nordisk Venezuela

Other subsidiaries
FeF Chemicals A/S
NNIT A/S
Novo Nordisk Engineering A/S
Novo Nordisk Servicepartner A/S

Associated companies
DakoCytomation A/S
Ferrosan A/S
ZymoGenetics Inc
Aradigm Corporation

Algeria
Argentina
Brazil
Brazil
China
Croatia
Denmark
Egypt
Hong Kong
India
Indonesia
Israel
Malaysia
Mexico
Philippines
Russia
Singapore
Singapore
Singapore
South Africa
South Korea
Taiwan
Thailand
Tunisia
Turkey
Venezuela

Denmark
Denmark
Denmark
Denmark

Denmark
Denmark
United States
United States

1994
1997
2002
1990
1994
2004
2002
2004
2001
1994
2003
1997
1992
2004
1999
2003
1994
1997
1997
1959
1994
1990
1983
2004
1993
2004

1989
1998
1989
1998

1992
1986
1988
2001

270,000,000
DZD
7,465,150
ARS
199,641,074
BRL
84,727,136
BRL
165,957,192
CNY
500,000
HRK
35,000,000
DKK
50,000
EGP
500,000
HKD
265,000,000
INR
827,900,000
IDR
100
ILS
200,000
MYR
150,000
MXN
50,000,000
PHP
1,600,000
RUB
12,000,000
SGD
2,000,000
SGD
200,000
SGD
ZAR
8,000
KRW 6,108,400,000
9,000,000
TWD
15,500,000
THB
20,000
TND
25,296,300
TRL
9,500,000
VEB

DKK
DKK
DKK
DKK

DKK
DKK
USD
USD

10,000,000
1,000,000
500,000
1,000,000

77,369,312
121,827,000
565,823,000
293,369,400

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
49
100
100
100

100
100
100
100

27
30
36
12

A A

A A A

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 97

S U M M A R Y O F F I N A N C I A L D ATA 2 0 0 0 – 2 0 0 4

DKK million

Sales
Sales by business segments:

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy
Other products
Biopharmaceuticals total

Sales by geographic segments:

Europe
North America
International Operations
Japan & Oceania

Licence fees and other operating income (net)
Operating profit
Net financials
Profit before income taxes
Income taxes
Net profit

Cash and marketable securities
Total assets
Total current liabilities
Total long-term liabilities
Equity

Investments in property, plant and equipment (net) **)
Investments in intangible assets and long-term financial assets (net)
Free cash flow *)
Net cash flow

Ratios

Sales in percent:

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy
Other products
Biopharmaceuticals total

Sales outside Denmark as a percentage of sales
Sales and distribution costs as a percentage of sales
Research and development costs as a percentage of sales
Administrative expenses as a percentage of sales

Gross margin *)
Operating profit margin *)
Growth in operating profit *)
Growth in operating profit, three-year average *)
Net profit margin *)

Effective tax rate *)
Equity ratio *)
Payout ratio *)
Return on equity *)
Change in market capitalisation
ROIC *)
Cash/earnings *)
Cash/earnings, three-year average *)

2000

2001

2002

2003

2004

20,485

23,385

24,866

26,158

29,031

142
13,161
1,080
14,383

2,252
2,008
1,298
544
6,102

9,093
4,028
2,869
4,495

571
4,703
181
4,884
1,730
3,154

3,845
24,597
5,860
2,117
16,620

2,123
(22)
2,712
1,381

0.7%
64.2%
5.3%
70.2%

11.0%
9.8%
6.3%
2.7%
29.8%

98.8%
29.4%
16.6%
9.4%

75.5%
23.0%
32.6%
24.1%
15.4%

35.4%
67.6%
29.0%
19.6%
56.2%
22.3%
86.0%
66.3%

459
14,533
1,392
16,384

3,071
2,055
1,426
449
7,001

10,562
5,167
3,395
4,261

815
5,410
285
5,695
2,075
3,620

3,062
28,662
6,138
2,824
19,700

3,829
288
186
(820)

2.0%
62.1%
6.0%
70.1%

13.1%
8.8%
6.1%
1.9%
29.9%

99.2%
29.7%
16.6%
8.3%

74.2%
23.1%
15.0%
22.7%
15.5%

36.4%
68.7%
32.1%
19.9%
20.4%
22.7%
5.1%
56.2%

1,187
14,651
1,620
17,458

3,593
2,061
1,333
421
7,408

10,889
5,786
4,099
4,092

758
5,927
401
6,328
2,212
4,116

1,738
31,612
6,152
2,983
22,477

3,893
81
497
56

4.8%
58.9%
6.5%
70.2%

14.4%
8.3%
5.4%
1.7%
29.8%

99.2%
28.9%
15.9%
7.9%

73.5%
23.8%
9.6%
19.1%
16.6%

35.0%
71.1%
30.2%
19.5%
(40.4%)
20.5%
12.1%
34.4%

2,553
14,492
1,430
18,475

3,843
2,133
1,322
385
7,683

11,697
6,219
4,227
4,015

1,036
6,422
954
7,376
2,543
4,833

3,090
34,564
7,032
2,756
24,776

2,273
40
3,846
(64)

9.8%
55.4%
5.5%
70.6%

14.7%
8.2%
5.1%
1.5%
29.4%

99.3%
28.5%
15.5%
7.1%

71.7%
24.6%
8.4%
11.0%
18.5%

34.5%
71.7%
30.8%
20.5%
15.4%
19.5%
79.6%
32.3%

4,507
14,383
1,643
20,533

4,359
2,317
1,488
334
8,498

12,411
7,478
4,844
4,298

575
6,980
477
7,457
2,444
5,013

3,959
37,433
7,280
3,649
26,504

2,999
312
4,278
2,136

15.5%
49.5%
5.7%
70.7%

15.0%
8.0%
5.1%
1.2%
29.3%

99.3%
28.5%
15.0%
6.7%

72.3%
24.0%
8.7%
8.9%
17.3%

32.8%
70.8%
31.8%
19.6%
21.9%
20.6%
85.3%
59.0%

98 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

S U M M A R Y O F F I N A N C I A L D ATA 2 0 0 0 – 2 0 0 4
Supplementary information in EUR

EUR million

Sales
Sales by business segments:

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy
Other products
Biopharmaceuticals total

Sales by geographic segments:
Europe
North America
International Operations
Japan & Oceania

Licence fees and other operating income (net)
Operating profit
Net financials
Profit before income taxes
Income taxes
Net profit

Cash and current asset investments
Total assets
Total current liabilities
Total long-term liabilities
Equity

Investments in property, plant and equipment (net) **)
Investments in intangible assets and long-term financial assets (net)
Free cash flow *)
Net cash flow

Share data

Basic earnings per share in DKK *)
Diluted earnings per share in DKK *)
Dividend per share in DKK
Price/earnings *)

Number of shares at year-end (million)
Number of shares outstanding at year-end (million)
Average number of shares outstanding (million) *)
Average number of shares outstanding incl share options ‘in the money’ (million)

Quoted price at year-end for B shares in DKK *)
Quoted price (high) for B shares during the year in DKK
Quoted price (low) for B shares during the year in DKK
Quoted price at year-end for ADRs in USD *)
Market capitalisation in DKK (million) *)

Basic earnings per share in accordance with US GAAP in DKK
Diluted earnings per share in accordance with US GAAP in DKK
Basic earnings per ADR in accordance with US GAAP in USD *)
Diluted earnings per ADR in accordance with US GAAP in USD *)

Employees

Total full-time positions at year-end

Denmark
Rest of Europe
North America
International Operations
Japan & Oceania

2000

2001

2002

2003

2,748

3,138

3,347

3,520

19
1,766
145
1,930

302
269
174
73
818

1,220
540
385
603

77
631
24
655
232
423

515
3,296
785
284
2,227

284
(3)
363
185

9.03
9.03
2.65
31.56

377.2
345.5
349.2
349.5

285
368
168
35.40
98,507

10.04
10.01
1.25
1.25

13,752
8,767
1,999
999
1,216
771

62
1,950
187
2,199

412
276
191
60
939

1,417
693
456
572

109
726
38
764
278
486

412
3,855
825
380
2,649

515
39
25
(110)

10.47
10.45
3.35
32.66

354.7
346.7
345.7
346.6

342
393
277
40.10
118,563

9.87
9.84
1.17
1.17

16,141
10,127
2,292
1,404
1,531
787

160
1,972
218
2,350

484
277
179
57
997

1,465
779
552
551

102
798
54
852
298
554

234
4,258
829
402
3,027

524
11
67
8

11.87
11.85
3.60
17.27

354.7
345.3
346.7
347.2

205
340
168
28.90
70,613

12.32
12.30
1.74
1.74

18,005
11,104
2,361
1,481
2,248
811

344
1,950
192
2,486

517
287
178
52
1,034

1,574
837
569
540

139
864
129
993
343
650

415
4,643
945
370
3,328

305
5
517
(9)

14.17
14.15
4.40
17.01

354.7
338.2
341.2
341.6

241
254
171
40.96
81,494

14.20
14.18
2.38
2.38

18,756
11,414
2,430
1,590
2,455
867

2004

3,902

606
1,933
221
2,760

586
311
200
45
1,142

1,668
1,005
651
578

77
938
64
1,002
328
674

532
5,033
979
491
3,563

403
42
575
287

14.89
14.83
4.80
20.08

354.7
332.1
336.6
338.1

299
331
230
54.26
99,301

13.92
13.86
2.55
2.53

20,285
11,839
2,454
1,949
3,104
939

*) For definitions, please refer to page 70.
**) For 2002 Investments in tangible fixed assets (net) include fixed assets acquired in connection with the acquisition of Novo Nordisk Producao Famacêutica Do Brasil

(DKK 104 million/EUR 14 million).

Key figures are translated into EUR as supplementary information – the translation of income statement items is based on the average exchange rate in 2004 (EUR 1 = DKK 7.4399) and
the translation of balance sheet items is based on the exchange rate at the end of 2004 (EUR 1 = 7.4381). The figures in DKK reflect the economic substance of the underlying events
and circumstances of the Novo Nordisk Group.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 99

A C C O U N T I N G P O L I C I E S F O R N O N - F I N A N C I A L D ATA

ACCOUNTING POLICIES FOR NON-FINANCIAL DATA

The accounting policies for the 2003 assurance of non-financial data can
be found as part of the web-based Sustainability Report 2003 at
novonordisk.com/sustainability.
Non-financial comparative performance data for 2000 to 2003 other than
the EPIs and their underlying data have not been audited but were subject to
an assurance process in 2003. Please refer to the statement from Deloitte in
the Sustainability Report 2003.

In 2004, there have been no significant restatements, but the following
changes have been made to accounting policies applied for non-financial
data:
A The environmental data covering the packaging site in Tianjin, China,
have been included in the environmental data for 2004, which is its first
year of operation. This inclusion has not affected the comparative data.
A In the best possible pricing scheme a margin of +10% to the realised sales
price (ie 20 –22% of average western price) was introduced. This was
done to ensure that compliance measurement is unaffected by external
factors such as fluctuating exchange rates.

A All financial data are adjusted to the changes in accounting policies due

to the adoption of IFRS (see note 1, page 64).

To Novo Nordisk, the AA1000 Assurance Standard (AA1000AS) is an es-
sential component in creating a generally applicable approach to assessing
and strengthening the credibility of our public reporting of non-financial
data. Novo Nordisk’s assurance process has been designed to ensure that
the qualitative as well as quantitative data that make up sustainability per-
formance plus the systems that underpin the data and performance are
assured. We have dealt with the principles as described below.

1. Completeness
As a pharmaceutical company with global reach, Novo Nordisk is engaged in
a range of activities to support sustainable development. All of these are
founded in the company’s corporate governance framework. The Annual
Report aims to capture the organisation’s ‘footprint’ in terms of social,
environmental and economic impacts on society. Hence, we account for our
performance in relation to targets, major achievements and key issues. It
does not provide a full coverage of all our activities. See scope of report
below.

2. Materiality
Key issues are identified through ongoing stakeholder engagement and ad-
dressed by programmes or action plans with clear and measurable targets.
Stretch targets are set to guide the long-term efforts in strategic areas, such
as global access to health. The issues presented in the Annual Report are
deemed to have a significant impact on the company’s future business per-
formance and may support stakeholders in their decision-making and are
therefore regarded as Novo Nordisk’s material issues.

3. Responsiveness
The report is reaching out to a wide range of stakeholders, each with their
specific needs and interests. To most of our stakeholders, however, the
Annual Report is but a single element of our interaction and communica-
tion. It reflects how we have addressed stakeholder concerns and interests
in dealing with the dilemmas and issues. Stakeholder dialogue is an invalu-
able part of our efforts, and we encourage readers to give us feedback.

Scope
Accounting policies for the non-financial data in the Annual Report are
based on data for Novo Nordisk A/S, ie Novo Nordisk A/S, Novo Nordisk IT
A/S, Novo Nordisk Engineering A/S and Novo Nordisk Servicepartner A/S and
affiliates. Environmental data cover the significant environmental impact
of the organisation’s activities at our production sites. Social data cover
all employees. Economic data cover the Novo Nordisk Group. Engagements
in joint ventures and contract licensees are not included in the report
scope. However, data for animal testing include testing taking place at con-
tract research organisations. Likewise, performance recorded from environ-
mental and social evaluations of key suppliers is included.

Data
To ensure consistency of data, all data have been defined and described in
company guidelines. Internal control procedures have been established to
ensure that data are reported according to the definitions.

Environmental data
The environmental data cover those activities which, based on an overall
environmental assessment, could have a significant impact on the environ-
ment.

Resources
A Water consumption includes consumption of drinking water, industrial
water and steam. Data are based on meter readings and checked to in-
voices.

A Energy consumption (direct and indirect supply) includes both direct sup-
ply of energy (fuel) eg natural gas, fuel oil and other types and indirect
supply of external energy (energy) eg electricity, steam and district heat.
The consumption of fuel and energy is based on meter readings and in-
voices.

A Raw and packaging materials comprise materials for production and
related processes and packaging of products. Consumption of raw mate-
rials and packaging is converted to tons. Data are based on registrations
in our stock-system.

Waste
A Wastewater: Wastewater includes industrial wastewater and sanitary
wastewater. The volume is calculated based on measurements and in-
voices. Quantities of components eg COD, nitrogen and phosphorous are
calculated based on test results or standard factors.

A By-products (biomass): By-products include NovoGro, NovoGro30 and
yeast slurry. The volume is based on measurements and components eg
nitrogen and phosphorous are based on test results or standard factors.
A Waste (total) is the sum of non-hazardous and hazardous waste. The
disposal of waste is registered based on weight receipts. The disposal
percentages are calculated as the sum of waste disposed in a specific
manner of the total waste (total). Waste for recycling can be both non-
hazardous and hazardous. The remaining part of the hazardous waste is
waste for controlled destruction.

Emissions to air
A Organic solvents cover the sum of emissions of different types of organic
solvents such as acetone, ethanol etc. exclusive of emissions of ozone-
depleting materials. Data are based on measurement and ensuring cal-
culations.

A Ozone-depleting materials include emissions of CFCs, HCFCs and Halon.

Data are based on maintenance log books.

A Emissions of CO2, SO2 and NOx from energy are based on standard factors
for fuel and for energy on available emission factors from the external
suppliers of energy, often the previous years emission factors as the cur-
rent year’s emissions factors are not available when we calculate the emis-
sions at the time of reporting.

Environmental impact potentials
A The environmental impact potentials for global warming, ozone layer de-
pletion, acidification and eutrophication are calculated on the basis of
a method developed by the Institute for Product Development, DTU
published by the Danish EPA in ‘Udvikling af Miljøvenlige Industri Pro-
dukter’ (UMIP).

EPI for water and energy
A The eco-productivity indices for water and energy are calculated as
the number of released units as a ratio of the direct production related
consumption of water and energy, respectively, compared to the previous
year’s figures.

100 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

A C C O U N T I N G P O L I C I E S F O R N O N - F I N A N C I A L D ATA

ACCOUNTING POLICIES FOR NON-FINANCIAL DATA (CONTINUED)

Compliance data
A Compliance data consist of breaches of regulatory limits, regulatory limits
with repeated breaches, accidental releases, accidental releases of GMMs
and complaints. All data are based on information from departments and
test results. All breaches and accidental releases are reported to the
authorities.

Social data
The social data cover all employees included in Novo Nordisk’s headcount.

Basic employee statistics
A All basic employee statistics are based on registrations in the company’s
SAP Human Resource system. The number of employees is calculated as
the actual number of employees as of year-end.

A Rate of absence: For employees in Denmark excl. FeF Chemicals, absence
data are registered in the SAP Human Resource system. For employees
outside Denmark, data for rate of absence are based on local registra-
tions. Types of absence include absence due to the employee‘s own ill-
ness, pregnancy-related sick leave and occupational injuries and illnesses
per total available working hours in the year adjusted for country specific
holidays.

A Rate of staff turnover: The rate of staff turnover is calculated as the
number of employees who left Novo Nordisk during the financial year
compared with the average number of employees in the financial year.
A eVoice indicators: Four of Novo Nordisk’s Triple Bottom Line Performance
Indicators are based on employee feedback to questions in the employee
survey database eVoice. The averages are simple averages calculated in
the database on answers given by the employees.

Health & Safety
A The frequency of occupational injuries is the number of injuries reported
for all employees per million working hours. An occupational injury is any
work related injury causing more than one day of absence in addition to
the day of the injury.

A The frequency of occupational illness is the number of illnesses reported
for all employees per million working hours. An occupational illness is any
illness (bodily harm or loss of capacity) caused by continued and repeated
exposure to conditions (infection, strain, toxins, fumes or other) of the
work environment over a period of time.

A The number of fatal occupational accidents is based on registrations cen-

trally and locally in affiliates.

Economic data
The economic data are based on financial registrations.
A Cash Value Distribution is calculated based on Novo Nordisk’s global

financial registrations.

A Direct and indirect effects on number of jobs, job income and income
tax are calculated using financial registrations and general statistics from
eg Statistics Denmark. The indicators apply to effects created by Novo
Nordisk in Denmark and globally from Danish jobs.

A All types of taxes reported are based on financial registrations of taxes

paid in Denmark except corporate tax as a share of turnover.

Other financial data
A Training costs are all costs on a specific account in the financial accounts.
The amount covers internal and external training posted on the account
in the financial books.

A Data on environmental costs and investments are based on reporting
from the included production sites and central registrations of invest-
ments.

Animal data
A Animals purchased for testing are the number of animals purchased for
all testing undertaken for Novo Nordisk either in-house or at Contract
Research Organisations (CROs). The number of animals purchased is
based on internal registration of purchased animals and yearly reports
from CROs.

A The percentage of animal test types removed from external and internal
specification is calculated as the number of test types removed from
external and internal specification from the total test types identified. The
indicator refers to test types performed in Denmark. Test types refer to
tests required by regulatory authorities.

A The indicator ‘Housing conditions for experimental animal’ is based on an
annual status of the implementation of new facilities improving living
conditions. The indicator applies to Novo Nordisk’s in-house testing in
Denmark.

Patents
A Patent families are the ‘number of active patent families to date’ and the

‘new patent families (first filing)’.

Fulfilment of action points
A The percentage of fulfilment of action points planned arising from facili-
tations of the Novo Nordisk Way of Management. It is calculated as the
number of overdue action points end year per total number of action
points with deadline in the period minus the action points abolished
during the year due to organisational changes.

Access to health
A Novo Nordisk A/S has formulated a pricing policy for the least developed
countries. The purpose of the policy is to offer insulin to the world’s least
developed countries at or below a price of 20% of the average prices
for insulin in the western world. The average western world price is de-
fined as the average of Novo Nordisk’s list prices as identified in the List
Price Database for all insulin injectable products for the western world
countries. The western world is defined as Europe (EU, CH, N), the United
States, Canada, and Japan. The policy target price is measured in DKK per
MU using the Novo Nordisk official standard exchange rates and is cal-
culated every second year. A margin of +10% to the realised sales price
(ie 20-22%) is permitted to ensure that compliance measurement is un-
affected by external factors such as fluctuating exchange rates.

A The term ‘operates in’ does not denote actual physical presence by Novo
Nordisk. It is defined as direct or indirect sales by Novo Nordisk via govern-
ment tender or private market sales to wholesalers, distributors, NGOs,
etc.

All data are documented and evidence has been put forward to the auditors.

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 101

Q U A R T E R LY F I G U R E S 2 0 0 3 A N D 2 0 0 4 ( U N A U D I T E D )

DKK million

Sales

Sales by business segments:

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)

2003

2004

6,009

6,435

6,603

7,111

6,515

7,164

7,408

7,944

484
3,388
360

572
3,642
298

705
3,526
384

792
3,936
388

886
3,206
416

1,037
3,640
379

1,252
3,593
445

1,332
3,944
403

Diabetes care total

4,232

4,512

4,615

5,116

4,508

5,056

5,290

5,679

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy
Other products

918
499
277
83

990
534
290
109

1,002
516
358
112

933
584
397
81

1,019
550
339
99

1,084
557
389
78

1,086
559
396
77

1,170
651
364
80

Biopharmaceuticals total

1,777

1,923

1,988

1,995

2,007

2,108

2,118

2,265

Sales by geographic segments:

Europe
North America
International Operations
Japan & Oceania

Gross profit
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income (net)
Operating profit

Net financials
Profit before taxation
Income taxes

Net profit

2,712
1,530
910
857

4,341
1,734
940
460
171
1,378

234
1,612
556

2,923
1,471
1,058
983

4,633
1,821
972
420
226
1,646

287
1,933
662

2,909
1,634
1,026
1,034

4,793
1,837
1,015
490
216
1,667

27
1,694
583

3,153
1,584
1,233
1,141

4,982
2,059
1,128
487
423
1,731

406
2,137
742

2,884
1,727
980
924

4,661
1,886
1,040
477
232
1,490

87
1,577
524

3,106
1,837
1,134
1,087

5,219
1,991
983
431
71
1,885

20
1,905
633

3,057
2,098
1,171
1,082

5,318
2,039
1,086
502
59
1,750

85
1,835
609

3,364
1,816
1,559
1,205

5,783
2,364
1,243
534
213
1,855

285
2,140
678

1,056

1,271

1,111

1,395

1,053

1,272

1,226

1,462

Depreciation, amortisation and impairment losses

309

356

363

553

380

387

576

549

Total equity
Total assets

Ratios

Gross margin
Sales and distribution costs as a
percentage of sales
Research and development costs as a
percentage of sales
Administrative expenses as a
percentage of sales
Operating profit margin
Equity ratio

Share data

21,712
31,382

22,692
33,103

23,587
35,140

24,776
34,564

23,942
33,838

24,827
34,248

25,557
35,587

26,504
37,433

72.2%

72.0%

72.6%

70.1%

71.5%

72.9%

71.8%

72.8%

28.9%

28.3%

27.8%

29.0%

28.9%

27.8%

27.5%

29.8%

15.6%

15.1%

15.4%

15.9%

16.0%

13.7%

14.7%

15.6%

7.7%
22.9%
69.2%

6.5%
25.6%
68.5%

7.4%
25.2%
67.1%

6.8%
24.3%
71.7%

7.3%
22.9%
70.8%

6.0%
26.3%
72.5%

6.8%
23.6%
71.8%

6.7%
23.4%
70.8%

Basic earnings per share/ADR (in DKK)
Diluted earnings per share/ADR (in DKK)

3.07
3.06

3.72
3.72

3.27
3.26

4.12
4.11

3.11
3.10

3.76
3.74

3.64
3.63

4.38
4.37

Average number of shares
outstanding (million) – basic EPS
Average number of shares
outstanding (million) – diluted EPS

Employees

Number of full-time positions at the end
of the period

344.4

341.5

340.3

338.5

338.2

338.1

336.7

333.6

344.6

342.0

340.7

339.1

339.8

338.2

334.7

18,221

18,465

18,664

18,756

19,179

19,631

20,001

20,285

102 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

M A N A G E M E N T S TAT E M E N T

The Annual Report does not include the Financial Statements of the Parent Company, Novo Nordisk A/S. These have been prepared in a separate document,
which can be obtained upon request from Novo Nordisk A/S and are available at novonordisk.com

The Financial Statements of the Parent Company, Novo Nordisk A/S form an integral part of the complete Annual Report. The complete Annual Report including
the Financial Statements of the Parent Company, Novo Nordisk A/S, will be filed with the Danish Commerce and Companies Agency where a copy also can be
obtained.

To meet the requirements of the US Sarbanes-Oxley Act, Novo Nordisk A/S has established an Audit Committee.

The Audit Committee assists the Board of Directors with the oversight of; the external auditors, the internal auditors, the procedure for handling complaints
regarding accounting, internal accounting controls, auditing or financial reporting matters (whistle blowers), the accounting policies and the systems of internal
controls.

The complete Annual Report has the below Management Statement and Auditors Reports as provided on page 104.

STATEMENT BY THE BOARD OF DIRECTORS AND EXECUTIVE MANAGEMENT ON THE ANNUAL REPORT

Today, the Board of Directors and Executive Management approved the Annual Report of Novo Nordisk A/S for the year 2004. The Consolidated financial state-
ments have been prepared in accordance with International Financial Reporting Standards. The Financial Statements of the Parent Company, Novo Nordisk A/S,
have been prepared in accordance with the Danish Financial Statements Act, Danish Accounting Standards and the financial reporting requirements of the
Copenhagen Stock Exchange. In our opinion, the accounting policies used are appropriate and the Annual Report gives a true and fair view of the Group‘s and
the Company‘s assets, liabilities, equity, financial position, results and cash flows.

Novo Nordisk’s reporting has been prepared in accordance with the 2002 GRI Sustainability Reporting Guidelines – covering performance on the Triple Bottom
Line – and includes Communication on Progress in support of the United Nations Global Compact.

Gladsaxe, 27 January 2005

Executive Management:

Lars Rebien Sørensen
President and CEO

Jesper Brandgaard
CFO

Lars Almblom Jørgensen

Lise Kingo

Kåre Schultz

Mads Krogsgaard Thomsen

Board of Directors:

Mads Øvlisen
Chairman

Sten Scheibye
Vice chairman

Kurt Briner

Johnny Henriksen

Niels Jacobsen
Audit Committee member

Ulf J Johansson
Audit Committee member

Anne Marie Kverneland

Kurt Anker Nielsen
Chairman
of the Audit Committee

Stig Strøbæk

Jørgen Wedel

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 103

A U D I T O R S ‘ R E P O R T S

The Novo Nordisk Annual Report 2004 integrates financial and non-
financial performance. The Annual Report is presented with two
auditors‘ reports. The first covers the audit of all the information in the
Annual Report, including all financial information in accordance with
International Financial Reporting Standards, the Danish Financial State-
ment Act and additional Danish reporting requirements as well as

information pertaining to Novo Nordisk’s non-financial performance.
The second covers Novo Nordisk’s commitment to sustainability and
stakeholder engagement embodied in the principles of materiality,
completeness and responsiveness of the AA1000 Assurance Standard.

Opinion
In our opinion, the Consolidated financial statement of the Annual
Report give a true and fair view of the Group’s financial position at 31
December 2004 and of the results of the operations and consolidated
cash flows for the financial year 2004 in accordance with International
Financial Reporting Standards (IFRS) and the additional Danish Re-
porting requirements. Furthermore, in our opinion, the Annual Report
gives a true and fair view of the Parent Company’s financial position at
31 December 2004 and of the results of the operations for the financial
year 2004 in accordance with the Danish Financial Statement Act and
the additional Danish reporting requirements.

AUDITORS’ REPORT ON THE ANNUAL REPORT FOR 2004

We have audited the Annual Report of Novo Nordisk A/S for 2004.
The Consolidated financial statement of the Annual Report have been
presented in accordance with IFRS and the Annual Report as a whole in
accordance with the Danish Financial Statement Act and the additional
Danish reporting requirements.

The Annual Report is the responsibility of the Company’s Management.
Our responsibility is to express an opinion on the Annual Financial
Report based on our audit.

Basis of opinion
We conducted our audit in accordance with International and Danish
auditing standards. Those standards require that we plan and perform
the audit to obtain reasonable assurance that the Annual Report is free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Annual Report.
An audit also includes assessing the accounting policies used and
significant estimates made by Management, as well as evaluating the
overall Annual Report presentation. We believe that our audit provides
a reasonable basis for our opinion.

Our audit did not give rise to any qualifications.

Gladsaxe, 27 January 2005

PricewaterhouseCoopers
Statsautoriseret Revisionsinteressentskab

Ernst & Young
Statsautoriseret Revisionsaktieselskab

Lars Holtug
Danish State-Authorised Public Accountant

Ole B Neerup
Danish State-Authorised Public Accountant

104 Consolidated Financial Statements

Novo Nordisk Annual Report 2004

A U D I T O R S ‘ R E P O R T S

ASSURANCE REPORT ON NON-FINANCIAL REPORTING 2004

Subject, responsibilities, objective, and scope
of assurance statement
We have reviewed Novo Nordisk’s commitment to sustainability and
stakeholder engagement embodied in the principles of the AA1000
Assurance Standard (AA1000AS).

Management of Novo Nordisk is responsible for defining stakeholders
and for the collection and presentation of the non-financial informa-
tion in the Annual Report. Our responsibility, as agreed with Man-
agement, is to express conclusions with limited assurance in relation
to the principles of materiality, completeness and responsiveness of the
AA1000AS and in accordance with the ISAE 3000.

Moreover, we have assessed Management’s statement that the Annual
Report meets the conditions for reporting ‘in accordance’ with the GRI’s
2002 Sustainability Reporting Guidelines, and whether the reporting
and underlying policies, systems and activities support Management’s
commitment to the United Nations’ Global Compact.

Basis of opinion
We planned and performed our work based on the AA1000AS and in
accordance with the ISAE 3000. Based on an assessment of materiality
and risk, our work included a review of management systems, re-
porting structures and boundaries as well as enquiries, interviews and
testing of registration and communication systems, data and under-
lying documentation. We tested whether data and the underlying
components are accounted for in such a way as to fulfil the assertions
of materiality, completeness, valuation, existence and cut-off in ac-
cordance with the Novo Nordisk accounting policies for non-financial
data. Two major production sites were visited in Denmark, namely
Bagsværd and Kalundborg.

We have assessed Novo Nordisk’s statement that it reports ’in ac-
cordance’ with GRI by checking that the reporting (the Annual Report
and the supplementary information in the online report) contains the
required information and indicators and by reviewing Novo Nordisk’s
own assessment of whether these are consistent with the eleven
Reporting Principles of Part B in the GRI Guidelines.

With respect to the UN Global Compact we have reviewed Novo
Nordisk’s own assessment of how the reported information and the
underlying policies, systems and activities are aligned to and support
the principles of the UN Global Compact.

Opinion
Based on the work performed nothing has come to our attention that
would cause us not to believe that
A the Annual Report includes information that is material to Novo
Nordisk’s corporate stakeholders and that the reported targets and
indicators in respect of sustainability in general are used in strategic
and operational decision-making;

A the Annual Report presents a fair and balanced account of Novo
Nordisk’s material sustainability performance, risks and impacts at
the corporate level and that Novo Nordisk can identify and under-
stand material aspects of its corporate sustainability performance;
A through the Annual Report Novo Nordisk is responsive to major
issues raised by stakeholders and that Novo Nordisk has robust
policies, programmes and procedures in place to address material
issues raised by stakeholders.

Based on our work we consider that Novo Nordisk’s policies, systems
and activities taken as a whole support Management’s commitment to
the UN Global Compact. In addition, nothing has come to our attention
that disproves Novo Nordisk’s statement that it has met the conditions
for reporting ‘in accordance’ with the GRI guidelines.

Gladsaxe, 27 January 2005

PricewaterhouseCoopers
Statsautoriseret Revisionsinteressentskab

PricewaterhouseCoopers AG, Switzerland

Lars Holtug
Danish State-Authorised Public Accountant

Thomas Scheiwiller
Dr Sc.nat

Novo Nordisk Annual Report 2004

Consolidated Financial Statements 105

B O A R D O F D I R E C T O R S

Clockwise from top left: Mads Øvlisen, Stig Strøbæk, Johnny Henriksen, Niels Jacobsen, Kurt Anker Nielsen, Kurt Briner, Ulf J Johansson, Sten Scheibye, Anne Marie Kverneland and
Jørgen Wedel.

Mads Øvlisen, chairman
Mads Øvlisen is chairman of the Board of Novo Nordisk A/S. Former president and chief
executive officer of Novo Nordisk, Mr Øvlisen became chairman of the Board in November
2000. Mr Øvlisen is also chairman of the Board of the Danish Royal Theatre (2000), and
chairman of the Board of LEGO A/S (a member of the board since 1990, chairman since
1996), member of the Board of Governors of the Novo Nordisk Foundation (since 1981)
and a member of the Board of the Wanås Foundation, Sweden. Mr Øvlisen was made
Knight Commander of the Order of Dannebrog in 2004 and holds the Italian Order of
Merit (It.F.3). He is adjunct professor of corporate social responsibility at the
Copenhagen Business School. Mads Øvlisen was elected to the Board of Novo Nordisk
A/S (initially in the former Novo Industri A/S) in 1981 and has been re-elected several
times, most recently in March 2004. Mr Øvlisen’s term as a board member expires in
March 2005. Mr Øvlisen is a Danish national, born on 9 March 1940.

Sten Scheibye, vice chairman
Sten Scheibye is vice chairman of the Board of Novo Nordisk A/S. Since 1995, Mr
Scheibye has been the CEO of Coloplast A/S, Denmark. Mr Scheibye is also adjunct pro-
fessor of applied chemistry at the University of Aarhus, Denmark. Besides being a mem-
ber of the Board of Directors of various Coloplast companies, Sten Scheibye is a member
of the Board of Directors of Danske Bank A/S. Mr Scheibye was elected to the Board of
Novo Nordisk A/S in March 2003 and re-elected in March 2004 and his term as a board
member expires in March 2005. Mr Scheibye is a Danish national, born on 3 October 1951.

Kurt Briner
Kurt Briner works as an independent consultant in the pharmaceutical and biotech in-
dustry and is a board member of CBax SA, OM Pharma, Progenics Pharmaceuticals Inc,
GALENICA SA, and a member of the Supervisory Board of Altana Pharma GmbH.
In 1988, he was promoted president & CEO of Sanofi Pharma – a position he held until
1998. He has been chairman of the European Federation of Pharmaceutical Industries and
Associations, Brussels (EFPIA). Kurt Briner was elected to the Board of Novo Nordisk A/S
in November 2000 and was re-elected most recently in March 2004. Mr Briner’s term as a
board member expires in March 2005. Mr Briner is a Swiss national, born on 18 July 1944.

Johnny Henriksen
Johnny Henriksen has been an employee-elected member of the Board of Directors of
Novo Nordisk A/S since March 2002. He joined Novo Nordisk in January 1986 and cur-
rently works as an environmental adviser in Product Supply. Johnny Henriksen’s term as
a board member expires in March 2006. Mr Henriksen is a Danish national, born on
19 April 1950.

Niels Jacobsen
Since 1998, Niels Jacobsen has been president & CEO of William Demant Holding A/S
and Oticon A/S, an industrial group in the hearing healthcare field. Mr Jacobsen is a board
member of Højgaard Holding A/S, Nielsen & Nielsen Holding A/S, and is also a board
member of a number of companies wholly or partly owned by the William Demant Group,
including Sennheiser Communications A/S, Himsa A/S, Himsa II A/S, Hearing Instrument
Manufacturers Patent Partnership A/S (chairman) and William Demant Invest A/S (chair-
man). Furthermore, Mr Jacobsen holds a seat on The Central Board of the Confederation
of Danish Industries. Niels Jacobsen was elected to the Board of Novo Nordisk A/S in

November 2000 and was re-elected most recently in March 2004. Mr Jacobsen’s term as
a board member expires in March 2005. Niels Jacobsen is a member of the Audit
Committee. Mr Jacobsen is a Danish national, born on 31 August 1957.

Ulf J Johansson
In 1990, Ulf Johansson founded and became chairman of Europolitan Holdings AB, a
GSM mobile telephone operator in Sweden, which was publicly listed from 1994 to
2003. Since 1990, Mr Johansson has been a member of the Royal Swedish Academy of
Engineering Sciences. He is chairman of the Boards of Directors of Europolitan Vodafone
AB (formerly Europolitan Holdings AB), AcandoFrontec AB, Zodiak Venture AB and
Eurostep Group AB. He is also a board member of Novo A/S and Trimble Navigation Ltd
and was chairman of the University Board of the Royal Institute of Technology,
Stockholm, from 1998 to 2003. Ulf Johansson was elected to the Board of Novo Nordisk
A/S in March 1998 and was re-elected most recently in March 2004. Mr Johansson’s
term as a board member expires in March 2005. Ulf Johansson is a member of the Audit
Committee. Mr Johansson is a Swedish national, born on 21 August 1945.

Anne Marie Kverneland
Anne Marie Kverneland has been an employee-elected member of the Board of
Directors of Novo Nordisk A/S since November 2000. Ms Kverneland works as a labor-
atory technician in Discovery. Anne Marie Kverneland was re-elected by the employees
in March 2002 and her term as a board member expires in March 2006. Ms Kverneland
is a Danish national, born on 24 July 1956.

Kurt Anker Nielsen
Kurt Anker Nielsen is former CEO of Novo A/S. He serves as vice chairman of the Board
of Novozymes A/S and as a board member of Novo A/S, DakoCytomation A/S, Coloplast
A/S, ZymoGenetics, Inc, Norsk Hydro ASA, and TDC A/S. In the three last mentioned
companies Mr Nielsen is also elected as Audit Committee member. Kurt Anker Nielsen
was elected to the Board of Novo Nordisk A/S in November 2000 and was re-elected in
March 2002 and March 2004. Mr Nielsen’s term as a board member expires in March
2005. Kurt Anker Nielsen is chairman of the Audit Committee in Novo Nordisk A/S.
Mr Nielsen is a Danish national, born on 8 August 1945.

Stig Strøbæk
Stig Strøbæk has been an employee-elected member of the Board of Directors of Novo
Nordisk A/S and of the Board of Governors of the Novo Nordisk Foundation since 1998.
Mr Strøbæk is presently working in Product Supply as an electrician. Stig Strøbæk was
re-elected by the employees in March 2002 and his term as a board member expires in
March 2006. Mr Strøbæk is a Danish national, born on 24 January 1964.

Jørgen Wedel
Prior to his retirement in 2001, Jørgen Wedel was executive vice president of the Gillette
Company. He was responsible for Commercial Operations, International, and was a
member of Gillette’s Corporate Management Group. Since 2004, Mr Wedel has been a
board member of ELOPAK AS, a Norwegian food packaging company. Jørgen Wedel
was elected to the Board of Novo Nordisk A/S in November 2000 and was re-elected
most recently in March 2004. Mr Wedel’s term as a board member expires in March
2005. Mr Wedel is a Danish national, born on 10 August 1948.

106

Novo Nordisk Annual Report 2004

E X E C U T I V E M A N A G E M E N T

Clockwise from top left: Lars Rebien Sørensen, Mads Krogsgaard Thomsen, Lise Kingo, Jesper Brandgaard, Kåre Schultz and Lars Almblom Jørgensen.

Mads Krogsgaard Thomsen
Mads Krogsgaard Thomsen is executive vice president and chief science officer (CSO) of
Novo Nordisk A/S. He joined Novo Nordisk in 1991. Dr Thomsen was appointed CSO in
November 2000. Mads Krogsgaard Thomsen sits on the editorial boards of three inter-
national journals and is a member of the Board of Directors of the Danish Technical
University. He is a Danish national, born on 27 December 1960. Mads Krogsgaard
Thomsen holds a Doctor of Veterinary Medicine degree from the Royal Veterinary and
Agricultural University in Denmark in 1986, where he also obtained a PhD degree in
1989 and a DSc degree in 1991, and in 2000 became professor of pharmacology. He is
president of the National Academy of Technical Sciences (ATV).

Senior Management Board
Jesper Bøving – Diabetes Active Pharmaceutical Ingredients
Mariann Strid Christensen – Quality
Eric Drapé – Diabetes Finished Products
Klaus Ehrlich – Europe
Peter Bonne Eriksen – Regulatory Affairs
Torben Skriver Frandsen – NNIT
Lars Green – Corporate Finance
Ginger Gregory – People and Organisation
Jesper Høiland* – International Operations
Per Jansen – Novo Nordisk Servicepartner
Lars Fruergaard Jørgensen – IT & Corporate Development
Lars Guldbæk Karlsen – Global Development
Peter Kurtzhals – Discovery
Roger Moore – Japan & Oceania
Ole Ramsby – Legal Affairs
Jakob Riis** – International Marketing
Martin Soeters – North America
Kim Tosti – Devices and Sourcing
Per Valstorp – Product Supply
Hans Ole Voigt – NNE

** As of 1 January 2005

** As of 15 February 2005

Lars Rebien Sørensen
Lars Rebien Sørensen is president and chief executive officer (CEO) of Novo Nordisk A/S.
He joined Novo Nordisk’s Enzymes Marketing in 1982. Over the years he has been sta-
tioned in several countries, including the Middle East and the US. Mr Sørensen was
appointed a member of Corporate Management in May 1994, and was given the special
responsibility in Corporate Management for Health Care in December 1994. He was
appointed president and CEO in November 2000. Lars Rebien Sørensen is a member of
the Board of Scandinavian Airlines System AB and ZymoGenetics, Inc. He is a Danish na-
tional, born on 10 October 1954. Lars Rebien Sørensen has a Master’s degree in forestry
from The Royal Veterinary and Agricultural University in Denmark in 1981, and a BSc in
International Economics from the Copenhagen Business School in 1983.

Jesper Brandgaard
Jesper Brandgaard is executive vice president and chief financial officer (CFO) of Novo
Nordisk A/S. He joined Novo Nordisk in 1999 as corporate vice president of Corporate
Finance. Mr Brandgaard was appointed CFO in November 2000. Jesper Brandgaard
serves as chairman of the Boards of NNE A/S and NNIT A/S. He is a Danish national, born
on 12 October 1963. Jesper Brandgaard holds an MSc in Economics and Auditing (1990)
as well as a Master of Business Administration (1995), both from the Copenhagen
Business School.

Lars Almblom Jørgensen
Lars Almblom Jørgensen is executive vice president, quality, regulatory and business de-
velopment of Novo Nordisk A/S. He joined Novo Nordisk in 1980 as area manager for
North America. In November 2000 Mr Jørgensen was appointed chief of operations.
From March 2002 to December 2003 he was chief of staffs. Lars Almblom Jørgensen is a
Danish national, born on 31 July 1948. Lars Almblom Jørgensen received his MSc (Econ)
from the Copenhagen Business School in 1976.

Lise Kingo
Lise Kingo is executive vice president, people, reputation and relations of Novo Nordisk
A/S. She joined Novo Nordisk’s Enzymes Promotion in 1988 and worked over the years to
build up the company’s Triple Bottom Line approach. In 1999 Ms Kingo was appointed
corporate vice president, Stakeholder Relations. She was executive vice president,
Stakeholder Relations from March 2002 to December 2003. Lise Kingo is a member of
the Board of Business for Social Responsibility in the US and a core faculty member of
HRH Prince of Wales Businesses and the Environment Programme. She is a Danish na-
tional, born on 3 August 1961. Lise Kingo holds a BA in Religions and Ancient Greek Art
(1986, University of Aarhus, Denmark), a BCom in Marketing Economics (1991, the
Copenhagen Business School) and an MSc (Responsibility and Business Practice) from
the University of Bath, United Kingdom (2000).

Kåre Schultz
Kåre Schultz is executive vice president and chief operating officer (COO) of Novo
Nordisk A/S. He joined Novo Nordisk in 1989 as an economist in Health Care, Economy
& Planning. In November 2000 Mr Schultz was appointed chief of staffs. In March 2002
he took over the responsibility of COO. Kåre Schultz is a Danish national, born on
21 May 1961. Kåre Schultz holds an MSc (Economy) from the University of Copenhagen
(1987).

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Novo Nordisk Annual Report 2004

107

S H A R E H O L D E R I N F O R M AT I O N

N ovo Nordisk’s B shares are quoted on the stock ex-

changes in Copenhagen and London and on the New
York Stock Exchange in the form of American
Depositary Receipts (ADRs) with the ticker code
‘NVO’. The B shares are traded in units of DKK 2. The ratio of Novo
Nordisk B shares to ADRs is 1:1 (one B share to one ADR). The B
shares are issued to the bearer but may upon request be registered
in the holder’s name in Novo Nordisk’s register of shareholders. Each
holding of DKK 2 of the A share capital carries 20 votes. Each hold-
ing of DKK 2 of the B share capital carries 2 votes.

The turnover of Novo Nordisk’s B shares on the Copenhagen
Stock Exchange amounted to DKK 63.2 billion in 2004. The share
price ended the year at DKK 299, compared with a price at year-end
2003 of DKK 241. The market value of Novo Nordisk’s outstanding
share capital was DKK 89 billion at the end of 2004. During 2004,
the price of Novo Nordisk’s B shares rose by 24% and the Novo
Nordisk share was one of the most traded stocks on the
Copenhagen Stock Exchange. This compares to an increase in the
European Pharma index of 2.2%. The price of Novo Nordisk ADRs
listed on the New York Stock Exchange measured in USD increased
by 32.5%. This compares to a decrease in the US Pharma index of
8.6%.

Share ownership

Novo Nordisk’s share capital is DKK 709,388,320, which is divided
into an A share capital of nominally DKK 107,487,200 and a B share
capital of nominally DKK 601,901,120. Novo Nordisk’s A shares are
non-listed shares and held by Novo A/S (based in Gladsaxe,
Denmark), a private limited Danish company which is 100% owned
by the Novo Nordisk Foundation (based in Gentofte, Denmark). The
sale of A shares is restricted by the by-laws of the Foundation. In ad-
dition, Novo A/S holds DKK 77,685,560 B share capital. Holding
26.1% of the total share capital, Novo A/S controls 70.6% of the
total number of votes. As Novo Nordisk B shares are in bearer form,

Price development of Novo Nordisk shares

299

63.2

DKK was the closing share price for
Novo Nordisk’s B shares at the end of
2004.

billion turnover in 2004 for
Novo Nordisk’s B shares on the
Copenhagen Stock Exchange.

Breakdown of shareholders

% of capital

Geographical distribution
of share capital
% of capital

Novo A/S 26.1%

Novo Nordisk A/S 6.4%

Denmark 58.9%

North America 24.6%

Danish ATP pension fund 4.3%

The Capital Group Companies 10%

UK 12.5%

Other 4%

Fidelity Investments 4.4%

Other 48.8%

no official record of all shareholders exists. Based on the available
sources of information on the company’s shareholders, it is esti-
mated that Novo Nordisk’s shares at the end of 2004 were distri-
buted as shown in the pie charts above. At that point in time 88.2%
of the total share capital was included in Novo Nordisk’s register of
shareholders. At the end of 2004 Novo Nordisk has more than
57,000 shareholders and the free-float is around 67.5%.

Form 20-F

Copies of the Form 20-F Report for 2003 filed in February 2004 with
the US Securities and Exchange Commission can be obtained upon
request from Novo Nordisk Inc. The Form 20-F Report for 2004 is ex-
pected to be filed before the end of February 2005.

Payment of dividends

Shareholders resident in Denmark will – unless they are tax-exempt

Price development of Novo Nordisk’s B shares on the Copenhagen Stock Exchange
relative to the European Pharma index
Index 1 January 2000=100

Price development of Novo Nordisk’s ADRs on the New York Stock Exchange
relative to US Pharma index
Index 1 January 2000=100

250

200

150

100

108

2000

2001

2002

2003

2004

2000

2001

2002

2003

2004

250

200

150

100

Novo Nordisk’s B shares (prices in DKK)

European Pharma index

Novo Nordisk’s ADRs (prices in USD)

US Pharma index

Novo Nordisk Annual Report 2004

4.80

58.9%

DKK dividend is proposed
for 2004.

of share capital is held
in Denmark.

26.1%

of shares belong to Novo A/S.

votes are allowed
per A share.

votes are allowed
per B share.

January 2006: Novo
Nordisk announces the
full-year results for 2005.

– receive their dividend in DKK with the statutory deduction of 28%
Danish tax. Shareholders resident outside Denmark will receive their
dividend in DKK with the statutory deduction of 28% Danish tax.
ADR holders will receive their dividend in USD with the statutory
deduction of 28% Danish tax. If the holder is resident in the US or
Canada the deduction might be reduced to 15%. Shareholders resi-
dent in countries outside Denmark are eligible for a refund of divi-
dend tax deducted in Denmark subject to the double taxation con-
ventions in force between Denmark and the countries concerned.
US and UK resident shareholders may apply to the Danish author-
ities for a refund of dividend tax in excess of 15%. Shareholders’
enquiries concerning dividend payments, transfer of share certifi-
cates, consolidation of shareholder accounts and tracing of lost
shares should be addressed to Novo Nordisk’s transfer agents (see
opposite).

For 2004, the dividend payments for Novo Nordisk shares were as

illustrated in the table below.

Investor Relations

Novo Nordisk Investor Relations

Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

Mogens Thorsager Jensen
Tel +45 4442 7945
mtj@novonordisk.com

Palle Holm Olesen
Tel +45 4442 6175
phoo@novonordisk.com

A shares
DKK 2

B shares
DKK 2

ADRs

Transfer agents

Dividend payment

DKK 4.80

USD 0.88

Novo Nordisk does not pay a dividend on its own holding of treasury
shares. The proposed dividend for 2004 is DKK 4.80 for each Novo
Nordisk B share of DKK 2 and for each Novo Nordisk A share of
DKK 2.

Internet

Novo Nordisk’s homepage for
investors can be found at
novonordisk.com. It includes historic and updated information about
Novo Nordisk’s activities: press releases from 1995 and onwards,
financial results, investor presentations, background information,
recent annual reports and accounts, parent company accounts and
sustainability reports.

Price development and monthly turnover of Novo Nordisk’s B shares on the
Copenhagen Stock Exchange 2004

DKK

375

300

225

150

DKK million

Jan

Feb

Mar

Apr

May

June

July

Aug

Sep

Oct

Nov

Dec

Novo Nordisk’s B shares (prices in DKK)

Turnover of B shares in million

Shareholders’ enquiries concerning dividend payments,
transfer of share certificates, consolidation of shareholder
accounts and tracing of lost shares should be addressed to
Novo Nordisk’s transfer agents:

Danske Bank
Holmens Kanal 2–12
1092 Copenhagen K
Denmark
Tel +45 3344 0000

In North America:
JP Morgan Chase Bank
PO Box 43013
Providence, RI 02940-3013
USA
Tel +1 781 575 4328

FINANCIAL CALENDAR 2005

Annual General Meeting

9 March 2005

Dividend

Ex-dividend
Record date
Payment

B shares

ADRs

10 March 2005
14 March 2005
15 March 2005

10 March 2005
14 March 2005
22 March 2005

Announcement of financial results 2005

First three months Half year

Nine months

Full year

28 April

11 August

27 October

27 January 2006

Novo Nordisk Annual Report 2004

109

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photographer: Cliff Watts