Novo Resources Annual Report 2005

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FY2005 Annual Report · Novo Resources

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financial, social & environmental performance 2005

how
novo nordisk
is changing
diabetes

pursuing
the vision
business results
diabetes care
biopharmaceuticals
challenging workplace
values in action

performance

highlights
consolidated financial
and non-financial
statements 2005

spotlight on
access to health
innovation
globalisation
business ethics

Steven and Elissa Renouf with their five children.
Steven and three of the boys have type 1 diabetes.

Jaya Vandhana Naidu has never been overweight, yet at the
age of 14, she was diagnosed with type 2 diabetes.

A reader’s
guide

This is Novo Nordisk’s Annual Report 2005. It
accounts for the company’s performance dur-
ing the year and discusses key challenges. It
presents the strategic initiatives to develop the
business in order to meet its targets and sus-
tain long-term value creation. And it explains
Novo Nordisk’s way of doing business as a
values-based company guided by a vision.

The vision sets the direction and aims to in-
spire everyone at Novo Nordisk to make their
contribution to shaping the future for the
company: achieving competitive business re-
sults, defending the company’s leadership in
diabetes care, offering innovative products
and services in biopharmaceuticals, making
the company a challenging workplace and
putting values into action. Each of the vision

statements translates into short- and medium-
term targets throughout the organisation.

Opportunities and challenges
The feature articles are organised under the
vision’s five headings, and present the key
opportunities and challenges for Novo Nordisk
as a global healthcare company. They present
company-driven activities in pursuit of the
Novo Nordisk vision and strategic objectives,
and respond to concerns identified through
interactions with shareholders, financial ana-
lysts and other stakeholders during the year.
These topics have been identified as material
for readers’ valuation of the company’s posi-
tion for the future.

Four challenges stand out as particularly
critical to address: access to health for every-
one, innovation in the pharmaceutical industry,
the implications of globalisation and standards
of business ethics. These are put in the spot-
light and framed as key stakeholders see them.
For each, Novo Nordisk has a strategic response
in place, but also dilemmas to confront.

You will find a more detailed account of
performance in the consolidated financial and
non-financial statements. This section also in-
cludes the management report and discus-
sion, topical articles on corporate governance
and risk management, management profiles
and additional shareholder information.

Information on demand
The online annual reporting provides more
background, context and data. It presents in-
formation about the company and its ap-
proach to doing business and serves as a
point-of-entry for users with specific informa-
tion wishes. Each article references additional
information online. On the website you will
also find a list of contact persons.

Enjoy reading!

Õ See the online report at novonordisk.com/

annual-report and download publications at
novonordisk.com/investors/download-centre

Accounting for performance

The Novo Nordisk Annual Report covers the fiscal year
2005. It is issued in January 2006, for approval by share-
holders at the Annual General Meeting in March.

The Annual Report does not include the Financial State-
ments of the Parent Company, Novo Nordisk A/S. These
form an integral part of the complete Annual Report,
which will be filed with the Danish Commerce and Com-

panies Agency, where a copy can be obtained. In note 31
on p 79, the Appropriation of net profit incl proposed divi-
dends of the Parent Company is included. The Financial
Statements of the Parent Company are available online.
Novo Nordisk’s reporting complies with International Finan-
cial Reporting Standards (IFRS) as adopted by the EU and
Danish legislation. It also meets the standards for voluntary
reporting set by the Global Compact and in accordance
with the GRI Guidelines for Sustainability Reporting.

The Annual Review is an abridged version intended for
readers wanting a quick overview. It does not include the
consolidated financial and non-financial statements.

The Form 20-F is filed in February 2006 with the United
States Securities and Exchange Commission and is also
available online.

As a supplement, the company provides additional in-
formation and a full data set on environmental and social
performance in its online annual reporting.

Fabian Wenger and his brother Florian are identical twins,
but only Fabian has type 1 diabetes.

Masae Minami has type 1 diabetes
and works as a diabetes doctor.

Business results

Diabetes care

Challenging workplace

We will achieve competitive
business results.

We will be the world’s leading
diabetes care company.

A job here is never just a job.

Performance
highlights

Poised for continued
growth – but not at
any cost

The Novo Nordisk
way

Facing the
leadership challenge

Future of R&D
builds on core
competences

Pipeline overview

News

Novo Nordisk is
changing diabetes
in the US

Changing diabetes
demands new
approaches

People with values
make the difference

Spotlight on
globalisation

Quality Mindset
sets the standard

Prevention of chronic
diseases is hope for
the future

News

Spotlight on
access to health

Biopharmaceuticals

We will offer products and
services in other areas where
we can make a difference.

Expanding the scope
of biopharmaceuticals

Spotlight on
innovation

Values in action

Our values are expressed
in all our actions.

Spotlight on
business ethics

Ethical practices guide
medical research

Environmental
strategy builds the
business case

Consolidated
financial and
non-financial
statements

Management report
and discussion

Corporate
governance

Risk management

Consolidated
financial statements

Consolidated
non-financial
statements

105

Management
statement and
auditors’ reports

108

Board of Directors
and Executive
Management

111

Shareholder
information

Novo Nordisk Annual Report 2005

business results
performance highlights

33,760

million DKK sales in 2005.

Financial
performance

In 2005, Novo Nordisk increased sales by
16% to a total value of DKK 33,760 million.
There has been a continued strong de-
mand for Novo Nordisk’s key strategic prod-
ucts: the insulin analogues and NovoSeven®.
Sales of insulin analogues increased by
62%, while sales of NovoSeven® increased
by 16%. Novo Nordisk’s other therapeutic
areas have also experienced solid growth in
sales.

North America and International Oper-
ations are strong growth drivers, with sales
increases at 27% and 25% respectively.

The operating profit increased by 16%
to DKK 8,088 million while the underlying
operating profit (measured in local cur-
rencies and excluding non-recurring items)
increased by approximately 20%. Net profit
increased by 17% to DKK 5,864 million and
earnings per share (diluted) increased by
20% to DKK 17.83.

In 2006, Novo Nordisk expects to increase
sales measured in local currencies by at least
10%, and reported operating profit is ex-
pected to grow by slightly more than 10%.

Dividend
At the Annual General Meeting on 8 March
2006, the Board of Directors will propose a
25% increase in dividend to DKK 6.0 per
share of DKK 2. A new share repurchase
programme of DKK 6 billion is expected to
be initiated in 2006.

Long-term financial targets
By 2005, Novo Nordisk is approaching the
achievement of its long-term financial tar-
gets, defined in 2001. The targets were
established to ensure a long-term focus to-
wards shareholder value generation and in-
cluded operating profit, growth, profitabil-
ity, financial return and generation of cash.
The four revised targets guide the finan-
cial development of Novo Nordisk, given
the current scope of business activities, and
have been prepared assuming that currency
exchange rates remain at the current level.
Individually and combined these four finan-
cial targets are considered to be competi-
tive compared to the overall performance
of the pharmaceutical industry.

Environmental
performance

In 2005, Novo Nordisk continued to improve
eco-efficiency, a measure of the ability to
produce more products with use of less
energy and water. In the period 2001–2005
the average annual realised improvements
were 8% for water and 14% for energy, as
measured by EPI indices. Hence, the five-
year targets of improvements of the water
and energy use efficiency at 5% and 4% per
annum, respectively, have been achieved.

Global implementation of environmental
management standards progresses on
schedule; in 2005, an additional two of Novo
Nordisk’s production facilities achieved ISO
14001 certification. This is instrumental in
putting local management focus on pollu-
tion prevention and compliance.

In 2005, the environmental strategy was
reviewed. There are six corporate focus
areas for 2005–2008: genetically modified
organisms, energy and climate change,
sustainable process/product, product stew-
ardship, transportation and sustainable
supply chain management.

During 2005, a total of 340 suppliers,

Poised for
continued growth

The year 2005 was another solid growth
year for Novo Nordisk. In the markets, there
is growing demand for the company’s dia-
betes care products and biopharmaceut-
icals. In production, global sourcing and
efficiency gains help curb costs, and eco-

efficiency measures are paying off in terms
of significantly reduced use of water and
energy. And across the organisation people
are reinforcing the company’s position as a
values-based business.

Ratio

Long-term financial targets
2001–2005

Result Three-year average
2003–2005
2005

Operating margin
Growth in operating profit
Return on invested capital (ROIC)
Cash to earnings (three-year average)

25%
15%
25%
60%

24.0%
15.9%
24.7%
82.4%

24.2%
11.0%
21.6%
82.4%

Four long-term financial targets ensure management focus on the long-term growth of the business and
ensure achievement of a competitive shareholder return.

Therapy areas
Sales

DKK billion

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

All exchange rates in this report are translated based on the currency rate at 31 December 2005.

Novo Nordisk Annual Report 2005

24.0%

operating margin
in 2005.

15.9%

growth in operating profit
in 2005.

24.7%

return on invested capital
in 2005.

82.4% 22,460

cash to earnings ratio
in 2005.

people work for Novo Nordisk
around the world.

Social
performance

accounting for 20% of the total value of
Novo Nordisk’s purchases, were evaluated
on their environmental and social perform-
ance. Of these, 87% reported a satisfactory
performance. Novo Nordisk has requested
corrective actions from those who achieved
a rating for poor performance.

Long-term environmental targets
At the end of 2005, Novo Nordisk finalised
a climate strategy that sets an ambitious tar-
get for reducing its CO2 emissions by 10%
in the period 2004–2014, as compared with
2004. In the absence of reduction initiatives,
the company’s emissions would increase by
67% in step with production growth. The
target has been defined in an agreement
with the WWF, making Novo Nordisk the
10th company in the world to become a
member of the Climate Savers programme.
The significant CO2 reductions will be
achieved through a broad range of measures
including improved energy efficiency, fuel
switching and conversion to renewable
sources.

In 2005, Novo Nordisk extended its global
reach. Since 2000, the workforce has
grown by 63%, now counting 22,460 em-
ployees in 79 countries.

Recruitment, talent development, rewards
and mobility and performance are the cor-
nerstones of the People Strategy that aims
to reinforce Novo Nordisk’s competitive
market position. While respecting diverse
cultural and legislative conditions in its mar-
kets, global standards are being rolled out.
Employee satisfaction surveys underscore
the internal support for the company’s
values-based approach, and a 100% fulfil-
ment of action plans arising from facilita-
tions supports a company-wide adherence
to the Novo Nordisk Way of Management.
In 2005, Novo Nordisk has provided
insulin for 12–14 million people, of whom
6.5 million live in Europe, the US, Japan
and Oceania, and the remaining 5.5–7.5
million in the International Operations re-
gion. The range is due to the fact that in
the developing world two or three people
may share a daily dose. Novo Nordisk’s ac-

cess to health programmes are estimated
to reach out to at least 22 million people
worldwide through awareness raising,
education, diagnosis or treatment.

In 2005, Novo Nordisk implemented a
new global business ethics policy supported
by a set of guidelines. The policy adheres to
the principles of the UN Convention against
Corruption and the Global Compact. Imple-
mentation measures include training, an
advisory function and compliance audits.

Long-term social targets
Novo Nordisk is leading the fight against
diabetes. With its mission of changing dia-
betes, concerted efforts focus on improved
health management for people with dia-
betes and preventative measures for those
at risk of acquiring it. In 2006, Novo Nordisk
will define long-term targets for impacts of
its interventions.

One initiative is the Oxford Health
Alliance, established as an independent
body to focus on prevention of chronic
diseases.

Geographical areas
Sales

DKK billion

Full-time positions
Geographical areas

1,000 full-time positions

Eco-productivity index (EPI)
Water

Eco-productivity index (EPI)
Energy

Index = 100

130

125

120

115

110

105

130

125

120

115

110

105

Europe
North America
International Operations
Japan & Oceania

Denmark
Europe (excluding Denmark)
North America
Japan & Oceania
International Operations

Õ See the full financial and non-financial

statements at novonordisk.com/
annual-report

Novo Nordisk Annual Report 2005

opening statement
the year in review

Poised for continued growth
– but not at any cost

Novo Nordisk strives to conduct its activities in
a financially, environmentally and socially re-
sponsible way, as expressed in our articles of
association. In 2005, we achieved very satis-
factory results in support of this objective and
our vision of defeating diabetes.

Financially – and operationally – 2005 was
our strongest year ever, with growth in sales
and earnings of 16% and 17% respectively
compared to 2004.

Our strong growth was driven by an in-
creased demand for our key products:
NovoRapid®, NovoMix® and Levemir® (insulin
analogues) and NovoSeven® (haemostasis man-
agement). Market share was gained in diabetes
care in Europe, the US and other international
markets due to the continued roll-out of our
competitive, convenient and complete insulin
analogue portfolio and devices. Levemir®, the
better basal insulin, has been rolled out in all
major European markets as well as in increas-
ing numbers of emerging economies. We are

looking forward to launching this product in
the US in 2006, complementing our portfolio
of treatment options in the US.

Treatment of people with haemophilia with
NovoSeven® is still expanding. And in 2005,
groundbreaking new knowledge on the utilisa-
tion of NovoSeven® in the treatment of stroke
was published in the New England Journal of
Medicine, indicating the great promise of
NovoSeven® in this indication. Phase 3 trials are
ongoing in the area of stroke as well as trauma
for the purpose of filing for approval with
regulatory authorities.

A combination of our insulin device technol-
ogy and a liquid formulation of Norditropin®
(human growth hormone) has proven very user-
friendly and is therefore highly competitive,
gaining market share in all major markets.

Leadership entails responsibility
There is a general desire within the diabetes
community to improve treatment outcomes in

Lars Rebien
Sørensen

diabetes. New and improved treatment regi-
mens, such as insulin analogues, have there-
fore been well received and as a result have
expanded the diabetes market. This is also the
case for countries outside the established
pharmaceutical markets in Europe, the US and
Japan. Countries such as Brazil, China and
India are increasingly able to provide treatment
for lifestyle-related chronic diseases such as
type 2 diabetes. The need for better methods
of intervention is exacerbated by the escalat-
ing incidence of diabetes worldwide at an
ever-faster pace in low- and middle-income
countries where increased urbanisation and
growing affluence are leading to more seden-
tary lifestyles and Western-style diets high in
fat, sugar and salt.

A commitment to changing diabetes
As a world leader in diabetes care, Novo
Nordisk has the opportunity to grow. But not
at any cost. Type 2 diabetes, as a lifestyle dis-
ease, can be prevented. Three risk factors –
smoking, poor nutrition and lack of physical
activity – lead to chronic disease such as heart
disease, diabetes, pulmonary disease and
some cancers, which together account for
more than 50% of global mortality. We have a
responsibility as part of our vision to try to in-
fluence the negative trends of this global
health issue and avoid unnecessary human
suffering and a staggering cost to society. That
is why we wish to be a catalyst for changing
diabetes. As part of this commitment, we are
also actively involved in trying to improve ac-
cess to diabetes care in both developed and
developing countries.

Investing for the future
Looking forward, we seek to balance current
value creation with long-term growth. The
profit from the current positive business cycle,
efficiencies in operation and lower costs from
strategic global sourcing will be invested into
research and development within our core
business areas, and into expanded sales and
marketing activities, in particular in the US and
other international markets.

Novo Nordisk Annual Report 2005

Following the strong operational, financial
and non-financial performance, we yet again
saw an appreciation in the Novo Nordisk share
price.

Novo Nordisk adheres to global standards
for reporting. The Annual Report complies with
International Financial Reporting Standards
(IFRS) as adopted by the EU and has been pre-
pared in accordance with the 2002 Global
Reporting Initiative (GRI) Guidelines. It repre-
sents a balanced and reasonable presentation
of our organisation’s economic, environmen-
tal and social performance.

We hope you enjoy reading it.

Lars Rebien Sørensen
President and CEO

Mads Øvlisen
Chairman of the Board of Directors
(until 8 March 2006)

Mads
Øvlisen

By 2005, Novo Nordisk was close to meeting
its long-term financial targets. Hence the com-
pany has revisited the targets and revised the
return and liquidity targets upwards to reflect
current performance and future ambition.

It is our ambition to build a broader bio-
pharmaceuticals business with new business
areas focusing on immunotherapy in cancer
and on inflammation. Our projects in these
areas are still in the early phases of research
and development and unlikely to significantly
contribute to our business within the next 10
years. However, to accelerate the process we
are establishing the technology platform and
strengthening the skills base required, both in-
house and with partners, and we are looking
into identifying the best investments to match
our aspirations.

In other words, we are committed to growth
in the near term – balanced with growth in the
longer term.

The globalisation challenge
There are also costs associated with globalisa-
tion. While globalisation provides many busi-
ness opportunities, it also provides dilemmas
for us as a corporation and to some of our
people it may come at a price. Our ambition is
to become a truly global leader in diabetes
and other disease areas. But not at any cost.

A global economy offers opportunities in
the form of access to markets, innovation, tal-
ent and competitive manufacturing environ-
ments. As markets become global, so does
competition. Information is instantly shared
and available, capital is abundant, and talent
and high-quality education are giving rise to
new insights, fresh competitors and potential
technological breakthroughs.

On the other hand, operating in the phar-
maceutical industry globally presents many
challenges. It exposes the company to cultural
and social environments that in many ways
may differ from those with which we are fa-
miliar. We respect and encourage cultural dif-
ferences, but we will not deviate from the
Novo Nordisk Way of Management. As a
global corporation we have a commitment to
one global set of standards, namely the Novo
Nordisk Way of Management that guides our
operations, whether it concerns environmen-
tal, social and labour affairs, marketing prac-
tices or business ethics in general – in every
market where we are active.

As we grow and move into new markets, our
people need more concrete directions for put-
ting these guiding principles into action. As a

result, we have clarified our internal policies
for business ethics, for example regarding
conflict of interest, bribery and interaction
with suppliers as well as promotion of phar-
maceutical products to healthcare profession-
als, and contracts with marketing consultants
and agents. The company is also complying
with new requirements for transparency of
clinical trial results. Such initiatives will be
strengthened and supplemented in the future.
As we grow and become more global, we
will likely leave a greater environmental foot-
print, but here too Novo Nordisk has set very
ambitious global targets for reduction of CO2
emissions, as part of the WWF Climate Savers
Programme.

Dealing with dilemmas and setbacks
However, we did experience some setbacks in
2005. Early in the year, we submitted a regis-
tration file to the European regulatory author-
ities for use of NovoSeven® in trauma, based
on encouraging data from phase 2 trials, but
we withdrew the file when the authorities
requested additional phase 3 data. Such
events are part of the calculated risk that all
pharmaceutical companies must be prepared
to take.

Our marketing practices came under scru-
tiny in the US. Novo Nordisk was also one of
many companies listed as paying fees in con-
nection with contracts entered into under the
United Nations Oil-for-Food programme,
which enabled Iraq to sell limited quantities of
oil to meet its people’s humanitarian needs,
including life-saving medicines like insulin.
Such incidents underline the fact that, in striv-
ing to practise a high standard of business
ethics, there will always be dilemmas and
challenges which we need to address in our
daily operations. We will perform as a competi-
tive company, but not at any cost.

Our people make it possible
The financial performance of Novo Nordisk in
2005 was very satisfactory. In fact, it has ex-
ceeded our expectations. We are proud of
achieving this result while at the same time
contributing to sustainable development. This
would not be possible without the strong com-
mitment of our employees and the support of
suppliers, partners and local communities
where we operate. For this we are very grate-
ful. To show our appreciation of an extraordin-
ary performance and provide an incentive for
the future, we granted a global offering of
shares to all employees in the autumn.

Novo Nordisk Annual Report 2005

business results
about Novo Nordisk

The Novo Nordisk way

As a focused healthcare company,
Novo Nordisk is committed to leading
the fight against diabetes. In this prom-
ise lies a clear business rationale and a
social commitment deeply rooted in
the company’s way of doing business.

Effective prevention, early diagnosis and opti-
mal treatment improve the health of people
with diabetes. This is what drives Novo
Nordisk’s mission of changing diabetes. As a
world leader in diabetes care, the company
pursues its aspiration to defeat diabetes while
building its business on sustained and bal-
anced growth.

Novo Nordisk’s strong position in diabetes
care builds on more than 80 years of experi-
ence. Since the first successful experiments in
1922, extracting insulin from the pancreas of
cows and pigs, Novo Nordisk’s production has
been based on biotechnology. Fermentation is
the core process, today using genetically mod-
ified microorganisms to produce insulin.

A values-based approach
Novo Nordisk is a public limited liability com-
pany. Within this framework, shareholders

The Triple Bottom Line
– a broad business principle

Economically viable
Corporate profitability and growth,
socio- and health economics

Diabetes care
Biopharmaceuticals

have the ultimate authority to exercise deci-
sions for the company. The company ‘strives
to conduct its activities in a financially, envir-
onmentally and socially responsible way’. This
statement is anchored in the articles of associ-
ation and embraces the principles upon which
the company was founded.

This formal commitment to sustainable de-
velopment and balanced growth has been
built into the corporate governance struc-
tures, management tools and individual per-
formance assessments. The Brundtland Com-
mission’s principle of ‘preserving the planet
while improving the quality of life for its cur-
rent and future inhabitants’ resonates well
with Novo Nordisk’s business rationale and its
values-based approach. This is what lies be-
hind the Triple Bottom Line which the company
has adopted as a broad business principle.
It ensures that decision-making balances finan-
cial growth with corporate responsibility,
short-term gains with long-term profitability
and shareholder return with other stakeholder
interests.

Ownership structure
Novo Nordisk’s ownership is split between
holders of A and B shares. A shares are held by
Novo A/S, a 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.
With approximately 25% of the total share
capital and approximately 71% of the votes, it
maintains a controlling influence with a long-
term view to value creation. The A shares held
by Novo A/S cannot be divested.

The Novo Nordisk Foundation is a private,
self-governing institution. Its objectives are to
provide a stable basis for the commercial and
research activities undertaken by the com-
panies in the Novo Group and to support sci-
entific, humanitarian and social purposes. The
majority of its grants go to medical and scien-
tific projects.

parency, accountability, openness, integrity
and responsibility in its operations. The com-
pany is in general in compliance with current
codes of good corporate governance at stock
exchanges in Copenhagen, New York and
London, where the Novo Nordisk B share is
listed.

As a Danish public limited liability company,
Novo Nordisk has a two-tier board structure
consisting of two separate bodies: the non-
executive Board of Directors and Executive
Management.

Engaged with stakeholders
Novo Nordisk holds itself accountable to the
company’s shareholders and other stakehold-
ers as well as individuals or groups affected by
its business in local communities. Stakeholders
are customers – that is healthcare profession-
als, people with diabetes and others whose
healthcare needs it serves – policy-makers,
educators, employees, investors, suppliers
and other business partners, and society at
large. To better manage its risks and act on
opportunities, Novo Nordisk proactively main-
tains engagements with a broad range of
stakeholders within its sphere of interest.

interactions with

Defining materiality
Ongoing
stakeholders,
trendspotting, business monitoring and the in-
tegrated systematic risk management process
are tools to identify the issues that are material
to Novo Nordisk’s business. The company’s re-
sponse to current and emerging business and
societal challenges, in turn, is shaped in a closer
dialogue with representatives of the stake-
holders affected by the issue. As a result of this
process, Novo Nordisk frames its strategic re-
sponse and defines its targets. The company
regularly reviews its key priorities to ensure
that they reflect current agendas, and reports
on progress against performance targets.

Socially responsible
Employees, patients,
communities

Environmentally sound
External environment,
animal welfare

Corporate governance
Novo Nordisk is committed to the principles of
good corporate governance such as trans-

Õ See the Novo Nordisk Way of Management

and more about the company at
novonordisk.com/annual-report
Click: Who we are

Novo Nordisk Annual Report 2005

The Novo Nordisk
Way of Management

The Novo Nordisk Way of Management is the
framework for how the company does busi-
ness. It consists of three elements:
n The 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 in its endeav-
ours to find the right balance between com-
passion and competitiveness – between
commercial business interests and the obli-
gations of a responsible business

n The Charter describes the company values,
its commitment to the Triple Bottom Line
and sustainable development, its Funda-
mentals – 11 management principles – and
follow-up methods to provide ongoing sys-
tematic and validated documentation of
performance in respect of the Novo Nordisk
Way of Management

n Global company policies, giving operational

guidelines within 15 specific areas.

Setting priorities
The Novo Nordisk Way of Management is sup-
ported by a range of management tools.

Long-term priorities and objectives are iden-
tified through a 10-year Strategic Planning
Process, inspired by ongoing trendspotting and
20-year diabetes scenarios, which is revisited

annually. Short-term targets, in turn, are man-
aged through the Balanced Scorecard. Corpor-
ate goals, both financial and non-financial, are
cascaded through the organisation to func-
tional areas and translated into individual or
team performance targets.

A range of internal procedures are in place,
such as the quality management system, the
risk management system, internal controls, as-
surance, audits and a whistleblower function.
Annual employee surveys serve as a dia-
logue tool about employee engagement and
working climate. An ombudsman function
gives employees access to fair process in cases
of intercompany disputes.

Methodology
The set of specific follow-up methods includes
three key activities.

Organisational development is assessed
through annual Organisational Audits, com-
missioned by the Board of Directors and Exec-
utive Management. This process, conducted at
senior management level, includes an assess-
ment of ‘linking business and organisation’ and
succession management, and takes a retro-
spective and a forward-looking perspective.

The annual reporting accounts for financial
and non-financial performance against short-
term and long-term targets, strategies, activ-
ities, risk profile and key business opportunities.
Facilitations are a unique set-up across the

Novo Nordisk’s Vision

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

Commitments
Financial, environmental and
social responsibility

Fundamentals

Policies

Methodology
c x l
Organisational
Audit

Annual
reporting

Facilitation

The Novo Nordisk Way of Management is the com-
pany’s governance framework.

Novo Group, anchored in the holding com-
pany. The facilitators, a global team of senior
people with deep insights into the business,
evaluate how well the practices and under-
standing of the Novo Nordisk Way of Manage-
ment are embedded in the organisation.

We will be the world’s
leading diabetes care
company.
Our aspiration is to defeat
diabetes by finding better
methods of diabetes preven-
tion, detection and treatment.
We will work actively to pro-
mote collaboration between
all parties in the healthcare
system in order to achieve
our common goals.

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 dia-
betes. We will develop and
market such products our-
selves whenever we can do
it as well as, or better than,
others.

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 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.

Our values are expressed
in all our actions.
Decency is what counts.
Every day we strive to find the
right balance between com-
passion and competitiveness,
the short and the long term,
self and commitment to
colleagues and society, work
and family life.

Novo Nordisk Annual Report 2005

business results
delivering competitive performance

Facing the
leadership challenge

With its proven leadership in diabetes
care, Novo Nordisk is prepared to take
on growing competition in the diabetes
field while building on its strengths in
biopharmaceuticals.

The incidence of diabetes is growing alarmingly
fast, calling for more awareness-building, ef-
fective diabetes therapy and improved access
to care.

As a world leader in diabetes care, Novo
Nordisk is ready to meet that challenge. Its ap-
proach is built not only on having superior
products and conducting cutting-edge scien-
tific research, but also on partnerships with a
wide range of stakeholders who share the
company’s vision to defeat diabetes.

Business results in 2005 further cemented
the company’s position in diabetes care. This
was due mainly to continued solid growth in
insulin analogues and injection devices. Novo

Long-term
financial targets

Focusing on growth, profitability, financial re-
turn and generation of cash, the four targets
serve to balance short- and long-term consid-
erations, thereby ensuring a focus on share-
holder value creation. By 2005, Novo Nordisk
was approaching the achievement of the long-
term financial targets and they no longer pro-
vide sufficient guidance on the targeted finan-
cial performance on a five-year horizon.

The four revised targets guide the financial
development of Novo Nordisk, given the current
scope of business activities, and have been pre-
pared assuming that currency exchange rates
remain at the current level. Individually and
combined, these four financial targets are con-
sidered to be competitive compared to the over-
all performance of the pharmaceutical industry.

Nordisk has strengthened its global leadership
position in the insulin market with a total
market share of 51% and an insulin analogue
market share of 34%, both measured in vol-
ume. The company’s operations in emerging
markets showed strong growth,
particularly in China, India and
Brazil. Insulin analogues contin-
ue to drive overall growth.

In preparation for the US
launch of Levemir®, the com-
pany’s long-acting insulin ana-
logue, the diabetes care sales
force in the US is being expand-
ed by around 400 people to a
total of more than 1,200 dia-
betes care specialists.

Novo Nordisk’s diabetes strat-

egy is based on the industry’s broadest port-
folio of insulin analogues and injection devices
that deliver physiological control for people
with diabetes. Good control is critical for pre-

Our strategy is to
build up a sustain-
able portfolio of
promising biological
drug candidates in
addition to
NovoSeven® and
human growth
hormone.

Lars Rebien Sørensen
president and CEO,
Novo Nordisk

venting serious long-term complications such
as blindness, kidney disease, foot and leg
amputations, nerve damage, heart disease and
stroke.

Two new products are expected to enter
phase 3 clinical trials in 2006.
One is liraglutide, a once-daily,
long-acting analogue of human
GLP-1 for treatment of type 2 dia-
betes. The phase 3 trial will be
initiated in February 2006. The
other is AERx® iDMS, a delivery
system for administering insulin
by inhalation to people with
type 1 and type 2 diabetes, ex-
pected to enter phase 3 in 2006.
Commenting on the fact that
Novo Nordisk will not be first on
the market with these products, Jesper
Brandgaard, chief financial officer for Novo
Nordisk, says: “We have been second to mar-
ket with our insulin analogue products and

The target for operating margin remains at
25%. Further productivity improvements in
production and administrative areas are ex-
pected to be reinvested in research and devel-
opment activities.

The targeted growth in operating profit re-
mains at 15% on average. The target allows
for a deviation from the target in an individual
year if necessitated by business opportunities
or market conditions.

The target for return on invested capital
(ROIC) measured post tax is raised from 25%

to 30%. The increased target is reflecting the
expectation of continued lower growth in in-
vested capital compared to operating profit,
as well as a recurring lower effective tax rate.
The targeted cash to earnings ratio is raised
from 60% to 70%, reflecting the improved cash
conversion ability in the last three years. As
previously, this target will be pursued looking
at the average over a three-year period.
Performance on this ratio may be impacted in
individual years by significant in-licensing ac-
tivities or other major investments.

Ratio

Previous target

Result
2005

Three-year average
2003–2005

New target

Operating margin
Growth in operating profit
Return on invested capital (ROIC)
Cash to earnings (three-year average)

25%
15%
25%
60%

24.0%
15.9%
24.7%
82.4%

24.2%
11.0%
21.6%
82.4%

25%
15%
30%
70%

Novo Nordisk Annual Report 2005

At home with
the Pearl

Steven Renouf, 35 years old, known
throughout Australia and the world as the
‘Pearl’ of World Class Rugby League, was
22 when he was diagnosed with type 1
diabetes. He was on the brink of his athlet-
ic career; his first-born son Sam was only
six weeks old.

Four children later, diabetes once more
entered the family’s life. Charlie, their sec-
ond-youngest son, was only three years
old when they received the news that he
too had diabetes. Then Billy, their second-
eldest son, was diagnosed at the age of
eight, and then Freddie, their baby, was
diagnosed at the age of two. Their eldest
son, Sam, and their daughter, Sunita, do
not have diabetes, but still their blood
glucose levels are being monitored on a
regular basis.

“We try never to blame diabetes for
anything and that’s what we teach our
children too,” says Steven Renouf. “My
attitude towards it is that diabetes is just
something you have to deal with, and that’s
how we’ve taught the boys to see it.”

There is no doubt that for 11-year-old
Billy, six-year-old Charlie and four-year-old
Freddie, diabetes will never stop them from
accomplishing and doing whatever they
set their minds to. It provides no restric-
tions for their father, and neither will it be
allowed to present any obstacles for them.
Together, the Renouf family is changing
what it means to live with diabetes.

Steven Renouf with his sons Billy, Charlie and Freddie. Like their father, all three boys have type 1 diabetes.

have still gained a
leadership position
because of our product profiles and strong
commitment to diabetes care. I am confident
that we will also be able to get our fair share
of the market within these new treatment
categories.”

Strategy to develop biopharmaceuticals
The biopharmaceuticals business showed
healthy growth in 2005, particularly in sales of
NovoSeven®, but also within growth hormone
therapy.

The company’s biopharmaceuticals business
is an increasing growth driver, primarily fuelled
by the blood coagulation factor rFVIIa, mar-
keted as NovoSeven®. The drug is currently
marketed for people with haemophilia with
inhibitors (antibodies) against their existing
factor medication and for other people with
rare bleeding disorders.

NovoSeven® is currently in phase 3 clinical
development for use in the treatment of blunt
trauma, for example in connection with traffic
accidents, and for intracerebral haemorrhage
(ICH), and in phase 2 for other critical bleeding
conditions. (See p 24.)

Moving into new territory within cancer
Recently, Novo Nordisk started research within
cancer and inflammation.

“Our strategy is to build up a sustainable
portfolio of promising biological drug candi-
dates,” says Lars Rebien Sørensen, president
and CEO of Novo Nordisk.

“With our expertise in proteins and bio-
pharmaceuticals and knowledge of immunol-
ogy from type 1 diabetes, there is a clear ra-
tionale for us to move into inflammation and
cancer. Also, the areas we are looking at have
many similarities to diabetes and haemophilia.
They represent chronic therapy areas, they in-
creasingly require patient self-management
through injections, and they require specialist
and hospital-based treatment. All in all they suit
the skills and competences of Novo Nordisk
very well,” adds Mads Krogsgaard Thomsen,
chief science officer for Novo Nordisk.

Õ See more shareholder information at

novonordisk.com/investors

Novo Nordisk Annual Report 2005

business results
delivering competitive performance

Future of R&D builds
on core competences

Mads Krogsgaard Thomsen, chief sci-
ence officer for Novo Nordisk, explains
the rationale behind the company’s
R&D strategy.

What are the key elements of the Novo
Nordisk R&D strategy?

There are three main areas of competence –
research into diabetes, therapeutic proteins
and the delivery of these. These form the basis
of our R&D strategy and core competences that
have been developed over more than 80 years
and continuously refined in the process. In
2005, the research activities within diabetes
care and biopharmaceuticals were split into
two separate research units to boost innova-
tion and to build a broader presence within
biopharmaceuticals.

In diabetes, Novo Nordisk is defining its
leadership through insulin analogues. Why?

In type 1 diabetes insulin is the only therapy,
and in type 2 diabetes, in many cases, the best
therapy. Insulin analogues are a critical step in
helping people with diabetes achieve better
control of their condition and avoid serious
complications. That is the focus of our ongoing
development and continued refinement of
our insulin analogues: to bring patients back
to a near-normal blood sugar level without in-
creasing the risk of low blood glucose levels
(hypoglycaemia). Many studies have shown
that more intensified treatment can signifi-
cantly reduce the risk of developing late-stage
complications.

In January 2006, the first of our next-
generation insulins entered phase 1 trials. We
believe these new insulins will provide even
greater treatment benefits.

Is Novo Nordisk developing new com-
pounds for the treatment of diabetes?

Yes. Our human GLP-1 analogue, liraglutide,
is one in a new class of products for the treat-
ment of type 2 diabetes. GLP-1 is a human
hormone produced in the intestine. It stimu-
lates the pancreas to secrete insulin, and also
tells the brain to reduce appetite.

In a recent phase 2b study, patients achieved
significant improvements in blood glucose
control when using liraglutide. There were no
cases of major or minor hypoglycaemia and
patients also lost weight. We 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
meaning that it can be taken once daily for the
treatment of type 2 diabetes. I expect Novo
Nordisk to be the first company to market with
a once-daily product based on human GLP-1.
So, while our GLP-1 won’t be first in class, it
will be the best in class.

You mentioned delivery as a core compon-
ent of your strategy. What’s new with de-
livery devices?

We have the broadest portfolio of insulin in-
jection devices and are exploring new con-
cepts for insulin delivery, including the AERx®
iDMS. The AERx® insulin Diabetes Manage-
ment System is an inhalable insulin, which we
believe will be a viable treatment option that
makes it easier for some people with diabetes
to begin insulin therapy.

What about oral antidiabetic treatment
(OAD) for people with type 2 diabetes?
Isn’t Novo Nordisk lagging in this area?

In recent years we’ve had to abandon OAD
projects when clinical results failed to indicate
a sufficient competitive advantage for our
compounds compared with similar marketed
products. This does not mean we’ve given up.
In fact, a new project entered phase 1 in late
2005. Of course we would prefer to have an
OAD drug candidate further on in the devel-
opment pipeline, but these projects haven’t
yet been able to meet our requirements. That
said, we will continue to invest in OAD pro-
jects when they show significant advantages
over current treatment standards.

Our research focus in OADs relates to blood
sugar regulation, insulin resistance and obesity.

Novo Nordisk also conducts research into a
cure for diabetes. Tell us about that.

A cure is our ultimate goal. Although we be-

lieve it will take at least a decade to find a cure
for type 1 diabetes, we are very much at the
forefront of stem cell research in this area. We
believe this holds the greatest promise of cre-
ating a safe, stable and widely available source
of insulin-secreting cells for transplantation
into people with type 1 diabetes.

Through the Hagedorn Research Institute,
an independent basic research component of
Novo Nordisk, we are currently investing more
than 15 million Danish kroner (2 million euros)
in developmental biology and stem cell re-
search. Hagedorn is presently the only indus-
trial partner in two cutting-edge research ef-
forts: the Beta Cell Biology Consortium (BCBC)
supported by the National Institutes of Health
(NIH), and the Juvenile Diabetes Research
Foundation Center for Beta Cell Therapy in Dia-
betes in Europe. In 2005, this centre received
an 11.8 million euro grant from the EU over five
years, together with Hagedorn, to lead the
work of 15 laboratories across Europe to fur-
ther study the potential of embryonic stem cells

Mads
Krogsgaard
Thomsen

Novo Nordisk Annual Report 2005

Globally, more than 3,000 people are working together on R&D activities at Novo Nordisk in a number of very diverse areas: basic and discovery research, preclinical and
clinical development, production/formulation and delivery of drug substance, regulatory, quality, licensing, patenting, portfolio management and bioethics.

to become mature functional beta cells in vitro.
Hagedorn also received a prestigious grant
of 4.3 million US dollars (3.6 million euros) over
four years from the US government-funded
NIH to coordinate a mainly European research
effort in development biology at the BCBC.

What is the company’s position on the
ethics of using embryonic stem cells?

We recognise that the use of human embryos
for stem cell research has evoked an important
ethical debate. At Novo Nordisk, we only use
human embryonic stem cells when we antici-
pate that the same scientific results can’t be
obtained from the use of adult stem cells. At
present no source other than embryonic stem
cells has proven useful in generating insulin-
producing cells in vitro. We support an open
dialogue and an ethical and political clarifica-
tion regarding the use of human embryonic
stem cells, and we fully back laws that ensure
that this important research is adequately
regulated and controlled.

Novo Nordisk is part of a biomarkers pro-
ject. What is its aim?

Along with the University of Oxford and the
UK National Health Service, we are a partner
in the Oxford Centre for Diabetes, Endocrinol-
ogy and Metabolism (OCDEM). This is the first
diabetes centre outside Denmark to combine
basic and clinical research with patient care
and medical training under one roof. OCDEM
is heading up a project in the European Union
to look for biomarkers for diabetes: molecules

in the body that reveal the development of the
disease and can shape more individualised
diagnosis and treatment.

What is the strategy for developing the
company’s biopharmaceuticals area?

We are committed to developing NovoSeven®
as the world’s first general haemostatic agent.
We have come a long way in establishing a
new portfolio of projects in haemophilia and
other critical bleeding condi-
tions with rFVIIa, the active sub-
stance in NovoSeven®. For ex-
ample, we have shown proof of
concept in both trauma and
intracerebral haemorrhage (ICH).
We are about to initiate clinical
development of the first new
rFVIIa analogue with enhanced
therapeutic properties including
faster onset of action. We are
also excited about the potential
of recombinant FXIII, which has been tested in
patients with FXIII deficiency. We have started
an additional study – currently in connection
with cardiac surgery – where rFXIII is being
tested alone and later will be tested in combin-
ation with NovoSeven®.

As the largest
private investor in
diabetes research,
we invest
significantly to
maintain our
scientific edge.

Mads Krogsgaard Thomsen
chief science officer,
Novo Nordisk

First, there is a clear unmet medical need; we
have a leading technology platform within
therapeutic proteins; we possess knowledge of
immunology based on our expertise within
type1 diabetes, a disease of the immune system;
and, finally, we see growing scientific opportun-
ities within cancer, especially with the targeted
therapies that Novo Nordisk is developing.

This is not to say that we expect this to be
an easy undertaking. We know that the suc-
cess rate of developing drugs
within these therapeutic areas is
lower than within diabetes. That
is why we are building capabil-
ities and critical mass through
more
research projects and
aggressively setting about build-
ing a pipeline – not just of pro-
jects in their early phases but
also of clinical development can-
didates. Despite the challenge
before us, we think it is time to
really accelerate the development of protein-
based drugs in new therapeutic areas. In prin-
ciple, it doesn’t matter whether the projects
originate from us here at Novo Nordisk or
externally. We are prepared to in-license
development projects if the right opportun-
ities arise.

The company has announced it will devel-
op new therapy areas in cancer and inflam-
mation. What makes you think Novo
Nordisk can be competitive in this field?

There are four main reasons why it makes
sense for Novo Nordisk to move into this area.

Õ See more about Novo Nordisk’s R&D activities

at novonordisk.com/science

Novo Nordisk Annual Report 2005

business results
pipeline overview

Novo Nordisk’s strategy is to provide diabetes care leadership and, furthermore, to make a difference in other areas of unmet
medical need where the company can make competitive use of its biotechnology platform. The R&D pipeline is updated
quarterly at novonordisk.com/investors.

Compound

Indication

Description

e
r
a
c
s
e
t
e
b
a
D

s
l
a
c
i
t
u
e
c
a
m
r
a
h
p
o
B

Levemir®
Insulin detemir

NovoMix® 50 and
NovoMix® 70
Insulin aspart mix

Types 1 and 2 diabetes

A soluble basal insulin analogue with neutral pH and a mechanism of protraction
which provides a smooth and predictable action profile and offers a longer dur-
ation of action compared with conventional NPH.

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).

AERx® iDMS

Types 1 and 2 diabetes

The AERx® insulin Diabetes Management System is a pulmonary delivery system
for administering insulin to people with types 1 and 2 diabetes.

Liraglutide (NN2211)

Type 2 diabetes

A once-daily, long-acting analogue of human GLP-1 for treatment of type 2 dia-
betes.

NN344

Types 1 and 2 diabetes

A neutral, soluble, long-acting human insulin analogue with 24-hour coverage
by once-daily injection. NN344 has a very flat and predictable action profile.

NN9101

NN5401

Type 2 diabetes

A novel oral antidiabetic for treatment of type 2 diabetes.

Types 1 and 2 diabetes

A next-generation insulin.

NovoSeven®
Intracerebral haemorrhage

Bleeding in emergencies,
intracerebral haemorrhage

In a phase 2b study NovoSeven® has been demonstrated to reduce haematoma
growth, improve treatment outcome and reduce mortality.

NovoSeven®
Trauma

NovoSeven®
Variceal bleedings

Bleeding in emergencies,
trauma

In a phase 2b study NovoSeven® has been demonstrated to reduce transfusion
needs in patients with severe blunt trauma.

Bleeding in emergencies,
upper gastrointestinal
bleeds, cirrhotic patients

Potential NovoSeven® benefits: improved haemostasis.

NovoSeven®
Cardiac surgery

Elective surgery,
cardiac surgery

Potential NovoSeven® benefits: improved haemostasis.

NovoSeven®
Traumatic brain injury

Bleeding in emergencies,
traumatic brain injury

Potential NovoSeven® benefits: improved haemostasis.

NovoSeven®
Spinal surgery

rFXIII
Cardiac surgery

Activelle®
Low dose

Vagifem®
Low dose

IL-21

Elective surgery,
spinal surgery

Elective surgery,
cardiac surgery

Hormone replacement
therapy

Cancer, malignant
melanoma

Potential NovoSeven® benefits: improved haemostasis.

Coagulation factor XIII plays an important role in the maintenance of haemosta-
sis through cross-linking of fibrin and other coagulation molecules.

Ultra-low-dose continuous combined product.

Ultra-low-dose topical product for vaginal application.

Immuno-stimulatory protein that helps the immune system attack tumour cells.

Novo Nordisk Annual Report 2005

Phase

Phase 1

Phase 2

Phase 3

Filed

Approved in most parts of the world, including Europe,
North America, South America and Asia. Filed in Japan.

NovoMix® 50: approved in Europe. Filed in the US.
NovoMix® 70: approved in Europe. Filed in the US.

Phase 2 has been completed.

Phase 1.

Phase 3.

Phase 2.

Phase 1.

Phase 3 has been completed.

Phase 3.

Phases 1/2.

Phase 1 Studies in a small group of healthy volunteers, usually between 10 and 100, to test a new drug for best dosage and potential side effects.
Phase 2 Testing a drug’s known dose and side effects in a larger group of volunteers to learn of side effects, the body’s use of the drug and its effect on the condition.
Phase 3 Studies in large groups of volunteers to compare the new drug with a commonly used drug for both safety and efficacy.
Filed

A New Drug Application is submitted for review by various government regulatory agencies.

Novo Nordisk Annual Report 2005

news

EU approves
NovoMix® 50 and
NovoMix® 70
In 2005, the European Commission grant-
ed EU marketing authorisation for the new
premixed insulin analogues NovoMix® 50
and NovoMix® 70. These complement
NovoMix® 30 in the company’s portfolio of
premixed insulins, which contain both
rapid- and intermediate-acting insulin, and
therefore cover both the need at meal-
times and the basal need for insulin. The
new products make it possible to intensify
insulin treatment over time – important
because diabetes is a progressive disease. In
these mixes, the percentage of rapid-acting
insulin is raised from 30% in NovoMix® 30
to 50% and 70% respectively.

The new product ratios make it possible
to start insulin treatment with NovoMix® 30
and, without changing insulin, intensify
treatment over time, making the NovoMix®
product range simple to use for both
healthcare professionals and people with
type 2 diabetes.

NovoMix® 30 celebrated its third anniver-

sary in 2005.

TakeAction! kids
changing diabetes

Novo Nordisk employees put their energy into
getting the message about healthy living across
to young people in the TakeAction! School
Challenge that kicked off on World Diabetes
Day 2005. TakeAction! is the employee volun-
teer programme to support initiatives that
reflect the company’s Triple Bottom Line com-
mitment, focusing on leveraging the company’s

areas of expertise in social and environmental
projects and community engagement. In the
TakeAction! School Challenge, employees from
around the world engage children in activities
that teach healthy living and diabetes preven-
tion, from a nationwide quiz in Slovenia to a
competition to create the healthiest sandwich
in Germany, to taking part in the Global
Diabetes Walk in India. Locally initiated school
challenge activities have reached more than
65,000 children in more than 30 countries.

Improving healthcare
provider safety with
NovoFine® Autocover®

for

The NovoFine® Autocover®
safety needle is designed
to minimise the risk of ac-
cidental needle prick in-
healthcare
juries
providers, who can contract infectious dis-
eases like HIV/AIDS and hepatitis B/C by
pricking themselves after having injected
patients. The NovoFine® Autocover® safety
needle is automatically covered by a piece
of plastic that locks around the needle
after injection. It was introduced in the US
in 2005 and will be launched in Europe in
2006. NovoFine® Autocover® is the latest
needle innovation from Novo Nordisk.

Since the discomfort of insulin injections
is closely connected with the diameter of
the needle, Novo Nordisk is committed to
producing even thinner, shorter needles in
order to make injections easier. NovoFine®
32G Tip needle, one of the world’s
thinnest globally available needles, was
rolled out to major markets in 2005.

Better health in
the workplace

NovoSund is a voluntary prevention pro-
gramme aimed at offering support to improv-
ing the health of Novo Nordisk employees.
Currently, it is active only in Denmark, where
56% of the company’s employees are based,
but it will eventually become global. A smok-
ing cessation programme, which included 700
employees, has been very successful. After 12
months, close to 47% of them were still not

smoking – a very high success rate compared
to a Danish benchmark. Several activities to
encourage exercise took place in 2005, includ-
ing a company relay run, where nearly 2,500
employees joined a five-kilometre run as part
of a fitness initiative with other companies.
NovoSund also carried out a basic health evalu-
ation questionnaire of all 12,000 employees in
Denmark. In 2006, senior vice presidents at
Novo Nordisk will use the survey data to devel-
op activities for improving employee health in
their business areas.

Novo Nordisk Annual Report 2005

New lower-dose option
for menopausal women

In 2005, Novo Nordisk announced the posi-
tive results of phase 3 data of its new ultra-
low-dose product Activelle®
(Activella®),
underscoring Novo Nordisk’s commitment
to offering a range of low-dose hormone re-
placement therapy (HRT; HT in the US) prod-
ucts. Novo Nordisk believes that women
needing this type of therapy should start
when
severe
menopausal symptoms and use this therapy
for the shortest possible period of time. This
position reflects the findings from recent
studies that reported potential health risks
associated with HRT. Most health authorities
recommend using the lowest effective dose
for the shortest effective period of time to
relieve symptoms of menopause.

experience

they

first

Novo Nordisk
creates haemophilia
foundation
The Novo Nordisk Hemophilia Foundation
(NNHF) was created in 2005 in Zurich,
Switzerland, as a sign of the Novo Nordisk
commitment to social responsibility within
haemophilia care. This is a response to the
significant need to improve haemophilia
treatment and infrastructure in developing
countries, where haemophilia is currently
not a healthcare priority and many
haemophilia and inhibitor patients go un-
diagnosed. Thus, life expectancy for people
with haemophilia is short and treatment
with clotting factors is suboptimal.

The foundation is dedicated to support-
ing the improvement of haemophilia care
by funding sustainable local and regional
projects. These projects involve stakehold-
ers within the haemophilia community,
such as healthcare professionals, patient
associations and governmental and non-
governmental organisations.

NNHF focuses on increasing awareness
and diagnosis of haemophilia, its treatment
and prevention of complications. NNHF
operates on an annual donation of
approximately 10 million Danish kroner
(1.3 million euros) from Novo Nordisk.

To date, four projects in Algeria, Poland,
Uzbekistan and Venezuela have received
approval for funding, and many more pro-
jects around the world are in the pipeline.
The foundation also presents an annual
award to an outstanding individual within
the haemophilia community for their con-
tribution to disease betterment.

NovoPen® turns 20
with NovoPen® 4
In 2005, the revolutionary insulin delivery
device, NovoPen®, turned 20. Prior to
NovoPen®, people with diabetes injected in-
sulin using syringes and vials, a process which
many found inconvenient and indiscreet.
NovoPen® helped them to normalise their
lifestyle by taking away the embarrassment
associated with traditional insulin injections.
Today, almost 3.5 million people worldwide
use a NovoPen® system daily.

NovoPen® 3, launched in 1992, is the most
used insulin pen in the world. In 2005, an
improved sleeker version, NovoPen® 4, was
launched in a number of markets. At 155
mm and weighing only 45 g, it is the world’s
most compact insulin delivery pen. The larger
dose scale ensures correct dosage, 50% less
pressure is required to push the injection
button, and there is an audible indication
when an injection is complete.

NovoPen® 4 has won two awards from
Good Design Award 2005, for outstanding
industrial design and innovative graphic de-
sign in the promotion campaign.

Levemir® launched
in 23 markets

Novo Nordisk is gearing up for the launch of
Levemir® in the US, expected in the first half of
2006. This is good news for physicians and other
people who are trying to manage and control
blood sugar levels. Levemir®, first launched in
Switzerland in March 2004, is a long-acting in-
sulin. Levemir® provides more predictable day-
to-day control of blood glucose levels with a
low risk of hypoglycaemia and less weight
gain than conventional human insulin prepar-
ations. In 2005, Levemir® was launched in

Spain, France, the Czech Republic, Lithuania,
Luxembourg, Turkey, Australia, New Zealand,
Brazil, Belgium, Romania and Israel, bringing
the total number to 23 countries and generat-
ing intense interest
in all markets. Novo
Nordisk’s share of the EU basal insulin ana-
logue market is 17%.

“The Levemir® roll-out is one of the most
successful launches ever of an insulin ana-
logue from Novo Nordisk. In many countries
we have managed to capture a large share of
the basal insulin segment in a very short time,”
says Kåre Schultz, chief operating officer for
Novo Nordisk.

Novo Nordisk Annual Report 2005

diabetes care
the leadership challenge

Novo Nordisk is changing
diabetes in the US

Being the preferred partner in diabetes
care isn’t just about having competi-
tive products. For Novo Nordisk, the
real competitive edge comes from the
company’s commitment to changing
diabetes. Perhaps nowhere is this more
evident than in the US, which is facing
an explosive rise in diabetes.

Dr Francine Kaufman is a leading paediatric
endocrinologist in the US. Too often, she says,
the children that she treats are not in optimal
control of their diabetes. This has a direct im-
pact on their quality of life and can raise the
risk of developing serious complications in the
long term.

“The challenges faced by children – and
adults – with diabetes are immense,” says Dr
Kaufman, professor of Pediatrics at the Keck
School of Medicine and head of the diabetes
programme at Children’s Hospital, Los Angeles.
“They are never free of their diabetes.”

Dr Kaufman’s experience underlines the fact
that it takes more than good products to treat
diabetes. Such a complex disease demands a
high level of self-management and an individ-
ualised treatment approach not always pos-
sible for overwhelmed physicians and a health-
care system oriented towards acute rather
than chronic care.

“We need to get people to confront the fact
that we have a system that is fundamentally
unable to deal with diabetes as a chronic dis-
ease,” she adds.

Catalyst for change
Dr Kaufman is one of many key opinion lead-
ers in the diabetes field who are supporting
the National Changing Diabetes Program, a
programme launched by Novo Nordisk in
2005 to help bring about meaningful change
and foster collaboration among all parties in
the healthcare system.

We have achieved
our goal when
all Americans
with diabetes are
in good control.

Martin Soeters
president,
Novo Nordisk in the US

“We want to be a catalyst for changing dia-
betes,” says Martin Soeters, president, Novo
Nordisk in the US. “That means better serving
the needs of the 21 million Americans with
diabetes. A third of these don’t even know they
have diabetes, and two thirds of those being
treated are not in good control. Healthcare pro-
fessionals today have little time
for anything other than keeping
up with their patients’ needs. It
is understandable that they have
only a little time available for
pharmaceutical industry repre-
sentatives. The time we are
allowed with the diabetes spe-
cialists is therefore used to not
only inform about our products,
but also to discuss how we can
work together – even if the shared mission is
something as ambitious as facilitating change
in the healthcare system. We try to engage as
partners with one shared goal – the well-being
and health outcomes of people with diabetes.”
Novo Nordisk is making a multi-million dol-
lar commitment to the National Changing
Diabetes Program over the next five years. It
will work to remove barriers to chronic disease
management, create new incentives for better
diabetes care, enhance medical training for
diabetes and chronic care, and help people

with diabetes manage their condition more
effectively. The programme was launched in
November 2005 in Washington, DC, with a
diabetes forum attended by around 200 peo-
ple involved in diabetes in the US, from policy-
makers and patient organisations to physicians,
nurses and diabetes educators. For many,
it was the first time that all
the relevant stakeholders were
gathered in the same room.

“Our vision and our commit-
ment to social responsibility com-
pel us to pursue a National
Changing Diabetes Program be-
cause of the very poor state of
diabetes control in this country,”
says Andrew Purcell, vice presi-
dent, Strategic Business Develop-

ment in the US.

A report published in 2005 by Yale University
Schools of Public Health and Medicine with
the Institute for Alternative Futures and spon-
sored by Novo Nordisk predicted that if the
system remains unchanged, by 2025 an esti-
mated 50 million people (15% of the popula-
tion) will develop diabetes, more than double
the current number. It will also cost America
351 billion dollars (298 billion euros) in direct
medical and indirect societal costs, more than
double the amount currently spent.

A different approach
Novo Nordisk is working for change through
its Government Affairs office in Washington,
DC. Its goal is to increase patient focus and re-
sources for changing diabetes care in the US
by working together with Congress and the
Federal Government. One result of this effort
is that insulin devices are now covered under
Medicare, the government assistance pro-
gramme for people over age 65; another
achievement is that Medicare recipients now
qualify for preventive services that can help
detect diabetes.

Dr Francine Kaufman is a supporter of the National
Changing Diabetes Program.

Novo Nordisk Annual Report 2005

Martin Soeters kicks off the National Changing Diabetes Program, to better serve the 21 million Americans with diabetes.

”Our approach is very different, and that’s
what gets us heard in Washington,” says
Michael Mawby, chief government affairs offi-
cer for Novo Nordisk.

Great place to work
Based on the belief that people come first in
building a successful business, Novo Nordisk
in the US has worked to create a ‘my company’
culture among its more than 2,300 employees.
The company culture is very important to the
US affiliate, which has experienced annual
growth in sales of 30% over a period of five
years.

“The Novo Nordisk approach to business
has played a big part in how we attract and re-
tain people,” says Jeff Frazier, vice president of
Human Resources for Novo Nordisk in the US.
“The values, the access to top management
and the feeling of contributing to the com-
pany’s mission of helping people with dia-
betes and other serious health needs are all
highly motivating. This is borne out by annual

surveys on the work climate and by a retention
rate for top performers that is significantly
higher than for the industry as a whole,” says
Jeff Frazier. The company earned recognition
as an employer in 2005 when it was named
the best place to work among large com-
panies in New Jersey by NJBIZ magazine and
The Best Companies Group.

The way forward
In 2005, Novo Nordisk achieved for the first
time the largest insulin market share in the US
by volume at 39%, edging out long-estab-
lished, much larger competitors. The US is the
company’s fastest-growing market. While still
small in comparison with its competitors, the
company’s sales force of 1,200 has grown six-
fold since 2001. Novo Nordisk is building its
US market through a strategic approach that
includes several elements: expanding the sales
force, attracting and retaining talented people,
increasing market penetration for the com-
pany’s insulin analogue portfolio and working

together with key stakeholders to make posi-
tive changes in the healthcare system that will
benefit people with diabetes.

While Martin Soeters is pleased with Novo
Nordisk’s growth in the US, there is a lot more
work ahead as it faces growing competition.
His next goal is to continue and accelerate the
growth of the company’s insulin analogue
portfolio. To accomplish this, Novo Nordisk is
preparing to launch Levemir®, the newest add-
ition to the family of insulin analogues.

“The US represents 50% of the world’s
global sales of pharmaceutical products. There
is no reason Novo Nordisk’s sales shouldn’t re-
flect that. This will happen not just because of
our products, but because of our focus on
people with diabetes, employees and society.
That is the only way to build a sustainable
business,” concludes Martin Soeters.

Õ See more about Novo Nordisk in the US at

novonordisk.com/annual-report
Click: How we work

Novo Nordisk Annual Report 2005

diabetes care
the leadership challenge

194

million people worldwide
had diabetes in 2003.

333

million people will have diabetes
in 2025 if nothing is done to
slow down the epidemic.

Changing diabetes
demands new approaches

Curbing the unfolding epidemic of
diabetes requires a focused business
strategy that takes into account the
need to get more people into better
control of the condition.

Diabetes is a major global public health prob-
lem. In 2003, 194 million people worldwide
had diabetes, according to the International
Diabetes Federation. That number is expected
to reach 333 million by 2025. Moreover, dia-
betes is associated with long-term complica-
tions such as heart disease and stroke, blind-
ness, kidney failure, foot complications, nerve
damage and amputations. The human and
socio-economic costs associated with diabetes
are exorbitant. In the US alone, total health-
care costs were estimated at 132 billion US
dollars (112 billion euros) in 2002. There is
clearly scope for disease management strat-
egies that will help to reduce this burden.

Reducing complications
Improved blood sugar control is at the core of
preventing or delaying complications, and this

is where Novo Nordisk is targeting its efforts.
The level of haemoglobin A1c shows the
average amount of sugar in the blood over the
previous two to three months and is the best
way to find out if the blood sugar is under
control. Recommendations are that HbA1c
should be below 6.5%. Lowering HbA1c has
been shown to have a significant impact on
the risk of late-stage complications. People
with diabetes in very poor control run a signifi-
cant risk of developing late-stage complica-
tions. Lowering the HbA1c level by just 1%
can achieve significant benefits.

“Novo Nordisk has a vision of being the
world’s leading diabetes care company. This is
an ambitious goal and one that we approach by
way of our full portfolio of insulin analogues.
Our message is that control matters. Strict
blood sugar control is the key to successful
management of diabetes,” says Jakob Riis, se-
nior vice president of International Marketing.
With the new insulin preparations that
more closely mimic physiological insulin secre-
tion, blood sugar levels can be better con-
trolled and an acceptable HbA1c level can be
achieved. Achieving near-normal blood glu-

cose has been an elusive goal for many people
with diabetes and one that has often been as-
sociated with the increased risk of hypogly-
caemic events and weight gain. With the new
insulin analogues it is however possible to
reap the benefits of tight control without the
increased risk of hypoglycaemia and unneces-
sary weight gain.

While this is a significant step towards an
optimal disease management strategy, Jakob
Riis also recognises that not all people with dia-
betes can deal with this level of rigorous self-
management.

Individually tailored treatment
Acknowledging that people are different and
that optimal control is achieved by under-
standing the people behind the disease is a
firm conviction of Novo Nordisk. Novo
Nordisk’s DAWN programme builds on the
findings of a breakthrough study conducted
by Novo Nordisk into the attitudes, wishes and
needs of people with diabetes and diabetes
healthcare professionals. The study has creat-
ed a platform for working with other stake-
holders to better understand what it takes to

Harmut Kraft of Germany has had type 2 diabetes for 34 of his 69 years. After struggling with oral therapy for over 30 years, he wanted to put an end to the diabetes
complications that were beginning to rule his life. “I wanted a normal life, one I can enjoy. Switching from tablets to insulin really changed my life. I am my old self again.
I always tell myself I wish I had listened to my doctor’s advice and started on insulin years ago,” he says.

Novo Nordisk Annual Report 2005

4th

50%

main cause of death in
most developed countries
is diabetes.

of all people with diabetes are unaware
of their condition. In some countries this
figure may be as high as 80%.

19,000

people will develop diabetes every day
for the next 20 years.

25%

of the world’s nations have not made
any specific provision for diabetes care
in national health plans.

help people with diabetes achieve better con-
trol of their diabetes. It starts by understand-
ing the person behind the disease.

“People with a high level of support from

family and friends, and people
who cope actively have different
treatment preferences
from
people who feel overwhelmed
by the condition and have poor
social support. A person who
leads a highly active lifestyle with
variable mealtimes and a high
level of physical activity needs a
very different insulin regimen
from a retired person living a
lifestyle with regular
quieter
meals
long-established
and
habits. Tailoring therapies to fit
each person’s needs may be key to improving
treatment outcomes in diabetes in the future,”
says Søren Skovlund, manager of the DAWN
programme.

There is no shortage
of experts and
statistics sounding
the alarm about
the diabetes
epidemic but it is
still not ranked high
enough on the
global agenda.

Lise Kingo
executive vice president for
people, reputation and relations,
Novo Nordisk

people with diabetes and their families had to
adhere to a rigid meal plan that evolved
around the insulin dose. Now the insulin dose
evolves around people’s preferred lifestyles. So
modern diabetes therapy has
provided both health and lifestyle
benefits,” says Jakob Riis.

“For people who grew up
with diabetes from early child-
hood or adolescence, diabetes
often becomes a part of life; it is
something you just deal with,”
he continues.

“For many adults with type 2
diabetes, there is a need for a
more convenient insulin regi-
men. Our premixed insulins are
good ‘starter insulins’ that give
good physiological coverage and can be inten-
sified over time if the need for more intensive
therapy arises,” concludes Jakob Riis.

betes and, once people have been diagnosed,
faster insulin initiation.

“We know that this could prevent a lot of
hardship among those affected in terms of
fewer late-stage complications and better
quality of life. It would also carry significant
socio-economic benefits. With the National
Diabetes Programme, Novo Nordisk works to
influence change in healthcare systems; in the
way physicians and people with diabetes
approach treatment; and a renewed commit-
ment towards prevention and early detec-
tion,” says Peter Gerhardsson, vice president
of Corporate Health Partnerships. “This is a
partnership effort requiring the active partici-
pation of stakeholders from many sectors in-
cluding patient associations, healthcare pro-
fessionals, health policy-makers and others.”
For more on improving diabetes care, see
pp 22–23. To date, 267 national diabetes pro-
grammes have been established worldwide.

“The great thing about the new insulin ana-
logues is that we can customise treatments to
the patient’s preferred lifestyle. Previously,

Earlier diagnosis
One area that Novo Nordisk feels strongly
about is the need for earlier diagnosis of dia-

Õ See more about Novo Nordisk’s changing

diabetes at novonordisk.com/about_us/
changing-diabetes

Range of options for
best treatment outcome

The Novo Nordisk approach to diabetes treat-
ment is based on the company’s recognition
that people with diabetes have differing needs
and requirements for treatment, which may
change over time. By choosing the treatment
best suited to the individual, there is a greater
chance of an optimal treatment outcome.

A tailored diabetes strategy
The company’s insulin portfolio is built on the
knowledge that to effectively control blood
glucose it is important to address both fasting
blood glucose (in between mealtimes) and
post-prandial glucose
(after mealtimes).
Therefore, the Novo Nordisk product range in-
cludes both fast-acting and long-acting insulin
analogues. A full range of insulin analogues
accommodates the need for people with dia-
betes to intensify insulin treatment over time

in order to reach optimal blood glucose levels
and avoid serious complications.

cant weight gain often associated with con-
ventional insulin preparations.

Insulin analogues are designed to mimic
more closely the body’s own physiological in-
sulin regulation of blood glucose levels than
human insulin, and offer better mealtime glu-
cose control, less hypoglycaemia and in-
creased convenience for all types of people
with diabetes.

Levemir® brings new benefits
Levemir®, the latest of the insulin analogues
developed by Novo Nordisk, is a long-acting
insulin that provides more consistent day-
to-day control of blood glucose levels than
conventional human insulins. Among the
benefits for people with diabetes is that it has
been demonstrated that Levemir® reduces
the fasting blood glucose with a low risk of
hypoglycaemia.

In addition, studies have shown that people
using Levemir® may not experience the signifi-

Other insulin analogues marketed by Novo

Nordisk include:
n NovoRapid® (NovoLog® in the US), which
gives tighter blood glucose control at meal-
times without increased risk of hypo-
glycaemia

n NovoMix® 30 (NovoLog® Mix 70/30 in the
US and NovoRapid® 30 Mix in Japan), a
dual-release insulin analogue, which covers
both mealtime and basal requirements.

Injection devices that offer convenience and
discretion are also part of improved control of
diabetes and better quality of life. Novo Nordisk
produces a range of devices for insulin therapy.
These include FlexPen®, an easy-to-use prefilled
injection pen, and NovoPen® 4, just launched
in 2005. NovoPen® 4 is the advanced new suc-
cessor to the world’s best-selling durable in-
sulin device, NovoPen® 3.

Novo Nordisk Annual Report 2005

diabetes care
the leadership challenge

60%

of all deaths are due to
chronic diseases.

million people die from
chronic diseases every year.

Prevention of chronic diseases
is hope for the future

Diabetes is among the epidemic chron-
ic diseases that are costing too many
people their health and lives. Preven-
tion is the most effective weapon in this
fight, especially if young people lead
the change towards healthier lifestyles.

Diabetes and three other epidemic chronic
diseases – cardiovascular disease, chronic lung
disease and some types of cancer – account
for more than 50% of deaths globally. These
diseases are linked to three risk factors: to-
bacco, unhealthy diets with too much fat and
sugar and too little physical exercise. Eighty
percent of these deaths occur in low- and
middle-income countries, according to the
World Health Organization (WHO).

“This is not tomorrow’s epidemic, this is
today’s epidemic,” says Derek Yach, head of the

Global Health Division at Yale University and
former chronic disease expert with the WHO.
Prevention is key to halting the course of
epidemic chronic diseases, but raising aware-
ness, changing behaviour and reorienting
healthcare systems to meet this challenge are
a huge undertaking. That is the goal of the
Oxford Health Alliance, a broad stakeholder
initiative launched by Novo Nordisk and the
University of Oxford to focus attention on the
importance of preventing chronic diseases.

Raising the level of urgency
In 2004, Novo Nordisk, which is represented
on the board of trustees, committed 3 million
British pounds (4.4 million euros) over three
years to support the Alliance. In 2005, it be-
came an independent non-profit foundation,
which allows the group to attract a wider range
of partners and funding than would be pos-

sible if it were solely a Novo Nordisk initiative.
Through the Oxford Health Alliance, based in
London, experts and activists from different
backgrounds collaborate to raise awareness
and change behaviours, policies and perspec-
tives at every level of society.

About 170 experts from 35 countries
gathered for three days at the third annual
meeting of the Alliance at Yale University in
New Haven, Connecticut, US, in 2005. Through
CAPCoD
(Community Action to Prevent
Chronic Disease), the Alliance is supporting
local examples of best practice in 18 mostly de-
veloping countries and six locations in the US.
For Lars Rebien Sørensen, president and
CEO of Novo Nordisk, there is clearly a busi-
ness rationale behind the company’s involve-
ment in the Alliance.

“Moving diabetes and other chronic dis-
eases higher up on public health agendas will

Young attendees at a conference
about prevention presented ways
to mobilise their generation.

80%

of chronic disease deaths
occur in low- and
middle-income countries.

billion people
are overweight.

388

33%

50%

million people will die in the
next 10 years of a chronic disease,
if action is not taken.

of all American children born
today will develop diabetes over
the course of their lifetime.

of the world’s population do
not reach recommended levels
of physical activity.

inevitably lead to more and better treatment,
and probably lead to greater use of our prod-
ucts. But that is not the main reason we are
involved,” he says. “Our vision is to defeat
diabetes, and that is only possible if the world
finds better ways to prevent diabetes. Part of
our success as a company is due to the dia-
logue and relations we have with
people who in one way or another
form public opinion. Through the
Alliance we meet with, learn from
and have the opportunity to work
with some of the people who will
shape health policies over the next
decade. We benefit by being part of
an initiative that will lead to new
ways of thinking about healthcare, spur our
own ideas about what role private industry
can play and create solutions for tomorrow.”

Research Foundation, said that a decisive factor
in better treatment outcomes for the people
treated at his centre is that “we spend time
with the patient – as much time as it takes. We
do as much for the patient and as little as pos-
sible to the patient.”

In Alaska, that philosophy is taking hold in
one of the CAPCoD projects.
Native Alaskan-Americans,
experiencing a much higher
incidence of diabetes than
the non-native Alaskan
population, are finding that
lifestyle coaches – govern-
ment-paid community health
workers – are giving them
the tools they need to adopt healthier
lifestyles through basic health information,
community advocacy and learning how to
teach others.

The bullet-proof
vest of epidemic
chronic disease
has to be
prevention.

Stig Pramming
executive director of the
Oxford Health Alliance

Everyone has a role to play
The experts gathered at Yale University all
agreed that action must start at the grassroots
level but that global coordination is key. A
major challenge is changing healthcare systems
to deal with the complex nature of chronic
diseases.

Bernard Lown, Nobel prize-winning director
of the Lown Cardiovascular Center and

“I’ve learned that a few people can make a
profound difference – but not alone, only to-
gether with others,” said Bernard Lown.

“We have spent three days agreeing that
something has to be done to deal with this
global health problem,” said Lise Kingo,
executive vice president for people, reputation
and relations, who represented Novo Nordisk at
the meeting. “Now is the time to take action.

“Changing the mindset about diabetes has to start
with young people,” says Hala Khalaf, author of
Young Voices, produced by Novo Nordisk. Proceeds
from the book are donated to the World Diabetes
Foundation to benefit diabetes care for young
people in the developing world.

It has been a welcome challenge to have young
people represented at this meeting. They’ve
been reminding us that problems are not solved
simply by getting a group of experts together
in dialogue. I think we have enough knowledge
now to simply get going.” The young people
are representatives of Novo Nordisk’s Youth
Panel who, together with a group of young
journalists, participated to offer recommen-
dations for how their generation can be mo-
bilised to adopt healthier lifestyles.

Õ See more about Novo Nordisk changing

diabetes at novonordisk.com/about_us/
changing-diabetes

Reaching young people:
what will it take?

One in three children born in the US today will
develop diabetes during their lifetime, accord-
ing to the US Centers for Disease Control. Due
to rising rates of obesity and a less active
lifestyle, children and young people are devel-
oping type 2 diabetes, once only found in
adults. In addition, many children with type 1
diabetes are in poor control of their condition.
In 2005, Novo Nordisk set up a panel of
young people from countries like China, the
US, Jordan, Denmark and the UK, some with
diabetes, who all want to help prevent chronic
disease. They are helping Novo Nordisk and its
partners to better understand how it is pos-
sible to engage young people in taking active
responsibility for their own health.

“If we want to defeat diabetes, we have to

make an impact before problems have become
irreversible. That is why we focus on improv-
ing control among young people with dia-
betes – to prevent complications; and why we
work to encourage healthy lifestyles among
young people – to prevent diabetes in their
lifetime,” says Lise Kingo. “This is an under-
taking that requires us to rethink the way we
communicate health messages. It also requires
a whole new way of engaging stakeholders in
the needs of young people.”

Here, five young people answer the question:
What is the single most important message to
young people about the importance of a
healthier lifestyle to avoid chronic diseases?

Take responsibility for yourself and for future
generations.
Joanna Matthews, 22, UK

Communicate in a language we care about.
Then we will be compelled to act.
Erik Dunham, 21, US, type 2 diabetes

It’s possible to enjoy life without the threat of
chronic disease hanging over your head.
Ronald Cummings-John, 18, UK

We think we’re immortal. We know the risks,
but we don’t want to change. Find out what
motivates us to change. That’s the only way to
get the message through.
Anja Østergren Nielsen, 21, Denmark,
type 1 diabetes

Look out for your own fitness, diet and health.
No one is going to do it for you. It’s in your
hands.
Hala Khalaf, 24, Jordan

Novo Nordisk Annual Report 2005

Jaya Vandhana Naidu has type 2 diabetes and lives in Lautoka, Fiji.

Li Guang Jun has type 2 diabetes
and lives in Beijing, China.

Spotlight on access to health

THE BIG PICTURE
The right to basic
healthcare services
Historically, people have had implicit
trust in their doctors, and have felt they
could relegate responsibility for their
care to the medical profession.

Today however, healthcare systems
face economic pressure and doctors are
overburdened. Healthcare is being ra-
tioned, worsening already existing in-
equities. People no longer feel comfort-
able
their
relinquishing control of
healthcare, sparking a growing patient
rights’ movement around the world.

But, while richer and more educated
patients are adept at placing demands
on the system, poorer and disenfran-
chised groups are less able to fight for
their rights. Yet those who don’t get ac-
cess to care quickly enough get sicker,
and become a greater burden on society.
Politicians are aware of the need for a
patient-centred approach to healthcare;
some even believe this could help reduce

healthcare bills. But, governments’
approaches – such as Patient Charters –
have had little impact, as they are poorly
implemented. What is having an effect
are grassroots movements among pa-
tients and civic groups. These groups
realise that the public must take charge
of the management of their own health-
care, especially in matters of prevention.
Prevention is key to addressing chron-
ic diseases. However, if patients are to
take greater responsibility for managing
their own care, they must be afforded
the rights to do so. The big challenge for
the next decade will be equitable health
reform. Without placing the ultimate
users of the healthcare system – the
public – at the centre, it is difficult to see
how governments will ever achieve the
cost reductions they seek, while still ful-
filling their responsibility to ensure fair
and adequate access to healthcare for
their citizens.

Alexandra Wyke
Founder and CEO of PatientView

Alexandra Wyke was invited by Novo Nordisk to provide a perspective on the hot topic of access to
health and to outline some of the issues currently under debate.

THE NOVO NORDISK APPROACH
Partnerships can bridge
gap in access to care
It wasn’t until he ended up in hospital that Li
Guang Jun discovered that he had type 2 dia-
betes. Recently retired at the age of 63, he
was ready to devote himself to his passion for
calligraphy. Instead, he had to learn to live a
different sort of life. Today, Li Guang Jun, 74,
is in control of his diabetes through medicine,
diet, exercise (his faithful morning tai chi) and
constant monitoring of his blood sugar.

“By understanding, accepting and having
the right attitude about my diabetes, I am able
to rise above it and control it,” he says.

Li Guang Jun is lucky. He has access to doc-
tors, medicine and the other support he needs
to manage his chronic condition. That is not the
case for many others, in both the developed and
developing world, who lack access to nurses,
doctors, clinics or hospitals or the knowledge
and awareness to manage their health.

Pressing need for new solutions
Novo Nordisk is committed to ensuring greater
access to health. The company’s approach is
built on the four priorities (see model on oppos-
ite page) of the World Health Organization
(WHO). The aim is to partner with key stake-
holders to develop entirely new strategies and
solutions for how to better meet the needs of
people with or at risk of developing diabetes.

Novo Nordisk Annual Report 2005

Abdalla M Abeid has type 2 diabetes
and lives in Dar es Salaam, Tanzania.

Punithevel Thanikachalam has type 2 diabetes and lives in Chennai, India.

The economic burden of diabetes, already
huge, will increase in the future if nothing is
done. As part of its strategy for access to
health, Novo Nordisk undertakes socio-eco-
nomic studies to better understand what it
takes to change societies and how the com-
pany can contribute to such change.

Novo Nordisk’s studies show that poor con-
trol of diabetes translates into lost lives, lost
quality of life and lost national productivity.
With proper treatment, people with diabetes
can lead an almost normal life and reduce the
risk of disabilities and premature death. But
proper treatment of diabetes is far from univer-
sal, even in the developed world, due to lack of
awareness. In the developing world the problem
is made worse by too few economic resources
and inadequate healthcare infrastructure.

National Diabetes Programme in China
In 2003, a National Diabetes Management
Programme was set up jointly by Novo Nordisk,
the World Diabetes Foundation and the
Chinese Ministry of Health. This five-year pro-
gramme, supported with 18 million Danish
kroner (2.4 million euros), aims to prevent, de-

Strategies for access to health

WHO priorities

Novo Nordisk response

Development of national
healthcare strategies

National Diabetes
Programme

Development of
healthcare capacity

Best possible pricing

Additional funding

National Diabetes
Programme

Best possible pricing
scheme in LDCs

World Diabetes
Foundation

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

tect and treat diabetes, and thereby reduce
the burden of diabetes on Chinese society.

The total number of people with diabetes in
China is currently estimated to be in excess of
30 million and continuing to grow.

Project activities will cover an area with a
population of around 500 million people, in-
cluding 20 million people with diabetes. The
aim is to introduce systematic diabetes educa-
tion for doctors and nurses. Fifty thousand
doctors and nurses will be trained in diabetes
care and management through seminars and
on-the-job training. The first national training
programme, with approximately 3,500 partici-
pants in 33 cities, has now finished.

In addition, Novo Nordisk is working with
partners in seven developing countries to im-
prove diabetes care through activities such as
establishing diabetes clinics, training doctors
and nurses, and working with governments to
set up national diabetes programmes. These
countries are Bangladesh, Costa Rica, El Sal-
vador, India, Malaysia, Tanzania and Zambia.

Focus on low-income minorities
Access to diabetes care is also an issue in the
developed world. Some groups of people, due
to their ethnic background and genetic predis-
position, experience a higher incidence of dia-
betes; some of them also experience inequities
in access to care. In 2005, Novo Nordisk’s initia-
tives to better serve the needs of low-income
minority populations included:
n The Changing Diabetes Dialogue series,
aimed at working with partners to identify
barriers to care for low-income minorities.
Dialogues so far have looked at commun-
ities in Greece and the Netherlands. The
goal is to gather examples of best practice
and make these available to those who
work with diabetes worldwide

n A three-year project with the University of
California at Irvine in the US to identify im-
provement in quality of care and cultural
beliefs about diabetes among Vietnamese
living in California. A ‘coaching’ technique
is being tested, in which people with dia-
betes coach one another, as such an ap-
proach may be effective in close-knit com-
munities to improve treatment outcomes.

Best possible pricing
Novo Nordisk offers human insulin to the pub-
lic health systems in the 50 Least Developed
Countries (LDCs), as defined by the UN, at
prices not to exceed 20% of the average price
in North America, Europe and Japan. For
2005, Novo Nordisk offered this pricing policy
to all 50 countries and sold human insulin in a
total of 32 countries at or below this price,
compared with 33 in 2004.

Reaching the poorest nations
The World Diabetes Foundation (WDF) was
launched by Novo Nordisk in 2001 as an inde-
pendent non-profit organisation with a grant
of 500 million Danish kroner (about 67 million
euros) to be spent over 10 years to improve
diabetes care and prevention in the world’s
poorest countries. Funding goes towards sus-
tainable projects in education and awareness
programmes, and assistance
in building
healthcare capacity. Today the WDF is support-
ing 57 ongoing projects with an estimated
direct impact on 24 million people in more
than 65 countries in the developing world.

Õ See performance data on access to health

at novonordisk.com/annual-report
Click: How we perform

Novo Nordisk Annual Report 2005

biopharmaceuticals
leveraging core competences

billion USD is the estimated
annual cost of care for stroke
patients in the US.

Expanding the scope
of biopharmaceuticals

In 2005, Novo Nordisk focused on
growing its biopharmaceuticals busi-
ness within critical bleeds as well as
new therapy areas in cancer and
inflammation.

Terje Kalland, head of the Novo Nordisk Bio-
pharmaceuticals Research Unit, is a determined
man. His mission is to expand the Novo Nordisk
biopharmaceuticals business, a challenge he
does not take lightly. But he takes heart from
the fact that in 2005, clinical trials continued
to demonstrate the potential of blood coagu-
lation factor NovoSeven® to address critical
bleeds in situations where there had previously
been little hope of medical treatment.

“NovoSeven® is poised to grow. If results
from our ongoing clinical trials hold up, it will
make a difference to a patient population that
had little hope in the past,” says Terje Kalland.
“Many physicians truly believe NovoSeven®
has the potential to save lives,” says Richard
Weiskopf, project vice president for Emergency
Bleeds for Novo Nordisk.

Boost from new R&D centre in the US
In North Brunswick, New Jersey, Marcus Carr
is heading up a first-of-its-kind haemostasis
research centre, established by Novo Nordisk
in 2005. It will provide additional scientific
support for building the company’s haemosta-
sis business.

“My goal is to help Novo Nordisk become a
world leader in haemostasis,” says Marcus
Carr, a renowned expert in the field of coagu-
lation with extensive experience in basic and
clinical research from more than 25 years in
both clinical practice and academia. “In five to
six years I’d like to see us recognised as the
preferred partner for evaluating novel ways of
treating bleeding and related complications.”

New hope in stroke and trauma
In 2005, Novo Nordisk moved NovoSeven® for
treatment of intracerebral haemorrhage (ICH),
the most deadly form of stroke, into phase 3

trials. This followed the positive clinical results
from a phase 2 trial, reported in the New
England Journal of Medicine in February 2005.
The results signalled the first-ever breakthrough
within ICH. The phase 2 trial found that people
given NovoSeven® soon after having experi-
enced an intracerebral haemorrhage were
more likely to survive without severe disability.

looking to these areas to give us that in due
course,” says Terje Kalland.

Immunotherapy is a promising form of
treatment in the fight against cancer. The con-
cept is either to stimulate the immune system
or to use proteins produced by the immune
system, for example cytokines or monoclonal
antibodies, to combat malignant tumours.

About 40% of people who experience ICH
die within 30 days; those who survive are left
with more severe disabilities than
survivors of other forms of stroke,
including loss of movement,
speech and mental capability.

NovoSeven® is also in phase 3
trials for use in trauma, such as
acute bleeding due to traffic ac-
cidents. “Many clinicians with
whom I speak who have used
NovoSeven® investigationally for
trauma-associated haemorrhage
feel strongly that the product can
effectively stop bleeding in patients with severe
trauma. We still need confirmation of the clin-
ical proof of concept, as can be provided by a
phase 3 study, and that’s why we’re conduct-
ing these trials,” explains Richard Weiskopf.

For more on Novo Nordisk’s R&D within
haemostasis, see pp 10–11. For the status of
the pipeline, see pp 12–13.

Targeting cancer and inflammation
The company will exploit its technology plat-
form to develop molecules to target cancer
and inflammation as a new therapy area. As a
scientist specialising in oncology and inflam-
mation, Terje Kalland is committed to develop-
ing a number of projects that will allow the
company to gain a foothold in these new ther-
apy areas.

“In the future, Novo Nordisk will not be con-
tent just to defend and extend its leadership in
diabetes and haemostasis. We will accelerate
the development of protein-based drugs in
new therapeutic areas, such as cancer and
inflammation. We would welcome another
string to our competitive bow, and we are

Our protein
expertise will take
us a long way.
Where we lack
expertise we
will develop
partnerships.

Terje Kalland
head of the Novo Nordisk
Biopharmaceuticals Research Unit

At the moment, the substance that has
reached the furthest stage of development is
IL-21, which is licensed from
ZymoGenetics, Inc, a US biotech
company partly owned by Novo
Nordisk. This compound is cur-
rently being tested in humans
with widespread malignant
melanoma and renal cancer.

Novo Nordisk has increased
its number of early-stage com-
pounds and has thereby ex-
panded its portfolio of exciting
projects.

“These are areas where, because the suc-
cess rate is simply very low, you need to have
critical mass in your number of research pro-
jects, and that is what we are working to-
wards,” says Terje Kalland.

Terje Kalland acknowledges that there are
hurdles to be overcome before Novo Nordisk
achieves its ambition of becoming a player in a
new therapy area. Its current projects are still
at an early stage, with only animal data and
early-stage human data available. Yet he be-
lieves that Novo Nordisk can make a differ-
ence in this area relative to competitors – both
within its own areas of expertise and through
in-licensing agreements with other firms that
can complement that expertise.

“The management at Novo Nordisk is serious
about its commitment to this area. They have
ambitious aims to grow the area rapidly and to
invest what’s necessary in order to succeed.”

Õ See more about the biopharmaceuticals

business at novonordisk.com/annual-report
Click: What we do

Novo Nordisk Annual Report 2005

10%

92%

40%

50%

of all recorded deaths
are caused by trauma.

of all intracerebral haemorrhages
(ICH) result in disability or death.

of people who experience
ICH die within 30 days.

In people less than 44 years
old, trauma is the leading
cause of death.

of patients with severe
trauma die within 24 hours
from blood loss.

Terje Kalland is heading up
the new Biopharmaceuticals
Research Unit in Novo Nordisk.

How NovoSeven®
is used today

Approved for treatment for:
n the estimated 3,500 people with haemo-
philia with inhibitors in the developed world
(US, EU, Japan and other countries)
n people with acquired haemophilia

(EU and Japan)

n people with the rare bleeding disorder

Glanzmann’s thrombasthenia (EU)

n FVII deficiency (US and EU).

In 2005 approved by the FDA for:
n use in surgical procedures involving haemo-

philia patients with inhibitors
n patients with FVII deficiency.

Fabian Wenger has type 1 diabetes and lives in Bad Schussenried, Germany.

Spotlight on innovation

THE BIG PICTURE
New paradigm to
unleash innovation
It is fair to say that large pharmaceutical
companies have not been as innovative
as they need to be. The standard para-
digm centred around a few convention-
al drug targets has proven a much hard-
er approach than first believed. In stark
contrast, smaller firms that have pur-
sued biologics have had a pretty spec-
tacular turn in the past decade –
opportunities large pharma have failed
to grasp. This is not to say the industry
lacks innovation; most products get to
market through some sort of pharma-
ceutical development. The challenge is
to find a new model of innovation.

Engaging with the small company
sector and academia has proven to be
fertile ground for innovation. Success in
such partnerships is more than simply
putting money on the table, but rather
having industry contribute its unique skills

in drug development and set aside its
prejudices about appropriate therapeut-
ic targets. Companies must determine
how much they can sensibly outsource
without losing their ability to make good
decisions. It is a matter of managing
those relationships well, and having on
board a certain amount of expertise.

While the old model no longer works,
a new model has not yet evolved. Such a
model will have to go to the sources of
innovation in biomedicine, to academia
and small biotech. The winners will be
smaller rather than larger, have a diverse
range of both therapeutic approaches
and molecules, be quick on their feet and
very good at external relationships. That
is the best model for the moment, but
whether it will continue to hold for the
next decade remains to be seen.

John Bell
Regius Professor of Medicine,
University of Oxford

John Bell was invited by Novo Nordisk to provide a perspective on the hot topic of innovation with-
in the pharmaceutical industry and to outline some of the issues currently under debate.

THE NOVO NORDISK APPROACH
Harnessing creativity
through partnerships
When it comes to cracking the nut of complex
chronic diseases, no single company or institu-
tion holds the patent on innovation. For that
reason, Nicolai Wagtmann, vice president of
Biopharmaceuticals Biology at Novo Nordisk,
is constantly on the lookout for partners that
can help Novo Nordisk assemble a portfolio of
promising biological drug candidates within
cancer and inflammation.

He found such a partner in Innate Pharma, a
small biotech company in France specialising
in cancer immunotherapy. Since 2003, Innate
Pharma and Novo Nordisk have been collabor-
ating on the generation of a new therapeutic
class of immuno-modulatory antibodies target-
ing natural killer (NK) cells that may prove to
be effective in the treatment of some cancers.
Novo Nordisk was a preferred partner for
Innate Pharma not only for its ability to pro-
vide large-scale production, but also for its ex-
pertise within biology, Nicolai Wagtmann ex-
plains. “If you have good science in-house,
you become a more credible player and more
interesting to potential partners,” he says.

ZymoGenetics is another biotechnology firm,
based in the US, with which Novo Nordisk has

Novo Nordisk Annual Report 2005

Medical representative Anouar Ben Younes
works in Tunis, Tunisia.

Li Hua works as a research assistant at the Novo Nordisk Research Centre
outside Beijing, China.

been able to capitalise on synergies in the de-
velopment of new compounds for the treat-
ment of cancer (see p 24). Novo Nordisk has
around 240 collaborations through scientific
in-licensing with biotech firms as well as uni-
versities around the world. University research
is often at an early stage of development, for
example at the biological hypothesis stage or
first-patent application, but it can nonetheless
provide interesting opportunities to exploit
synergies.

Creating a culture of innovation
For Novo Nordisk, innovation is about exploit-
ing ideas that can provide added value for the
company and its stakeholders. Innovation is a
high priority throughout the entire organ-
isation. The company is working on finding the
right balance between management systems
and space for new ideas in order to create a
true culture of innovation.

Recently, an external review was conducted
of Novo Nordisk’s capacity to innovate relative
to other organisations. As a response to the
review, a number of innovation projects were
selected by top management and are now in
the process of being realised. Examples in-
clude new models for sales and marketing, new
insulin devices for the developing world and
more efficient methods for insulin production.
Nurturing a more risk-taking, entrepreneurial
spirit, and yet still managing the inherent risks
of drug development to an appropriate level,
is critical in the pharmaceutical industry, which
faces a risk of around 30% that drugs tested as
far as in phase 3 studies will never reach the
market. Delays in development of new drugs

or failure to obtain approval 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.

Translating knowledge into practice
There are many examples of how Novo Nordisk
takes innovative ideas and technologies and
puts them into practice. For example, in 1985,
the launch of NovoPen® set a new standard in
diabetes care. As the world’s first insulin delivery
pen, it offered people with diabetes a unique
and innovative tool that combined the syringe
and insulin container in one instrument.

Over the last 20 years, Novo Nordisk has con-
tinued to enhance and update the NovoPen®
range of insulin delivery pens. There have been
improvements in accuracy, convenience, dur-
ability, discretion and ease of use. The com-
pany launched the first-ever prefilled insulin
device in 1989. In 2005, on the 20th anniver-
sary of NovoPen®, NovoPen® 4 was launched.
It is the world’s most compact insulin delivery
pen, with significant user-friendly enhance-
ments such as a three-times larger, easy-to-
read dose scale, 50% less pressure required to
push the button compared with current avail-
able insulin pens, and audible indication when
injection is complete.

These developments in insulin delivery pens
have had a significant impact on treatment
outcomes for people with diabetes, since pa-
tient preference for insulin delivery devices
strongly influences their compliance with
treatment in the long term.

Another example of innovation in practice is

the Norditropin® SimpleXx® delivery system for
human growth hormone (hGH). Novo Nordisk
used its knowledge in developing pens for in-
sulin delivery in order to develop the world’s
first liquid hGH in a superior pen device, offer-
ing the same simplicity of use and discretion as
NovoPen®.

Taking a cue from nature
The discovery of new technologies in the
world of science is a rare event. Novo Nordisk
succeeded in just that with its acylation tech-
nology, a new technology for prolonging the
duration of insulin. The technology has been
used in the development of Levemir®, the
company’s latest insulin analogue, and in the
development of liraglutide, a GLP-1 product
for diabetes (see p 10).

What is exciting about the technology, ac-
cording to Peter Kurtzhals, senior vice presi-
dent for the Diabetes Research Unit at Novo
Nordisk, is that it appears to be generally ap-
plicable to any biopharmaceutical compound,
which means that use of the technology could
result in a potential value upgrade for any
compound in the company’s diabetes pipeline.
“In some ways, this technology is nature’s
own idea,” he explains. “We have engineered
a natural principle into a pharmacological util-
ity. For me, that’s what innovation is about –
taking knowledge and using it for practical
purposes to develop better products and
processes.”

Õ See more about innovation in Novo Nordisk’s

R&D activities at novonordisk.com/science

Novo Nordisk Annual Report 2005

challenging workplace
innovation and performance

26%

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

The Novo Nordisk Global People Board, responsible for creating the People Strategy of the company, at a meeting in the new House of People in Denmark.

People with values
make the difference

Having a diverse and mobile work-
force is a prerequisite for Novo Nordisk
to stay competitive in the global mar-
ketplace. That way, people can oper-
ate seamlessly across national borders
as well as functional areas. The People
Strategy drives strategic efforts to
build an agile organisation guided by a
strong set of values.

In less than four years, Jack Chen’s career at
Novo Nordisk has taken him in a number of
different directions – across functions, busi-
ness areas and geographical borders. Eighteen
months after joining the company in 2002 as
strategic planning manager for the company’s
US affiliate, he moved to diabetes product
management in the US. Then later he returned
to his native China to serve first as business
development director and now as director of

the Biopharmaceuticals Business Unit for
Novo Nordisk in China.

The frequent new job assignments keep
him challenged, says Jack Chen. He realises that
his broad skills base and his ease at working in
different countries make him a valuable em-
ployee in a company like Novo Nordisk seek-
ing to expand its global reach.

“All the career moves add to my operational
experience,” says Jack Chen. “What I have
learned in the US has been a tremendous help
in bringing best practice to China. For example,
I challenged our affiliate to adapt the more dy-
namic style of US national sales meetings and,
when they did, it was a great success.”

Jack Chen’s experience illustrates the four
anchors of the People Strategy: recruitment,
talent development, rewards and mobility,
and performance.

“Everything we do depends on our people.
Every employee must have a chance to devel-

op personally and professionally. We’re ex-
panding our operations internationally, which
means we need a diverse and mobile work-
force. There are tough business challenges
ahead, which means we need to develop lead-
ers,” explains Lars Christian Lassen, senior vice
president for Corporate People & Organisation
at Novo Nordisk.

The ambition is to achieve more transparent
and uniform performance measures. This will
give more flexibility in spotting the right
people for vacant positions across borders and
functions.

Clear business benefits
The Novo Nordisk People Strategy focuses on
two key areas: supporting the values of the
company and contributing to meeting business
challenges in the markets. People develop-
ment programmes are designed to achieve
closer alignment between competence devel-

Novo Nordisk Annual Report 2005

1,735

new positions were
created by Novo Nordisk
in 2005.

44%

of Novo Nordisk employees
work outside Denmark.

of Novo Nordisk employees
worked outside their home
country in 2005.

of Novo Nordisk’s employees
left the company in 2005.

3.2

was the average absence rate
for Novo Nordisk employees
in 2005.

opment and business goals, and talent pro-
grammes are a priority to prepare tomorrow’s
leaders and facilitate succession management.
Furthermore, work is ongoing to develop
competitive performance rewards and global
health and safety standards for Novo Nordisk’s
global workforce.

The expected long-term business benefits
would be higher job satisfaction, lower ab-
sence rates and a people retention rate that
can outperform industry peers. In 2005, Novo
Nordisk was ranked as Best Place to Work in
several of its markets (see p 35), and rated as
one of the most attractive places to work
among engineering, life science and manage-
ment graduates in Denmark.

Mobility to seize talent
For Novo Nordisk, mobility is making sure that
the very best talents are identified and select-
ed, globally. This task is in the hands of the
Global Rewards & Mobility Centre of Excellence
at Novo Nordisk’s headquarters in Denmark,
which is itself a microcosm of the way the
company wants to internationalise: the centre’s
11 staff members have diverse backgrounds
and come from Denmark, France, Mexico,
Portugal, the UK and the US. “We are sup-
porting highly mobile people, so we want to
make sure we have international experience
ourselves. That way we do our work best,”
says Neil Miller, vice president, Global Rewards
& Mobility.

While only 6% of Novo Nordisk’s employees

Lars
Christian
Lassen

The People Strategy
is our framework to
continue to inspire,
engage and develop
our employees’
talents so that we
can meet our
strategic objectives.

Lars Christian Lassen
senior vice president,
Corporate People & Organisation,
Novo Nordisk

work outside their home country, this repre-
sents a notable increase since 2004. Likewise,
the overall global mobility – that is employees
on expatriate contracts, extended business
trips, transfers on local conditions or in gradu-
ate programmes – has increased by nearly
50% since 2002.

Diversity management is also a priority with
Novo Nordisk, but management recognises
that there are no quick fixes. For instance, there
is a range of initiatives to encourage more
women in management, includ-
ing development and mentor
programmes. While the com-
pany won awards in 2005 for its
efforts in and commitment to
equal opportunities (see p 35),
results are yet to translate into
solid data.

“In this field, we share the
challenges that many other com-
panies are facing – change takes
time,” says Global HR Partner
Ove Munch Ovesen, who leads
the diversity programmes.

Ove Munch Ovesen is confident that con-
crete results will materialise: “The programme
is paying off, and numbers are moving in the
right direction. An example is our talent pool
for senior managers, where we have recruited
more women in 2005. So in the coming years
we are likely to have more women in senior
management positions.” The company does
not favour quotas, but seeks to nurture the
best talent for any job.

Growing talent
Globalisation requires leadership. It requires
future talents to be developed to have a global
mindset, possess strong traits and values and
an ability to work across cultures, lead people
from different cultural backgrounds and man-
age complexity in a constantly changing envir-
onment. Novo Nordisk has two global talent
pools for management positions: the Light-
house programme for senior managers and
the Greenhouse programme for younger
managerial talents.

Joan Schmidt, American and manager of
the Licensing & Litigation team, Corporate
Legal, and a member of the Greenhouse pro-
gramme, is encouraged by this opportunity to
learn of the bigger picture and see broader
career opportunities in the company: “I’ve
worked for Novo Nordisk for 10 years, first as
assistant general counsel at Novo Nordisk, Inc

in the US for eight years before transferring to
Denmark. When your company says ‘we‘ve
been watching you, we think you’re doing a
good job and we want to give you additional
tools to develop further’, that’s highly moti-
vating. I’ve also found that the more I lead
other people and acquire responsibility, the
more prominent the Novo Nordisk values and
the Triple Bottom Line figure in my work life.”
Moreover, the company offers competence
development for all its employees to better
equip them to match the busi-
ness goals. In 2005, investments
in people development amount-
ed to an average of 9,899
Danish kroner (1,327 euros) per
employee.

Never just a job
While the People Strategy aims
to improve Novo Nordisk’s com-
petitiveness through its people,
other programmes also inspire
and encourage employee en-
gagement. Novo Nordisk conducted a study
on The Future Work Life together with em-
ployee unions in Denmark. The project indicat-
ed that in an increasingly networked society
where change is the only constant, it becomes
even more important for people to be engaged
in their job and to share a sense of community
and support.

One global programme in particular inspires
employees to support the company values.
TakeAction!, a volunteer programme, encour-
ages employees to undertake team activities
that contribute to the Triple Bottom Line.
Activities are in support of social objectives
and often involve local communities. The only
prerequisite is that activities are aligned with
the company’s business objectives.

Another is NovoSund, a prevention pro-
gramme that aims to inspire and enable em-
ployees and their families to adopt a healthier
lifestyle and reduce their risk of developing
chronic diseases like diabetes. Novo Nordisk is
taking a rigorous approach and works to pro-
duce solid data that can show the impact of
various interventions. In this way the company
will package its offerings of healthy choices
and activities to the maximum benefit of its
people.

Õ See performance data on workplace quality

at novonordisk.com/annual-report
Click: How we perform

Novo Nordisk Annual Report 2005

The FlexPen® plant in Hillerød, Denmark.

Switzerland: 78 people work in the two regional
headquarters Region Europe and International
Operations.

Spotlight on globalisation

THE BIG PICTURE
Plug into the
global economy
I know of a New York restaurant that has
outsourced its reservation service to a
company in India. That’s my favourite
metaphor for globalisation. What they’ve
done is to take advantage of the digital
revolution to move one function – just
the one function where it makes perfect
business sense to do so. The chef and
waiters stay in New York. You don’t have
to disaggregrate an entire business; but
if you want to stay competitive, you have
to look at what elements can be done
better in new ways. That’s how a com-
pany can be responsible to shareholders,
employees and society.

There are evidently two sides to glob-
alisation. Fundamentally it offers advan-
tages. In emerging economies, by and
large Western companies are a force for
good. Paying a premium for talent sends
a signal that education pays. The biggest

hope we have – and the solution to
global inequity – is moving these coun-
tries in the right direction. Acquire tech-
nological skills, knowledge – that’s how
we can improve the world. The message
to people should be: you can plug into
the global economy and prosper.

The caveat is that there is going to be
intense competitive pressure on the
workforce in the West. That’s the central
dilemma. We owe it to Western workers
to enable them to move up the value
chain. Those with easily reproducible
skills are most at risk. The real challenge
is to make massive investments in train-
ing and retraining. This requires govern-
ments and private organisations to in-
vest and work together – not just take
protective measures, which is a short-
term defense.

Fareed Zakaria
Editor, Newsweek International

Fareed Zakaria was invited by Novo Nordisk to provide a perspective on the hot topic of globalisation
and to outline some of the issues currently under debate.

THE NOVO NORDISK APPROACH
Striving for
balanced growth
For Niels-Erik Olsen, shop steward for Novo
Nordisk’s largest insulin production facility in
Kalundborg, Denmark, the company’s strat-
egy to expand its production beyond its tradi-
tional production base in Denmark prompts
anxiety among some of his fellow workers
concerned about their job security.

In meetings held in 2005 between employ-
ees in Denmark and Lars Rebien Sørensen,
president and CEO of Novo Nordisk, globalisa-
tion was a hot topic: employees wanted to
understand the rationale behind the decision
to extend production outside Denmark, and
they wanted senior management to advocate
wage tax reductions in Denmark to lower liv-
ing costs and the ensuing pressure to retain a
high wage level.

Lars Rebien Sørensen recognises the di-
lemmas. “Many rich countries with high tax
levels and living costs are concerned that glob-
alisation will mean jobs moving out. The reality
is that in recent years we have managed to cre-
ate around 2,500 new jobs outside Denmark
while at the same time creating around 800
new jobs in Denmark. This has been possible
because we are competitive and constantly

Novo Nordisk Annual Report 2005

Dr Masae Minami has type 1 diabetes and works as a diabetes
specialist at her own clinic in Fukuoka, Japan.

grow our business. We have also been able to
secure existing jobs through new skills devel-
opment and job transfers. The company’s suc-
cess is the best job guarantee for anyone. But I
can understand that for the individuals ex-
posed to these changes, it causes a lot of anx-
iety. That’s why we engage in a dialogue with
our people and offer competence upgrades.”
A Job Transfer Center for production em-
ployees in Denmark gives employees from
downsized Danish production sites a chance
to register their skills and preferences and be
referred to jobs and relevant training within
Novo Nordisk. Since May 2004, 166 employ-
ees have received a new job at Novo Nordisk
through the centre. In another initiative,
employee trade unions in Denmark and Novo
Nordisk management took part in the Future
Work Life project to explore conditions for and
development opportunities in operations in
Denmark over the next 10 years.

“We appreciate the open dialogue; it’s im-
portant that we can talk about these issues,”
says Niels-Erik Olsen.

Many faces to globalisation
There is another side to the story: Novo
Nordisk’s investments in new and growing
markets, often with struggling economies, are
also seen as a boon. For example, Athos
Avelino, mayor of Montes Claros, Brazil, wel-
comed Novo Nordisk’s decision to invest sub-
stantially in an additional insulin production
facility in his city. It meant jobs and a boost to
the local economy.

“The investment brings more money to our
community, not just the 600 permanent jobs
at the facility, but 2,500 construction jobs and

more service jobs to satisfy the needs of the in-
flux of people into the city,” says Mayor Avelino.
It comes down to balanced growth. Novo
Nordisk views globalisation as an opportunity
to retain its competitive edge as a focused
pharmaceutical company through market ex-
pansion, global sourcing and building a di-
verse workforce. But these are transitions that
must be handled responsibly. Novo Nordisk
recognises its role in supporting balanced eco-
nomic growth and assumes a particular re-
sponsibility wherever the company has a local
presence. Global outreach and a strong inter-
national mindset are required in a globalised
economy, as well as consistent values, global
standards of business conduct and a readiness
to deal with the concerns of those affected by
the impact of globalisation.

Getting access to talent
Globalisation is not only about moving work-
places to locations with lower costs and tax-
ation levels. It is also about getting access to
international talent and investments.

“In today’s business environment, it is crit-
ical that we can attract the best people,” says
Kåre Schultz, chief operating officer for Novo
Nordisk. “Among other things, this means
having a presence where we have the best
conditions for attracting top talent.”

That was one of the reasons why the
NovoSeven® marketing function was moved
from Denmark to Zurich, Switzerland, in 2005.
“This decision offers a number of advantages
seen from an operational and organisational
perspective,” says Kåre Schultz. “The interna-
tional environment, access to highly qualified
people with pharmaceutical experience, and

the proximity to two of our regional head-
quarters make Zurich an attractive location.”

Wider reach, deeper impacts
With its global expansion Novo Nordisk
achieves significant business benefits and helps
build healthier societies through the provision
of its core products and services.

In addition, the company seeks to measure
its economic footprint and its contributions to
social benefits and economic growth by pro-
viding increased employment, skills develop-
ment, technology transfer and investments.

At the same time, establishing business and
operations across diverse cultural and political
boundaries exposes the company to a host of
ethical challenges around issues such as
labour rights, human rights and bribery and
corruption. This makes it more essential than
ever to ensure that business is conducted in
accordance with the principles and values laid
out in the Novo Nordisk Way of Management
and the Triple Bottom Line approach.

To be better prepared to take on these chal-
lenges, in 2005, Novo Nordisk formulated a
business ethics policy (see pp 36–37) setting
global standards for ethical business conduct.
Several support functions
launched pro-
grammes in response to strategic responsibility
challenges. Examples are the People Strategy
with its focus on mobility and leadership de-
velopment (see pp 28–29), and the corporate
brand promise ‘changing diabetes’ that builds
on the company’s core value propositions.

Õ See more about Novo Nordisk’s initiatives in

response to globalisation at novonordisk.com/
annual-report Click: How we work

Novo Nordisk Annual Report 2005

challenging workplace
innovation and performance

Quality Mindset
sets the standard

Novo Nordisk puts quality front and
centre. Even more so after the estab-
lishment of Quality Mindset as a fun-
damental in the Novo Nordisk Way of
Management. As consumers and gov-
ernments are raising the quality bar,
quality is turning into a real competi-
tive parameter.

Today’s healthcare consumers are demanding;
they know good quality from poor, and they
expect the best for themselves and their loved
ones. People living with a chronic condition
expect outstanding quality from the products
they use every day over a lifetime. When prod-
uct safety is called into question, it leads to
general mistrust from consumers and raises
awareness about the need for vigilance on
quality matters.

“It is not enough to simply comply with
quality standards. We must ensure that the
products we develop and manufacture meet
the healthcare needs of the people we serve,
and live up to their expectations for quality –
every time, long term,” says Lars Almblom
Jørgensen, executive vice president, Quality,
Regulatory Affairs and Business Development
at Novo Nordisk.

Trust takes time to earn, and comes from
consistently showing a strong quality mindset
in everything the company does; from the prod-
ucts it brings to the market to the responsive-
ness of people across the organisation, he adds.

Strong focus on quality
A new fundamental principle has been added
to the Novo Nordisk Way of Management:
‘Everyone must continuously improve the
quality of their work.’

This is being integrated through a Quality
Mindset that encourages all employees to work
across organisational barriers. Some 14,000
separate quality action plans are consistently
tracked. There has been a significant improve-
ment in timely adverse event reporting and

customer surveys indicate an improvement in
the level of customer satisfaction.

and we do our best to live up to their trust,”
says Lars Almblom Jørgensen.

Overall, Novo Nordisk follows a ‘cut-no-
corners’ philosophy in the way it develops new
products and makes improvements. Quality is
part of the way the company builds on its core
competences and knowledge. For example,
customers’ suggestions for improvement were
instrumental in the development of the
NovoPen® insulin device product line that cele-
brated its 20th anniversary in 2005 with the
newest-generation pen, NovoPen® 4 (see p15).

Increased vigilance
Governments are becoming increasingly vigi-
lant about ensuring that healthcare products
live up to high quality standards in order to en-
sure safety for consumers and in
the interest of society. Greater
regulation and monitoring of
product safety are being intro-
duced worldwide, among other
things through inspections to
ensure that facilities employ
Good Manufacturing Practice
(GMP).

Novo Nordisk is in compliance
with regulatory demands and
averages approximately 50 in-
spections per year. None of the inspections in
2005 revealed any major non-compliance
with regulations concerning customer health
and safety.

In fact, the US Food and Drug Administra-
tion (FDA) has used the Novo Nordisk produc-
tion facilities in Clayton, US, as a sterile prod-
uct-processing training site for its inspectors.
During such inspections, the FDA trainers have
identified some ‘best practice’ processes used
by the operation. Novo Nordisk requires the
same GMP standards wherever it operates in
the world. “One important benefit from being
vigilant about our quality standards has been
the strengthening of relations with regulatory
authorities. They’ve come to expect our facil-
ities to be in good shape and in compliance,

Novo Nordisk has also introduced cLEAN®,
the Novo Nordisk version of the LEAN produc-
tion philosophy aiming at optimising flow and
increasing productivity. It is a way of thinking,
a new and smarter work culture being applied
within quality, production,
laboratories,
processes, distribution channels and adminis-
trative units.

Within Product Supply its goal is optimisa-
tion throughout the supply chain by shorten-
ing lead times and focusing on zero defects,
simplicity and continuous improvement. For
Quality, it is also about improved monitoring of
critical processes to prevent potential problems
and allow effective communication.

The dedication to quality is a
fundamental commitment to
the millions of people using
Novo Nordisk products every day.

Faster response to customers
There are numerous examples of
where cLEAN® has had positive
results. For example, the Novo
Nordisk Customer Complaint
Center reduced the turnaround
time from up to 20 calendar days
to only two working days through a dedicated
cLEAN® effort involving all employees in the
Customer Complaint Center. Furthermore, the
effort to improve customer relations through
optimising complaint-handling continues.

Increased productivity in insulin production
means that Novo Nordisk affiliates rarely face
product shortages. Solving a bottleneck in the
dispensing unit on the filling line at the Clayton
facility reduced downtime by 93%. At the
Chartres production facility, technicians carry
out maintenance on machines while their col-
leagues are at lunch, so no time is wasted.

Õ See more about Novo Nordisk’s Quality

Mindset at novonordisk.com/annual-report
Click: How we perform

We have a tremen-
dous responsibility
to our customers.
Every day, millions
of people put their
lives in our hands.

Lars Almblom Jørgensen
executive vice president,
Quality, Regulatory Affairs
and Business Development,
Novo Nordisk

Novo Nordisk Annual Report 2005

When lives hang
in the balance

Every day, Signe Wenneberg juggles to keep
her son Simon (centre), who is 10 and has
type 1 diabetes, healthy and happy. And at the
same time keeping family life as normal as
possible for little brother Noah, who is five.
Being able to trust the insulin and insulin
pump her son uses to stay in control of his dia-
betes gives her one less thing to worry about.

“I know these products save my child’s life
every day,” says Signe Wenneberg, a writer
who lives in Denmark. “I rely on these products
but I don’t take them for granted. There are so
many things that can go wrong when you
have a child with diabetes. You have to con-
sider how much your child will exercise each
day, what he will eat, whether the insulin in his
schoolbag will be left out in the sun and get
too warm. It’s a huge pressure. Anything that
can ease that pressure makes our lives easier.”

news

Employee share
programme

To stimulate the ownership interest in the
company and to provide incentive, the
employees were granted a global offering
of shares in the autumn of 2005. The of-
fering includes approximately 1 million B
shares (equivalent to around 0.3% of the
total share capital), which was sold from
the company’s holding of treasury shares
at a price of 150 Danish kroner per share.
These shares will generally have a min-
imum restricted period of five years for
employees in Denmark and three years for
employees outside Denmark. A total of
13,400 employees have bought shares.

Lars Rebien Sørensen,
a principal voice

The president and CEO of Novo Nordisk was
one of 13 individuals invited to take part in
Principal Voices, a project aimed at stimulating
discussion on some of the major challenges
facing the world today. Throughout 2005, the
project sponsors, Time, Fortune and CNN, in
association with Shell, brought together a
group of globally renowned experts in a series
of videos, articles and round-table discussions.

Lars Rebien Sørensen has appeared on an
ongoing basis on CNN from January to
September. The Principal Voices video has been
shown in more than 200 countries on five
continents, reaching more than 147 million
households.

In October, during a round-table discussion
in London, Lars Rebien Sørensen offered his
perspective on the role of a pharmaceutical
company in improving diabetes care in the de-
veloping world.

Novo Nordisk cited as
sustainability leader

In its 2005 analysis of sus-
tainability leadership, the
Zurich-based SAM Group
rated Novo Nordisk a Super
Sector Leader in healthcare.
The rating places Novo Nordisk as a health-
care leader on the global Dow Jones Sus-
tainability World Index as well as the pan-
European Dow Jones STOXX Sustainability
Index. These global indexes track the finan-
cial performance of the leading sustain-
ability-driven companies worldwide. Novo
Nordisk is consistently placed among the
best in the indexes, but this is the first time
it has been named Super Sector Leader.

Lars Rebien Sørensen, president and
CEO of Novo Nordisk, was awarded the
Sustainability Leadership Award by the
Sustainability Forum in 2005. The prize is
given annually to an individual for personal
leadership or pioneering work in imple-
menting the principles of sustainability
within the private sector.

Supporting youth
soccer in Brazil

Seventeen Brazilian teenagers travelled to Den-
mark in 2005 to play in the Tivoli Cup 2005,
an international soccer tournament with Novo
Nordisk as its main sponsor. They made it un-
defeated through the tournament to win the

finals. The youths come from the poor neigh-
bourhoods around the city of Montes Claros,
where Novo Nordisk has a production site. The
soccer team is one of several community pro-
jects initiated by Novo Nordisk in the local
community. There are 24 youths, ages 14 to
16, currently on the team, but that number
will soon increase to 50 players.

Novo Nordisk Annual Report 2005

South African scoops
media prize 2005

The winner of the 2005 Novo Nordisk Media
Prize is South African journalist Justine Joseph.
With a mother and stepfather with diabetes,
Justine Joseph grew up in a household where
diabetes was considered an opportunity for a
healthier lifestyle rather than a burden. In the
winning article in the South African magazine
Shape, What diabetes can do for you, Justine
Joseph describes how her family and close
friends with diabetes lead full, healthy lives. The
Novo Nordisk Media Prize, supported by IDF,
was first awarded in 2003. A certificate and a
10,000 euro award are given every year for ex-
cellence in writing on diabetes in the lay press.

Reaching out to
disaster victims

A number of natural disasters in 2005 took a
heavy toll on human life and suffering, includ-
ing people with diabetes. In the aftermath of
the devastating earthquake in Pakistan, Novo
Nordisk committed 1 million Danish kroner
(134,000 euros) from the company to the relief
work. Half was directed to the Danish Red
Cross in support of the organisation’s general
relief efforts in the region, while the other half is
to be used at the discretion of the Novo Nordisk
affiliate in Pakistan for projects aimed at re-
building diabetes care infrastructure in the re-
gion. Directly after the earthquake, the affiliate
donated insulin and other products worth
around 0.7 million kroner (94,000 euros).

When Hurricane Katrina hit the Gulf Coast of
the US, the Novo Nordisk US affiliate shipped

nearly 4 million US dollars’ (3.4 million euros)
worth of FlexPen® insulin pens, insulin vials and
needles to shelters, clinics and doctors in the
area. Over 65,700 packages were sent to 118
different locations, benefiting many thousands
of people with diabetes. Novo Nordisk has also
matched private donations by staff to the
American Red Cross. On top of this, a total cash
donation of 1 million dollars (846,000 euros)
was donated to selected relief organisations.

Other natural disasters recede from the
headlines, but their painful legacy lives on. Sri
Lanka is still trying to rebuild after the 2004
tsunami. In its continuing efforts to help the
country, Novo Nordisk donated about 180,000
dollars (153,000 euros) to Sri Lanka in 2005 to
help rebuild and upgrade the diabetes care fa-
cilities that were destroyed. The contribution
will also provide necessary facilities for early
detection and health education.

Novo Nordisk ranked
top place to work

The Novo Nordisk affiliates in Argentina,
Brazil, Denmark, Sweden, the UK and the
US were recognised as a ‘Great Place to
Work’ in 2005. In the UK competition,
Novo Nordisk received a special award in
the category Corporate Responsibility and
in the European competition an award for
Pride. Novo Nordisk in the UK and Sweden
were both named among the 100 Best
Workplaces in Europe.

Novo Nordisk in Brazil was named as one
of the top 50 best workplaces for women
in the country. In Argentina Novo Nordisk
was named among the 100 best work-
places in Latin America and as one of the
three best companies to work for in
Argentina.

All the awards were given by the Great
Place to Work Institute. It organises annual
competitions in 24 countries, asking em-
ployees about the level of trust and quality
of relationships that exist between them-
selves and management.

Novo Nordisk was rewarded twice in
Denmark during 2005 for diversity and
equal opportunities. The MIA Prize for di-
versity, established by the Danish Institute
for Human Rights with support from the
EU, was presented to Novo Nordisk by Her
Royal Highness Crown Princess Mary of
Denmark. The prize for equal opportun-
ities was awarded by the Great Place to
Work Institute based on a survey among
100 Danish companies. Novo Nordisk was
recognised for its guidelines on equal op-
portunities and their presence in the com-
pany’s Balanced Scorecard.

The journal The Scientist ranked Novo
Nordisk as the fourth best place to work in
the world among large biotechnology and
pharmaceutical companies. This was based
on the responses of1,600 scientists working
in the US, Canada and Western Europe.

Her Royal Highness Crown Princess Mary of
Denmark and Lise Kingo, Novo Nordisk.

Novo Nordisk Annual Report 2005

V Anbazhagan, N Saravanan, SG Dilipkumar and R Kannaiyan
are medical sales representatives in Chennai, India.

Martha White-Ewans works as a diabetes care
specialist in Oakland, California, US.

Spotlight on business ethics

THE BIG PICTURE
With integrity
at stake, industry
needs to act
Companies must take a forceful and vigi-
lant stance against bribery and corruption
and other violations of good business
conduct. To achieve this, comprehensive
ethics policies and procedures are essen-
tial. These require time and effort to de-
velop and then improve, but a greater
challenge still is to make sure that all
employees live by them and to translate
them into everyday business practices.

Applying business ethics is not just a
matter of how a company’s employees
operate but also how the company’s
partners, its consultants and agents op-
erate. They too must behave according
to high ethical standards. The company
must also communicate publicly to its
stakeholders that they can expect the
company to behave ethically.

For pharmaceutical companies, ethi-
cal issues often extend beyond bribery.
Avoiding conflicts of interest, ethical
marketing and ensuring that the health
of consumers remains foremost must be
integral to their ethical policies.

Pharmaceutical companies must be
proactive and anticipatory rather than
rely on simply responding when a crisis
occurs. By adopting sound ethical poli-
cies and procedures, and implementing
them openly and transparently, pharma-
ceutical companies can minimise the risk
of corruption and foster confidence
among their employees, their stakehold-
ers and consumers at large.

David Nussbaum
Chief executive, Transparency International

David Nussbaum was invited by Novo Nordisk to provide a perspective on the hot topic of business
ethics and to outline some of the issues currently under debate.

NOVO NORDISK’S APPROACH
Providing clarity and
direction for good
business practice
Managers who work for the regional office of
Novo Nordisk in Latin America often come to
Maria Augusta S Buarraj, the region’s legal
manager, for guidance on how to deal with
issues that come up in their daily business – for
instance, the proper procedures regarding
handling of donations.

Now Maria Buarraj’s job, and that of the
managers she advises, is a bit easier, thanks to
a new Novo Nordisk business ethics policy
launched in September 2005 and supported
by new standard operating procedures and
company-wide training.

“Having the policy and procedures in place
will help avoid different interpretations of
what is acceptable practice,” she says. “The
managers in our region have a good sense of
what is ethical, but it can be a subjective mat-
ter; there are always grey areas. The policy
makes very clear the company’s ethical stand-
ards regarding donations, gifts and commis-
sion fees for local distributors, all of which our
managers deal with as part of their everyday
business. Taking the policy on board has not
been difficult; in fact, it saves us time. And our

Novo Nordisk Annual Report 2005

Reiko Yanagisawa is a medical sales representative in Tokyo, Japan.

employees do expect a very high ethical stand-
ard from the company.”

legal activities have taken place in connection
with Novo Nordisk’s contracts or payments.

Novo Nordisk believes it is important for
employees working in a high-pressure, com-
petitive environment to have clear guidance
on ethical behaviour. Increasingly, stakehold-
ers expect companies to hold themselves to
high standards of conduct. And companies
that have clear guidance and transparency
will be better prepared to respond to those
expectations.

Facing dilemmas
While the Novo Nordisk Way of Management
serves as the overall guiding principles, the
company recognises that, particularly in situa-
tions where ethical judgement is left to individ-
ual employees, those principles cannot stand
alone. Staying true to principles of good busi-
ness conduct can present dilemmas. Never-
theless, to Novo Nordisk this must never be
used as an excuse.

Despite its long-standing commitments to
conduct its business responsibly, dilemmas do
emerge and must be addressed case by case.
In a report published in October 2005 by an
enquiry committee under the United Nations
(UN), Novo Nordisk was mentioned as one of
around 2,200 companies that allegedly paid
so-called after-sales service fees in connection
with contracts entered into under the UN Oil-
for-Food Programme. Between 1996 and
2003, the programme enabled Iraq to sell lim-
ited quantities of oil to meet the humanitarian
needs of its people during the economic sanc-
tions that were imposed on Iraq following its
invasion of Kuwait.

Novo Nordisk’s own assessment is that no il-

This situation does however underline the
difficulty of operating in countries around the
world with very different business practices.

This presents one dilemma, according to
Lars Rebien Sørensen, president and CEO of
Novo Nordisk: “We have supplied the Iraqi
people with insulin for the last 15 years, and
we have traded there for 30 years. If we had
opted to withdraw from Iraq, I’m not sure that
the Iraqis would have been able to obtain the
medicine they needed,” he says.

Putting policy into practice
As a signatory to the United Nations Global
Compact, Novo Nordisk is working actively to
implement the 10 Global Compact principles
into its business and within its sphere of influ-
ence. This includes working against all forms
of corruption, including extortion and bribery.
The new business ethics policy is backed by
three procedures:
n Business ethics – dealing with conflict of in-
terest, bribery, facilitation payments, dona-
tions and interaction with suppliers

n Promotion of pharmaceutical products –
covering interaction with public officials
and healthcare professionals

n Novo Nordisk contracts with marketing
consultants and agents – concerning legal
compliance, contracts and fees for services,
deliverables and payments, accounting and
documentation etc.

contributions and limits for entertainment of
customers. It also states that employees can
never offer anything of value to a public offi-
cial for the purpose of obtaining an improper
benefit for Novo Nordisk.

It is the responsibility of all managers to
communicate the new procedures to employ-
ees, promote business ethics and lead by ex-
ample. Therefore, training in the policy and
procedures began in January 2006. This in-
cludes mandatory e-learning for all managers
worldwide.

Moreover, all top management groups in
the markets, International Marketing and
Strategic Sourcing will run customised work-
shops prepared by Corporate Legal during
2006 discussing business ethics within their
area in detail.

In addition to the training, advice in specific
situations is available to employees through
the Corporate Legal function, concerns can be
raised through a whistleblower function via
the Audit Committee, and the Group Internal
Audit and the facilitation function will review
implementation of business ethics.
the
Furthermore, the commitment to business
ethics
in the company’s
Balanced Scorecard.

incorporated

The procedures make clear how Novo Nordisk
employees should act to preserve ethical stand-
ards. This includes a prohibition on political

Õ See more about Novo Nordisk’s business ethics

approach at novonordisk.com/annual-report
Click: How we perform

Novo Nordisk Annual Report 2005

values in action
striking the balance

Ethical practices
guide medical research

Demands for greater accountability
and transparency are rising, with com-
panies expected to show how they
ensure ethical considerations in the
process of bringing products to market.

Healthcare companies hold a unique ethical
responsibility by the very nature of their busi-
ness. While regulatory authorities monitor that
research is conducted in accordance with rele-
vant laws and universal principles, stakehold-
ers also seek reassurance that companies con-
sider any ethical concerns that may emerge. In
particular, this is a matter of being respectful of
the integrity of people participating in medical
studies, animal welfare and culturally founded
objections to certain types of research.

Disclosure of clinical study results
The pharmaceutical industry came under fire
in 2004. It was suspected of not making all re-
sults publicly available from its clinical trials,
particularly results compromising the market
value of its products. One response was a de-
cision by the International Committee of
Medical Journal Editors (ICMJE) to only pub-
lish clinical trial results from trials that had
been registered in a public database at their
inception. The US National Institutes of Health
(NIH) extended their site for use on a global
scale – www.clinicaltrials.gov. Additionally, the
Pharmaceutical Research and Manufacturers
of America (PhRMA), an industry association,
established a site to hold clinical information
and references to publications, and requested
its member companies to include all clinical
trials finalised after 1 October 2002 for mar-
keted products (www.clinicalstudyresults.org).
Novo Nordisk complies with the ICMJE require-
ments and also posts its trial results on the
PhRMA site. The ICMJE requires the registra-
tion of trials that started recruiting on or after
1 July 2005. Because many ongoing trials
were not registered at inception, the ICMJE
will consider for publication ongoing trials
registered before 13 September 2005. Novo
Nordisk has met both deadlines, with 51 trials
of compounds registered at the NIH site by the

end of 2005 and 73 trials for marketed com-
pounds posted on the PhRMA site.

”Honest and full disclosure of all studies is
an important first step towards transparent
and ethical practices. What we need to do
next is to establish a mechanism for independ-
ent validation and a body to monitor and exe-
cute any required sanctions,” says Torben V
Schroeder, member of the ICMJE and editor of
the Journal of the Danish Medical Association.

Informed consent
The principle of informed consent is at the core
of human drug testing and is contained in
guidelines endorsed worldwide, such as the
World Health Organization’s Helsinki Declar-
ation. These rules prohibit coercion and trick-
ery, and give patients the right to withdraw
from a trial at any time for any
reason. A hotly debated topic is
whether informed consent can
be upheld in countries where
the participants may be impov-
erished and illiterate or where
government ethical oversight
may be
limited.
lacking or
informed consent
Obtaining
also presents dilemmas, such as
in cases where patients’ condi-
tion makes them unable to give
informed consent.

“Novo Nordisk ensures that the people par-
ticipating in the trials are given detailed infor-
mation both verbally and in written form. We
provide information on the purpose of the trial
in the native language, both the potential risks
and benefits of participation,” says Anders
Dejgaard, chief medical officer in endocrinol-
ogy reporting, Novo Nordisk. “We make sure
that illiteracy, poverty or cultural barriers do
not prevent a person’s full understanding of
the issues involved in participating in a clinical
trial. Moreover, we only initiate trials in coun-
tries that can provide approval from an exter-
nal local ethical committee.”

ceutical and medical products, and is required
by regulatory authorities. However, it is also a
source of concern for many people. That is
why animal experimentation is one of the
industry-specific reputational risks identified
by financial analysts. They want to see
evidence that companies duly consider this
issue, and are also vigilant in looking for best
practices.

Novo Nordisk has a long history of engaging
with stakeholders such as animal welfare
organisations to find solutions for improving
the welfare of experimental animals. The com-
pany recognises that not all animal experiments
can be replaced in the foreseeable future, but
will only use animals where no available and
acceptable alternative exists. With its ongoing
commitment to finding new ways to replace,
reduce and refine the use of ani-
mals for testing (the three Rs),
Novo Nordisk has been setting
new standards in this area. One
example is the state-of-the-art
housing standards.

Due to a higher activity level in
the discovery phase in 2005,
there was a 22% increase in the
number of purchased animals,
from a total of 47,311 to 57,905
animals, of which 97% are

mice, transgenic mice and rats.

Novo Nordisk is the pioneer of a new discip-
line called biosimulation, which involves com-
puter models that simulate human beings as
closely as possible. In the long term, biosimu-
lation can lead to fewer and better experi-
ments on animals, and fewer people will be
needed for clinical trials of new drugs. Novo
Nordisk is the only healthcare company par-
ticipating in a new, EU-supported network of
scientists working on biosimulation.

Full disclosure of
clinical trial results
ensures that the
public can access
information that
helps shape medical
decision-making.

Anders Dejgaard
chief medical officer,
Novo Nordisk

Leading standards for animal welfare
The use of animals is essential for the discov-
ery, development and production of pharma-

Õ See more about Novo Nordisk’s bioethics at

novonordisk.com/annual-report
Click: How we perform

Novo Nordisk Annual Report 2005

Environmentally sound design is one example of how environmental considerations are integrated in decision-making at Novo Nordisk.

Environmental strategy
builds the business case

Today, with ample evidence that the
global climate is changing, there is a
strong case for global leaders to take
responsible action. The business case
is equally clear: proactively preparing
for a carbon-constrained future is a
matter of cost-effective environmental
management and risk mitigation.

While the world’s political leaders were prepar-
ing to travel to Montreal, Canada, for what
was to become an encouraging breakthrough
commitment to negotiate future binding CO2
reduction targets, more than 130 people from
Novo Nordisk with responsibilities for environ-
mental management in Product Supply and
Research & Development met in Denmark to
kick off an ambitious plan for CO2 reductions:
by 2014, the company will have achieved a re-
duction of 10% of its CO2 emissions as com-
pared with 2004 emission levels.

The target has been defined in an agreement
with WWF, which makes Novo Nordisk the
10th company in the world to become a mem-
ber of the Climate Savers programme.

Climate change cuts across the dimensions
of the Triple Bottom Line: it is now generally
recognised as a huge global challenge, with
potentially devastating consequences for the
world’s environment, for people’s health and
for economic development. To Novo Nordisk it
also taps directly into the company’s strategic
business objectives.

Going for a stretch target
The Climate Savers agreement marks the suc-
cessful conclusion to more than a year of
preparations, assessments and investigations.
“We have indeed set the organisation up for

target,” says Per
an ambitious stretch
Valstorp, senior vice president of Novo Nordisk
Product Supply. “In the absence of emission
reduction programmes, Novo Nordisk’s emis-
sions would increase by approximately 67%
during the period 2004–2014.”

Such projections speak for themselves.
Given the diabetes pandemic, there will be in-
creased demand for insulin, and manufactur-
ing facilities are bound to be expanded within
the 10-year timeframe. Furthermore, the pro-
duction of insulin analogues is highly resource
intensive.

The CO2 strategy encompasses all produc-
tion sites globally and will also be implement-
ed under the broad umbrella of the cLEAN®
programme. The significant CO2 reductions
will be achieved through a broad range of
measures which include energy
efficiency, fuel switching and
conversion to renewable sources.
Given the fact that currently 91%
of the company’s CO2 emissions
arise in Denmark, where energy
supplies
are predominantly
based on fossil fuels, significantly
reducing CO2 emissions will re-
quire genuinely innovative think-
ing and technology leaps, and –
most importantly – it will rely on
the active participation of every-
one in the organisation.

“We believe that we can find 20% of the
necessary CO2 reductions through energy sav-
ings, and that is why we invited all of our
people responsible for environmental manage-
ment to get involved. They know our equip-
ment and processes better than anyone, and
they have already given us many ideas to
explore,” says Per Valstorp. Furthermore, Novo

Nordisk Product Supply is well underway in
implementing cLEAN® – an adapted LEAN
manufacturing programme that aims at opti-
mising flow and increasing productivity. In
other words, cLEAN® leads to better exploita-
tion of production facilities, raw materials and
energy, thereby making it possible to postpone
expansions of production facilities. By produc-
ing more with less, so to speak, cLEAN® will
have a significant positive effect on the use of
energy, and consequently CO2 emissions.

Revisiting priorities
In 2005, Novo Nordisk revisited its environmen-
tal strategy to prioritise and align environmen-
tal focus areas with business objectives. While
the climate change strategy is the number one
priority, other corporate-led initiatives look at
different aspects of the prod-
ucts’ lifecycle: the safe use of
genetically modified organisms
(GMOs), sustainable processes,
product
trans-
portation and supply chain man-
agement. Regular management
of environmental impacts, in
turn, is organised through ISO
14001-certified processes at the
individual sites. Here, compliance
with regulatory requirements,
pollution prevention and eco-
efficiency are the responsibility
of line managers, and achieving these targets
is factored into their bonus schemes.

stewardship,

With the stretch
targets in our CO2
strategy, we want
to challenge percep-
tions of what can
be done and demon-
strate that there is a
solid business case
for protecting the
environment.

Per Valstorp
senior vice president,
Product Supply, Novo Nordisk

Õ See more about the strategic priorities and

environmental data at novonordisk.com/
annual-report. Click: How we perform

Novo Nordisk Annual Report 2005

Reporting against
global standards

Novo Nordisk has chosen an integrated
approach to reporting on its financial
and non-financial performance. Hence,
this report follows current international
standards in terms of both mandatory
and voluntary reporting.

The Novo Nordisk Annual Report is the respon-
sibility of the Board of Directors and Executive
Management. The information is audited and
assured (see pp 106–107).

IFRS
As of 2004, Novo Nordisk’s financial accounting
principles comply with International Financial
Reporting Standards (IFRS) as adopted by the
EU. This is one year ahead of requirements.

Sarbanes–Oxley
In 2005, again a year ahead, Novo Nordisk is in
full compliance with the requirements of docu-
menting and reporting on the effectiveness of

internal controls over financial reporting, as
required by the Sarbanes–Oxley Act. Novo
Nordisk provides this information in its Form
20-F filed in February 2006.

Corporate governance codes
As an international company listed on the
stock exchanges in Copenhagen, New York
and London, Novo Nordisk is in compliance
with Danish, US and UK securities laws, with
the Danish Recommendations on Corporate
Governance, and is in general in compliance
with corporate governance standards on the
New York and London Stock Exchanges.

AA1000 Framework
Novo Nordisk’s non-financial reporting follows
the accountability standard, AA1000 Frame-
work. It states that reporting must provide a
complete, accurate, relevant and balanced
picture of the organisation’s approach to and
impact on society. The annual report is assured
against AA1000AS.

Initiative’s

Global Reporting Initiative Guidelines
Novo Nordisk reports in accordance with the
Global Reporting
(GRI’s) 2002
Sustainability Reporting Guidelines which re-
quire reporting according to 11 principles and
against a list of indicators. In the online report
there is a GRI index with an overview of the
full ‘in accordance’ reporting.

Global Compact
Novo Nordisk is a signatory to the United
Nations Global Compact, a platform to pro-
mote good corporate principles and learning
in the areas of human rights, labour, environ-
ment and anti-corruption. The company re-
ports on actions to implement its 10 principles
during 2005 in a Communication on Progress,
including performance metrics aligned with
the GRI Guidelines.

Õ See Novo Nordisk’s performance data at

novonordisk.com/annual-report
Click: How we perform

Novo Nordisk’s GRI Content Index 2005 at a glance

Indicators

Level of reporting

Vision and strategy

Profile

Governance structure
and management systems

1.1, 1.2

2.1– 2.22

3.1– 3.20

GRI Content Index

4.1

Economic performance

EC1– EC13

Environmental performance

EN1– EN35

Social performance

LA1– LA17

HR1– HR14

SO1– SO7

PR1– PR11

Fully reported / Number of indicators

Not reported / Number of indicators

Global Reporting
Initiative Guidelines

Initiative’s

Novo Nordisk reports ‘in accordance’ with the Global
Reporting
(GRI’s) 2002 Sustainability
Reporting Guidelines. This approach offers a compre-
hensive, balanced and transparent account of the
company’s sustainability performance. In essence, this
means that the reporting is based on 11 sound prin-
ciples for sustainability reporting and that it responds
to 142 indicators covering economic, environmental
and social aspects of the business performance.

The table illustrates how Novo Nordisk responds to
the GRI indicators. In most cases reporting covers all
aspects of the indicators. This is marked as fully re-
ported. For the remaining indicators, Novo Nordisk re-
ports only on some aspects of the indicator; this is
marked as not reported. In these cases, however, an
explanation for the omission is offered in the GRI
Content Index, available in the online report. Typically,
this is either because the indicator is irrelevant to
Novo Nordisk’s operations or because it is not possible
to generate the required information.

Õ See Novo Nordisk’s GRI Content Index at

novonordisk.com/annual-report
Click: How we are accountable

Novo Nordisk Annual Report 2005

contents list
financial and non-financial statements 2005

108

Board of Directors

110

Executive
Management

111

Shareholder
information

Management report
and discussion

Financial
highlights

Non-financial
highlights

Corporate
governance

Risk management

100

102

104

Consolidated
non-financial
statements

Accounting policies
for non-financial
statements

Companies in the
Novo Nordisk Group

Summary of
financial data
2001–2005

Quarterly figures
2004 and 2005
(unaudited)

105

Management
statement

106

Auditors’ reports

Consolidated
income statement

Consolidated
balance sheet

Consolidated cash
flow statement and
financial resources

Consolidated
statement of changes
in equity

Notes – accounting
policies

Financial definitions

Notes – consolidated
income statement

Notes – consolidated
balance sheet

Notes – consolidated
cash flow and
financial resources

Notes – additional
information

Novo Nordisk Annual Report 2005

Management report and discussion

Novo Nordisk is very pleased with the
strong financial results that have been
achieved in 2005. This has been a year
of continued strong demand for Novo
Nordisk’s key strategic products: the
insulin analogues and NovoSeven®.
There has also been solid growth in
the sales of products within Novo
Nordisk’s other therapeutic areas.

During 2005, the company continued to realise
efficiency gains in its production. In combina-
tion with the strong growth in sales this has
enabled Novo Nordisk to further expand the
diabetes care sales force in the important
North American market as well as in key mar-
kets in Europe. Furthermore, additional funds
have been allocated to research and develop-
ment to ensure the best possible foundation
for moving key projects forward in clinical
development.

Business performance
and discussion

Reported sales in 2005 of DKK 33,760 million
correspond to a sales growth of 16% as com-
pared with sales in 2004 of DKK 29,031 million,
with the key drivers of growth being:
n Sales of insulin analogues increasing by
62% supported by the continued roll-out of
Levemir® and NovoMix® in Europe and
International Operations

n Sales of NovoSeven® increasing by 16% re-
flecting growth within all regions and with
North America as the primary contributor to
growth

n Sales in North America increasing by 27%
n Sales in International Operations increasing

by 25%

n Sales measured in local currencies increas-

ing by 15%.

thereby exceeding the expectations for oper-
ating profit as communicated in January 2005.
Measured in local currencies and excluding
the impact from non-recurring items operat-
ing profit increased by around 20% – thereby
exceeding the long-term financial target of
15%, which formed the basis for the operat-
ing profit growth expectations for 2005.

The operating margin for 2005 was realised
at 24.0%, unchanged relative to the previous
year. The unchanged operating margin mainly
reflects efficiency gains in production and ad-
ministrative areas countered by a lower level
of non-recurring income. The impact in 2005
from development in foreign exchange rates
on operating margin is negligible.

Net financials amounted to an income of
DKK 146 million for 2005, as compared to an
expected income of DKK 100 million at the
beginning of 2005.

The effective tax rate decreased to 28.8%,
from 32.8% in 2004. This is lower than ex-
pected in January 2005 but is mainly the result
of a reduction in the Danish corporation tax
from 30% to 28%, effective for the full income
year of 2005 onwards, and a non-recurring re-
duction due to the tax-exempt status of non-
recurring income from Ferrosan A/S and
ZymoGenetics, Inc.

Net profit increased by 17% to DKK 5,864
million, as compared to the 2004 level of DKK
5,013 million. Earnings per share (diluted)
thereby increased from DKK 14.83 to DKK
17.83 in 2005, corresponding to a growth
of 20%.

The total net capital expenditure for prop-
erty, plant and equipment was realised at
DKK 3.7 billion – in line with expectations for
the year when including the acquisition of
tangible assets of approximately DKK 300 mil-
lion from Aradigm Corporation related to the
AERx® iDMS project.

Return on invested capital (ROIC) was
24.7%, an increase from 21.5% in 2004. This
is mainly due to operating profits, less taxes,
increasing at a higher rate than the average
invested capital combined with a positive im-
pact from the non-recurring impact on the ef-
fective tax rate. Adjusted for the impact of the
effective tax rate from non-recurring items,
ROIC was realised at 23.9% in 2005.

The cash to earnings ratio for 2005 was 82%,
slightly down from 85% in 2004. The free cash
flow for 2005 was expected to be more than
DKK 2 billion, but was realised at a significant-
ly higher level of DKK 4.8 billion, reflecting pri-
marily the higher realised net profit for 2005,
an increase in trade payables and a positive
impact from the sale of shares in Ferrosan A/S.

Long-term
financial targets

Following the demerger of Novozymes to-
wards the end of 2000, Novo Nordisk commu-
nicated four long-term financial targets in
early 2001. Focusing on growth, profitability,
financial return and generation of cash, the
four targets have served to balance short- and
long-term considerations, thereby ensuring a

Ratio

Previous target

Result
2005

Three-year average
2003–2005

New target

Operating margin
Growth in operating profit
Return on invested capital (ROIC)
Cash to earnings (three-year average)

25%
15%
25%
60%

24.0%
15.9%
24.7%
82.4%

24.2%
11.0%
21.6%
82.4%

25%
15%
30%
70%

Operating profit increased by 16% to DKK
8,088 million from DKK 6,980 million in 2004,

1) Excluding the non-recurring reductions in 2005 in the effective tax rate, ROIC would have been 23.9%
2) The cash to earnings ratio is 82.4% both for the year 2005 and as an average for the period 2003–2005

Novo Nordisk Annual Report 2005

management report and discussion

focus on shareholder value creation.

By 2005, Novo Nordisk was approaching
the achievement of the long-term financial
targets. The four ratios are still considered the
best way to ensure value creation; however,
the current targets are no longer providing
sufficient guidance on the targeted financial
performance on a five-year horizon. Following
a review, the targets for the four ratios have
been reassessed and the updated targets are
illustrated below.

The updated targets are guiding the finan-
cial development of Novo Nordisk given the
current scope of business activities. Individually,
and on a combined basis, these four financial
targets are considered to be competitive com-
pared to the overall performance of the phar-
maceutical industry.

The target for operating margin remains at
25%, as further productivity improvements in
production and administrative areas are ex-
pected to be re-invested in research and devel-
opment activities.

tated by business opportunities or market
conditions.

The target for return on invested capital
(ROIC) measured post tax is raised from 25%
to 30%. The increased target reflects the ex-
pectation of continued lower growth in in-
vested capital compared to operating profit as
well as a recurring lower effective tax rate,
partly due to the lowering of the Danish cor-
porate tax rate from 30% to 28% effective for
the year 2005 onwards.

The targeted cash to earnings ratio is raised
from 60% to 70% reflecting the improved
cash conversion ability in the last three years.
As previously, this target will be pursued as an
average over a three-year period. Performance
measured by this ratio may be impacted in in-
dividual years by significant in-licensing activ-
ities or other major investments.

Sales development
by segments

The targeted growth in operating profit re-
mains at 15% on average. The target allows
for a deviation in an individual year if necessi-

Sales in 2005 increased by 16% in Danish kro-
ner and by 15% measured in local currencies.
Sales growth was realised both within dia-

betes care and biopharmaceuticals – primarily
driven by the portfolio of insulin analogues as
well as NovoSeven®. Furthermore, sales of
growth hormone therapy products con-
tributed to growth.

Sales growth was realised in all regions. The
main growth driver was North America, con-
stituting 28% of total sales, followed by Inter-
national Operations with 18% of total sales.
The growth of 16% in sales for 2005 ex-
ceeded the around 10% growth expectations
outlined in January 2005 as a result of im-
proved currency exchange rates as well as a
stronger underlying sales performance.

Diabetes care
Sales of diabetes care products increased by
17% in Danish kroner to DKK 24,012 million
compared to 2004 and by 16% in local
currencies.

Insulin analogues, human insulin and insulin-
related products
Sales of insulin analogues, human insulin and
insulin-related products increased by 18%
measured in Danish kroner to DKK 22,304

Therapy areas
Sales

DKK billion

Geographical areas
Sales

DKK billion

Diabetes care
Sales

DKK billion

NovoSeven®
Sales

DKK billion

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

Europe
North America
International Operations
Japan & Oceania

Novo Nordisk Annual Report 2005

management report and discussion

million and by 17% in local currencies. All
regions contributed to growth measured in lo-
cal currencies as well as in Danish kroner, with
North America and International Operations
having the highest growth rates.

Novo Nordisk continues to consolidate its
global leadership position within the insulin
segment: the company’s total insulin market
share worldwide is 51% and the analogue
market share is 34%, both measured in vol-
ume. The similar market shares in 2004 were
50% and 28%, respectively.

Sales of insulin analogues increased by 62%
in Danish kroner to DKK 7,298 million in 2005
and by 61% in local currencies. Insulin ana-
logues constituted around 62% of the overall
sales growth for Novo Nordisk in 2005, meas-
ured in local currencies, as compared to 55%
in 2004.

insulin

analogues NovoLog®

North America
Sales in North America increased by 40% in
Danish kroner and by 39% in local currencies
in 2005, reflecting solid sales performance for
the
and
NovoLog® Mix 70/30. Novo Nordisk now holds
38% of the total US insulin market and 23%
of the analogue market, both measured in vol-
ume. The similar market shares in 2004 were
34% and 18%, respectively. The human in-
sulin products also contributed to the sales in-
crease in 2005 due to higher volumes and
higher average sales prices.

Novo Nordisk has in the final quarter of 2005
expanded its US diabetes care sales force by
adding around 400 individuals, thereby bring-
ing the total sales force to 1,200. The company
is thereby well positioned to launch Levemir®
in the US market, which is expected to take
place during the second quarter of 2006.

Europe
Insulin sales in Europe increased by 8% in
Danish kroner and by 7% in local currencies,
primarily reflecting progress for the portfolio
of insulin analogues, including Levemir®. Novo
Nordisk continues to consolidate the leadership
position in the insulin analogue market, hold-
ing 43% of the market, measured in volume.

International Operations
Sales in International Operations increased by
27% in Danish kroner and by 23% in local

Whereas

insulin sales

currencies. The primary growth drivers in
2005 were sales in China, Russia and Brazil.
China accounted for close to 20% of total in-
sulin sales in International Operations and
25% of the increase in insulin sales during
2005. Novo Nordisk holds close to 60% of the
Chinese insulin market, measured in volume.
International
Operations remain dominated by human in-
sulin products, the portfolio of insulin ana-
logue products continues to add to the overall
sales growth in the region, with Turkey and
Russia as the largest growth drivers. Novo
Nordisk remains the overall insulin market
leader within the International Operations re-
gion and also holds the leadership position
within insulin analogues.

Japan & Oceania
Sales in Japan & Oceania increased by 10% in
Danish kroner and by 11% in local currencies,
primarily reflecting higher sales of NovoRapid®
and NovoRapid® 30 Mix, assisted by the on-
going switch from durable to prefilled devices.
In Japan, Novo Nordisk holds close to 60%
and in Australia close to 70% of the insulin
analogue market, measured by volume.

Oral antidiabetic products
Sales of oral antidiabetic products increased
by 4% in Danish kroner to DKK 1,708 million
and by 3% in local currencies, compared to
2004. While the sales development was posi-
tive both in Europe and International Opera-
tions, this was partly offset by slightly lower
sales in the US market, compared to 2004, re-
flecting a lower market share for Prandin®.

Biopharmaceuticals
Sales of biopharmaceutical products increased
by 15% in Danish kroner to DKK 9,748 million
and by 14% in local currencies compared to
2004.

NovoSeven®
Sales of NovoSeven® increased by 16% in
Danish kroner to DKK 5,064 million and by
16% in local currencies compared to 2004. All
regions contributed to the increase in sales,
with North America as the main contributor to
growth.

The sales growth of NovoSeven® was influ-
enced by several factors during 2005. Due to

the high penetration within spontaneous
bleeds in congenital inhibitor patients, the
predominant part of the growth within the in-
hibitor segment was generated by treatment
of acquired haemophilia patients and usage of
NovoSeven® in connection with elective sur-
gery. Treatment of spontaneous bleeds for
congenital inhibitor patients remains the
largest area of use. In addition, sales are per-
ceived to have been positively affected by in-
creased investigational use of NovoSeven®.

Growth hormone therapy (Norditropin® and
Norditropin® SimpleXx®)
Sales of growth hormone therapy products
increased by 20% in Danish kroner to DKK
2,781 million and by 20% in local currencies,
and all regions contributed to the sales increase
compared to 2004, with North America and
Europe having the highest growth rates. The
NordiFlex® prefilled ready-to-use delivery device
was the main reason for the increase in sales.

Other products
Sales of other products within biopharmaceut-
icals, which predominantly consist of hormone
replacement therapy (HRT) products, increased
by 4% in Danish kroner to DKK 1,903 million
and by 4% in local currencies compared to last
year. The main sales increase occurred in the
US market, while sales in Europe were slightly
above the levels realised in 2004.

Costs, licence fees and
other operating income

The cost of goods sold increased by 14% to
DKK 9,177 million, representing a gross margin
of 72.8%, compared to 72.3% in 2004. The
improvement mainly reflects an improved prod-
uct mix and increased production efficiency.
Total non-production-related costs
in-
creased by 16% to DKK 16,898 million. The
increase in non-production-related costs in
particular reflects increased sales and distribu-
tion costs, which increased in line with the
growth in sales. This was mainly due to the in-
crease in the US diabetes care sales force dur-
ing the fourth quarter of 2005 as well as costs
related to the continued roll-out of Levemir® in
the European market, including expansion of
sales forces in key markets.

Total costs related to depreciation, amorti-

Novo Nordisk Annual Report 2005

management report and discussion

sation and impairment losses in 2005 were
DKK 1,930 million compared to DKK 1,892
million in 2004. The costs for 2005 include
DKK 171 million in impairment charges, pri-
marily related to fixed assets, compared to
DKK 326 million in 2004.

In 2005, Novo Nordisk expensed costs in re-
lation to share-based incentive programmes for
senior management and other senior employ-
ees amounting to DKK 83 million. The compa-
rable expense for 2004 was DKK 104 million.
In addition, costs amounting to DKK140 million
in connection with the previously announced
general employee share programme were ex-
pensed during the fourth quarter of 2005.

Licence fees and other operating income in
2005 were DKK 403 million, compared to
DKK 575 million in 2004, reflecting a lower
level of non-recurring income in 2005.

Net financials
and tax

Net financials showed an income of DKK 146
million in 2005 compared to an income of
DKK 477 million in 2004.

The result from associated companies was
an income of DKK 319 million compared to an
expense of DKK 117 million in 2004, primarily
reflecting Novo Nordisk’s share of the net loss
in ZymoGenetics, Inc being more than offset
by total non-recurring gains during 2005 of
approximately DKK 450 million from sales of
shares in Ferrosan A/S and an offering of new
shares in ZymoGenetics, Inc.

The foreign exchange result was a loss of
DKK 40 million compared to a gain of DKK
533 million in 2004. The loss on foreign ex-
change in 2005 reflects losses from foreign ex-
change hedging activities due to the higher
level in 2005 of especially US dollars versus
Danish kroner compared to 2004. In accord-
ance with IFRS, an unrealised loss of DKK 345
million was deferred by the end of December
2005 for profit and loss recognition in 2006
and 2007 when the hedged operational cash
flows occur.

Novo Nordisk has as per 26 January 2006
hedged expected net cash flows in US dollars,
Japanese yen and British pounds for 13, 12
and 10 months respectively. In accordance
with IFRS, the financial impact from foreign

exchange contracts will be included in ‘Net
financials’ as the underlying operational cash
flows materialise.

The effective tax rate for 2005 was 28.8%,
a decrease from 32.8% in 2004, equivalent to
a total tax expense of DKK 2.4 billion in 2005.
The lower effective tax rate for 2005 is a result
of several factors, including the reduction of
the Danish corporate income tax rate from
30% to 28%, effective for the entire 2005,
and a beneficial impact from the re-evaluation
of the company’s deferred tax liabilities, as
well as the tax-exempt status of the non-
recurring gains from associated companies as
mentioned above.

Capital expenditure
and free cash flow

Net capital expenditure for property, plant and
equipment for 2005 was realised at DKK 3.7
billion, compared to DKK 3.0 billion for 2004.
The main investment projects in 2005 were
the expansion of purification and filling cap-
acity for insulin products.

Free cash flow for 2005 was realised at DKK

Growth hormone therapy
Sales

Hormone replacement therapy
Sales

DKK billion

US dollars
Currency

Months

Japanese yen
Currency

Rate

Months

Rate

650

625

600

575

550

525

12/04

3/05

6/05

9/05

12/05

12/04

3/05

6/05

9/05

12/05

Cover (left)
Rate (right)

Novo Nordisk Annual Report 2005

6.50

6.25

6.00

5.75

5.50

5.25

management report and discussion

4.8 billion compared to DKK 4.3 billion for
2004.

Novo Nordisk’s financial resources at the end
of 2005 were DKK 11.4 billion compared to
DKK 10.2 billion in 2004. Included in the finan-
cial resources are undrawn committed credit
facilities of approximately DKK 7.5 billion.

Non-financial
performance

In managing its business with a Triple Bottom
Line approach,
the corporate Balanced
Scorecard reflects financial as well as non-
financial goals that are subsequently cascaded
as appropriate to line management. Moreover,
the performance-based incentive programme
for Executive Management and the Senior
Management Board is based on long-term
value creation, following achievement of pre-
defined overall business-related targets (see
management’s remuneration p 83).

Performance indicators
A set of top-level indicators help track the
company’s performance in terms of economic,
environmental and social responsibility. They
relate to areas of strategic importance: direct
and indirect economic impacts; direct and in-
direct environmental impacts; and internal
(people) and external (patients and society)
social impacts. See performance data and
comments in the consolidated non-financial
statements on pp 92–97.

In addition, Novo Nordisk reports in accord-
ance with the Global Reporting Initiative’s
2002 Sustainability Reporting Guidelines and
the principles of the Global Compact (see
p 40).

Defining materiality
Ongoing interactions with stakeholders, trend-
spotting, business monitoring and the integrat-
ed systematic risk management process are
tools to identify the issues that are material to
Novo Nordisk’s business. As a result of these
processes Novo Nordisk frames its strategic
response and defines its targets. The company
regularly reviews its key priorities to ensure
that they reflect current agendas and reports
on progress.

Economic impacts
Job creation
In 2005, Novo Nordisk created 1,735 new
positions globally and had 22,007 full-time
positions, measured as full-time equivalents
(FTE). This is an increase of 8% from 2004.
These jobs translate into 52,200 indirect jobs
globally, primarily in the supply chain from
production needs, but also as a result of em-
ployees’ private consumption.

Economic contribution in Denmark
Novo Nordisk’s sales in 2005 accounted for
2.2% of the Danish GDP. The company’s eco-
nomic contribution to overall economic
wealth for the Danish society through the
value added was 1.3% of gross value added
(GVA), and 4.8% of Danish exports compared
to 3.9% in 2004.

Environmental impacts
Eco-efficiency
In 2005, Novo Nordisk continued to improve
eco-efficiency, a measure for the ability to pro-
duce more pharmaceutical products with less
use of water and energy. In the period
2001–2005 the average annual realised im-
provements were 8% for water and 14% for
energy as measured by EPI indices. Hence, the
five-year targets of improvements of the water
and energy use efficiency at 5% and 4% per
annum respectively were achieved.

Climate change
At the end of 2005, Novo Nordisk finalised a
climate strategy that sets an ambitious target
for reducing its CO2 emissions by 10% in the
period 2004–2014 as compared with 2004. In
the absence of reduction initiatives, the com-
pany’s emissions would increase by 67% in
line with production growth. The target has
been defined in an agreement with the WWF,
which makes Novo Nordisk the 10th company
in the world to become a member of the
Climate Savers programme. The significant
CO2 reductions will be achieved through a
broad range of measures including improved
energy efficiency, fuel switching and conver-
sion to renewable sources.

Compliance
In 2005, Novo Nordisk continued to be chal-
lenged on compliance. The number of breaches

of regulatory limit values increased to 174 from
74 in 2004. The number of accidental releases
increased from 29 in 2004 to 83 in 2005.

The registered breaches and accidental
releases are evaluated to be minor incidents
with no or only minor impact on the external
environment. Out of 174 breaches of regula-
tory limits 164 (94%) are related to pH and
temperature in waste water, which are moni-
tored through continuous measurements. The
number of breaches is largely due to the fact
that at several production sites there have
been challenges in managing pH levels in the
wastewater in spite of the fact that the com-
pany has invested up to DKK 10 million per
neutralisation system at some sites.

A total of 50 out of the 83 accidental re-
leases (60%) were related to accidental re-
leases of cooling agents such as HCFCs and
HFCs. In 2005, a campaign set focus on acci-
dental releases from these types of facilities.
There was one accidental release of GMOs at
the site in Montes Claros. There will be a con-
tinued focus on compliance and preventive
measures to help curb the curve.

In 2006, a three-stringed approach will be
taken to ensure increased focus on compli-
ance: first, a revision of approvals in close co-
operation with authorities, second, education,
and third, focused exchange of experiences.

Environmental management
Global implementation of environmental man-
agement standards progresses on schedule. In
2005, an additional two of Novo Nordisk’s
production facilities achieved ISO 14001 certi-
fication. This is instrumental in focusing local
management on pollution prevention and
compliance.

Sustainable supply chain management
During 2005, a total of 340 suppliers, ac-
counting for 20% of the total value of Novo
Nordisk’s purchases, were evaluated on their
environmental and social performance. Of
these, 87% reported a satisfactory perform-
ance, while 8% received a rating for poor en-
vironmental performance and 5% of suppliers
received a rating for both poor environmental
and social performance. Following implemen-
tation of corrective actions, Novo Nordisk has
not yet had to withdraw from the relationship
as a result of repeated poor performance.

Novo Nordisk Annual Report 2005

management report and discussion

As of 2005, the programme includes audits
of suppliers, following similar processes as
Novo Nordisk’s regular quality audits. In 2005,
12 of 340 key suppliers were audited. These
are mainly located in countries with high risk
of violation of Novo Nordisk’s requirements.
The conclusions from the audits are a generally
satisfying social and environmental perform-
ance. A close follow-up on non-satisfactory
performance ensures that corrective actions
are taken.

Social impacts
People
Living the values is a key performance param-
eter, as this is seen to impact business results.
In 2005, there was a 100% fulfilment of ac-
tion plans arising from facilitations which sup-
port a company-wide adherence to the Novo
Nordisk Way of Management.

Employee satisfaction surveys underscore
the internal support for the company’s values-
based approach. In the annual employee sur-
vey, the average of respondents’ answers as to
whether social and environmental issues are
important for the future of the company were

on a par with 2004 4.2 (on a scale from 1 to 5,
with 5 being the highest score). The average
of respondents’ answers as to whether their
manager’s behaviour is consistent with Novo
Nordisk’s values was 4.0, which is at the same
level as in 2004.

In the same survey, employees were asked
‘whether their work gives them an opportun-
ity to use and develop their competences and
skills’. The average of respondents’ answers
remained at a high level of 3.8. The average of
respondents’ answers to the question as to
whether people from diverse backgrounds have
equal opportunities increased from 3.8 to 3.9.
This reflects the company’s focus on equal
opportunities and diversity management.

The rate of absence remained at 3.2, while
the rate of employee turnover increased from
7.3 in 2004 to 8.0 in 2005.

While the health and safety initiatives in the
organisation focus on prevention, additional
measures will be made to prevent occupation-
al injuries and improve the working environ-
ment, as there was a notable increase in the
frequency of occupational injuries from 5.6
per million working hours in 2004 to 7.3 in

2005, which is not satisfactory. These figures
cover the entire organisation; however, 70%
of the injuries happen at production sites.

Patients
In 2005, Novo Nordisk provided insulin for
12–14 million people around the world. Of
these, 6.5 million live in Europe, the US, Japan
& Oceania; the remaining 5.5–7.5 million
people live in the International Operations re-
gion. The range here is due to the fact that in
the developing world two or three persons
may share a daily dose of insulin.

During 2005, Novo Nordisk set off leading
the fight against diabetes. With its mission of
changing diabetes, concerted efforts focus on
improved health management for people with
diabetes and preventative measures for those at
risk of acquiring it. The goal is to effectively curb
the curve of the global diabetes pandemic.

Among the initiatives in 2005 was the
Oxford Health Alliance that was established as
an independent body to focus attention to
prevention of chronic diseases.

Novo Nordisk’s programmes to help provide
global access to health continued in 2005. It is

Eco-productivity index (EPI)
Water

Eco-productivity index (EPI)
Energy

Index = 100

Full-time positions
Geographical areas

1,000 full-time positions

130

125

120

115

110

105

130

125

120

115

110

105

Remuneration
Geographical areas

100

Denmark
Europe (excluding Denmark)
North America
Japan & Oceania
International Operations

Novo Nordisk Annual Report 2005

management report and discussion

estimated that the corporate and locally-
driven programmes, most notably the National
Diabetes Programme, reach out to at least 22
million people through awareness raising,
education, diagnosis or treatment.

For 2005, Novo Nordisk offered its best pos-
sible pricing scheme to all 50 Least Developed
Countries as defined by the United Nations.
Novo Nordisk operates in 35 of these countries,
and during 2005, the company sold insulin in
32 of the LDCs at or below the maximum price
at 20% of the average prices in the Western
world.

Society
In 2005, Novo Nordisk implemented a new
global business ethics policy supported by a
set of guidelines. The policy adheres to the
principles of the UN Convention against
Corruption and the Global Compact. Imple-
mentation measures include training, an
advisory function and compliance audits.

Full disclosure of current clinical studies was
completed within the deadlines requested by
the Pharmaceutical Research and Manufactur-
ers of America (PhRMA) and the International
Committee of Medical Journal Editors (ICMJE).
Each of these bodies specifies a website at
which clinical trial results must be registered.
By the end of 2005, Novo Nordisk had 51 trials
of compounds registered at the website re-
quired by the ICMJE and 73 trials for marketed
compounds at the PhRMA site.

The value of knowledge
People and talent development is one of the
cornerstones in the People Strategy. This in-
cludes offers for continued education for all,
talent pools and leadership training. In 2005,
the annual spending for training, measured as
average spend per employee, increased by
10% to 9,899 Danish kroner. The money spent
per employee does not fully reflect invest-
ments in training, since on-the-job-training,
internal seminars and other similar activities
are not included.

Research and development
update

Diabetes care
Levemir® was approved by the US Food and
Drug Administration (FDA) in June 2005, and

Novo Nordisk is thereby the only company with
a complete range of insulin analogues ap-
proved in the US, encompassing rapid-acting
NovoLog®, premixed NovoLog® Mix 70/30 and
now also the long-acting analogue, Levemir®.
Novo Nordisk expects to launch Levemir® in
the US market in the second quarter of 2006.
Levemir® was also filed for marketing ap-
proval in Japan. As is already the case in the US
and Europe, Novo Nordisk expects, upon ap-
proval of the product, to be the first and only
company with both rapid-acting, premixed
and long-acting insulin analogues in Japan.

In Europe, the European Commission has
extended the marketing authorisation for
Levemir® to include treatment of diabetes in
children and adolescents 6–17 years of age.
Moreover, an extended authorisation has also
been received in Europe for NovoRapid® to in-
clude treatment of diabetes in children 2–6
years of age. Also the US regulatory authori-
ties (FDA) extended the marketing authorisa-
tion for both NovoLog® and Levemir® to in-
clude paediatric treatment.

A label expansion for NovoLog® Mix 70/30
in the US has been approved by the FDA. Key
additions to the label include blood glucose
control data showing that more patients on a
NovoLog® Mix 70/30 regimen reach an HbA1c
target of 7.0% compared to treatment with a
basal insulin analogue. The label expansion is
expected to support further market share gains
for NovoLog® Mix 70/30 in the US market.

Novo Nordisk has received marketing au-
thorisation from the European Commission
for NovoMix® 50 and NovoMix® 70. For filing
of NovoMix® 50 in Japan, additional data will
be required for approval. Novo Nordisk is cur-
rently planning the initiation of the necessary
additional clinical trials. For the US, Novo
Nordisk filed an application in June with the
FDA for a marketing authorisation for
NovoLog® Mix 50/50 and NovoLog® Mix 30/70
(the US trade names for NovoMix® 50 and
NovoMix® 70).

At the annual meeting of the European
Association for the Study of Diabetes (EASD)
in September 2005, Novo Nordisk launched
the NovoPen® 4 durable pen device for insulin
treatment of patients with diabetes. This is the
fourth generation of the NovoPen® range of
durable devices, and NovoPen® 4 offers pa-
tients a more convenient treatment option,

compared to other marketed products.

The phase 2b study with liraglutide was suc-
cessfully completed in November 2005. The
results from the 14-week study showed an im-
provement of long-term glycaemic control, as
measured by haemoglobinA1c (HbA1c), of
between 1.5 and 2 percentage points by treat-
ment with liraglutide compared to placebo.
Liraglutide was well tolerated and nausea was
reported at a level of 5–10%. There were no
cases of major or minor hypoglycaemia in
spite of the impressive glycaemic control.
Phase 3 studies with liraglutide including ap-
proximately 3,800 patients are still expected
to start in February 2006.

Biopharmaceuticals
In August 2005, the FDA approved the use of
NovoSeven® in surgical procedures involving
haemophilia patients with inhibitors against
their existing factor VIII or factor IX treatment.
Furthermore, the FDA has also approved the
use of NovoSeven® in patients with factor VII
deficiency, a rare hereditary haemorrhagic dis-
ease caused by the diminution or absence of
this coagulation factor. Additionally, Novo
Nordisk filed in December an application with
the FDA for US marketing approval of
NovoSeven® for treatment of bleeding episodes
in patients with acquired haemophilia.

In October, Novo Nordisk filed in the EU for
marketing approval of NovoSeven® in ICH,
based on results of clinical phase 2 trials. Novo
Nordisk has received preliminary feedback
from EMEA, indicating a preference for receiv-
ing additional data. Based on this, and a high-
er than expected recruitment rate in the on-
going global phase 3 study, Novo Nordisk will
withdraw the current file and resubmit an ap-
plication following the completion of phase 3.
The updated application will reflect the less re-
strictive inclusion criteria in the phase 3 trial.
This trial, now expected to be completed by
the end of 2006, is aimed at satisfying the
needs of regulatory agencies for approval
worldwide outside Japan. A phase 2 clinical
study has been initiated in Japan, which is ex-
pected to include around 100 patients and to
be completed during 2007.

The NovoSeven® phase 3 clinical study in
trauma outside the US is continuing as
planned. The study includes mortality as a pri-
mary study outcome and is expected to in-

Novo Nordisk Annual Report 2005

management report and discussion

clude around 1,500 patients.

In the US, the FDA has asked for additional
data related to the feasibility of conducting a
NovoSeven® phase 3 clinical study in trauma
informed consent.
without a waiver of
Therefore, Novo Nordisk has decided to initi-
ate a phase 3 study without a waiver of in-
formed consent, with the same primary end-
point as the non-US trial, in order to provide
the required data to the FDA. Novo Nordisk
expects this process to take at least one year,
but the timeline will ultimately depend on
how the FDA interprets preliminary patient
enrolment data from the study conducted
without a waiver of informed consent.

Novo Nordisk expects to finalise four on-
going phase 2 studies with NovoSeven® within
traumatic brain injury, cardiac surgery, spinal
surgery and upper gastro-intestinal bleeds, re-
spectively, in the second half of 2006.

In the HRT area, Novo Nordisk expects to file
in February 2006 in Europe and the US for
marketing approval of an ultra-low-dose ver-
sion of Activelle® (Activella® in the US).

See also discussions of Novo Nordisk’s re-
search and development activities on pp 10–11
and 24–25 and the pipeline on pp 12–13.

Equity

Total equity was DKK 27,634 million at the
end of 2005, equal to 65.9% of total assets,
compared to 70.8% at the end of 2004. The
lower equity ratio reflects the accelerated
completion of the DKK 5 billion share repur-
chase programme announced in April 2004 as
well as unrealised losses on cash flow hedges,
deferred as part of net equity for profit and
loss recognition in 2006 and 2007.

Proposed dividend and reduction
of share capital
At the Annual General Meeting on 8 March
2006, the Board of Directors will propose a
25% increase in dividend to DKK 6.00 per
share of DKK 2, corresponding to a pay-out
ratio of 33.2%, compared to 31.8% for the fi-
nancial year 2004. No dividend will be paid on
the company’s holding of treasury B shares.

In order to maintain capital structure flexi-
bility the Board of Directors will also propose a
reduction in the B share capital, by cancellation
of nominally DKK 35.5 million (17,734,708

shares) of current treasury B shares, to DKK
566.4 million. This corresponds to a 5% re-
duction of the total share capital.

Treasury shares and
share repurchase programme
As per 27 January 2006, Novo Nordisk A/S and
its wholly-owned affiliates owned 30,979,219
of its own B shares, corresponding to 8.73%
of the total share capital. In 2005, a total of
852,647 B shares were disposed of to employ-
ees under the general employee share pro-
gramme.

During 2005, Novo Nordisk purchased
9,657,118 B shares at a cash value of DKK 3
billion which, combined with the DKK 2 billion
worth of B shares repurchased during 2004,
completes the share repurchase programme
of DKK 5 billion announced in April 2004.

The Board of Directors has approved the
initiation of a new share repurchase pro-
gramme of DKK 6 billion to be repurchased
during 2006–2007. The objective is to align
Novo Nordisk’s capital structure to the expect-
ed positive development in free cash flow. The
completion of the new programme will be
subject to the shareholders’ approval at the
Annual General Meeting on 8 March 2006 of
the proposed reduction of the company’s
share capital.

The repurchased shares will be kept as
treasury shares and the value of the repur-
chased shares will, in accordance with Novo
Nordisk's accounting policies, be written off
against equity. A corresponding reduction will
be made in ’number of shares outstanding’
used in the calculation of Novo Nordisk's fi-
nancial ratios.

Corporate
governance

Long-term share-based
incentive programme
As from 2004, Novo Nordisk’s Executive
Management and the Senior Management
Board (26 in total) participate in a performance-
based incentive programme where Novo
Nordisk B shares are allocated annually 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 on average 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 2005 as well as the per-
formance of the R&D portfolio and key sus-
tainability projects, the Board of Directors on
26 January 2006 approved the establishment
of a bonus pool for 2005 by allocating a total
of 116,013 Novo Nordisk B shares, correspond-
ing to a cash value of DKK 35.5 million. This al-
location amounts to seven months of salary
on average per participant.

Share option programme
The grant of share options to approximately
400 senior employees, excluding the mem-
bers of Executive Management and the Senior
Management Board, in accordance with Novo
Nordisk’s share option programme is subject
to the achievement of shareholder value-
based targets as determined by the Board of
Directors. For 2005, targets were established
for operating profit and return on invested
capital, respectively, in addition to a number
of non-financial targets for the performance
of the R&D portfolio and key sustainability
projects. These non-financial targets are iden-
tical to the targets included in the long-term
share-based incentive programme for Executive
Management and the Senior Management
Board.

As the majority of the non-financial targets
and both financial targets for 2005 were
achieved, a total of 820,234 share options will
be granted at an exercise price of DKK 306 per
option. The options can be exercised in the
period 31 January 2009–30 January 2014. The
value of the share option programme is esti-
mated to be DKK 47 million, based on the
Black-Scholes model. The company’s holding
of its own shares will cover this commitment.

Compliance with Sarbanes–Oxley
requirements
In 2005, Novo Nordisk completed the process
of becoming compliant with the Sarbanes–
Oxley Act section 404 that requires detailed
documentation of how financial reporting
processes are designed and operating: the flow
of information, and systems and controls sup-

Novo Nordisk Annual Report 2005

management report and discussion

porting the reporting processes. Novo Nordisk
must ensure that there are no material weak-
nesses in the internal controls which could
lead to a material misstatement in the com-
pany’s financial reporting. Novo Nordisk will
include a conclusion on the evaluation of the
financial reporting processes and the auditors’
evaluation hereof in the so-called Form 20-F
filing to the US Securities and Exchange
Commission, which is submitted in February
2006. Compliance with these requirements as
a foreign registrant on the New York Stock
Exchange (NYSE) is only required by the end of
2006 and, hence, Novo Nordisk’s compliance
with section 404 is achieved one year ahead of
requirements.

Legal issues

As of 26 January 2006, Novo Nordisk Inc, as
the majority of hormone therapy product
manufacturers in the US, is a defendant in
product liability lawsuits related to hormone
therapy products. These lawsuits currently
involve a total of 37 individuals who allege to
have used a Novo Nordisk hormone therapy
(Activella® and
product. These products
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 Company (now
Pfizer Inc).

According to information received from
Pfizer, an additional 13 individuals currently
allege, in relation to similar lawsuits against
Pfizer Inc, that they also have used a Novo
Nordisk hormone therapy product. Currently,
it is expected that the first trial may take place
in the third or fourth quarter of 2006; how-
ever, Novo Nordisk is not expecting the claims
to impact Novo Nordisk’s financial outlook.

In September 2005, Novo Nordisk filed a
patent infringement lawsuit against sanofi-
aventis, Aventis Pharmaceuticals Inc, Aventis
Pharma Deutschland GmbH, and Aventis
Pharma AG alleging that the OptiClik® pen
system marketed in the US by Aventis Pharma-
ceuticals infringes US patent No. 6582408. In
the complaint, Novo Nordisk has asked for an
injunction and monetary damages that have
and will result from sale of the OptiClik® pen
system. The lawsuit was filed in the US District
Court for the district of Delaware. An initial

conference was held on 10 January 2006, at
which time the court scheduled the trial for
August 2007. The discovery phase will com-
mence in early 2006.

ingredient

In June 2005, Novo Nordisk filed a patent
infringement lawsuit against Caraco Pharma-
ceutical Laboratories Ltd in response to their
Abbreviated New Drug Application (ANDA)
in
for repaglinide, the active
Prandin®. In their ANDA, Caraco requests ap-
proval to sell repaglinide following the 2009
expiration of a US patent relating to repaglin-
ide, and provides Paragraph IV certification
under the statutes of the Drug Competition
and Patent Term Extension Restoration Act
(Hatch–Waxman Act), alleging non-infringe-
ment and invalidity of a Novo Nordisk patent
relating to the fixed combination or simultan-
eous administration of repaglinide with met-
formin, which expires in 2018. The discovery
phase is expected to commence in early 2006.
Novo Nordisk Inc is currently a defendant in
three separate cases filed in the US alleging
that Novo Nordisk and a number of other
pharmaceutical companies provided a false
Average Wholesale Price for certain drugs cov-
ered by Medicaid. These cases have been
brought by the State of Alabama, the State of
Mississippi and Erie County, New York. Novo
Nordisk was recently dismissed from 31 similar
cases by counties in the State of New York.

For information on contingencies for pend-
ing litigation, see the financial statements,
note 37 on p 89.

Outlook 2006

Novo Nordisk expects at least 10% growth in
sales measured in local currencies for 2006.
This is based on expectations of a strong mar-
ket for insulin products in general and the con-
tinued market penetration of Novo Nordisk’s
insulin analogue portfolio, combined with ex-
pectations of increasing NovoSeven® and
Norditropin® SimpleXx® sales. Given the cur-
rent level of exchange rates versus Danish kro-
ner, the sales growth rate for 2006 measured
in Danish kroner is expected to be slightly
higher than the growth rate measured in local
currencies.

For 2006, operating profit growth meas-
ured in local currencies and excluding the im-
pact from non-recurring items is expected to
grow by around 10%, reflecting the expected
higher spending on sales and marketing activ-
ities, combined with an increased number of
late-stage clinical development projects.
Measured in Danish kroner the growth in
operating profit is expected to be slightly more
than 10%, reflecting a minor positive currency
impact and the absence of non-recurring
income in 2006.

Novo Nordisk expects a net financial ex-
pense of DKK 350 million in 2006, reflecting:
n a net financial expense of around DKK 150
million (excluding Novo Nordisk’s share of
profit & loss in associated companies), pri-
marily related to deferred losses from for-
eign exchange hedging contracts, and

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

Invoicing currency

USD
JPY
GBP
USD-related*)

Annual impact on Novo Nordisk’s operating profit in 2006
of a 5% movement in currency

DKK 350 million
DKK 150 million
DKK 90 million
DKK 100 million

*)USD-related currencies include CNY, CAD, ARS, BRL, MXN, CLP, SGD, TWD and INR

Novo Nordisk Annual Report 2005

Novo Nordisk expects the effective tax rate to
be 30%, 1 percentage point higher than the
tax rate realised for 2005. As previously stated,
the tax rate for 2005 was positively impacted
by the tax-exempt status of non-recurring
gains related to associated companies as well
as the positive impact from re-evaluation of
deferred tax liabilities.

Novo Nordisk plans capital expenditures of
around DKK 3 billion, primarily related to the
construction of additional purification and fill-
ing capacity for insulin products. Depreciation,
amortisation and impairment losses are ex-
pected to be around DKK 2.1 billion and the
free cash flow to be around DKK 4 billion.

All of the above expectations are provided
that currency exchange rates remain at the
current level for 2006. All other things being
equal, movements in key invoicing currencies
will impact Novo Nordisk’s operating profit in
2006 as illustrated on p 50.

With the results achieved and the invest-
ments made in 2005, the Board of Directors
and Executive Management are confident that
this provides a strong platform for 2006,
which will enable Novo Nordisk to deliver solid
financial performance and to continue to in-
vest in the future.

management report and discussion

Forward-looking
statement

The above sections contain forward-looking
statements 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 sub-
ject to risks, uncertainties and inaccurate
assumptions. This may cause actual results to
differ materially from expectations. Factors that
may affect future results include interest rate
and currency exchange rate fluctuations, delay
or failure of development projects, production
problems, unexpected contract breaches or ter-
minations, government-mandated or market-
driven price decreases for Novo Nordisk’s
products, introduction of competing products,
Novo Nordisk’s ability to successfully market
both new and existing products, exposure to
product liability and other lawsuits, changes in
reimbursement rules and governmental laws
and related interpretation thereof, and unex-
pected 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) in-
cluding the company’s Form 20-F, which was
filed on 21 February 2005. Please also refer to
pp 56–57. Novo Nordisk is under no duty to
update any of the forward-looking statements
or to conform such statements to actual results,
unless required by law.

Novo Nordisk Annual Report 2005

financial highlights

Sales

2001

2002

2003

2004

2005

2004–2005

2004

2005

DKK million

Change

EUR million

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

459
14,533
1,392

1,187
14,651
1,620

2,553
14,492
1,430

4,507
14,383
1,643

7,298
15,006
1,708

Diabetes care total

16,384

17,458

18,475

20,533

24,012

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

Biopharmaceuticals total

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

5,064
2,781
1,565
338

9,748

Total sales by segments

23,385

24,866

26,158

29,031

33,760

Europe
North America
International Operations
Japan & Oceania

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

13,447
9,532
6,070
4,711

Total sales by geographical areas

23,385

24,866

26,158

29,031

33,760

62%
4%
4%

17%

16%
20%
5%
1%

15%

16%

8%
27%
25%
10%

16%

606
1,933
221

2,760

586
311
200
45

1,142

3,902

1,668
1,005
651
578

3,902

979
2,015
229

3,223

680
373
210
45

1,308

4,531

1,805
1,279
815
632

4,531

Price and vo|ume/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

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
Equity ratio

17%
(3%)

14%

11%
(5%)

15%
(10%)

15%
(4%)

11%

15%
1%

16%

DKK million

Change

EUR million

5,410
285
5,695
3,620

19,700
28,662
3,829
186

DKK

10.47
10.45
3.35
342

15.0
22.7
23.1
23.2
5.1
56.2
15.5
68.7

5,927
401
6,328
4,116

22,477
31,612
3,893
497

DKK

11.87
11.85
3.60
205

9.6
19.1
23.8
21.1
12.1
34.4
16.6
71.1

6,422
954
7,376
4,833

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

DKK

14.17
14.15
4.40
241

8.4
11.0
24.6
20.4
79.6
32.3
18.5
71.7

6,980
477
7,457
5,013

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

DKK

14.89
14.83
4.80
299

8.7
8.9
24.0
21.5
85.3
59.0
17.3
70.8

8,088
146
8,234
5,864

27,634
41,960
3,665
4,833

16%
(69%)
10%
17%

4%
12%
22%
13%

DKK

Change

20%
20%
25%
19%

938
64
1,002
674

3,563
5,033
403
575

EUR

2.00
1.99
0.65
40

1,085
20
1,105
787

3,704
5,624
492
649

EUR

2.41
2.40
0.81
47.73

Long-term financial target in %

New

25
25

25
30

17.89
17.83
6.00
355

15.9
11.0
24.0
24.7
82.4
82.4
17.4
65.9

Key figures and per share data are translated into EUR as supplementary information – the translation is based on the currency rate at 31 December 2005 (EUR 1 = DKK 7.4605).

Novo Nordisk Annual Report 2005

non-financial highlights

Economics

R&D

Ratio of R&D expenditure to tangible investments
R&D as share of sales

2001

2002

1:1
16.6

1:1
15.9

2003

1.8:1
15.5

2004

1.5:1
15.0

2005

1.3:1
15.1

Investments

Total tangible investments

DKK million

3,829

3,893

2,273

2,999

4,009

Remuneration

Remuneration as share of cash value added

–

Employment

Employment impact worldwide (direct and indirect)

Number of jobs

56,200

62,400

64,900

69,500

74,200

Corporate tax

Total corporate tax as share of sales

Exports

Novo Nordisk exports as share of Danish exports

Environment

Resources

Water consumption
Energy consumption
Raw materials and packaging materials

Waste water

COD
Nitrogen
Phosphorus

Waste

Total waste
Recycling percentage

Emissions to air

EPI

CO2
Organic solvents

EPI for water
EPI for energy

Compliance

Breaches of regulatory limit values
Accidental releases

Social

Living our values Average of respondents’ answers as to whether social and envir-

onmental issues are important for the future of the company

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

Tons
Tons
Tons

Tons
%

1,000 tons
Tons

Number
Number

Average of respondents’ answers as to whether their manager’s
behaviour is consistent with Novo Nordisk’s values

Fulfilment of action points planned arising from facilitations of
the Novo Nordisk Way of Management and values

Access to health LDCs where Novo Nordisk operates

LDCs where Novo Nordisk sells insulin at or below the policy
price

People

Employees (total)
Rate of absence
Rate of employee turnover

Average of respondents’ answers as to whether their work gives
them an opportunity to use and develop their competences/skills

Average of respondents’ answers as to whether people from
diverse backgrounds have equal opportunities

Health & Safety

Frequency of occupational injuries per million working hours
Fatalities

Training costs

Annual training costs per employee

Patent families

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

Animals

Animals purchased
Test types removed from external and internal specification

*) Was reported as 76 and 30. Reporting error now corrected.

Number

Number
%
%

Number

DKK

Number
Number

Number
%

8.9

4.1

8.9

4.4

9.7

4.4

8.4

3.9

1,790
1,838
88

830
86
15

2,044
2,083
93

971
111
17

2,621
2,299
110

1,187
122
21

2,756
2,408
111

1,448
121
21

7.0

4.8

3,014
2,591
150

1,303
126
22

14,866
50

12,935
41

21,356
41

21,855
40

23,776
33

174
75

102
114

68
5

4.3

3.8

–

199
149

116
115

30
12

4.1

3.7

206
137

110
124

105
20

4.0

3.8

214
115

107
108

74*)
29*)

4.2

4.0

226
124

108
109

174
83

4.2

4.0

100

16,693
3.8
7.7

18,372
2.7
6.4

19,241
3.1
7.1

20,725
3.2
7.3

22,460
3.2
8.0

3.8

3.9

8.2
–

3.7

3.8

8.9
–

3.7

5.4
0

3.8

5.6
1

3.8

3.9

7.3
0

8,201

8,189

7,518

8,992

9,899

590
107

654
114

701
140

778
145

812
130

55,876
18

48,128
64

42,869
73

47,311
82

57,905
82

Novo Nordisk Annual Report 2005

Corporate governance

Stakeholder demands for evidence of
good corporate governance evolve,
and so do the codes, standards and
practices according to which busi-
nesses are managed. In 2005, Novo
Nordisk was among the first companies
outside the US to be in full compliance
with the requirements of documenting
and reporting performance required
by the American Sarbanes–Oxley Act.

Corporate governance refers to the system by
which Novo Nordisk is directed and controlled,
the goals towards which the company is man-
aged and the major principles and frame-
works which regulate the interaction between
the Board of Directors, Executive Management,
the shareholders and the stakeholders.

Framework
Codes and regulations
As an international company listed on the stock
exchanges in Copenhagen, New York and
London, Novo Nordisk is in compliance with
Danish, US and UK securities laws, with the
Danish Recommendations on Corporate Gov-
ernance, and is in general in compliance with
corporate governance standards on the New
York and London Stock Exchanges.

Compliance

is supported by company
standards and a set of management tools that
drive and monitor performance.

Novo Nordisk Way of Management
The Novo Nordisk Way of Management forms
the values-based governance framework for
the company (see p 7). From vision to policies,
it explicates how values are put into action. It is
sufficiently specific to guide decision-making,
yet at the same time allows for the adoption
of new, supporting guidelines, policies or
practices in response to evolving societal ex-
pectations or business developments.

Novo Nordisk holds itself accountable to
shareholders and stakeholders for its financial,
social and environmental performance. The
accuracy, completeness and reliability of the
information provided in the company’s report-
ing is verified through internal controls, assur-
ance and independent audits. Reporting is the
tool through which shareholders can assess
the actions of the board of directors, and can,

at the Annual General Meeting, query them.
Integrity and values are the spine of Novo
Nordisk’s corporate culture and must never be
compromised. These are essential elements of
the control environment, affecting the design,
administration and monitoring of other intern-
al control components. This is the message
conveyed to employees, as laid down in the
Novo Nordisk Way of Management.

Risk management
Executive Management is responsible for the
risk management process, including risk iden-
tification, assessment of likelihood and poten-
tial impact and initiation of mitigating actions.
Major risks are systematically identified and
regularly reported to Executive Management
and the Board of Directors (see pp 56–57).

Internal control
In 2005, one year ahead of requirements,
Novo Nordisk completed the process of be-
coming compliant with the Sarbanes–Oxley
Act section 404 that requires detailed docu-
mentation of how financial reporting process-
es are designed and operating. Novo Nordisk
must ensure that there are no material weak-
nesses in the internal controls which could
lead to a material misstatement in its financial
reporting. The company’s conclusion and the
auditors’ evaluation of these processes are in-
cluded in its Form 20-F filing to the US
Securities and Exchange Commission.

Governance structure
Ownership and shares
Novo Nordisk’s share capital is divided between
A shares and B shares. All A shares are held by
Novo A/S, a private limited liability Danish
company, fully owned by the Novo Nordisk
Foundation which is a private self-governing
institution (see p 111). The B shares are traded
on the stock exchanges in Copenhagen and
London and in the form of American Depositary
Receipts on the New York Stock Exchange.
Each A share carries 10 votes, whereas each B
share carries 1 vote (see p 111).

Management structure
Novo Nordisk has a two-tier board structure
with a Board of Directors and an Executive
Management. The two bodies are separate,
and no one serves as a member of both. With

the exception of agenda items reserved for
the Board’s internal discussion, executives at-
tend and may speak, without voting rights, at
board meetings, ensuring that the Board is suf-
ficiently informed of the company’s operations.
The Executive Management also conveys infor-
mation on major shareholders’ views.

Board of Directors
On behalf of shareholders, the Board of
Directors actively contributes to developing
the company and
supervises Executive
Management in its decisions and operations.
Hence, the aim is to compose a Board consist-
ing of individuals whose particular knowledge
and experience enables the Board as a whole
to attend to the interests of shareholders, em-
ployees and other stakeholders. New board
members receive an induction programme
equalling two full days during their first year
on the board and participate subsequently in
educational activities on an as needed basis.

shareholders. Five of

The Novo Nordisk Board of Directors cur-
rently has 11 members, eight of whom are
elected by
the
shareholder-elected Board members are con-
sidered independent, as defined by the Danish
Corporate Governance Recommendations,
while three are former executives in Novo
Nordisk and related to the majority sharehold-
er through board or executive positions.
According to Danish law another three Board
members are elected by Danish employees
among themselves serving for a four year
term, with the same rights, duties and respon-
sibilities as shareholder-elected directors. See
the profiles of the current Board members on
pp 108–109.

The Board of Directors conducts an annual
self-assessment, based on written question-
naires, to improve performance and the co-
operation with Executive Management. This
process is directed by the chairmanship and is
facilitated by an external consultant. The
process evaluates the degree to which each
director participates actively in Board meet-
ings. This includes an assessment of whether
the director is inspirational and contributes
with independent judgement in key areas
such as organisation, management, financial
and operational strategy. Further, it is assessed
whether the environment supports open dis-
cussion at Board meetings. The Board continu-

Novo Nordisk Annual Report 2005

ously assesses, formally once a year, the per-
formance of each executive, and the chairman
conducts an annual interview with each.

Executive Management
Executive Management is responsible for the
company’s daily operations. It consists of the
president and CEO, and five other executives.
Its responsibilities include organisation of the
company and allocation of resources, strat-
egies and policies, setting direction and ensur-
ing timely information to the Board and the
stakeholders of Novo Nordisk. Executive
Management meets at least once a month.

The Board appoints Executive Management
and determines their remuneration. The chair-
manship reviews other executives’ perform-
ance. As part of the Organisational Audit (see
p 7) the chairmanship identifies successors to
executives and presents candidates’ names to
the Board for approval.

Remuneration policy
The Remuneration policy is designed to at-
tract, retain and motivate board members and
executives. Board members receive a fixed
amount, the Chairmanship and the Audit
Committee members receive a multiplier
thereof (see p 83). Board members are not of-
fered stock options, warrants or participation
in other incentive schemes.

Executive remuneration must be competitive
and is evaluated against Danish and interna-
tional benchmarks. It consists of a base salary,
cash bonus, pensions, non-monetary benefits
and a long-term incentive, which is designed
to align the interests of the executive with
those of the shareholders (see p 83).

Assurance
Compliance with codes and regulations as well
as follow-up methodology specified by the
Novo Nordisk Way of Management is support-
ed by a range of internal procedures such as
the Organisational Audit, Facilitation, Quality
Management system, assurance and internal
and external audits. The internal procedures
are monitored, and potential deficiencies are
reported upstream, with serious matters re-
ported to Executive Management and the
Audit Committee or the Board of Directors.

External audit
The annual report and the internal controls
over financial reporting processes are audited
by an external auditor elected by the Annual
General Meeting. The auditor acts in the inter-
est of the shareholders, as well as the public
(see pp 106–107).

The auditor reports any significant findings
regarding accounting matters and any signifi-
cant internal control deficiencies via the Audit
Committee to the Board and in the auditor’s
long-form report.

Internal audit
The internal audit function provides inde-
pendent and objective assurance, primarily
within internal control and governance. To en-
sure that the function works independently of
management, its charter, audit plan and
budget are approved by the Audit Committee.
The head of internal audit is appointed by and
reports to the Audit Committee.

Facilitation
Facilitations (see p 7) are a method to evaluate

Novo Nordisk’s corporate governance model

Framework

Governance structure

Assurance

Codes and
regulations

Novo Nordisk
Way of Management

Risk management

Internal controls

Shareholders

Board of Directors
h x
i

Chairmanship

Audit Committee

Executive Management

Organisation

External audit

Internal audit

Organisational
Audit

Facilitation

Quality audit

The Novo Nordisk corporate governance model sets the direction and is the framework under which the com-
pany is managed.

corporate governance

how well the practices and understanding of
the Novo Nordisk Way of Management are
embedded in the organisation. The findings
and identified corrective actions are part of
the documentation that the CEO presents to
the Board of Directors.

Quality audit
The commitment to quality is outlined in the
Novo Nordisk Way of Management. Quality is
defined as meeting the expectations and
needs of customers and society. The Quality
Management system, including audits, en-
sures continuous improvements (see p 32).

Õ See a detailed review of Novo Nordisk’s

compliance with and deviations from codes
on corporate governance designated by stock
exchanges in Copenhagen, New York and
London at novonordisk.com/annual-report
Click: Who we are

Board of Directors’ roles
and responsibilities

The Board of Directors focuses on those activ-
ities that seek to effectively promote share-
holders’ interests. The Board’s corporate gov-
ernance framework regulates its relationship
with shareholders, the conduct of Board af-
fairs and
relationship with
Executive Management and stakeholders.

the Board’s

The Board ordinarily meets seven times a
year and ensures via a fixed annual calendar
that it addresses the main tasks in a timely
manner. In 2005, the Board met seven times
and all Board members attended all meetings.

Chairmanship
A chairman and a vice chairman elected by the
Board among it members form the chairman-
ship of the Board. They carry out administra-
tive tasks, such as the planning of board meet-
ings
a balance between
determination of strategy and supervision of
the company. Other tasks include recom-
mending the remuneration of directors and
executives and suggesting candidates for elec-
tion by the general meeting.

ensure

Audit Committee
The Audit Committee has three members
elected by the Board among its members. All
members qualify as independent as defined by
the US Securities and Exchange Commission
(SEC) and two are considered financial experts.
The Audit Committee assists the Board with
the oversight of the external and internal audi-
tors, the procedure for handling complaints
regarding accounting, internal controls, audit-
ing or financial reporting matters (‘whistle-
blower function’), the accounting policies and
the systems of internal controls.

In 2005, the Audit Committee held four

meetings, in which all members participated.

Novo Nordisk Annual Report 2005

Risk management

In the rapidly changing business envir-
onment of the pharma industry, hav-
ing a clear view on risks and timely
mitigations allows Novo Nordisk to
better allocate resources to target
future growth opportunities.

With increased pressure for innovations in re-
search and development, it is essential for
management to nurture an entrepreneurial
spirit that encourages calculated risk-taking,
and at the same time proactively mitigates po-
tential risks. Monitoring risks requires a 360
degree perspective: risks may not only occur in
relation to business operations and external
factors such as regulatory demands, compli-
ance requirements and product safety. In a
globalised business environment, reputational
risks need to be considered too. In 2004, Novo
Nordisk established a governance structure
for risk management to ensure that the com-
pany seeks to respond in a timely and appro-
priate way to potential risks.

In business as in personal life there will be
risks to be faced, to take and to avert. For
people at Novo Nordisk, understanding risks
and managing them appropriately will enhance
their ability to make better decisions, deliver
on objectives and subsequently improve per-
formance. If, on the other hand, they fail to

identify and manage business risks, this may
result in considerable expenditure and eroded
shareholder confidence.

organisational assurance activities, such as
Organisational Audit, Facilitation, quality audit
and Group Internal Audit.

For Novo Nordisk, risk management is about
identifying and reducing risk to an acceptable
level. Risks are defined as ‘events or develop-
ments which could reduce our ability to meet
our overall objectives’, as defined by the com-
pany’s vision and reflected in business plans.
The company’s risk policy spells out that ‘we
will manage risks to enable continued growth
of our business and to protect our people,
assets, earnings and reputation against mater-
ial loss’. Hence, risk management considers
both financial and non-financial risks, and key
risks are reported through one integrated and
systematic process.

Novo Nordisk’s strategic planning process
forms part of the risk management process.
Once a year, a strategic plan with an in-depth
identification and evaluation of long-term
strategic growth opportunities is performed
across the organisation. This also creates the
basis for formulating Critical Success Factors
and setting targets for the Key Performance
Indicators which are part of the company’s
Balanced Scorecards. Subsequently, risk factors
and mitigations are identified and these are
factored into individual business plans for all
units in Novo Nordisk. The assessment of key
risks will build on Novo Nordisk’s existing

As of 2004, Executive Management estab-
lished a dedicated Risk Management Group of
senior executives, representing all key business
activities and selected supporting functions.
Chaired by the chief financial officer, it reports
to Executive Management and the Board of
Directors. It sets the strategic direction and
challenges for risk management, and analyses
the risk and control information generated by
the individual business areas. This process
helps reduce blind spots and consider poten-
tial cross-functional impacts. In quarterly re-
ports to Executive Management and the
Board of Directors, risks are assessed and
quantified in terms of potential financial im-
pact and reputational damage. For each risk
the potential impact is specified, as are miti-
gating actions.

Risk Office is the secretariat of the Risk
Management Group, and drives and consol-
idates risk reporting from discovery and devel-
opment, through manufacturing and logistics,
to marketing and sales. In addition, risks relat-
ed to support functions such as quality, regu-
latory, business development, finance, legal &
IT and HR are included. This is done in consul-
tation with relevant Novo Nordisk committees,
boards and management groups.

Integrated risk
management process

Novo Nordisk’s risk management process identi-
fies and assesses material risks associated with the
company’s overall business objectives. The risk
management framework aims:
n to provide timely and accurate reporting of risks

to Executive Management

n to maintain and improve stakeholders’ confi-
dence in the ability to achieve short- and long-
term goals, thereby maintaining and improving
the company’s reputation in the marketplace
n to utilise an effective and integrated risk man-
agement process while maintaining business
flexibility

n to identify and manage a comprehensive risk
portfolio aligned to the vision and corporate
Balanced Scorecard

n to monitor and mitigate risks to maximise busi-

ness benefits.

Risk management process

Novo Nordisk’s
Vision

10-year plan

Strategic plan

3-year plan

Business plan
and budget

Balanced
Scorecard

Risk management

Strategic
risks

Operational risks

Assurance

Appointed
task groups

Internal audit

Organisational
Audit

Facilitation

Quality audit

Novo Nordisk’s risk management is broadly divided into two major components: strategic risk management and
operational risk management.

Novo Nordisk Annual Report 2005

risk management

Assessing risks
In the assessment of risks two factors are con-
sidered: the likelihood of the event and its
eventual impact on the business. Impacts are
quantified and assessed in terms of potential
financial loss and reputational damage. The
matrix below shows how Novo Nordisk assess-
es its key risks.

The risks are assessed at a gross level and a
net level. The gross level is the assessment of the
risk with the assumption that no mitigating ac-
tions have been implemented. The net risk level
is the residual risk when taking into account the
mitigating actions and their anticipated effect.
Below are examples of key risks.

Pressure on insulin prices
Rising healthcare costs are putting pressure on
public healthcare. This, in turn, threatens to
undermine the profitability of the pharmaceut-
ical industry and discourage investments in re-
search into therapeutic areas where there are
limited prospects for commercialisation.

For Novo Nordisk this situation would imply
that the company cannot sustain its insulin
prices at their current level, as governmental
price regulation would be likely to result in
lower prices for insulin. While the company
fully recognises the need to resolve the issues, it
also proactively defends the value of its prod-
ucts. Backed by clinical and health economic
studies of the benefits of a high-quality insulin
therapy regimen, Novo Nordisk is closely
monitoring initiatives from regulatory bodies
and advocates moving diabetes higher up the
healthcare agenda for the benefit of the 194
million people in the world with diabetes and

the estimated 333 million people at risk of
developing diabetes by 2025, as projected by
the International Diabetes Federation.

Product recall
In pharmaceutical production, quality is para-
mount, and any incidents where patients’ well-
being is at risk would go against the Novo
Nordisk Way of Management. It would also
imply major reputational risks as well as risks
of costly compensation payments in the case
of product liability claims.

While gross risk is very high, this is an ex-
ample of how mitigating actions can signifi-
cantly reduce the net risk to the company.
Novo Nordisk has a corporate quality system in
place, with quality audits, quality improvement
plans and a number of management reviews.

Insufficient production capacity
The majority of Novo Nordisk’s manufacturing
capacity is concentrated at a few sites in
Denmark. This in itself entails a relatively low
risk profile, yet there is always a risk of failure
or breakdown in any of the company’s vital
production facilities. This would entail physical
damage and potential loss of life, and could in
the longer term also affect the supply chain. In
order to mitigate this risk, procedures and in-
structions are in place to minimise the risk of
fire, each site is inspected annually and there
are some back-up facilities and minimum safe-
ty inventories in place, should an incident hap-
pen. Moreover, to reduce losses, buildings are
designed to prevent any fires from spreading
by measures such as fire separation, fire
alarms and fire-extinguishing systems.

Adherence to ethical
marketing practices
Adherence to ethical marketing practices in
the pharmaceutical industry is particularly crit-
ical. Companies are expected to provide evi-
dence that they have policies in place and that
any misconduct is brought to light and recti-
fied. Any major breaches might jeopardise the
company’s reputation and could also mean
‘blacklisting’ by institutional investors, regula-
tory bodies, IGOs such as the UN or other in-
fluential stakeholders.

In December 2005, the office of the US
Attorney for the Eastern District of New York
served Novo Nordisk with a subpoena calling
for the production of documents relating to
the company’s US marketing and promotional
practices. The company believes that the in-
vestigation is limited to its insulin products.
The subpoena indicates that the documents
are necessary for the investigation of potential
criminal offences relating to healthcare bene-
fit programmes. Novo Nordisk is cooperating
fully with the US Attorney in this investigation.
In 2005, Novo Nordisk implemented a
global business ethics policy, supported by
standard operating procedures and training
for everyone affected. Business ethics prac-
tices will be audited by Group Internal Audit
and will also be addressed in the company’s
facilitation process.

In addition, affiliates’ ethics and compliance
policies, some of which have been in place for
many years, supplement and enhance the
global policy in accordance with local laws
and requirements.

Current risk profile
– examples

To the right are Novo Nordisk’s risk management structure
and reporting lines. The lean organisational structure with
clear reporting lines to the Executive Management team
makes it relatively easy for senior management to oversee
risks reported through the line and also to ensure that the
risk reporting addresses any event which might have an
impact elsewhere in the organisation.

Examples of key risks for illustrative purposes:
1 Pressure on insulin prices
2 Product recall
3 Insufficient production capacity
4 Adherence to ethical marketing practices
5 Drug development
6 Currency exposure

See a discussion of risks associated with drug develop-
ment on pp 26–27, currency exposure on p 80 and an up-
date on legal issues in the Management report and discus-
sion on p 50.

t
c
a
p
m

Critical

Major

Moderate

Minor

1 Gross risk
1 Net risk

3
2
6
4
56
143
2

Unlikely

Possible

Likely

Very likely

Likelihood

Executive
Management

Risk Management Group

Risk Office

Organisation

Novo Nordisk Annual Report 2005

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

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

Note

4, 5
6, 7

6, 7
6, 7
6, 7, 8
9

7, 16
10
11

13
13

2005

2004

2003

33,760
9,177

24,583

29,031
8,050

20,981

26,158
7,409

18,749

9,691
5,085
2,122
403

8,088

319
498
671

8,234

2,370

5,864

17.89
17.83

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

58 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

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 receivables
Other receivables
Marketable securities and financial derivatives
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 income tax liabilities
Provision for pensions
Other provisions

Total long-term liabilities

Short-term debt and financial derivatives
Trade payables
Tax payables
Other liabilities
Other provisions

Total current liabilities

Total liabilities

Total equity and liabilities

consolidated balance sheet

Note

31 Dec 2005

31 Dec 2004

14
15
16
23
17

18
19

20
17
30

22
23
24
25

27
25

485
19,941
926
879
169

22,400

7,782
4,794
504
1,455
1,722
3,303

314
17,559
883
769
159

19,684

7,163
4,062
710
1,040
1,341
3,433

19,560

17,749

41,960

37,433

709
(61)
–
26,962
24

27,634

1,248
1,846
316
335

3,745

1,444
1,500
676
4,577
2,384

10,581

14,326

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

41,960

37,433

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 59

consolidated cash flow statement and financial resources

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:
Acquisition of subsidiaries and business units
Sale of intangible assets and long-term financial assets
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 (maturity exceeding 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

Note

2005

2004

2003

5,864

5,013

4,833

2,370
1,930
44
1,109
(2,138)
(73)

9,106

(1,139)
(618)
1,363

8,712

(350)
400
(264)
234
(3,899)
(1,032)

(4,911)

–
(29)
(3,018)
206
(1,594)

(4,435)

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)

7,589

6,149

–
–

–

(312)
140
(3,139)
1,310

(2,001)

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

(3,452)

(40)
185
(2,458)
(1,516)

(3,819)

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

(2,394)

(634)

2,136

(64)

154

(480)

2,963

2,483

1,502
7,461

(14)

2,122

841

2,963

508
6,694

(14)

(78)

919

841

1,810
8,701

17
26

Financial resources at the end of the year

11,446

10,165

11,352

Cash flow from operating activities
+ Cash flow from investing activities
– Net change in marketable securities (maturity exceeding three months)

Free cash flow

8,712
(4,911)
(1,032)

4,833

7,589
(2,001)
1,310

4,278

6,149
(3,819)
(1,516)

3,846

60 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

consolidated statement of changes in equity

Share
capital

Treasury
shares

Share
premium
account *)

Retained
earnings

DKK million

2005

Balance at the beginning of the year

709

(45)

2,565

22,671

Other comprehensive income

Total

Exchange

Deferred
rate gain/loss on
cash flow
hedges

adjust-
ments

Other
adjust-
ments

(40)

182

461

183

26,504

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 for the year

Net profit for the year

Total income for the year

Cost of share-based payment
Purchase of treasury shares
Sale of treasury shares
Transfer of Share premium account to Retained earnings
Dividends

(461)
(345)

182

(806)

182

(806)

–

(19)
3

–

(2,565)

5,864

5,893

223
(2,999)
203
2,565
(1,594)

182

(461)
(345)
73

(551)

5,864

5,313

223
(3,018)
206
–
(1,594)

Balance at the end of the year

709

(61)

–

26,962

142

(345)

227

27,634

At the end of the year proposed dividends of DKK 1,945 million are included in Retained earnings. No dividend is declared on treasury shares.

*) In accordance with changes in the Danish Companies Act the Share premium account is transferred to Retained earnings.

2004

Balance at the beginning of the year

709

(33)

2,565

20,925

(79)

513

176

24,776

Net income recognised directly in equity for the year

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

(513)
461

–

(52)

5,013

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

(513)
461
7

(6)

5,013

5,007

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

709

(45)

2,565

22,671

(40)

461

183

26,504

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.

2003

Balance at the beginning of the year

709

(19)

2,565

18,849

Net income recognised directly in equity for the year

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

122

109

(391)
513
109

237

4,833

5,070

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

–

(14)
–

–

4,833

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

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.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 61

709

(33)

2,565

20,925

(79)

513

176

24,776

notes – accounting policies

Summary of significant accounting policies

The Consolidated financial statements are prepared in accordance with
International Financial Reporting Standards (IFRS) as adopted by the EU. The
Consolidated financial statements are prepared in accordance with the histori-
cal cost convention, as modified by the revaluation of available-for-sale financial
assets, financial assets and financial liabilities (including derivative financial
instruments) at fair value through profit or loss.

Effects of new accounting pronouncements
In 2005 Novo Nordisk adopted all of the new and revised standards and inter-
pretations that are relevant to Novo Nordisk and effective for accounting
periods beginning on 1 January 2005.

In 2005 the following standards and interpretations were implemented in

accordance with the effective date 1 January 2005:
n IFRS 5 ‘Non-current Assets Held for Sale and Discontinued Operations’
n Amendment to IAS 39 ‘Financial Instruments: Recognition and Measure-
ment – Transition and Initial Recognition of Financial Assets and Financial
Liabilities’

The implementation of these standards and interpretations did not result in any
significant changes to amounts reported for 2005 or prior periods.

The following standards and interpretations have been implemented before

the effective date 1 January 2006:
n Amendment to IAS 19 ‘Employee Benefits’
n Amendment to IAS 39 ‘Financial Instruments: Recognition and Measure-
ment – Cash Flow Hedge Accounting of Forecast Intragroup Transactions’
n Amendment to IAS 39 ‘Financial Instruments: Recognition and Measure-

ment – The Fair Value Option’

n IFRIC 4 ‘Determining Whether an Arrangement Contains a Lease’

The implementation of the amendment to IAS 19 ‘Employee Benefits’ has re-
sulted in increased disclosure regarding the Group’s defined benefit plans (see
note 24). The implementation of the amendments to IAS 39 and IFRIC 4 did not
have any significant effect on the financial statements of Novo Nordisk.

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.

Acquired and divested companies are included in the Income statement
during the period of Novo Nordisk’s ownership. Comparative figures are not
adjusted for disposed or acquired companies.

CRITICAL ACCOUNTING POLICIES

Novo Nordisk’s management considers the following to be the most important
accounting policies for the Group.

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, rebates, 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. Revenues
are considered to have been earned when Novo Nordisk has substantially
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:
n Novo Nordisk has transferred to the buyer the significant risk and rewards of

ownership of the goods

n Novo Nordisk retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the
goods sold

n The amount of revenue can be measured reliably
n It is probable that the economic benefits associated with the transaction will

flow to Novo Nordisk; and

At the end of 2005, the following standards were issued with effective date

n The costs incurred or to be incurred in respect of the transaction can be

1 January 2006 and 1 January 2007, which have not yet been implemented:
n Amendment to IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’
n IFRS 7 ‘Financial Instruments: Disclosures’
n Amendment to IAS 1 ‘Presentation of Financial Statements – Capital Dis-

closures’

The adoption of these standards is not expected to have any significant effect
on the Financial statements of Novo Nordisk.

Reclassification
In line with international development, the market value of financial instru-
ments has been reclassified from Other receivables to Marketable securities and
financial derivatives. Comparative figures have been adjusted accordingly. The
reclassification has affected the calculation of the key financial ratio ROIC.

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 statements
of the Parent company and of the subsidiaries and are prepared by combining
items of a uniform nature and eliminating intercompany transactions, share-
holdings, balances and unrealised intercompany profits and losses. The Con-
solidated financial statements are based on financial statements 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 assets acquired
and liabilities and contingent liabilities assumed in a business combination are

measured reliably.

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 occur-
rence of such future events.

Revenue is measured at the fair value of the consideration received or receiv-

able.

Research and development
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’.
Consequently the technical feasibility criteria of IAS 38 are not considered ful-
filled before regulatory approval is obtained. Therefore, all internal research and
development costs are expensed in the Income statement as incurred.

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 purposes

are capitalised and depreciated over their estimated useful lives.

62 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – accounting policies

Summary of significant accounting policies (continued)

Derivative financial instruments
The Group uses forward exchange contracts, currency options, interest rate
swaps and currency swaps to hedge forecasted transactions, assets and liabili-
ties, and net investments in foreign subsidiaries in foreign currencies.

Novo Nordisk applies hedge accounting under the specific rules of IAS 39 to
forward exchange contracts and currency swaps. Upon initiation of the con-
tract, 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 trans-
action 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 values at the balance sheet date. The value adjustments on forward
exchange contracts designated as hedges of forecasted transactions are re-
cognised directly under equity, given hedge effectiveness. The cumulative value
adjustment of these contracts is removed from equity and included in the
Income statement under Financial income or Financial expenses when the
hedged transaction is recognised in the Income statement.

Novo Nordisk has chosen not to apply the hedge accounting requirements
to interest rate swaps hedging forecasted transactions. Consequently, the fair
value adjustments of these contracts are recognised in the Income statement.

Currency options are initially recognised at cost and subsequently re-
measured at their fair values 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 Financial 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 statement under Finan-
cial income or Financial expenses, along with any value adjustments of the
hedged asset or liability that is attributable to the hedged risk.

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.

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:
n The translation of foreign subsidiaries’ net assets at the beginning of the year

translated at the exchange rates at the balance sheet date.

n 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.

n The translation of long-term intercompany receivables that are considered to

be an addition to net assets in subsidiaries.

n The translation of investments in associated companies.

The above exchange gains and losses are recognised in Other comprehensive
income under equity.

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 non-recurring income items (net) in respect of sale of intel-
lectual property.

Intangible assets
Goodwill
Goodwill represents any cost in excess of identifiable net assets, measured at
fair value, in the acquired company. Goodwill recorded under Intangible assets
is related to subsidiaries.

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 impairment

All fair values are based on marked-to-market prices or standard pricing

testing.

models.

The accumulated net fair value of derivative financial instruments is pre-
sented as ‘Marketable securities and financial derivatives’, if positive, or ‘Short-
term debt’, if negative.

Provisions
Provisions including tax and legal cases are recognised where a legal or con-
structive obligation has been incurred as a result of past events and it is prob-
able that it will lead to an outflow of resources that can be reliably estimated. In
this connection Novo Nordisk makes the estimate based upon an evaluation of
the individual most likely outcome of the cases. In the case where a reliable
estimate cannot be made, these are disclosed as contingent liabilities.

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 (functional currency). 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 ruling at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions 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.

Patents, licences and other intangibles
Patents and licences that include acquired patents and licences to in-process
research and development projects and other intangibles are carried at histo-
rical cost less accumulated amortisation and any impairment loss.

Amortisation is provided under the straight-line method over the estimated

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 accumulated
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. Subsequent cost is included in the assets
carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that future economic benefits associated with the item will flow to
the Group and the cost of the item can be measured reliably.

Land is not depreciated. Depreciation is provided under the straight-line

method over the estimated useful lives of the assets as follows:
n Buildings: 12– 50 years.
n Plant and machinery: 5 –16 years.
n Other equipment: 3 –16 years.
n 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 appro-
priate, at each balance sheet date.

An asset’s carrying amount is written down to its recoverable amount if the

asset’s carrying amount is higher than its estimated recoverable amount.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 63

notes – accounting policies

Summary of significant accounting policies (continued)

Leases
Leases of assets whereby the Group assumes substantially all the risks and re-
wards of ownership are capitalised as finance leases under Property, plant and
equipment and depreciated over the estimated useful lives of the assets, ac-
cording 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 companies’
net asset value applying Group accounting policies).

Goodwill relating to associated companies is recorded under Investments in

associated companies.

Impairment of assets
The Group assesses the carrying amount of identifiable intangible assets, long-
lived assets and goodwill annually, or more frequently if events or changes in
circumstances indicate that such carrying amounts may not be recoverable.
Factors considered material by the Group and that could trigger an impairment
test include the following:
n Significant underperformance relative to historical or projected future re-

sults.

n Significant changes in the manner of the Group’s use of the acquired assets

or the strategy for our overall business.

n Significant negative industry or economic trends.

When it is determined that the carrying amount of intangible assets, long-lived
assets or goodwill may not be recoverable based upon the existence of one or
more of the above indicators of impairment, any impairment is measured based
on discounted projected cash flows.

This impairment test is based upon management’s projections and anti-
cipated future cash flows. The most significant variables in determining cash
flows are discount rates, terminal values, the number of years on which to base
the cash flow projections, as well as the assumptions and estimates used
to determine the cash inflows and outflows. Management determines the
discount rates to be used based on the risk inherent in the related activity’s
current business model and industry comparisons. Terminal values are based on
the expected life of products, forecasted lifecycle and forecasted cash flows
over that period.

While the assumptions are believed to be appropriate, the amounts esti-
mated could differ materially from what actually occurs in the future. These
discounted cash flows are prepared at cash-generating-unit level.

Financial assets
The Group classifies its investments in the following categories: Financial assets
at fair value through profit or loss (financial derivatives), Loans and receivables
and Available-for-sale financial assets. The classification depends on the pur-
pose 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.

Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial derivatives
used for hedging purposes. Assets in this category are classified as current
assets.

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 receiv-
ables 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 includes 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 designated
in this category or not classified in any of the other categories. They are in-
cluded in ‘Other financial assets’ unless Management intends to dispose of the
investment within 12 months of the balance sheet date. Marketable securities
under current assets are classified as available-for-sale financial assets.

Recognition and measurement
Purchases and sales of investments are recognised on the settlement date.
Investments are initially recognised at fair value plus transaction costs for all
financial assets not classified as 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 trans-
ferred 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.

Unrealised gains and losses arising from changes in the fair value of financial
assets classified as available-for-sale are recognised in equity. When financial
assets 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 available-for-sale financial assets.

The fair values of quoted investments are based on current bid prices.

Financial assets for which no active market exists are carried at cost.

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.
If any such evidence exists for available-for-sale financial assets, the cumulative
loss is removed from equity and recognised in the Income statement. Impair-
ment 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 reviewed regularly in order
to ensure relevant measures of utilisation, production 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 recog-
nised 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. 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.

Tax payable/receivable includes tax payable computed on the basis of the
expected taxable income for the year and adjustments for tax payable for pre-
vious 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 asso-
ciated 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.

64 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – accounting policies

Liabilities
Generally, liabilities are stated at amortised cost unless specifically mentioned
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 declared at
the Annual General Meeting.

Consolidated statement of cash flows and financial resources
The Consolidated statement of cash flows and financial resources is presented
in accordance with the indirect method commencing with net profit. The state-
ment 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. Financial
resources consist of cash and cash equivalents, bonds with original term to
maturity exceeding three months, and undrawn committed credit facilities
expiring after more than one year.

United States Generally Accepted Accounting Principles (US GAAP)
The Group prepares a reconciliation of the effect on net profit, equity and
balance sheet of the application of US Generally Accepted Accounting Prin-
ciples (US GAAP) in lieu of International Financial Reporting Standards. Note 38
discloses the US GAAP reconciliation.

Summary of significant accounting policies (continued)

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 contributions.

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.

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 im-
pact 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 statement and a corresponding
adjustment to equity over the remaining vesting period. Adjustments relating
to prior years are included in the Income statement in the year of adjustment
‘truing up’.

2 Changes in the scope of consolidation

In January 2005, Novo Nordisk’s wholly owned subsidiary Novo Nordisk Delivery
Technologies, Inc completed the acquisition of a business unit from Aradigm
Corporation related to the AERx ® insulin Diabetes Management System (iDMS).
The date of acquisition was 26 January 2005. The cost of the combination was
DKK 358 million consisting of DKK 350 million in purchase price and DKK 8
million in assumed liabilities. The purchase price was paid in cash. The net assets
are included in the consolidation as from 26 January 2005. The acquisition
was accounted for under the purchase method of accounting and there was

no goodwill related to the acquisition. Note 29 shows the assets and liabilities
recognised as a result of the business combination. These values approximate
their carrying amounts immediately before the combination.

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 was no goodwill related to the acquisition. Until the acquisi-
tion of these shares, Aldaph SpA was an associated company of Novo Nordisk
and Novo Nordisk owned 45% of the share capital.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 65

notes – accounting policies

3 Critical accounting estimates and judgements

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assump-
tions 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 experience and various other as-
sumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgements about the reported
carrying amounts of assets and liabilities and the reported amounts of revenues
and expenses that may not be readily apparent from other sources. Actual
results could differ from those estimates. Novo Nordisk believes the following
are the significant accounting estimates and related judgements used in the
preparation of its Consolidated financial statements.

Sales rebate accruals and provisions
Sales rebate accruals and provisions are established in the same period as the
related sales. The sales rebate accruals and provisions are recorded as a reduc-
tion 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 percentage of sales for each product as defined 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 believes that the accruals and provisions established for sales
rebates are reasonable and appropriate based on current facts and circum-
stances. However, actual amount of rebates and discounts may differ from the
amounts estimated by Management.

The carrying amount of sales rebate accruals and provisions is DKK 1,872

million at 31 December 2005; please refer to note 5 for further information.

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, as well as IPC such as employee
costs, depreciation, maintenance etc.

IPC 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 inven-
tories. The carrying amount of IPC is DKK 3,536 million at 31 December 2005.

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 esti-
mated 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, addi-
tional allowances may be required in future periods. Management specifically
analyses trade receivables and analyses historical bad debt, customer concen-
trations, customer creditworthiness, current economic trends and changes in
the customer payment terms when evaluating the adequacy of the allowance
for doubtful trade receivables.

The uncertainty connected with the allowance for doubtful trade receivables
is considered limited. The carrying amount of allowances for doubtful trade
receivables is DKK 419 million at 31 December 2005.

Income taxes
Management judgement is required in determining the Group’s provision for
deferred income tax assets and liabilities. Novo Nordisk recognises deferred
income 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 income tax assets as well as outcome of tax cases should be
recognised.

The carrying amount of deferred income tax assets and deferred income tax
liabilities is DKK 879 million and DKK 1,846 million respectively at 31 December
2005.

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 statisti-
cal 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 496 million at

31 December 2005.

Management of the Group makes judgements about provisions and con-
tingencies, 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, etc,
management considers the evaluation of external counsel knowledgeable
about each matter, as well as known outcomes in case law. See note 37 for a
description of significant litigations pending.

66 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

financial definitions

ADRs
American Depositary Receipts.

Gross margin
Gross profit as a percentage of sales.

Basic earnings per share (EPS)
Net profit divided by the average number of shares outstanding.

Net profit margin
Net profit as a percentage of sales.

Cash to earnings
Free cash flow as a percentage of net profit.

Diluted earnings per share
Net profit divided by the sum of average number of shares outstanding in-
cluding 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 deno-
minator as an issue of shares for no consideration.

Effective tax rate
Income taxes as a percentage of profit before income taxes.

Equity ratio
Equity at year-end as a percentage of the sum of total liabilities and equity at
year-end.

Free cash flow
The sum of Cash flow from operating activities and Cash flow from investing
activities excluding Net changes in marketable securities.

Number of shares outstanding
The number of shares outstanding is the total number of shares excluding the
holding of treasury shares.

Operating profit
Earnings before tax, financial items and share of profit/loss in associated com-
panies.

Operating profit margin
Operating profit as a percentage of sales.

Payout ratio
Total dividends for the year as a percentage of net profit.

ROIC (return on invested capital)
Operating profit after tax (using the effective rate) as a percentage of average
inventories, receivables, property, plant and equipment as well as intangible
assets less non-interest bearing liabilities including provisions (the sum of the
above assets and liabilities at the beginning of the year and at year-end divided
by two).

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 67

notes – consolidated income statement

Segment information

Primary reporting format – Business segments

At 31 December 2005, 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

Business segments

DKK million

Segment sales and results

Sales
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

Change in DKK (%)
Change in local currencies (%)

Operating profit

Share of profit in associated companies
Financial 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

(NovoSeven ®), growth hormone therapy, hormone replacement therapy and
other products.

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 that 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.

2005

2004

2003

Diabetes care

7,298
15,006
1,708

4,507
14,383
1,643

2,553
14,492
1,430

24,012

20,533

18,475

24,012
16.9%
15.9%
4,055

20,533
11.1%
14.7%
3,404

18,475
5.8%
16.0%
3,142

–

3,177
1,446
171
3,510
–
17,502
28,484
6,635

2,932
1,312
320
2,652
–
15,270
24,997
4,788

2,805
1,125
143
1,930
–
14,405
23,911
4,241

Geographical segments

DKK million

Sales

Change in DKK (%)

Additions to property, plant and equipment and intangible assets including
acquisition of business units (net)
Property, plant and equipment
Total assets

2005

2004

2003

2005

2004

2003

Europe

12,411
6.1%
2,831

16,519
31,198

13,447
8.3%
2,332

16,946
32,523

North America

11,697
7.4%
2,137

15,510
29,166

9,532
27.5%
801

1,212
4,205

7,478
20.2%
133

425
2,725

6,219
7.5%
63

366
2,270

68 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – consolidated income statement

Segment information (continued)

Secondary reporting format – Geographical segments

The Novo Nordisk Group operates in four main geographical areas (the second-
ary 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.

The segments and regions are the same as those used for internal reporting,
allowing a reliable assessment of risk and returns.

2005

2004

2003

2005

2004

2003

2005

2004

2003

Biopharmaceuticals

Corporate/unallocated

Total

5,064
2,781
1,565
338

9,748

9,748
14.7%
14.2%
4,033

4,359
2,317
1,488
334

3,843
2,133
1,322
385

8,498

7,683

8,498
10.6%
15.4%
3,576

7,683
3.7%
14.0%
3,280

–

319
(173)

(117)
594

(59)
1,013

2,370

2,444

2,543

7,298
15,006
1,708

4,507
14,383
1,643

2,553
14,492
1,430

24,012

20,533

18,475

5,064
2,781
1,565
338

9,748

33,760
16.3%
15.4%
8,088

319
(173)
8,234
2,370

4,359
2,317
1,488
334

3,843
2,133
1,322
385

8,498

7,683

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

5,864

5,013

4,833

1,908
309
–
727
–
3,625
6,566
1,959

1,420
254
6
583
–
3,185
5,644
1,581

1,250
278
35
388
–
3,020
5,495
1,416

–
4
–
4
–
1,273
6,910
5,732

–
–
–
–
18
1,229
6,792
4,560

–
–
–
–
–
947
5,158
4,131

5,085
1,759
171
4,241
–
22,400
41,960
14,326

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

2005

2004

2003

2005

2004

2003

2005

2004

2003

International Operations

Japan & Oceania

6,070
25.3%
1,088

1,546
4,212

4,844
14.6%
252

376
2,387

4,227
3.1%
83

184
2,260

4,711
9.6%
20

237
1,020

4,298
7.0%
19

239
1,123

4,015
–1.9%
35

282
868

33,760
16.3%
4,241

19,941
41,960

Total

29,031
11.0%
3,235

17,559
37,433

26,158
5.2%
2,318

16,342
34,564

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 69

notes – consolidated income statement

Sales rebate accruals and provisions

7 Depreciation, amortisation and impairment losses

DKK million

2005

2004

2003

DKK million

2005

2004

2003

At the beginning of the year
Additional rebates deducted from sales
Payments and grants of rebates
during the year
Exchange rate adjustments

1,031
2,637

745
1,600

660
1,069

(1,943)
147

(1,258)
(56)

At the end of the year

1,872

1,031

Specification of sales rebate accruals
and provisions:
Other liabilities
Current provisions

77
1,795

107
924

Total sales rebate accruals and provisions

1,872

1,031

(888)
(96)

745

94
651

745

Employee costs

DKK million

2005

2004

2003

Wages and salaries
Share-based payment costs (refer to note 34)
Pensions – defined contribution plans
Pensions – defined benefit plans
(refer to note 24)
Other contributions to social security
Other employee costs

9,101
223
660

137
584
793

8,119
104
592

100
488
660

7,657
76
516

91
483
554

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/(loss) in associated companies

1,525
67
231
107
–

1,322
226
218
126
–

1,076
116
197
188
4

Total depreciation, amortisation
and impairment losses

1,930

1,892

1,581

Fees to statutory auditors

DKK million

2005

2004

2003

Statutory audit
Audit-related services
Tax advisory services
Other services

Total

24
6
20
1

17
5
18
3

15
4
16
4

Licence fees and other operating income (net)

Total employee costs

11,498

10,063

9,377

DKK million

2005

2004

2003

Included in the Income statement
under the following headings:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses

3,664
3,380
2,095
1,751

3,219
2,868
1,713
1,523

2,951
2,756
1,516
1,479

Licence fees and settlements
Net income from IT, engineering and
other services
Other income

Total licence fees and other operating
income (net)

164

51
188

382

58
135

901

43
92

403

575

1,036

Total included in the Income statement

10,890

9,323

8,702

Included in the Balance sheet as:
Capitalised employee costs related to
assets in course of construction etc
Change in employee costs included
in inventories

Total included in the Balance sheet

605

608

598

142

740

524

151

675

Total employee costs

11,498

10,063

9,377

For information on remuneration to the Board of Directors and
Executive Management, please refer to note 35.

10 Financial income

DKK million

2005

2004

2003

Interest income
Capital gain on investments etc (net)
Foreign exchange gain (net)
Foreign exchange gain on derivative
financial instruments (net)

Total financial income

210
–
288

–

498

235
–
–

285
2
–

663

1,195

898

1,482

Average number of full-time employees
Year-end number of full-time employees

21,146
22,007

19,520
20,285

18,381
18,756

11 Financial expenses

DKK million

2005

2004

2003

Interest expenses *)
Capital loss on investments etc (net)
Foreign exchange loss (net)
Foreign exchange loss on derivative
financial instruments (net)
Other financial expenses

Total financial expenses

254
20
–

328
69

671

107
12
130

–
55

184
–
229

–
56

304

469

*) Included in Interest expenses in 2005 is DKK 82 million to public authorities.

70 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – consolidated income statement

12 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 income less non-tax deductible expenses (net)
Effect on deferred tax related to the change in the Danish tax rate in 2005
Other

2005

2,389
40

2,429
(59)

2,370

18
(70)

(52)

28.0%
3.6%
–1.6%
–0.7%
–0.5%

2004

2003

2,293
125

2,418
26

2,444

–
8

30.0%
3.8%
–0.5%
–
–0.5%

2,541
(17)

2,524
19

2,543

(150)
44

(106)

30.0%
5.7%
–0.2%
–
–1.0%

Effective tax rate

28.8%

32.8%

34.5%

13 Earnings per share

Net profit

DKK million

2005

5,864

2004

2003

5,013

4,833

Average number of shares outstanding
Dilutive effect of outstanding options ‘in the money’

in 1,000 shares
in 1,000 shares

327,711
1,223

336,628
1,482

341,173
422

Average number of shares outstanding incl dilutive effect of options ‘in the money’

in 1,000 shares

328,934

338,110

341,595

Basic earnings per share
Diluted earnings per share

DKK
DKK

17.89
17.83

14.89
14.83

14.17
14.15

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 71

notes – consolidated balance sheet

14 Intangible assets

DKK million

2005
Cost at the beginning of 2005
Changes in consolidation
Reclassification
Additions during the year
Disposals during the year
Exchange rate adjustments

Cost at the end of 2005

Amortisation and impairment losses at the beginning of 2005
Reclassification
Amortisation for the year
Amortisation and impairment losses reversed on disposals during the year
Exchange rate adjustments

Amortisation and impairment losses at the end of 2005

Carrying amount at the end of 2005

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

Goodwill

Patents and
licences etc

Other
intangible
assets

Total

314
–
(45)
11
(276)
78

289
(20)
–
(276)
72

318
–
–
(4)

314

103
–
188
(2)

289

177
–
(1)
122
(1)
–

297

8
(1)
8
(1)
(1)

284

8
170
(1)
–

177

3
5
–
–

169

327
8
46
89
(3)
3

470

207
21
57
(3)
4

286

184

264
66
–
(3)

327

153
56
–
(2)

207

120

818
8
–
222
(280)
81

849

504
–
65
(280)
75

364

485

590
236
(1)
(7)

818

259
61
188
(4)

504

314

72 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

15 Property, plant and equipment

DKK million

2005
Cost at the beginning of 2005
Changes in consolidation
Additions during the year
Disposals during the year
Transfer from/(to) other items
Exchange rate adjustments

Cost at the end of 2005

Depreciation and impairment losses at the beginning of 2005
Depreciation for the year
Impairment losses for the year
Depreciation and impairment losses reversed on disposals during the year
Exchange rate adjustments

Depreciation and impairment losses at the end of 2005

notes – consolidated balance sheet

Land and
buildings

Plant and
machinery

Other
equipment

9,030
84
139
(219)
920
63

11,162
–
199
(191)
1,447
53

10,017

12,670

2,467
369
70
(111)
22

2,817

4,897
1,094
101
(160)
25

5,957

2,272
26
164
(173)
158
45

2,492

1,538
231
–
(142)
32

1,659

Payments on
account and
assets in
course of
construction

3,997
235
3,397
–
(2,525)
91

Total

26,461
345
3,899
(583)
–
252

5,195

30,374

–
–
–
–
–

–

8,902
1,694
171
(413)
79

10,433

Carrying amount at the end of 2005

7,200

6,713

833

5,195

19,941

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

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

Depreciation and impairment losses at the end of 2004

8,597
63
(239)
643
(34)

10,058
384
(410)
1,153
(23)

9,030

11,162

2,247
344
8
(122)
(10)

2,467

4,211
931
127
(355)
(17)

4,897

2,550
135
(314)
(85)
(14)

2,272

1,561
230
3
(242)
(14)

1,538

3,156
2,557
–
(1,711)
(5)

24,361
3,139
(963)
–
(76)

3,997

26,461

–
–
–
–
–

–

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

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 73

notes – consolidated balance sheet

16 Investments in associated companies

18 Inventories

DKK million

2005

2004

DKK million

Aggregated financial information of
associated companies:
Sales
Net profit
Total assets
Total liabilities

Novo Nordisk‘s share of profit/(loss)
in associated companies
Novo Nordisk‘s carrying amount of investments
in associated companies

Market values of shareholdings in listed
associated companies:
– ZymoGenetics, Inc (NASDAQ symbol: ZGEN)
– Aradigm Corporation (NASDAQ symbol: ARDM)

1,948
(446)
4,828
2,051

319

926

2,687
(590)
5,350
2,765

(117)

883

2,248
–

2,627
74

In 2005, Novo Nordisk’s share of profit/(loss) in associated companies includes
unrealised capital gains amounting to DKK 186 million net related to Zymo-
Genetics, Inc (DKK 95 million in 2004). Novo Nordisk divested all of its share-
holding in Ferrosan A/S during the year and recorded a gain of DKK 260 million.

Until January 2005, Aradigm Corporation was an associated company of Novo
Nordisk (refer to note 2). The shareholding of 11% of the share capital in
Aradigm Corporation is now included as a long-term available-for-sale invest-
ment.

Investments in associated companies include goodwill amounting to DKK 13
million at the end of the year (DKK 13 million in 2004).

Please refer to page 101 for a list of Novo Nordisk’s associated companies.

Raw materials and consumables
Work in progress
Finished goods

Total inventories

2005

2004

1,131
4,581
2,070

1,130
4,127
1,906

7,782

7,163

Indirect production costs included in work
in progress and finished goods

3,536

3,240

Amount of write-down of inventories
recognised as expense during the year

Amount of reversal of write-down
of inventories during the year

19 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

548

327

146

2005

2004

5,213

4,431

369
72
(22)

419

398
(3)
(26)

369

17 Financial assets

DKK million

Financial assets classified as fair value
through profit and loss:
– Derivative financial instruments (refer to note 36)

Available-for-sale financial assets:
– Unit trust units
– Listed shares
– Unlisted shares
– Bonds

Loans:
– Amounts owed by affiliated companies

Total financial assets

Specification of financial assets:
Long-term (Other financial assets)
Current (Marketable securities and financial derivatives)

Total financial assets

Revaluation surplus on available-for-sale financial
assets recognised in equity during the year
Bonds with maturity exceeding 12 months
from the balance sheet date
Duration of the Group’s bond portfolio (years)
Redemption yield on the Group’s bond portfolio

Total trade receivables

4,794

4,062

2005

2004

Trade receivables (net) are equal to an
average credit period of (days)

The carrying amount of Trade receivables approximates their fair values.

20 Other receivables

DKK million

Prepayments
Interest receivable
Amounts owed by affiliated companies
Other receivables

2005

2004

522
53
94
786

458
23
101
458

Total other receivables

1,455

1,040

The carrying amount of Other receivables approximates their fair values.

198

815

–
85
56
1,502

18
37
85
508

1,891

1,500

169
1,722

159
1,341

1,891

1,500

1,001
0.7
2.9%

508
1.0
2.5%

74 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

21 Share capital

DKK million

Development in share capital:
A share capital
B share capital

At the end of the year

notes – consolidated balance sheet

2005

2004

107
602

709

107
602

709

The A share capital remained DKK 107 million from 2001 to 2005. In 2001 the B share capital was reduced by DKK 45 million from DKK 647 million to DKK 602 million
and remained that amount from 2002 to 2005.

At the end of 2005 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

As % of
share capital

Market value
DKK million

22,585,129
9,657,118
(1,263,028)

6.37%
2.72%
–0.36%

6,753
3,018
(206)
1,419

30,979,219

8.73%

10,984

Acquisition of treasury shares during the year is part of the share repurchase 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 relates to the employee share
programme announced in August 2005 and exercised share options.

Of the treasury B shareholding at the end of the year 5,218,243 shares are regarded as hedge for the share-based incentive schemes.

22 Long-term debt

DKK million

Mortgage debt and other secured loans with terms to maturity between 2008 – 2016
and a weighted average interest rate of 3.41%

Unsecured loans and other long-term loans with terms to maturity between 2007– 2011
and a weighted average interest rate of 4.54%

Total long-term debt

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

Total long-term debt

The debt is denominated in the following currencies:
DKK
EUR
USD
JPY
Other currencies

Total long-term debt

2005

2004

659

589

659

529

1,248

1,188

16
158
–
–
1,074

1,248

3
656
570
12
7

26
13
153
–
996

1,188

3
655
492
37
1

1,248

1,188

Adjustment of the above loans to market value at year-end 2005 would result in a gain of DKK 14 million (a cost of DKK 2 million in 2004).

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 75

notes – consolidated balance sheet

23 Deferred income tax liabilities

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)

2005

2004

1,084
40
(14)
(70)
(73)

931
125
(8)
8
28

967

1,084

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

Netting of deferred tax assets and deferred tax liabilities related to
income taxes for which there is a legally enforceable right to offset

Total deferred tax liabilities (net)

(147)
–
(1,861)
(87)
(14)
(764)

(2,873)

1,371
998
–
–
–
1,471

3,840

1,994

(1,994)

(879)

1,846

2005
Total

1,224
998
(1,861)
(87)
(14)
707

967

–

967

Assets

Liabilities

(100)
–
(908)
(83)
(1)
(1,237)

1,443
998
–
–
–
972

(2,329)

3,413

2004
Total

1,343
998
(908)
(83)
(1)
(265)

1,084

1,560

(1,560)

–

(769)

1,853

1,084

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, it would result in an immaterial income tax charge 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.

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 assets of a tax loss of DKK 32
million (DKK 70 million in 2004) have not been recognised in the Balance sheet. DKK 32 million expires within three years.

76 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – consolidated balance sheet

24 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 the legal regulations, fiscal requirements and economic conditions of the
countries in which the employees are employed, and the benefits are generally
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 Cost of goods sold, Sales and distribution costs, Research and development
costs or Administrative expenses.

DKK million

2005

2004

DKK million

2005

2004

Changes in present value of the defined
benefit obligations are as follows:
At the beginning of the year
Changed classification of pension plans
Current service cost
Interest cost on pension obligation
Actuarial (gains)/losses
Past service costs
Benefits paid to employees
Other
Exchange rate adjustments

609
70
104
27
77
(11)
(27)
(7)
33

500
0
84
19
16
2
(15)
22
(19)

Present value of defined benefit obligation
at the end of the year

875

609

Specification of present value of defined
benefit obligations:
Present value of funded obligations
Present value of unfunded obligations

Total present value of defined benefit obligations

Changes in fair value of plan assets are as follows:
At the beginning of the year
Changed classification of pension plans
Expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Benefits paid to employees
Other
Exchange rate adjustments

Fair value of plan assets at the end of the year

576
299

875

313
53
15
(6)
72
(21)
6
3

435

364
245

609

246
0
9
(5)
63
(6)
9
(3)

313

The Group expects to contribute DKK 94 million to its defined benefit pension
plans in 2006.

The major categories of assets held as a
percentage of total plan assets are as follows:
Equities
Bonds
Cash at bank
Property

50%
30%
18%
2%

56%
22%
20%
2%

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 (net)
Unrecognised past service costs

Net liability in the balance sheet

The above amounts 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)

Net recognised (assets)/liabilities

576
(435)

141

299
(120)
(4)

316

364
(313)

245
(39)
(7)

250

227
(57)

170

171
(49)

122

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 amounts recognised in the Income
statement regarding post-employment
defined benefit plans are as follows:
Current service cost
Interest cost on pension obligation
Expected return on plan assets
Actuarial (gains)/losses recognised in the year
Past service cost

Total expenses included in employee costs

Actual return on plan assets

The actuarial assumptions used in the 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

104
27
(15)
2
19

137

84
19
(9)
(3)
9

100

2.0% to 12.0%
1.0% to 10.0%
2.0% to 10.0%
2.0% to 14.0%
3.0%
1.0% to

For all major defined benefit plans actuarial computations and valuations are
performed annually.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 77

notes – consolidated balance sheet

25 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

Total other provisions

Provisions
for returned
products

Provisions
for sales
rebates

Other
provisions

403
213
–
(120)
–

496

–
496

496

924
2,376
–
(1,650)
145

1,795

–
1,795

1,795

391
84
(5)
(82)
40

428

335
93

428

2005
Total

1,718
2,673
(5)
(1,852)
185

2004
Total

1,311
1,666
(3)
(1,200)
(56)

2,719

1,718

335
2,384

2,719

358
1,360

1,718

Provisions 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. The provision is expected to be used within the normal operating cycle.

Provisions for sales rebates:
In some countries the actual rebates depend on which customers purchase the products. Factors that complicate the rebate calculations are the 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.
Please refer to note 5 for further information on rebates deducted from sales.

Other provisions:
Other provisions consist of various types of provisions, which represents management’s best estimate.

26 Short-term debt and financial derivatives

27 Other liabilities

DKK million

2005

2004

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
Derivative financial instruments (refer to note 36)

Total short-term debt

The debt is denominated in the following currencies:
DKK
EUR
USD
JPY
Other currencies

Total short-term debt

820
25
599

1,444

61
199
986
25
173

1,444

470
37
–

507

5
87
373
34
8

507

At year-end, the Group had undrawn committed credit facilities amounting to
DKK 7,461 million (DKK 6,694 million in 2004). The undrawn committed credit
facilities consist of a EUR 400 million and a EUR 600 million facility committed
by a number of Danish and international banks. The facilities mature in 2009
and 2012 respectively.

2005

1,734
463
83
55
2,242

4,577

2004

1,513
317
110
65
1,716

3,721

78 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – consolidated cash flow and financial resources

28 Other reversals with no effect on cash flow

31 Appropriation of net profit incl proposed dividends

DKK million

2005

2004

2003

Share-based payment costs
Increase/(decrease) in provisions
(Gain)/loss from sale of property,
plant and equipment
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

223
890

(64)
72

37
96
127

(186)
(86)

104
501

104
(10)

(8)
204
212

(95)
6

Other reversals with no effect on cash flow

1,109

1,018

76
56

35
(28)

8
207
149

(94)
(44)

365

29 Cash flows from acquisition of subsidiaries and business units

for the Parent company

DKK million

2005

2004

2003

Proposed appropriation of net profit
in the Parent company, Novo Nordisk A/S:
Dividends
Net revaluation reserve according
to the equity method
Retained earnings

1,945

1,594

1,488

3,898
15

3,377
35

166
3,179

Net profit

5,858

5,006

4,833

Total equity in the Parent company,
Novo Nordisk A/S:
Share capital (not available for dividends)
Share premium account *)
Net revaluation reserve according to the
equity method (not available for dividends)
Retained earnings
Exchange rate adjustments

709
–

709
2,565

10,460
16,310
142

6,562
16,701
(40)

3,185
18,396
(79)

27,621

26,497

24,776

DKK million

2005

2004

2003

Total equity

Dividends per share

6.00

4.80

4.40

The Financial statements of the Parent company Novo Nordisk A/S are prepared
in accordance with Danish GAAP. Compared to the Group accounting policies
this also includes amortisation of goodwill. The net profit and equity in 2005 of
Novo Nordisk A/S are DKK 6 million (DKK 7 million in 2004) and DKK 13 million
(DKK 7 million in 2004) respectively lower than the net profit and equity of the
Group.

*) In accordance with changes in the Danish Companies Act, the Share premium account

is transferred to Retained earnings.

Intangible assets
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

8
345
5
–
(8)

350

–

(350)

–

(350)

–
–
–
–
–

–

–
(10)
(54)
–
64

–

30 Cash and cash equivalents

DKK million

2005

2004

2003

Cash at the end of the year

3,303

3,433

1,262

Short-term bank loans and overdrafts
at the end of the year

(820)

(470)

(421)

Cash and cash equivalents
at the end of the year

2,483

2,963

841

At the end of 2005, 2004 and 2003 there were no marketable securities with
original maturity of less than three months.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 79

notes – additional information

32 Financial risk

32 Financial risk (continued)

Novo Nordisk has centralised the management of the Group’s financial risks.
The overall objective and policies for the company’s financial risk management
are outlined in the Treasury Policy, which is approved by the Board of Directors.
The Treasury Policy consists of the Foreign Exchange Policy, the Investment
Policy, the Financing Policy and the Policy regarding Credit Risk on Financial
Counterparts, and includes a description of allowed financial instruments and
risk limits.

Novo Nordisk only hedges commercial exposures and consequently does
not enter into derivative transactions for trading or speculative purposes.
Novo Nordisk uses a fully integrated Treasury Management System to manage
all financial positions. All positions are marked-to-market based on real-time
quotes and risk is assessed using generally accepted standards.

Foreign exchange risk
Foreign exchange risk is the principal financial risk within Novo Nordisk and as
such has a significant impact on the Income statement and the Balance sheet.

The major part of Novo Nordisk’s sales is in EUR, USD, JPY and GBP, while a
predominant part of production, research and development costs is 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 due to the Danish fixed-rate policy vis-à-vis the EUR.

A 5% change in USD, JPY and GBP versus DKK will have an impact of ap-
proximately DKK 350 million, DKK 150 million and DKK 90 million respectively
on operating profit in 2006. In addition, USD-related currencies will have an
impact of DKK 100 million.

The overall objective of foreign exchange risk management is to limit the
short-term negative impact on earnings and cash flow from exchange rate
fluctuations, thereby increasing the predictability of the financial results.

Novo Nordisk hedges existing assets and liabilities in major currencies as well
as future expected cash flows up to 24 months forward. Currency hedging is
based upon expectations of future exchange rates and takes place using mainly
foreign exchange forwards and foreign exchange options matching the due
dates of the hedged items. Expected cash flows are continuously assessed using
historical inflows, budgets and monthly sales forecasts. Hedge effectiveness is
assessed on a regular basis.

During 2005 the USD appreciated substantially, ending with a 15.7% in-
crease versus DKK. In 2004 the USD decreased by 8.2% versus DKK. The
JPY and the GBP ended 2005 with a minor appreciation of 1.8% and 3.7%
respectively versus DKK. In 2004 the JPY and the GBP decreased by 5.3% and
0.8% respectively versus DKK.

At year-end 2005 Novo Nordisk has covered the foreign exchange exposures
on the Balance sheet together with 12 months of expected future cash flow in
USD. For JPY and GBP the equivalent cover was 11 months and 10 months of
future expected future cash flow respectively. At the end of 2004 the USD
cover was 15 months, and for JPY and GBP the cover was 12 months and 8
months respectively.

Novo Nordisk only hedges partially invested equity in major foreign affiliates.
Equity hedging takes place using long-term cross-currency swaps. At year-end,
hedged equity made up 20% of the Group’s JPY equity. For 2004 24% of the
Group’s JPY equity was hedged.

Interest rate risk
Changing interest rates affect Novo Nordisk’s Income statement as well as the
Balance sheet. Novo Nordisk is mainly exposed to interest rate risk through
interest-bearing assets and liabilities.

The overall objective of interest rate risk management 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, high-rated, liquid bonds
denominated in DKK or EUR or in money market deposits likewise in DKK or
EUR. The interest rate risk of the investments is managed based on duration
measured against a predefined benchmark outlined in the Investment Policy.

DKK and EUR interest rates fell during the first half of 2005, but rose in the
second half of 2005. The Danish 2-year bond yield was 2.86% at the end of
2005, up from 2.54% at the end of 2004. The value of the bond portfolio of
Novo Nordisk was more or less unaffected by the interest rate development in
2005.

Liquidity risk
Novo Nordisk ensures availability of required liquidity through a combination
of cash management, highly liquid investment portfolios, and uncommitted as
well as committed facilities.

Counterparty risk
The use of derivative financial instruments and money market deposits gives
rise to counterparty exposure. To manage and reduce the credit risk on financial
counterparties, Novo Nordisk only enters into derivative financial contracts with
financial counterparties having a satisfactory long-term credit rating assigned
by international credit rating agencies. Money market deposits are only entered
into with financial counterparts having a satisfactory short-term credit rating.
The credit risk on bonds is limited as investments are made in liquid bonds with
solid credit ratings.

Credit risk on Trade and Other receivables is limited as Novo Nordisk has
no significant concentration of credit risk, with exposure being spread over a
large number of counterparties and customers.

33 Related party transactions

Novo Nordisk A/S is controlled by Novo A/S (incorporated in Denmark), which
owns 25.5% 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 is 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 provided by Novo A/S
Purchase of treasury shares

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

2005
Purchase/
(sale)

2004
Purchase/
(sale)

(12)
35
646

(248)
142
–

(5)
34
643

(363)
158
(7)

415

There have not been any material transactions with the Novo Nordisk Founda-
tion 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 informa-
tion 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.

80 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – additional information

Share options on Novozymes shares
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 140,308 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.

Employee shares
In 2005 a new employee share program was introduced. In Denmark and inter-
nationally employees bought 852,647 shares under this program.

In the US, Brazil, China and Russia the program is structured as a share option
scheme with a vesting period of three years and an exercise price of nil. A total
of 113,540 options have been granted under this part of the program.

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 annual 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 participating
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’ 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 creation 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 2005, the allocation to
the bonus pool amounts to DKK 35.5 million, corresponding to seven months’
salary. This amount was expensed in 2005. The cash amount has been con-
verted into 116,013 Novo Nordisk B shares using a share price of DKK 306,
equal to the average trading price for Novo Nordisk B shares on the Copen-
hagen Stock Exchange from 29 January to 12 February 2005. 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.

The total number of shares in the bonus pool relating to the years 2004 and

2005 now amounts to 242,357 shares.

As the long-term share-based incentive programme is evaluated by the Board
of Directors to have worked successfully in 2004 –2005, it will continue in 2006
with an unchanged structure.

34 Share-based payment schemes

Share options
Novo Nordisk has established share option schemes with the purpose of mo-
tivating 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 financial and non-financial goals decided by the
Board of Directors aligned with the Group’s long-term 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 –2005 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 shares.

For 2005, 820,234 options were granted. This corresponds to 94% of the
maximum number of options available for grant. The exercise price is 306. 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 in 2000, a specific share
option plan was established for Executive Management and the Senior
Management Board, where the granting of the options was subject to the suc-
cessful 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
corresponds to the market price of 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 had to be maintained at least until the end
of the vesting period for the options, ie to 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 parti-
cipant, whereas the launch-share options could be exercised within a period of
three years until February 2007.

The launch scheme was mandatory for members of Executive Management
and voluntary for the Senior Management Board. In 2001 and 2002, a launch-
option incentive programme was also offered to newly appointed members of
the Senior Management Board.

Assumptions
The market value of the Novo Nordisk B share options has been calculated using
the Black-Scholes option pricing model.

The assumptions used are shown in the table below:

2005

2004

2003

Expected life of the option in years (average)

Expected volatility

Expected dividend per share (in DKK)

Risk-free interest rate
(based on Danish government bonds)

Novo Nordisk B share price
at the date of grant

Novo Nordisk B share price
at the end of the year

35%

4.80

35%

4.40

15%

6.00

3.25%

3.50%

3.80%

320

288

241

355

299

241

In 2005 the expected volatility is based on one year’s historical volatility. In 2004
and 2003, the expected volatility was based on four years’ historical volatility.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 81

Average exercise
price per option
DKK

Market value
per option
DKK

Market
value
DKK million

notes – additional information

34 Share-based payment schemes (continued)

Outstanding share options in Novo Nordisk

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 Ordinary share option plan
of 1998 Ordinary 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

Granted in respect of 2005 (issued on 31 January 2006)
Employee share options (issued Oct–Dec 2005)
Exercised in 2005:

of 1997 Ordinary share option plan
of 1998 Ordinary share option plan
of 1999 Ordinary share option plan
of 2000 Ordinary share option plan
of Launch-share option plan

Expired/cancelled in 2005
Value adjustment

Outstanding at the end of 2005

*) The market value has been calculated using the Black-Scholes model with the parameters existing at year-end 2005.

Share options

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

820,234
113,540

(9,500)
(51,500)
(103,667)
(91,624)
(134,040)
(13,208)

4,975,886

306
0

190
125
198
198
198
227

238

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
2001 Ordinary share option plan
2000 Launch-share option plan
2001 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
684,980
718,600
10,764

(64,000)
(178,333)
(253,833)
(234,707)
–
(226,320)
–

(27,000)
(50,917)
(77,167)
(25,168)
(42,894)
–
–

13,500
125,750
356,500
503,125
642,086
492,280
10,764

Exercisable at the end of 2005

3,324,344

(957,193)

(223,146)

2,144,005

2002 Launch-share option plan
2003 Ordinary share option plan
2004 Ordinary share option plan
2005 Ordinary share option plan
2005 Employee share options

26,024
1,092,500
809,416
820,234
113,540

–
–
–
–
–

–
(24,333)
(5,500)
–
–

26,024
1,068,167
803,916
820,234
113,540

Outstanding at the end of 2005

6,186,058

(957,193)

(252,979)

4,975,886

Average market price of Novo Nordisk B shares per trading period in 2005

February
May
August
November

Total exercised options

223
195

125
198
223

216

267

190
125
198
198
198
216

190
125
198
198
332
198
332

322
195
267
306
0

58
86

58
58
58

104

75
75
75
75
75
75

57
312

99
99
99
99
99
99

177
94

(1)
(3)
(2)
42

307

(1)
(4)
(7)
(11)
(7)
(1)
79

439

47
35

(1)
(5)
(10)
(9)
(13)
(1)
152

127

634*

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
8/2 2005 – 7/2 2010
1/2 2004 – 31/1 2007
8/2 2005 – 7/2 2010

7/2 2006 – 6/2 2011
6/2 2007 – 5/2 2012
31/1 2008 – 30/1 2013
31/1 2009 – 30/1 2014
1/11 2008 – 31/12 2008

Average
market price
DKK

306
302
324
329

Exercised
share
options

118,560
74,530
138,753
58,488

390,331

82 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – additional information

35 Management‘s remuneration, share options and shareholdings

For information on the Board of Directors, the members of Executive Management and of the Senior Management Board, please refer to pages 108 –110 of the Annual
Report.

Remuneration
It is the policy of Novo Nordisk that remuneration to the Board of Directors (eleven in total), Executive Management (six in total) and the 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’s fee: the Audit Committee
chairman (1.25 times) and an Audit Committee member (0.5 times). In 2005, 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. No other amounts or benefits are paid to the Board members or Audit Committee
members.

DKK million

Mads Øvlisen (Chairman of the Board)
Sten Scheibye (Vice chairman of the Board)
Kurt Anker Nielsen (Chairman of the Audit Committee)
Other Board of Directors /Audit Committee members

Total

Board of
Directors

Audit
Committee

0.8
0.5
0.3
2.2

3.8

–
–
0.4
0.3

0.7

2005
Total

0.8
0.5
0.7
2.5

4.5

Board of
Directors

Audit
Committee

0.8
0.4
0.3
2.1

3.6

–
–
0.4
0.3

0.7

2004
Total

0.8
0.4
0.7
2.4

4.3

Executive Management and Senior Management Board
The remuneration to Executive Management and the Senior Management Board is based on a fixed salary, a potential cash bonus of up to four months’ salary, pension
contributions of 20% to approximately 30% of the cash salary including bonus, as well as non-monetary benefits in the form of car and phone. Additionally, Executive
Management and the 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 be allocated annually 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
after 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 the Senior Management Board employed in foreign subsidiaries differs 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

2005
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

Share bonus pool *)

Fixed salary

Cash bonus

Pensions

Car allowance
etc

Share-based
payment

Total
remuneration

5.5
2.7
2.6
2.7
2.9
2.7

19.1

33.9

1.6
0.9
0.8
0.9
0.9
0.7

5.8

9.0

1.8
0.9
1.1
0.9
1.1
0.8

6.6

9.7

0.3
0.3
0.3
0.3
0.8
0.3

2.3

3.3

–
–
–
–
–
–

–

35.5

9.2
4.8
4.8
4.8
5.7
4.5

33.8

55.9

35.5

*) 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 the year using the grant date market value of Novo Nordisk B shares. 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 as a
result of lower than planned value creation in subsequent years.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 83

notes – additional information

35 Management‘s remuneration, share options and shareholdings (continued)

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

Car allowance
etc **)

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

0.3
0.3
0.3
0.3
0.3
0.3

1.8

5.3

–
–
–
–
–
–

–

8.7
4.6
4.4
4.6
5.1
4.1

31.5

67.1

Senior Management Board in total

39.4

11.3

11.1

Share bonus pool *)

33.7

**) For 2004, Car allowance etc has been adjusted to reflect a revaluation of car lease expenses.

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 contributions. This equals amounts between
DKK 10.5 million and DKK 21.9 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 300 thousand in 2005 (SEK 300 thousand in 2004) but does not retain the compensation from ZymoGenetics, Inc. Lars
Rebien Sørensen furthermore serves as a member of the Supervisory Board of Bertelsmann AG for which he receives EUR 41 thousand in 2005, which he retains.

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

Executive Management in total

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 Market value *)
DKK million
of the year

115,500
65,280
66,780
37,520
67,280
65,280

–
–
–
–
(38,530)
–

417,640

(38,530)

98,580
37,840

136,420

–
–

–

–
–
–
–
–
–

–

–
–

–

115,500
65,280
66,780
37,520
28,750
65,280

379,110

98,580
37,840

136,420

16.8
9.5
9.8
5.5
3.8
9.5

54.9

15.1
5.8

20.9

60.9

Senior Management Board in total ****)

585,754

(167,510)

15,500

433,744

Total

1,139,814

(206,040)

15,500

949,274

136.7

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 cover the holdings of share options by Senior Management Board members appointed in 2005.

In addition, Kurt Anker Nielsen has share options in Novo Nordisk, issued by Novo A/S. At the end of 2005, 21,000 of these options were outstanding.

84 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – additional information

35 Management‘s remuneration, share options and shareholdings (continued)

Management’s holding of Novo Nordisk shares
The internal rules for 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
Anne Marie Kverneland
Göran A. Ando
Henrik Gürtler
Johnny Henriksen
Jørgen Wedel
Kurt Anker Nielsen
Kurt Briner
Niels Jacobsen
Stig Strøbæk

Board of Directors in total

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

Share bonus pool for Executive Management
and Senior Management Board **)

At the beginning
of the year

Purchased
during the year

Sold
during the year

At the end Market value *)
DKK million
of the year

17,330
400
1,600
–
–
300
5,555
27,612
2,400
11,000
400

66,597

3,800
5,545
4,690
1,555
5,000
100

–
–
60
–
–
60
–
5,000
–
–
60

5,180

60
60
60
60
38,590
60

–
–
–
–
–
–
–
(5,000)
(2,400)
–
(300)

17,330
400
1,660
–
–
360
5,555
27,612
–
11,000
160

6.1
0.1
0.6
–
–
0.1
2.0
9.8
–
3.9
0.1

(7,700)

64,077

22.7

–
(5,445)
–
–
(43,430)
–

3,860
160
4,750
1,615
160
160

1.3
0.1
1.6
0.6
0.1
0.1

3.8

20,690

38,890

(48,875)

10,705

56,504

148,600

(165,631)

39,473

14.0

126,344

116,013

–

242,357

85.9

Total

270,135

308,683

(222,206)

356,612

126.4

*) 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. Based on the split of participants at the establish-
ment 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 as a result of lower than planned value creation in subsequent years.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 85

notes – additional information

36 Derivative financial instruments

Novo Nordisk uses a number of financial instruments to hedge currency exposure and, in line with the Group’s treasury policies, Novo Nordisk only hedges commercial
exposures and consequently does not enter into derivative transactions for trading or speculative purposes. 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 2005 and 2004 specified by hedging instrument and the major currencies. The fair value of the
financial instruments qualifying for hedge accounting under IAS 39 is recognised directly under equity until the hedged items are recognised in the Income statement.
At year-end a loss of DKK 345 million is deferred via equity (a gain of DKK 461 million in 2004). The fair values 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

DKK million

Forward contracts, net sales:
USD
JPY
GBP
Other

Total hedging of forecasted transactions
qualifying for hedge accounting under IAS 39

2005

2004

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

5,941
1,738
807
234

8,720

–
18
–
–

348
–
6
9

363

4,526
1,382
567
201

6,676

375
65
14
7

461

Financial instruments hedging forecasted transactions qualifying for hedge accounting under IAS 39, but for which hedge accounting is not applied

Interest rate swaps:
DKK/DKK
EUR/EUR
JPY/JPY

Total hedging of forecasted transactions
qualifying for hedge accounting under IAS 39,
but for which hedge accounting is not applied

310
502
430

1,242

–
–
–

–

34
8
–

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

1,056
835

1,891

11,853

3
7

–
–

–

310
501
422

1,233

1,424
372

1,796

–
–
–

–

84
12

405

9,705

557

–
–
–
–

–

34
6
–

–
–

–

86 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – additional information

36 Derivative financial instruments (continued)

2005

2004

The financial contracts existing at the end of the year cover expected
cash flow in key currencies in the following number of months:
USD
JPY
GBP

The above financial contracts (cash flow hedges) are expected to be
recognised in the Income statement in the following number of months:
USD
JPY
GBP

12 months
11 months
10 months

15 months
13 months
12 months

15 months
12 months
8 months

15 months
12 months
10 months

The maturity of the swaps existing at the end of 2005 is December 2007, December 2011 and December 2012 (September 2006 and December 2012 at the end of 2004)
and the interest margins are (2.79%) to (0.22%) ((3.20%) to (0.27%) at year-end 2004).

Hedging of assets and liabilities
The table below shows the fair value of fair value-hedging activities for 2005 and 2004 specified by hedging instrument and the major currencies. All changes in fair
values are recognised in the Income statement amounting to a loss of DKK 35 million in 2005 (a gain of DKK 284 million in 2004).

DKK million

Forward contracts, net sales:
USD
JPY
GBP
Other

Total forward contracts

Currency swaps:
EUR/USD
JPY/DKK

Total currency swaps

Total hedging of assets and liabilities

2005

2004

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

2,399
531
273
204

3,407

504
314

818

4,225

–
14
–
–

61
84

145

159

185
–
4
5

194

–
–

–

1,687
485
268
88

2,528

492
314

806

180
20
10
–

210

–
87

194

3,334

297

–
–
–
3

10
–

The maturity of the swaps existing at the end of 2005 is December 2011 (December 2011 at the end of 2004) and the interest margins are 0.99% to 4.05% ((0.90%)
to 4.05% at year-end 2004).

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.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 87

notes – additional information

36 Derivative financial instruments (continued)

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 2005 and 2004 specified by hedging instrument and
the major currencies. All changes in fair values relating to currency are recognised directly under equity, amounting to DKK 10 million in 2005 (DKK 13 million in 2004).
All changes relating to interest rates are recognised in the Income statement, amounting to DKK 1 million in 2005 (DKK 1 million in 2004).

DKK million

Currency swaps:
JPY/DKK

Total hedging of net investments in foreign subsidiaries

2005

2004

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

–

The maturity of the swap existing at the end of 2005 is September 2006 (September 2006 at the end of 2004) and the interest margin is 2.69% (2.69% at year-end
2004).

The financial contracts existing at the end of the year hedge the following share of the major net investments:

DKK million

USD
JPY
GBP
EUR *)
Other

Total

2005

2004

Net investment

% covered

Net investment

% covered

1,762
716
128
2,114
3,066

7,786

0%
20%
0%
0%
0%

1,126
544
141
2,380
1,477

5,668

0%
24%
0%
0%
0%

*) including subsidiaries with EUR as functional currency regardless of the local currency in the subsidiary.

Total hedging activities
The table below summarises the fair values of all the hedging activities of Novo Nordisk.

DKK million

Currency-related instruments:
Forward contracts
Currency options
Currency swaps

Total currency-related instruments

Interest-related instruments:
Interest rate swaps

Total interest-related instruments

Total derivative financial instruments included
in marketable securities and in short-term debt

The fair values at year-end are recognised in:
Income statement
Equity:
– Cash flow hedges
– Equity swaps (included in exchange rate adjustment
of investments in subsidiaries)

Total fair values

2005

2004

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

12,127
1,891
963

14,981

1,242

32
10
156

198

–

557
–
–

557

9,204
1,796
951

11,951

1,233

671
96
101

868

–

16,223

198

599

13,184

868

170

198

236

363

–

599

394

461

868

3
–
10

–

88 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

37 Commitments and contingencies

DKK million

Commitments

Operating lease commitments
The operating lease commitments below are related
to non-cancellable operating leases primarily related
to premises, company cars and office equipment.
Approximately 61% of the commitments are related to
leases outside Denmark. The lease costs for 2005 and
2004 were DKK 752 million and DKK 662 million re-
spectively.

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

2005

2004

456
386
306
261
332
722

349
278
202
164
135
450

2,463

1,578

Purchase obligations

819

1,274

The purchase obligations primarily relate to con-
tractual obligations to investments in property, plant
and equipment including purchase agreements re-
garding medical equipment and consumer goods.
Novo Nordisk expects to fund these commitments
with existing cash and cash flows from operations.

Obligations relating to research and
development projects

1,241

674

Novo Nordisk has engaged in research and develop-
ment projects with a number of external corporations.
The major part of the obligations comprises develop-
ment obligations relating to the option fee on pro-
teins developed by ZymoGenetics, Inc, fees on the
NovoSeven ® expansion programmes and liraglutide
clinical trials.

Other guarantees

255

224

Other guarantees primarily relate to guarantees issued
by Novo Nordisk in relation to rented property.

Security for debt

1,791

1,722

Land, buildings and equipment etc at carrying amount.

notes – additional information

World Diabetes Foundation
At the Annual General Meeting of Novo Nordisk A/S in 2002 the shareholders
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 donations 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 52 million in 2005 is recognised
in the Income statement.

Contingencies

Pending litigation
The polish Customs and Tax Authorities have been investigating a number of
international companies, alleging overstatement of the customs value of im-
ported pharmaceutical products. Such overstatement is claimed to have led to
margins higher than allowed under Pricing Regulations in force until April 2002,
a misstatement of VAT, and potential increases in reimbursement from the
Polish National Health Fund. In the opinion of management, Novo Nordisk has
acted in compliance with Polish legislation, but in spite of this there is a risk of
further legal actions against Novo Nordisk. The precise outcome of such legal
actions is not expected to have a material impact on Novo Nordisk’s financial
position, results of operations or cash flows.

As of January 26 2006, Novo Nordisk Inc. as the majority of hormone therapy
product manufacturers in the US, is a defendant in product liability lawsuits
related to hormone therapy products. These lawsuits currently involve a total of
37 individuals who allege to have used a Novo Nordisk hormone therapy pro-
duct. These products (Activella ® and Vagifem ®) have been sold and marketed in
the US since 2000. Until July 2003, the products were sold and marketed exclu-
sively in the US by Pharmacia & Upjohn Company (now Pfizer Inc.). According to
information received from Pfizer, an additional 13 individuals currently allege, in
relation to similar lawsuits against Pfizer Inc., that they also have used a Novo
Nordisk hormone therapy product. Currently, it is expected that the first trial
may take place in the third or fourth quarter of 2006; however, Novo Nordisk is
not expecting the claims to impact Novo Nordisk’s financial position, results of
operations or cash flows.

The office of the US Attorney for the Eastern District of New York has served
Novo Nordisk with a subpoena calling for the production of documents relating
to the company’s US marketing and promotional practise. At this time, the
company believes that the investigation is limited to its insulin products. The
subpoena indicates that the documents are necessary for the investigation of
potential criminal offences relating to healthcare benefit programmes. Novo
Nordisk is cooperating with the US Attorney in this investigation.

At this time, Novo Nordisk cannot determine or predict the outcome of this
matter. In addition, the company cannot predict how long the investigation will
take or when it will be able to provide additional information.

In addition, the Novo Nordisk Group is engaged in certain litigation pro-
ceedings. In the opinion of management, settlement or continuation of these
proceedings will not have a material effect on the financial position, results of
operations or cash flows 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 con-
nection with the demerger in November 2000.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 89

notes – additional information

38 Reconciliation to US GAAP

Novo Nordisk’s Consolidated financial statements have been prepared in ac-
cordance with International Financial Reporting Standards (IFRS), which as
applied by the Group differ in certain significant respects from United States
Generally Accepted Accounting Principles (US GAAP). The effects of the
application of US GAAP to net profit and equity are set out in the tables below.
A description of the Group’s IFRS accounting policies is set out in notes 1, 2
and 3.

a) Borrowing costs

Under IFRS an entity can choose whether to capitalise or expense borrowing
costs on self-constructed assets. Novo Nordisk has chosen to expense bor-
rowing costs under IFRS. Under US GAAP, borrowing costs incurred during
the construction period must be capitalised and depreciated as part of the
asset. Total capitalised borrowing costs under US GAAP as of 31 December
2005 were DKK 395 million.

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, Novo Nordisk has not complied with US GAAP hedge accounting
documentation requirements for the years prior to 2004.

c) Acquired in-process research and development projects

Under IFRS, acquired in-process research and development projects are
capitalised as intangible assets at the price paid, with annual impairment
testing and subsequent amortisation when the product receives marketing
authorisation.

According to US GAAP, such projects are expensed immediately following
the acquisition as the feasibility of the acquired research and development
project has not been fully tested and the technology has no alternative future
use.

The future amortisation of the assets is therefore reversed under US GAAP.

d) Acquired single-purpose research and development tangible assets

US GAAP requires a company to expense acquired tangible assets used in a
research and development project if these assets do not have an alternative
use in future R&D projects or otherwise (single-purpose R&D assets). Under
IFRS there is no such requirement to expense single-purpose R&D assets.

e) Unrealised capital gain on investments in research

and development 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 securi-
ties are not common stock or the main activity of the investee is research and
development.

f) 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 requires
the gains to be amortised over the lease term.

g) Impairment of goodwill

The impairment test models under IFRS and US GAAP are different and can
lead to different impairment losses.

According to US GAAP, goodwill must be tested for impairment annually

and whenever an indication occurs on each “reporting unit level”.

According to IFRS, goodwill must be tested for impairment annually and

whenever an indication occurs on each “cash-generating unit level”.

h) Other minor differences

Novo Nordisk has adjusted its accounting policies in 2004 to eliminate
differences between the Group’s IFRS accounting policies and US GAAP
accounting policies relating to finance lease and currency option premiums.
Besides this, there are some minor differences relating to pension provisions
and accounting for associated R&D companies.

None of the differences mentioned are individually significant and they are

therefore shown as a combined total.

Pension provisions
The methodology for accounting for defined benefit plans is similar under
IFRS and US GAAP. However there are some minor differences in the details
relating to the actuarial assumptions, minimum pension liability and past
service costs. In 2005, these differences have resulted in a reduced liability
amounting to DKK 6 million under US GAAP.

Under IFRS an entity participating in a multi-employer pension plan is
required to recognise any pension deficit in the multi employer plan that they
are contractually obligated to cover. Under US GAAP such a liability is con-
sidered a contingent liability and is not recognised.

Accounting for associated R&D companies
The method of calculating Novo Nordisk’s share of profit or loss in associated
companies has historically been slightly different under IFRS and US GAAP.
The methods have been aligned in 2004.

i) Tax arising from the difference between IFRS and US GAAP

and differences related to deferred taxes
This reconciliation item includes all tax effects due to the above-mentioned
reconciling items including accounting for deferred taxes relating to inter-
company profits.

Impact of temporary differences related to intercompany profits
Under IFRS and US GAAP, unrealised profits resulting from intercompany
transactions are eliminated from the carrying amount of assets, such as
inventories. In accordance with IFRS, the Group calculates the tax effect with
reference to the local tax rate of the company that holds the inventory (the
buyer) at period-end. However, US GAAP requires that the tax effect is calcu-
lated with reference to the local tax rate in the seller’s or manufacturer’s
jurisdiction.

In prior years, the differences between the IFRS and US GAAP calculations
have been immaterial; hence no reconciliation item has been reported. Due
to a significant increase in internal profits in 2005, Novo Nordisk has incor-
porated the difference between IFRS and US GAAP figures amounting to
DKK 466 million.

j) Statement of cash flow and financial resources

In the Statement of cash flow and financial resources, financial resources
comprise current asset investments and cash less short-term bank loans.
According to US GAAP, cash and cash equivalents consist solely of cash and
current asset investments with a remaining term to maturity of less than
three months. Current asset investments with remaining term to maturity
exceeding three months are presented as investing activities, and short-term
bank loans are recorded as financing activities.

90 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

notes – additional information

38 Reconciliation to US GAAP (continued)

The application of the US GAAP described would have resulted in the following adjustments:

DKK million

2005

2004

2003

Adjustments to net profit:
Net profit in accordance with IFRS
a) Borrowing costs
b) Financial instruments
c) Acquired in-process R&D projects
d) Acquired single-purpose R&D assets
e) Unrealised capital gain on investments in research and development companies
f) Sale and lease-back transactions
g) Impairment of goodwill
h) Other minor differences

i) Tax on the above-mentioned differences between IFRS and US GAAP and deferred taxes

Net profit in accordance with US GAAP

Adjustments to equity:
Equity in accordance with IFRS
a) Borrowing costs
c) Acquired in-process R&D projects
d) Acquired single-purpose R&D assets
f) Sale and lease-back transactions
g) Impairment of goodwill
h) Other minor differences including currency effect

i) Tax arising from the difference between IFRS and US GAAP and deferred taxes

5,864
15
–
(131)
(160)
(186)
(110)
–
6

(400)

4,898

27,634
281
(301)
(160)
(136)
–
58

(392)

5,013
(2)
–
(170)
–
(96)
(26)
(53)
–

4,685

26,504
266
(170)
–
(26)
–
–

4,833
(28)
122
–
–
(85)
–
31
1

(30)

4,844

24,776
268
–
–
–
53
34

Equity in accordance with US GAAP

26,984

26,582

25,155

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

US GAAP earnings per share:
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 *)

*) For translation into USD, the exchange rate at 31 December is used.

41,960
14,326

41,887
14,903

2.36
2.35
2.36
2.35

37,433
10,929

34,564
9,788

37,643
11,061

35,004
9,849

2.55
2.53
2.55
2.53

2.38
2.38
2.38
2.38

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 91

consolidated non-financial statements

In 2004 Novo Nordisk began to report on the company’s financial and non-
financial performance in one, inclusive document, the Annual Report. This
move reflects the company’s objective to ‘strive to conduct its activities in a
financially, environmentally and socially responsible way’. Recognising that truly
integrated reporting is more than putting two documents into one volume,
Novo Nordisk has embarked on a process to further integrate reporting prac-
tices. This entails alignment of key priorities, target-setting and definition of key
performance indicators, in consultations that involve internal and external
stakeholders. This is done in respect of current best practice and the principles
of materiality, completeness and responsiveness (see p. 107). Data definitions
are included in accounting policies on pp 98–99.

One step in this direction is a revision of past years’ format for reporting on the
company’s sustainability-driven activities. The ‘Environmental and social high-

lights table’ and the ‘Triple Bottom Line performance indicators’ presented in
Novo Nordisk Annual Report 2004 have been reviewed on the basis of feedback
from stakeholders and as part of the assurance process. As a result, material
performance data are presented in the ‘Non-financial highlights’ (see p 53).
The Non-financial Statements on the following pages present and discuss per-
formance during 2005. The selection of information reflects evolving priorities
in response to business and societal challenges.

To ensure transparency, an update of the complete ‘Environmental and social
highlights table’ and the ‘Triple Bottom Line performance indicators’ is available
online along with interactive charts for underlying data at novonordisk.com/
annual-report:how-we-perform.

Economics

Economic impacts
The development in the economic indicators has been as expected. Expenditure
on R&D is an important capacity builder for society and a source of innovation
creating future profitability for Novo Nordisk.

The ratio of expenditure on R&D to expenditure on physical investments (1.3:1)
reflects the continued increasing importance of R&D for Novo Nordisk. In the
period 2000 –2002 this ratio was 0.9:1 and 1:1. The slight increase in the share
of R&D as a share of sales (from 15.0% in 2004 to 15.1% in 2005) reflects the
fact that R&D expenditure has risen by 17% while sales have risen by 16%. The
wage share of R&D (41.2%) is an indication of the company’s impact as a
capacity builder in the community.

Most production facilities, 55% of the full-time employees and 79% of tangible
assets are in Denmark. The level and location of the absolute investment is
a measure of the company’s economic capacity in the near future and reflects
its aim to supply the market with products and to continue its internationalisa-
tion. In 2005, Novo Nordisk invested DKK 4 billion in new production facilities
globally (in Brazil, the US, France and China), up from DKK 3 billion in 2004.

In 2005, Novo Nordisk created 1,735 new positions globally and had 22,007
full-time positions; measured as full-time equivalents (FTE). These jobs translate
into 52,200 indirect global jobs in the supply chain from production needs and
employees’ private consumption. The majority is due to production (41,400)
but also the effect of private consumption from Novo Nordisk employees is
significant (10,800).

Measured by turnover Novo Nordisk is the 11th largest company in Denmark.
In terms of R&D investments Novo Nordisk is the largest Danish company and
ranks as number 36 on a European scale (in 2003 numbers). Among European
pharmaceutical companies Novo Nordisk ranks as number eight regarding R&D
investments.

In 2005, total corporate taxes constituted 7% of sales. In Denmark 13% of
taxes are paid as local taxes and 87% as state taxes. In 2005, Novo Nordisk ac-
counts for 3.4% of Danish corporate taxes and an estimated 0.6% of employ-
ment in Denmark. Novo Nordisk employees accounted for 0.6% of total Danish
income taxes.

Remuneration constituted 34% of the cash added value, mainly in the devel-
oped world, and particularly in Denmark, where the majority of Novo Nordisk’s
workforce is located. The value added per employee is DKK 794,000 indicating
the high productivity of Novo Nordisk’s employees.

Novo Nordisk’s sales in 2005 accounted for 2.2% measured as a share of Danish
GDP, as compared to 2% in 2004. In 2005, the company’s economic contri-
bution to overall economic wealth for the Danish society was 1.3% of Gross
Value Added (GVA), and 4.8% of Danish exports compared to 3.9% in 2004.

Ratio of R&D expenditure to tangible investments
R&D as share of sales
Total tangible investments
Remuneration as share of cash value added
Employment impact worldwide (direct and indirect)
Total corporate tax as share of sales
Novo Nordisk exports as share of Danish exports

%
DKK million
%
Jobs
%
%

2005

2004

2003

1.3:1
15.1
4,009
34
74,200
7.0
4.8

1.5:1
15.0
2,999
34
69,500
8.4
3.9

1.8:1
15.5
2,273
34
64,900
9.7
4.4

92 Consolidated Non-financial Statements

Novo Nordisk Annual Report 2005

economic stakeholder model

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, this will benefit customers, employees and suppliers. For customers, in turn, the products 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. Novo Nordisk’s 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.

Society
As a business, Novo Nordisk impacts through sustainable business
practices, investment, employment (estimated a total of 74,200
jobs globally), environmental impact and contribution to GDP/
export (2.2%/4.8% in Denmark).

As a pharmaceutical company, Novo Nordisk provides knowledge,
R&D and healthcare products (insulin for 12–14 million people)
and outreach through improved awareness, diagnosis or treatment
of diabetes (for at least 22 million people).

v k

k v k

vk vk vk v

k v

pit
e
t
u
r

s f

s
t

e
t
a
r
e
p
o
o
t
e
c
n
e
c

L
h

f
h
t
l
a
e
W

n
t

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
Products f

Customers
Novo Nordisk’s products provide
health for customers in inter-
action with the healthcare sec-
tor. Novo Nordisk has 52% of
the global insulin market and
20% of the global diabetes
care market.

v
k

h Profits
M aterials f

T
a
x
e
s

h
S
e
r
v
c
e
s

vk vk vk vk vk v

k v

k vk

v
k

k vk v

Investors/funders
Risk capital for develop-
ment and production
of new products is
rewarded through
dividend and share
prices (38% are non-
Danish investors).

k v k v
v

Employees
k
22,460 employees’
v
knowledge and product-
ivity are a major part of
k
the company’s intangible
v
value. 44% of employees
work outside Denmark.
34% of value added is
remuneration.

k
v

Suppliers
k
Suppliers profit from the location
of Novo Nordisk in their local
community and from the com-
pany’s need for long-term stable
supply partnerships globally.
An estimated 31,600 jobs are
created at suppliers in Denmark
and 41,400 globally.

Public sector
Taxes are paid to fund public
activities in society. In return,
services are received. Novo
Nordisk’s tax payments are
3.4% of corporate taxes in
Denmark. Novo Nordisk’s
employees in Denmark pay
0.6% of the country’s total
income tax.

Cash value distribution (2005)

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 services*)

Cash added value (a minus b)
Remuneration

c:
d: Dividend and interest payments
e:
f:

Taxes
Future growth

33,028
15,556
17,472
11,277
4,691
2,138
(634)

100%
47%

34%
14%
6%
(1%)

100%
65%
27%
12%
(4%)

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

Novo Nordisk Annual Report 2005

Consolidated Non-financial Statements 93

consolidated non-financial statements

Environment

Resources
The consumption of resources has increased since 2004. This is the case for
both water and energy consumption, which increased by 9% and 7% respect-
ively. However, at the same time the efficiency of water and energy use
improved by 8% and 9% respectively (see EPI data below). The consumption of

materials increased by 35%. The large increase is mainly due to changes in the
production process in Kalundborg, resulting in a high consumption of certain
raw materials.

Water consumption
Energy consumption
Raw materials and packaging materials

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

2005

3,014
2,591
150

2004

2,756
2,408
111

2003

2,621
2,299
110

Waste water
The changes in the measured components in waste water with regard to
nitrogen and phosphorus are at the same level as in 2004, as expected with
the increase in the production. Emissions of COD have decreased by 10%. A

significant part of the decrease is due to a 38% decrease in the COD quantity at
site Bagsværd due to a lower COD content in the wastewater from the pro-
duction facilities.

COD
Nitrogen
Phosphorus

Tons
Tons
Tons

2005

1,303
126
22

2004

1,448
121
21

2003

1,187
122
21

Waste
There has been an increase in solid waste of 9% compared to 2004. This is a
combination of an increase in the non-hazardous waste of 32% and a decrease
in hazardous waste of 8%. The increase in non-hazardous waste is mainly due
to the registration of a new waste fraction at site Hillerød which accounts for
16% of total non-hazardous waste. The recycling percentage has decreased to
33% from 40% in 2004. Since 2003, large quantities of ethanol waste from site

Kalundborg are sent for destruction elsewhere and not recycled for safety and
environmental reasons. This development follows the change in production
towards producing more insulin analogues. The site is working with a range of
initiatives to ensure a high rate of regeneration of the ethanol before it becomes
waste. The solid waste is exclusive of the quantity of by-products.

Total waste
– Non-hazardous waste
– Hazardous waste
Recycling percentage

Tons
Tons
Tons
%

2005

2004

2003

23,776
12,145
11,631
33

21,855
9,203
12,652
40

21,356
9,370
11,986
41

Emissions to air
In 2005, emissions to air generally developed as expected. The emission of
organic solvents has increased by 8%, which is due to smaller increases at all
sites. Of energy-related emissions, CO2 increased by 5% due to a general
increase in energy consumption by 7%. In 2005, Novo Nordisk decided to
change the method for calculating energy-related emissions. This new calcula-

tion method is in compliance with the GHG Protocol and approved by WWF as
a basis for Novo Nordisk’s inclusion in the Climate Savers programme (see
Accounting policies on p. 98). Using this new calculation method, the level of
CO2 emissions has increased for all reporting years except for 2004, where it is
lower than reported in 2004.

CO2
Organic solvents

1,000 tons
Tons

2005

2004

2003

226
124

214
115

206
137

94 Consolidated Non-financial Statements

Novo Nordisk Annual Report 2005

consolidated non-financial statements

Eco-productivity indices (EPI)
The eco-productivity indices (EPIs) for water and energy improved by 8% and
9% respectively, as compared with 2004. In the period 2001–2005 the average
annual realised improvements are 8% for water and 14% for energy, as
measured by EPI indices. Hence, the five-year targets of improvements of the
water and energy use efficiency at 5% and 4% per annum, respectively, have
been achieved. As of 2006, a new indicator will be used to measure consumed
water and energy against production: the Eco Intensity Ratios (EIR) for water
and energy. EIR for the two production areas, Diabetes Care and Biopharma-
ceuticals, will be reported. There will not be an aggregated target of EIR for

Novo Nordisk. A long-term target covering 2006 –2010 for the EIR will be
set during 2006 and will be based on lessons learned in 2006 with the new
indicator. EIR targets have been set for water and energy for 2006. To get the
best experience with EIR, the target is based on a bottom-up process where
Production has given its best estimates for energy and water consumption and
related these to the forecasted production. The EIR targets are implemented in
the Balanced Scorecard for Novo Nordisk as well as in the bonus scheme. A
more comprehensive explanation of the EIR concept will be stated in the next
Annual Report.

EPI for water
EPI for energy

2005

2004

2003

108
109

107
108

110
124

Compliance
In 2005, Novo Nordisk continued to be challenged on compliance. The number
of breaches of regulatory limit values increased to 174 from 74 in 2004. The
number of accidental releases increased from 29 in 2004 to 83 in 2005. The
targets for both indicators are zero and were therefore not met. The registered
breaches and accidental releases are evaluated to be minor incidents with no or
only minor impact on the external environment. 164 out of 174 breaches of
regulatory limits (94%) are related to pH and temperature in waste water,
which are monitored through continuous measurements. The increase in the
number of breaches is therefore largely due to the fact that there have been
challenges in dealing with pH in the wastewater at most sites in spite of the fact
that the company has invested up to DKK 10 million per neutralisation system at

some sites. Several initiatives have been taken to ensure increased focus on
compliance and one reporting standard has been successfully implemented
globally. 50 out of the 83 accidental releases (60%) were related to accidental
releases of cooling agents such as HCFCs and HFCs. A campaign in 2005
focused on accidental releases from these types of facilities. In 2005, there was
one accidental release of GMOs at the site in Montes Claros. There will be a con-
tinued focus on compliance and preventive measures to help curb the curve. In
2006 a three-stringed approach will be taken to address this challenge: first, a
revision of approvals in close cooperation with authorities; second, education;
and third, focused exchange of experiences.

Breaches of regulatory limit values
Accidental releases

Number
Number

*) Was reported as 76 and 30. Reporting error now corrected.

2005

2004

2003

174
83

74 *)
29 *)

105
20

Novo Nordisk Annual Report 2005

Consolidated Non-financial Statements 95

consolidated non-financial statements

Social

Living our values
Novo Nordisk’s performance improved or remained at a high level on all param-
eters in the area of ’living our values’. In the annual climate survey, eVoice, the
average of respondents’ answers as to whether ‘social and environmental issues
are important for the future of the company’ remained at a high level of 4.2 (on
a scale from 1– 5, with 5 being the highest score). Also in eVoice, the average of

respondents’ answers as to whether ‘my manager’s behaviour is consistent with
Novo Nordisk’s values’ stayed at the same level of 4.0; both above the target of
>3.5. There has been 100% fulfilment of action points arising from facilitations,
–
thus exceeding the target of 80% fulfilment.

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 their manager’s behaviour
is consistent with Novo Nordisk’s values
Fulfilment of action points planned arising from facilitations of adherence to
Novo Nordisk Way of Management and values

2005

2004

2003

4.2

4.0

100

4.2

4.0

3.8

Access to health
For 2005, Novo Nordisk offered its best possible pricing scheme, as part of the
global access to health initiatives, to all 50 Least Developed Countries (LDCs) as
defined by the United Nations. During 2005 Novo Nordisk sold insulin in a total
of 32 of the LDCs at or below a price of 20% of the average prices for insulin in
the western world, compared to 33 in 2004. In 15 countries Novo Nordisk is not
selling insulin at all, for various reasons. In several cases, the government has
not responded to the offer, there are no private wholesalers or other partners
with whom to work, or wars or political unrest make it sometimes impossible to
do business. While Novo Nordisk prefers to sell insulin at the preferential price

through government tenders, it is willing to sell to private distributors and
agents. The target is to offer the best possible pricing scheme to the govern-
ments of all LDCs.

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. Wholesalers and pharmacies may mark up the drug before selling it to the
consumer.

LDCs where Novo Nordisk operates
LDCs where Novo Nordisk sells insulin at or below the policy price *)

Number
Number

*) The wording of the indicator has been adjusted for the sake of transparency. The reporting scope is the same.

2005

2004

2003

35
32

35
33

30
16

Our employees
By the end of 2005 Novo Nordisk employed 22,460 persons – an increase of 8%
compared to 2004. This number equals a full-time equivalent of 22,007. It
reflects increased activities in all areas of the company. The ratio between men
and women has changed slightly; at the end of 2005, 51.2% of the employees
were men, as compared with 50.9% at the end of 2004. The rate of absence
is on a par with 2004 performance: 3.2, which is the same as in 2004.
Employee turnover increased to 8.0 from 7.3, which means that the target of a

reduction in employee turnover was not met. In the annual climate survey,
eVoice, the average of respondents’ answers as to whether ‘their work gives
them an opportunity to use and develop their competences and skills’ remained
at a high level of 3.8 (on a scale from 1–5, with 5 being the highest score) and
the average of respondents’ answers as to whether ‘people from diverse back-
grounds have equal opportunities’ increased from 3.8 to 3.9; both above the
target of >3.5.

–

Employees (total)
– Female
– Male
Rate of absence
Rate of employee turnover
Average of respondents’ answers as to whether their work gives them
an opportunity to use and develop their competences and skills
Average of respondents’ answers as to whether people from diverse
backgrounds have equal opportunities

Number
%
%
%
%

2005

2004

2003

22,460
48.8
51.2
3.2
8.0

3.8

3.9

20,725
49.1
50.9
3.2
7.3

3.8

19,241
49.4
50.6
3.1
7.1

3.7

96 Consolidated Non-financial Statements

Novo Nordisk Annual Report 2005

consolidated non-financial statements

Health & safety
Performance on the health & safety indicator ‘frequency of occupational in-
juries’ was not satisfactory as the frequency increased from 5.6 to 7.3 in 2005,
not meeting the target of a continuous decrease. There were no fatalities in
2005. There is a continued focus on ensuring health and safety standards for

employees in Novo Nordisk. In 2006 a health & safety management system
certified according to OHSAS 18001 will be adopted for Novo Nordisk in Den-
mark and Product Supply globally.

Frequency of occupational injuries
Fatalities

Per million working hours
Number

7.3
0

5.6
1

5.4
0

2005

2004

2003

Training costs
In 2005, the annual spending on training, measured as average spend per
employee, increased by 10%. The average spent per employee does not fully

reflect investments in training in Novo Nordisk, since on-the-job-training, intern-
al seminars and other activities are not included.

Annual training costs per employee

DKK

2005

9,899

2004

8,992

2003

7,518

Patent families
The performance of Novo Nordisk patent families has developed as expected in
2005. The number of active patent families to date has increased by 4%. The

number of new patent families (first filing) has decreased from 145 in 2004 to
130.

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

Number
Number

2005

2004

2003

812
130

778
145

701
140

Animals
Novo Nordisk sets goals to reduce, refine and replace experiments on animals
and to improve animal welfare. Hence, due to a significantly higher level of
research activity in early phases, when animal experimentation is required, the
number of animals purchased in 2005 increased by 22% to 57,905 animals, of
which 97% are mice, transgenic mice and rats. Total removal of all biological
test types for product control has been a target for Novo Nordisk in 2005.
However, having achieved regulatory approval in most countries over the last
decade, in 2005 Novo Nordisk unsuccessfully applied the remaining countries’

authorities for their acceptance of omission of one of the two remaining test
types. Although the target to completely remove the last two biological test
types could not be met, the dialogue with national authorities regarding these
tests has resulted in a considerable reduction of the test frequency and thereby
a considerable reduction in the number of animals used. Novo Nordisk is now
looking at identifying a new test type which does not use animals for one of
the remaining biological test types, and a strategy for removal of the second
biological test type is under preparation.

Animals purchased
Animal test types removed from external and internal specification

Number
%

2005

2004

2003

57,905
82

47,311
82

42,869
73

Novo Nordisk Annual Report 2005

Consolidated Non-financial Statements 97

accounting policies for non-financial data

Accounting policies for non-financial data

In 2005, there have been no significant restatements. The following changes
have been made to accounting policies applied to non-financial data:
n There has been a change to the method for calculating emissions of CO2
from energy consumption. Energy calculations are now based on a three-
year average of available emission factors from external suppliers of energy.
Hence, emission factors for 2005 are the three-year average for 2002 to
2004. Emissions data for 2000 to 2004 have been changed accordingly. The
changes in calculation of CO2 have been made in order to reflect the new
CO2 strategy.

n A selection has been made of indicators regarded as high-level indicators.
This implies reporting on fewer indicators in the Annual Report. The indica-
tors which are now only reported in the online reporting are: wastewater
volume, all data on by-products (bio-mass), emissions to air of ozone-deplet-
ing substances, SO2 and NOx, Environmental Impact Potentials, Complaints,
the ratio of female and male employees, frequency of occupational illnesses,
environmental costs and investments, housing conditions for experimental
animals and ISO14001 implementation. The full set of indicators (con-
sistently reported since 2001) can be found in the online reporting.

n The question ‘whether management demonstrates in words and action that
they live up to Novo Nordisk’s values’ has been replaced by ‘My manager’s be-
haviour is consistent with the Novo Nordisk values’. This change was imple-
mented to clarify employees’ interpretation of ‘management’. The change is
not assessed to have any significant impact on results.

To Novo Nordisk, the AA1000 Assurance Standard (AA1000AS) is an essential
component in creating a generally applicable approach to assessing and
strengthening the credibility of the company’s public reporting of non-financial
data. Novo Nordisk’s assurance process has been designed to ensure that the
qualitative and quantitative data that make up sustainability performance plus
the systems that underpin the data and performance are assured. The principles
outlined by the AA1000AS have been applied 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
on the company’s corporate governance framework, the Novo Nordisk Way of
Management. The Annual Report aims to capture the organisation’s ‘footprint’
in terms of social, environmental and economic impacts on society. Hence,
performance is accounted for in relation to targets, major achievements and
key issues. The report does not provide full coverage of all the company’s
activities. See scope of the report below.

2. Materiality
Key issues are identified through ongoing stakeholder engagement and
addressed 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 performance and
may support stakeholders in their decision-making and are therefore regarded
as Novo Nordisk’s material issues.

3. Responsiveness
The report reaches out to a wide range of stakeholders, each with their specific
needs and interests. To most of our stakeholders, however, the Annual Report
is just one single element of interaction and communication with the company.
It reflects how the company has addressed stakeholder concerns and interests
in dealing with the dilemmas and issues. Stakeholder dialogue is an invaluable
part of Novo Nordisk’s efforts as a responsible business, and readers are en-
couraged to give their 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,
NNE A/S and Novo Nordisk Servicepartner A/S and affiliates. Environmental data
cover the significant environmental impact of the organisation’s activities at its
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 contract research organisations.

Data
To ensure consistency of data, all data have been defined and described in com-
pany guidelines. Internal control procedures have been established to ensure
that data are reported according to the definitions.

Economic data
The economic indicators are based on data from the financial registrations. See
financial definitions.

R&D
n The R&D investments and sales are calculated based on Novo Nordisk’s

global financial registrations.

Investments
n The total investments and sales are calculated based on Novo Nordisk’s

global financial registrations.

Remuneration
n The cash value distribution is calculated based on Novo Nordisk’s global

financial registrations.

Corporate tax
n All types of tax reported are based on financial registrations of taxes paid in

Denmark, except corporate tax as a share of sales.

Employment
n Direct and indirect effects on the number of jobs, job income and income tax
are calculated using financial registrations and general statistics from public
sources such as Statistics Denmark, Updated Economic Multipliers for the US
Economy 2003 (Economic Policy Institute) and China Statistical Yearbook.
The indicators are an estimate of the effects created by Novo Nordisk in Den-
mark and globally.

Exports
n Novo Nordisk exports as a share of Danish exports are based on ‘Finans-

ministeriets Økonomiske Redegørelse’.

Environmental data
The environmental data cover those activities which, based on an overall en-
vironmental assessment, could have a significant impact on the environment.

Resources
n Water consumption includes consumption of drinking water, industrial water
and steam. Data are based on meter readings and checked against invoices.
n Energy consumption (direct and indirect supply) includes both direct supply
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 con-
sumption of fuel and energy is based on meter readings and invoices.

n Raw materials and packaging materials comprise materials for production
and related processes and packaging of products. Consumption of raw
materials and packaging is converted to tons. Data are based on registrations
in our stock-system.

Wastewater
n Quantities of components such as COD, nitrogen and phosphorous are cal-

culated based on test results or standard factors.

98 Consolidated Non-financial Statements

Novo Nordisk Annual Report 2005

accounting policies for non-financial data

n 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.

Our employees
n 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 at year-end.

n Rate of absence: For employees in Denmark excluding FeF Chemicals, ab-
sence data are registered in the SAP Human Resource system. For employees
outside Denmark, data for rate of absence are based on local registrations.
Types of absence include absence due to the employee’s own illness,
pregnancy-related sick leave, and occupational injuries and illnesses per total
available working hours in the year adjusted for national holidays.

n Rate of employee turnover: The rate of employee turnover is calculated as
the number of employees who left Novo Nordisk during the financial year
compared to the average number of employees in the financial year.

n Average of respondents’ answers as to whether their work gives them an
opportunity to use and develop their competences and skills is based on
employee feedback on the question in the employee survey database eVoice.
The average is a simple average calculated in the database of answers given
by the employees.

n Average of respondents’ answers as to whether people from diverse back-
grounds have equal opportunities is based on employee feedback on the
question in the employee survey database eVoice. The average is a simple
average calculated in the database of answers given by the employees.

Health & Safety
n 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.

n The number of fatal occupational accidents is based on registrations cen-

trally and locally in affiliates.

Training costs
n Training costs are all costs recorded in a specific account in the financial
accounts. The amount covers internal and external training posted in the
financial accounts.

Patent families
n Patent families are the ‘number of active patent families to date’ and the

‘new patent families (first filing)’.

Animals
n 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.

n 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 of the total test types identified. The indicator
refers to test types performed in Denmark. Test types refer to tests required
by regulatory authorities.

All data are documented and evidence has been submitted to the auditors.

Accounting policies for non-financial data (continued)

Waste
n Total waste is the sum of non-hazardous and hazardous waste. The disposal

of waste is registered based on weight receipts.

n The recycling percentage is calculated as the proportion of waste recycled
of the total waste. 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
n Emissions of CO2 from energy (total) are based on standard factors for fuel
and for energy on a three-year average of available emission factors from the
external suppliers of energy. Hence, emission factors for 2005 are the three-
year average of 2002 to 2004.

n Organic solvents cover the sum of emissions of different types of organic sol-
vents such as acetone, ethanol etc exclusive of emissions of ozone-depleting
materials. Data are based on measurement and ensuring calculations.

EPI for water and energy
n Eco Productivity Index (EPI) is defined as the development in Eco-productivity
(= Eco-efficiency) from one year to the next and it is calculated using the
equation:

The EPI = (Production yr02 / Resource consumptionyr02) / (Productionyr01 /
Resource consumptionyr01)

The EPI is calculated for each production area and aggregated to corporate
level by weighting the EPI result for each production area according to the
corresponding consumption of water or energy. The corporate EPI is calcu-
lated using the equation:

Corporate EPI = ∑(RCi * EPIi) / ∑(RCi), where i represents the individual
production area.

Compliance
n Compliance data consist of breaches of regulatory limits and accidental
releases. All data are based on information from departments and test re-
sults. All breaches and accidental releases are reported to the authorities.

Social data
The social data cover all employees included in Novo Nordisk’s headcount.

Living our values
n Average of respondents’ answers as to whether social and environmental
issues are important for the future of the company is based on employee
feedback on the question in the employee survey database eVoice. The aver-
age is a simple average calculated in the database of answers given by the
employees.

n Average of respondents’ answers as to whether ‘my manager’s behaviour is
consistent with the Novo Nordisk values’ is based on employee feedback on
the question in the employee survey database eVoice. The average is a simple
average calculated in the database of answers given by the employees.

n The percentage of fulfilment of action points planned arising from facilita-
tions of the Novo Nordisk Way of Management is calculated as the number of
overdue action points at year-end 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
n Novo Nordisk A/S has formulated a pricing policy for the Least Developed
Countries (LDCs). The purpose of the policy is to offer insulin to the world’s
LDCs at or below a price of 20% of the average prices for insulin in the
western world. The average western world price is defined 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, Switzerland, Norway), the United States, Canada and
Japan. The policy target price is measured in Danish kroner per MU using the
Novo Nordisk official standard exchange rates and is calculated every second
year. A margin of +10% on the realised sales price (ie 20 –22%) is permitted
to ensure that compliance measurement is unaffected by external factors
such as fluctuating exchange rates.

Novo Nordisk Annual Report 2005

Consolidated Non-financial Statements 99

companies in the novo nordisk group

Country

Year of
incorporation /
acquisition

Issued share capital /
paid-in capital

Percentage
of shares
owned

Activity

t
n
e
m
p
o
e
v
e
D
d
n
a
h
c
r
a
e
s
e
R
A

c
t
e

s
e
c
i
v
r
e
S
A

g
n
i
t
e
k
r
a
M
d
n
a

s
e
a
S
A

n
o
i
t
c
u
d
o
r
P
A

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 Lithuania
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 Delivery Technologies Inc
Novo Nordisk Region North America A/S
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

–

Austria
Belgium
Czech Republic
Denmark
Finland
France
France
Germany
Greece
Hungary
Ireland
Italy
Lithuania
Netherlands
Norway
Poland
Portugal
Spain
Sweden
Switzerland
Switzerland
Switzerland
United Kingdom
United Kingdom

Canada
United States
Denmark
United States
United States
United States

Australia
Denmark
Japan
New Zealand

1974
1974
1997
2002
1972
2003
1959
1973
1979
1996
1978
1980
2005
1983
1965
1996
1984
1978
1971
2003
2000
1968
1977
1978

1983
2005
2003
1988
1991
1982

1985
2002
1980
1990

EUR
EUR
CZK
DKK
EUR
EUR
EUR
EUR
EUR
HUF
EUR
EUR
LTL
EUR
NOK
PLN
EUR
EUR
SEK
CHF
CHF
CHF
GBP
GBP

CAD
USD
DKK
USD
USD
USD

36,336
69,000
14,500,000
100,500,000
420,500
5,821,140
57,710,220
614,062
1,050,000
371,000,000
635
516,500
150,000
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
20,001,000
500,000
283,835,600
55,000,000
2,000

500,001
AUD
DKK
15,500,000
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
100

100 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

companies in the novo nordisk group

Country

Year of
incorporation /
acquisition

Issued share capital /
paid-in capital

Percentage
of shares
owned

International Operations
Aldaph SpA
Novo Nordisk Pharma Argentina SA
Novo Nordisk Produsao Farmacêutica Do Brasil
Novo Nordisk Farmacêutica do Brasil Ltda
Novo Nordisk Pharma EAD
Novo Nordisk (China) Pharmaceuticals Co, Ltd
Novo Nordisk Hrvatska 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 Iran (Kish)
Novo Nordisk Iran (Pars)
Novo Nordisk Ltd
Novo Nordisk Pharma (Malaysia) Sdn Bhd
Novo Nordisk Mexico
Novo Nordisk Pharma (Private) Limited
Novo Nordisk Pharmaceuticals (Philippines) Inc
Novo Nordisk Romania
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
Novo Nordisk Pharma Golf
Novo Nordisk Venezuela

Other subsidiaries
FeF Chemicals A/S
NNIT A/S
NNE A/S
Novo Nordisk Servicepartner A/S

Associated companies
Dako A/S
ZymoGenetics, Inc

1994
Algeria
1997
Argentina
2002
Brazil
1990
Brazil
2005
Bulgaria
1994
China
2004
Croatia
2002
Denmark
2004
Egypt
2001
Hong Kong
1994
India
2003
Indonesia
2005
Iran
2005
Iran
1997
Israel
1992
Malaysia
2004
Mexico
2005
Pakistan
1999
Philippines
2005
Romania
2003
Russia
1994
Singapore
1997
Singapore
1997
Singapore
1959
South Africa
1994
South Korea
1990
Taiwan
1983
Thailand
2004
Tunisia
1993
Turkey
United Arab Emirates 2005
2004
Venezuela

Denmark
Denmark
Denmark
Denmark

Denmark
United States

1989
1998
1989
1998

1992
1988

DZD 1,742,650,000
7,465,150
ARS
536,280,984
BRL
84,727,136
BRL
2,000,000
BGN
165,957,192
CNY
5,000,000
HRK
103,302,302
DKK
50,000
EGP
500,000
HKD
265,000,000
INR
827,900,000
IDR
10,000,000
IRR
10,000,000
IRR
100
ILS
200,000
MYR
150,000
MXN
10,000,000
PKR
50,000,000
PHP
1,675,000
RON
38,243,360
RUB
12,000,000
SGD
2,000,000
SGD
200,000
SGD
8,000
ZAR
KRW 6,108,400,000
9,000,000
TWD
15,500,000
THB
400,000
TND
25,296,300
TRY
AED
100,000
VEB 2,250,000,000

DKK
DKK
DKK
DKK

10,000,000
1,000,000
500,000
1,000,000

DKK
USD

77,369,312
702,956,884

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
49
100
100
100
100

100
100
100
100

27
32

Activity

t
n
e
m
p
o
e
v
e
D
d
n
a
h
c
r
a
e
s
e
R
A

n
o
i
t
c
u
d
o
r
P
A

g
n
i
t
e
k
r
a
M
d
n
a

s
e
a
S
A

c
t
e

s
e
c
i
v
r
e
S
A

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 101

summary of financial data 2001– 2005

DKK million

2001

2002

2003

2004

2005

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 geographical 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 and financial derivatives
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 *)
ROIC *)
ROIC adjusted **)
Cash to earnings *)
Cash to earnings, three-year average *)

23,385

24,866

26,158

29,031

33,760

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

3,305
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%
23.2%
23.1%
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

2,580
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%
21.1%
20.6%
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

4,141
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%
20.4%
20.3%
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

4,774
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%
21.5%
21.3%
85.3%
59.0%

7,298
15,006
1,708
24,012

5,064
2,781
1,565
338
9,748

13,447
9,532
6,070
4,711

403
8,088
146
8,234
2,370
5,864

5,025
41,960
10,581
3,745
27,634

3,665
(136)
4,833
(634)

21.6%
44.4%
5.1%
71.1%

15.0%
8.2%
4.6%
1.0%
28.9%

99.2%
28.7%
15.1%
6.3%

72.8%
24.0%
15.9%
11.0%
17.4%

28.8%
65.9%
33.2%
24.7%
23.9%
82.4%
82.4%

102 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

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 geographical 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 and financial derivatives
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

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 dilutive effect of options ‘in the money’ (million)

Employees

Total full-time employees at year-end

Denmark
Rest of Europe
North America
International Operations
Japan & Oceania

summary of financial data 2001– 2005
supplementary information in EUR

2001

2002

2003

2004

3,138

3,347

3,520

3,902

62
1,950
187
2,199

412
276
191
60
939

1,417
693
456
572

109
726
38
764
278
486

443
3,855
825
380
2,649

515
39
25
(110)

10.47
10.45
3.35

354.7
346.7
345.7
346.6

160
1,972
218
2,350

484
277
179
57
997

1,465
779
552
551

102
798
54
852
298
554

347
4,258
829
402
3,027

524
11
67
8

11.87
11.85
3.60

354.7
345.3
346.7
347.2

344
1,950
192
2,486

517
287
178
52
1,034

1,574
837
569
540

139
864
129
993
343
650

557
4,643
945
370
3,328

305
5
517
(9)

14.17
14.15
4.40

354.7
338.2
341.2
341.6

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

642
5,033
979
491
3,563

403
42
575
287

14.89
14.83
4.80

354.7
332.1
336.6
338.1

16,141
10,127
2,292
1,404
1,531
787

18,005
11,104
2,361
1,481
2,248
811

18,756
11,414
2,430
1,590
2,455
867

20,285
11,839
2,454
1,949
3,104
939

2005

4,531

979
2,015
229
3,223

680
373
210
45
1,308

1,805
1,279
815
632

54
1,085
20
1,105
318
787

674
5,624
1,418
502
3,704

492
(18)
649
(85)

17.89
17.83
6.00

354.7
323.7
327.7
328.9

22,007
12,160
2,702
2,465
3,746
934

*) For definitions, please refer to page 67.
**) ROIC adjusted: Operating profit after tax (using the effective rate adjusted for non-recurring tax effects arising from financial transactions) as a percentage of average inventories, receivables,
property, plant and equipment as well as intangible assets less non-interest bearing liabilities including provisions (the sum of the above assets and liabilities at the beginning of the year and
at year-end divided by two).

Key figures are translated into EUR as supplementary information – the translation of income statement items is based on the average exchange rate in 2005 (EUR 1 = DKK 7.45174) and the
translation of balance sheet items is based on the exchange rate at the end of 2005 (EUR 1 = DKK 7.46050). The figures in DKK reflect the economic substance of the underlying events and
circumstances of the Novo Nordisk Group.

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 103

quarterly figures 2004 and 2005 (unaudited)

DKK million

Sales

Sales by business segments:

Insulin analogues
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)

2004

2005

6,515

7,164

7,408

7,944

7,258

8,283

8,793

9,426

886
3,206
416

1,037
3,640
379

1,252
3,593
445

1,332
3,944
403

1,448
3,346
376

1,692
3,753
391

1,929
3,871
487

2,229
4,036
454

Diabetes care total

4,508

5,056

5,290

5,679

5,170

5,836

6,287

6,719

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

1,019
550
339
99

1,084
557
389
78

1,086
559
396
77

1,170
651
364
80

1,090
596
328
74

1,248
704
410
85

1,336
700
406
64

1,390
781
421
115

Biopharmaceuticals total

2,007

2,108

2,118

2,265

2,088

2,447

2,506

2,707

Sales by geographical 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

2,884
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

3,006
2,092
1,128
1,032

5,173
2,139
1,106
483
67
1,512

276
1,788
556

3,405
2,282
1,395
1,201

6,073
2,267
1,197
470
202
2,341

2
2,343
659

3,434
2,462
1,750
1,147

6,435
2,402
1,231
545
55
2,312

104
2,416
664

3,602
2,696
1,797
1,331

6,902
2,883
1,551
624
79
1,923

(236)
1,687
491

1,053

1,272

1,226

1,462

1,232

1,684

1,752

1,196

Depreciation, amortisation and impairment losses

380

387

576

549

412

422

559

537

Total equity
Total assets

Ratios

23,942
33,838

24,827
34,248

25,557
35,587

26,504
37,433

25,729
36,497

25,620
37,731

26,589
40,181

27,634
41,960

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

71.5%
28.9%
16.0%
7.3%
22.9%
70.8%

72.9%
27.8%
13.7%
6.0%
26.3%
72.5%

71.8%
27.5%
14.7%
6.8%
23.6%
71.8%

72.8%
29.8%
15.6%
6.7%
23.4%
70.8%

Share data

Basic earnings per share/ADR (in DKK)
Diluted earnings per share/ADR (in DKK)

Average number of shares outstanding (million) – basic
Average number of shares outstanding (million) – diluted

3.11
3.10

338.2
339.8

3.76
3.74

338.1
339.8

3.64
3.63

336.7
338.2

4.38
4.37

333.6
334.7

71.3%
29.5%
15.2%
6.7%
20.8%
70.5%

3.71
3.70

332.0
333.2

73.3%
27.4%
14.5%
5.7%
28.3%
67.9%

5.11
5.09

329.6
330.8

73.2%
27.3%
14.0%
6.2%
26.3%
66.2%

5.38
5.36

325.8
326.9

73.2%
30.6%
16.5%
6.6%
20.4%
65.9%

3.70
3.68

323.4
324.8

Employees

Number of full-time employees at the end of the period

19,179

19,631

20,001

20,285

20,942

21,246

21,631

22,007

104 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

management statement

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.

The complete Annual Report has the below Management Statement and Auditors’ Reports as provided on p 107.

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 2005. The Consolidated financial statements
have been prepared in accordance with International Financial Reporting Standards as adopted by the EU. 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 non-financial statements have been prepared in accordance with the non-financial reporting principles of materiality, completeness and responsiveness
of AA1000AS, the 2002 GRI Sustainability Reporting Guidelines and include Communication on Progress in support of the United Nations Global Compact.

Gladsaxe, 26 January 2006

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

Göran A Ando

Kurt Briner

Henrik Gürtler

Johnny Henriksen

Niels Jacobsen
Audit Committee member

Anne Marie Kverneland

Kurt Anker Nielsen
Chairman
of the Audit Committee

Stig Strøbæk

Jørgen Wedel
Audit Committee member

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 105

Opinion
In our opinion, the Annual Report gives a true and fair view of the financial
position at 31 December 2005 of the Group and of the results of the Group
operations and consolidated cash flows for the financial year 2005 in ac-
cordance with International Financial Reporting Standards as adopted by the
EU and additional Danish annual report requirements for listed companies.

In addition, in our opinion, the Annual Report gives a true and fair view of the
financial position at 31 December 2005 of the Parent Company and of the
results of the Parent Company operations for the financial year 2005 in ac-
cordance with the Danish Financial Statements Act, and additional Danish
annual report requirements for listed companies.

auditors’ reports

Auditors’ report on the Annual Report for 2005

We have audited the Annual Report of Novo Nordisk A/S for the financial
year 2005. The Consolidated Financial Statements have been prepared in ac-
cordance with International Financial Reporting Standards as adopted by
the EU and the Parent Company Financial Statements have been prepared in
accordance with the Danish Financial Statements Act. Further, the Annual
Report has been prepared in accordance with the additional Danish annual
report requirements for listed companies.

The Annual Report is the responsibility of Company Management. Our respon-
sibility is to express an opinion on the Annual 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 misstate-
ment. 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 applied and significant estimates made by Manage-
ment, as well as evaluating the overall annual report presentation. We believe
that our audit provides a reasonable basis for our opinion.

Our audit has not resulted in any qualification.

Gladsaxe, 26 January 2006

PricewaterhouseCoopers
Statsautoriseret Revisionsinteressentskab

Lars Holtug
Danish State-Authorised Public Accountant

106 Consolidated Financial Statements

Novo Nordisk Annual Report 2005

auditors’ reports

Assurance Report on Non-Financial Reporting 2005

Subject, responsibilities, objective, and scope of assurance statement
We have reviewed the Novo Nordisk Annual Report 2005 with a view to
express a conclusion on the non-financial reporting against the principles of
materiality, completeness and responsiveness of the AA1000 Assurance
Standard (AA1000AS).

We have assessed Novo Nordisk’s statement that it reports ’in accordance’ with
GRI by checking that the reporting (the Annual Report and the supplementary
information in the online report) contains the required information and indica-
tors and by reviewing Novo Nordisk’s own assessment of whether these are con-
sistent with the eleven Reporting Principles of Part B in the GRI Guidelines.

Management of Novo Nordisk is responsible for defining stakeholders and for
the collection and presentation of the non-financial information in the Annual
Report. Our responsibility, as agreed with Management, is to perform sufficient
work to express a conclusion with limited assurance in relation to the principles
of materiality, completeness and responsiveness of the AA1000AS and in
accordance with the International Standard on Assurance Engagements (ISAE)
3000 ‘Assurance Engagements other than Audits or Review of Historical
Information’.

Moreover, we have assessed Management’s statement that the Annual Report
and the supplementary information in the online 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 conclusion
We planned and performed our work based on the AA1000AS and in accord-
ance with the ISAE 3000 to obtain limited assurance that the non-financial
reporting in the Annual Report is free of material misstatements and that the
information has been presented in accordance with the accounting policies. In
addition to the information in the Annual Report 2005, our work covered the
corporate consolidated performance data published in the section ‘Interactive
Charts’ in the online report at novonordisk.com. Based on an assessment of
materiality and risk, our work included on a test basis a review of management
systems, reporting structures and boundaries as well as enquiries, interviews
and testing of registration and communication systems, data and underlying
documentation. We tested whether data and the underlying components are
accounted for in such a way as to fulfil the assertions of materiality and com-
pleteness in accordance with the Novo Nordisk accounting policies for non-
financial data. Two major production sites were visited in Denmark, namely
Hillerød and Kalundborg. Our work also included an assessment of significant
estimates made by Management. We believe that the work performed provides
a reasonable basis for our conclusion.

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.

Conclusion
Based on the work performed nothing has come to our attention that would
cause us not to believe that
n 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;

n 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 understand material aspects of its
corporate sustainability performance;

n 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 accor-
dance’ with the GRI guidelines.

Gladsaxe, 26 January 2006

PricewaterhouseCoopers
Statsautoriseret Revisionsinteressentskab

PricewaterhouseCoopers AG, Switzerland

Lars Holtug
Danish State-Authorised Public Accountant

Thomas Scheiwiller
Dr Sc.nat

Novo Nordisk Annual Report 2005

Consolidated Financial Statements 107

board of directors

Henrik Gürtler Jørgen Wedel Stig Strøbæk Niels Jacobsen Anne Marie Kverneland Kurt Briner Mads Øvlisen Sten Scheibye

Mads Øvlisen
Mads Øvlisen is chairman of the Board of Novo
Nordisk A/S.

Former president and CEO of Novo Nordisk A/S,
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 chair-
man 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 has a Master’s degree in law from 1966
and holds an MBA from Stanford Graduate School of
Business from 1972.

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 responsi-

bility at the Copenhagen Business School.

Mr 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 2005. Mr Øvlisen’s term as a board
member expires in March 2006.

Mads Øvlisen is a Danish national, born on 9 March

1940.

Mr Øvlisen is not regarded as an independent*
Board member due to his former position as an
executive in Novo Nordisk and his membership of the
Board of the Novo Nordisk Foundation.

Sten Scheibye
Sten Scheibye is vice chairman of the Board of Novo
Nordisk A/S. Since 1995, Mr Scheibye has been CEO
of Coloplast A/S, Denmark.

Besides being a member of the Board of Directors
of various Coloplast companies, Mr Scheibye is a
member of the Board of Directors of Danske Bank
A/S. Furthermore, Mr Scheibye holds a seat on The
Executive Committee of the Confederation of Danish
Industries.

Mr Scheibye holds an MSc in Chemistry and Physics
from 1978 and a PhD in Organic Chemistry from 1981,
both from the University of Aarhus, and a BComm
from 1983 from the Copenhagen Business School.

Mr Scheibye is also an adjunct professor of applied

chemistry at the University of Aarhus.

Mr Scheibye was elected to the Board of Novo
Nordisk A/S in March 2003 and has been re-elected in
2004 and 2005. His term as a board member expires
in March 2006.

bilities for manufacturing, IT, business development
and M&A from 1995 to 2003.

From 1989 to1995, Mr Ando was medical director,
moving to deputy R&D director and then R&D director
of Glaxo Group, UK. Furthermore, Mr Ando was a
member of the Group Executive Committee of the
Glaxo Group.

Mr Ando is a specialist in General Medicine and is a
founding fellow of the American College of
Rheumatology in the US. Mr Ando serves as a board
member of A-Bio Pty, NicOx SA, Elan Corporation plc
and Enzon Pharmaceuticals, Inc.

Mr Ando qualified as a medical doctor at Linköping
Medical University in 1973, and as a specialist in
General Medicine at the same institution in 1978.

Mr Ando was elected to the Board of Novo Nordisk
A/S in March 2005 and his term as a board member
expires in March 2006.

Göran Ando is a Swedish national, born on 6

March 1949.

Sten Scheibye is a Danish national, born on 3

Mr Ando is regarded as an independent* board

October 1951.

member.

Mr Scheibye is regarded as an independent* board

member.

Göran A Ando
Göran A Ando, MD, was CEO of Celltech Group plc,
UK, until 2004. Mr Ando joined Celltech from
Pharmacia (Pfizer) where he was executive vice presi-
dent and president of R&D with additional responsi-

Kurt Briner
Kurt Briner works as an independent consultant in the
pharmaceutical and biotech industry and is a board
member of CBax SA, OM Pharma, Progenics
Pharmaceuticals Inc, GALENICA SA. From 1988 to
1998, he was president and CEO of Sanofi Pharma.
He has been chairman of the European Federation of

* In accordance with Section V4 of ‘Recommendations for corporate governance’ designated by the Copenhagen Stock Exchange.

108

Novo Nordisk Annual Report 2005

Henrik Gürtler is a Danish national, born on 11

August 1953.

Mr Gürtler is not regarded as an independent*
board member due to his former position as an
executive in Novo Nordisk A/S and his position as
president and CEO of Novo A/S.

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 currently works as an environmen-
tal adviser in Product Supply. His term as a board
member expires in March 2006.

ZymoGenetics, Inc, Norsk Hydro ASA and TDC A/S. In
the four last mentioned companies Mr Nielsen has
also been elected as Audit Committee chairman or
member.

Mr Nielsen received his Master’s of Commerce and
Business Administration from the Copenhagen
Business School in 1972.

Mr Nielsen was elected to the Board of Novo
Nordisk A/S in November 2000 and has been re-elected
several times, most recently in March 2005. Mr
Nielsen’s term as a board member expires in March
2006.

Mr Nielsen is chairman of the Audit Committee in
Novo Nordisk A/S and is also designated as Audit
Committee financial expert.

Johnny Henriksen has a Master’s degree in biology

Kurt Anker Nielsen is a Danish national, born on 8

from Copenhagen University from 1977.

August 1945.

Mr Henriksen is a Danish national, born on 19 April

1950.

Niels Jacobsen
Niels Jacobsen has since 1998 been president & CEO
of William Demant Holding A/S and Oticon A/S, an in-
dustrial group in the hearing healthcare field. Mr
Jacobsen is a board member of 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 Communica-
tions A/S, Himsa A/S, Himsa II A/S, Hearing Instrument
Manufacturers Patent Partnership A/S (chairman),
William Demant Invest A/S (chairman) and Össur hf.
Furthermore, Mr Jacobsen holds a seat on The
Council of the Confederation of Danish Industries.

Mr Jacobsen holds an MSc (Business Administration)

Kurt Anker Nielsen Johnny Henriksen Göran A Ando

Pharmaceutical Industries and Associations, Brussels
(EFPIA).

Mr Briner holds a Diploma of the Commercial

from the University of Aarhus (1983).

Mr Jacobsen was elected to the Board of Novo
Nordisk A/S in November 2000 and has been re-elect-
ed several times, most recently in March 2005. Mr
Jacobsen’s term as a board member expires in March
2006. Mr Jacobsen is a member of the Audit
Committee in Novo Nordisk A/S and is designated as
Audit Committee financial expert.

Niels Jacobsen is a Danish national, born on 31

August 1957.

Mr Jacobsen is regarded as an independent* board

member.

Anne Marie Kverneland
Anne Marie Kverneland has been an employee-elect-
ed member of the Board of Directors of Novo Nordisk
A/S since November 2000. Ms Kverneland works as a
laboratory technician in Discovery. Ms Kverneland
was re-elected by the employees in March 2002 and
her term as a board member expires in March 2006.
Ms Kverneland holds a degree in medical laboratory
technology from the Copenhagen University Hospital
of Denmark from 1980.

Schools of Basel and Lausanne.

Mr Briner was elected to the Board of Novo Nordisk
A/S in November 2000 and has been re-elected sev-
eral times, most recently in March 2005. His term as a
board member expires in March 2006.

Kurt Briner is a Swiss national, born on 18 July 1944.
Mr Briner is regarded as an independent* board

member.

Henrik Gürtler
Henrik Gürtler has since 2000 been president and CEO
of Novo A/S. Mr Gürtler was employed in Novo
Industri A/S as an R&D chemist in the Enzymes
Division in 1977.

After a number of years in various specialist and
managerial positions within this area, in 1991 Mr
Gürtler was appointed corporate vice president of
Human Resource Development in Novo Nordisk A/S
and in 1993 corporate vice president of Health Care
Production. In 1996, he became a member of corpor-
ate management of Novo Nordisk A/S with special re-
sponsibility for Corporate Staffs.

Mr Gürtler is chairman of the Boards of Directors of
Novozymes A/S and Copenhagen Airports A/S, and a
member of the Boards of Directors of COWI A/S and
Brødrene Hartmanns Fond.

Mr Gürtler holds an MSc in Chemical Engineering

from the Danish Technical University.

Mr Gürtler was elected to the Board of Novo
Nordisk A/S in March 2005 and his term as a board
member expires in March 2006.

Mr Nielsen is not regarded as an independent*
board member due to his former position as an
executive in Novo Nordisk A/S and his membership of
the board of Novo A/S.

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 holds a diploma as an electrician. He
also has a diploma in further training of board mem-
bers from the Employees’ Capital Pension Fund, 2003.
Stig Strøbæk is a Danish national, born on 24

January 1964.

Jørgen Wedel
Jørgen Wedel was, prior to his retirement in 2001,
executive vice president of the Gillette Company. He
was responsible for Commercial Operations, Interna-
tional, 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. Mr Wedel is a member of the
Audit Committee in Novo Nordisk A/S.

Mr Wedel received his Master’s of Commerce and
Business Administration from the Copenhagen
Business School in 1972 and has an MBA from the
University of Wisconsin, 1974.

Mr Wedel was elected to the Board of Novo Nordisk
A/S in November 2000 and has been re-elected sever-
al times, most recently in March 2005. Mr Wedel’s
term as a board member expires in March 2006.

Jørgen Wedel is a Danish national, born on 10

August 1948.

Mr Wedel is regarded as an independent* board

Anne Marie Kverneland is a Danish national, born

member.

on 24 July 1956.

Kurt Anker Nielsen
Kurt Anker Nielsen is former CFO and deputy CEO of
Novo Nordisk A/S and CEO of Novo A/S. He serves as
vice chairman of the Board of Directors of Novozymes
A/S and as a board member of Novo A/S, Dako A/S,

Õ See more about the competence profile of

the Board at novonordisk.com/annual-report
Click: About us

Novo Nordisk Annual Report 2005

109

executive management

Jesper Brandgaard Mads Krogsgaard Thomsen Lise Kingo Lars Rebien Sørensen Kåre Schultz Lars Almblom Jørgensen

Lars Rebien Sørensen
Lars Rebien Sørensen is president and CEO of Novo
Nordisk A/S.

Lars Rebien Sørensen joined Novo Nordisk’s Enzymes
Marketing in 1982. He has been stationed in several
countries, including the Middle East and the US. Mr
Sørensen was appointed member of Corporate
Management in May 1994, and given special respon-
sibility 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 Boards of Scandinavian Airlines
System AB and ZymoGenetics, Inc, and in May 2005,
he was elected a member of the Bertelsmann AG
Supervisory Board. Mr Sørensen received the French
award Chevalier de l’Ordre National de la Légion
d’Honneur in 2005. He is a Danish national, 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
CFO of Novo Nordisk A/S.

Jesper Brandgaard 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,
Novo Nordisk A/S with responsibility for Quality,
Regulatory Affairs and Business Development.

Lars Almblom Jørgensen joined Novo Nordisk in
1980 as area manager for North America. In 1985, he
became vice president for International Operations. On
1 January 1993, he was appointed senior vice presi-

dent, Business Development and Planning, Diabetes
Care Division. In May 1994, he was appointed presi-
dent of Biopharmaceuticals Division. He was later that
year appointed corporate vice president, Health Care
International Operations. In 2000, he was appointed
executive vice president and COO in charge of Sales,
Marketing and Product Supply. In 2002, Lars Almblom
Jørgensen was appointed chief of staffs and quality
(COS), and was in that role until December 2003. Prior
to joining Novo Nordisk, Lars Almblom Jørgensen was
head of section in The Federation of Danish Industries.
Lars Almblom Jørgensen is a Danish national, born
on 31 July 1948. Lars Almblom Jørgensen received his
MSc
(Econ) from the Copenhagen School of
Economics and Business Administration in 1976.

Lise Kingo
Lise Kingo is executive vice president, people, reputa-
tion and relations, Novo Nordisk A/S.

Lise Kingo joined Novo Nordisk’s Enzymes Promotion
in 1988 and has worked to build up the company’s
Triple Bottom Line approach. In 1999, Ms Kingo was
appointed corporate vice president, Stakeholder
Relations. She was appointed executive vice president,
people, reputation and relations in March 2002.

Lise Kingo is a member of the Board of GN Store
Nord A/S, the Board of Business for Social Responsibil-
ity in the US, associate professor at CIMO, Innovation
and Sustainability, Vrije Universiteit, Amsterdam, and
a member of the Danish Council on Ethics. She is a
Danish national, born on 3 August 1961. Lise Kingo
holds a BA in Religions and Ancient Greek Art (1986,
in Marketing
University of Aarhus), a BCom
Economics (1991, the Copenhagen Business School)
and an MSc (Responsibility and Business Practice)
from the University of Bath (2000).

Kåre Schultz
Kåre Schultz is executive vice president and COO,
Novo Nordisk A/S.

Kåre Schultz joined Novo Nordisk in 1989 as an
economist in Health Care, Economy & Planning. In
November 2000, Kåre 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).

Mads Krogsgaard Thomsen
Mads Krogsgaard Thomsen is executive vice president
and CSO, Novo Nordisk A/S.

Mads Krogsgaard Thomsen joined Novo Nordisk in
1991. He was appointed CSO in November 2000.
Mads Krogsgaard Thomsen sits on the editorial
boards of three international journals and is a mem-
ber 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 in 1989 and a
DSc in 1991, and in 2000 became professor of phar-
macology. He is a former president of the National
Academy of Technical Sciences (ATV).

Senior Management Board
Jesper Bøving – Preclinical and CMC Supply
Mariann Strid Christensen – Quality
Eric Drapé – Diabetes Finished Products
Peter Bonne Eriksen – Regulatory Affairs
Torben Skriver Frandsen – NNIT
Lars Green – Corporate Finance
Jesper Høiland – International Operations
Per Jansen – Novo Nordisk Servicepartner
Lars Fruergaard Jørgensen – IT & Corporate
Development
Lars Guldbæk Karlsen – Global Development
Terje Kalland – Biopharmaceuticals Research Unit
Peter Kurtzhals – Diabetes Research Unit
Lars Christian Lassen – Corp People & Organisation
Roger Moore – Japan & Oceania
Ole Ramsby – Corporate Legal
Jakob Riis – International Marketing
Martin Soeters – North America
Kim Tosti – Devices and Sourcing
Per Valstorp – Product Supply
Hans Ole Voigt – NNE

110

Novo Nordisk Annual Report 2005

355

79.7

DKK was the closing share price
for Novo Nordisk’s B shares at
the end of 2005.

DKK billion turnover in 2005
for Novo Nordisk’s B shares on the
Copenhagen Stock Exchange.

6.00

DKK dividend per
share is proposed
for 2005.

62.1% 25.5%

of the share capital is held
in Denmark.

of shares belong to
Novo A/S.

Shareholder information

Novo Nordisk’s B shares are quoted on the
stock exchanges 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 bear-
er 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 holding 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 79.7 billion in 2005. The share price
ended the year at DKK 355, compared to a
price at year-end 2004 of DKK 299. The mar-
ket value of Novo Nordisk’s outstanding share
capital was DKK 115 billion at the end of
2005. During 2005, the price of Novo Nordisk’s
B shares rose by 18.7% and the Novo Nordisk
share was one of the most traded stocks on
the Copenhagen Stock Exchange. The price of
Novo Nordisk ADRs listed on the New York
Stock Exchange measured in USD increased
by 3.7%.

capital

Share ownership
Novo Nordisk’s
is DKK
share
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, a private limited Danish
company which is 100% owned by the Novo
Nordisk Foundation. The sale of A shares is re-
stricted by the articles of association of the
Foundation.

In addition, Novo A/S holds DKK
73,407,324 of B share capital. Holding 25.5%
of the total share capital, Novo A/S controls
71% of the total number of votes adjusted for
treasury shares. As Novo Nordisk B shares are
in bearer form, no official record of all share-
holders exists. Based on the available sources
of information on the company’s sharehold-
ers, it is estimated that Novo Nordisk’s shares
at the end of 2005 were distributed as shown
in the pie charts below. At that point in time
85% of the total share capital was included in
Novo Nordisk’s register of shareholders. At the
end of 2005, Novo Nordisk has more than
62,000 registered shareholders and the free-
float is 65.7%.

Capital and share structures
It is the assessment of the Board of Directors
that the current capital and share structures of
Novo Nordisk serve the interests of the share-
holders and the company. In case of excess
capital after funding of organic growth oppor-
tunities and potential acquisitions, in general
Novo Nordisk will return capital to investors
through dividend payments and/or share re-
purchase programmes.

Form 20-F
Copies of the Form 20-F Report for 2004 filed
in February 2005 with the US Securities and
Exchange Commission can be obtained upon
request from Novo Nordisk Inc. The Form 20-F
Report for 2005 is filed in February 2006.

Payment of dividends
Shareholders resident in Denmark will – unless
they are tax-exempt – 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

Breakdown of shareholders

% of capital

Geographical distribution
of share capital
% of capital

Price development and monthly turnover of Novo Nordisk’s B shares
on the Copenhagen Stock Exchange 2005.
DKK

DKK million

375

300

225

150

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 DKK million

111

Novo A/S 25.5%
Novo Nordisk A/S 8.8%
The Capital Group Companies 10.0%
Danish ATP pension fund 4.0%
Other 51.7%

Denmark 62.1%
UK 14.2%
North America 20.7%
Other 3.0%

Novo Nordisk Annual Report 2005

shareholder information

tax. If the holder is resident in the US or Canada
the deduction might be reduced to 15%.
Shareholders resident in countries outside
Denmark are eligible for a refund of dividend
tax deducted in Denmark subject to the double
taxation conventions in force between Denmark
and the countries concerned. US and UK resi-
dent shareholders may contact the Danish au-
thorities for a refund of dividend tax in excess of
15%. Shareholders’ enquiries concerning divi-
dend payments, transfer of share certificates,
consolidation of shareholder accounts and
tracking of lost shares should be addressed to
Novo Nordisk’s transfer agents (see opposite).
For 2005, the dividend payments for Novo
Nordisk shares were as illustrated in the table
below.

Dividend payment A shares

B shares
of DKK 2 of DKK 2

ADRs

DKK 6.00 DKK 6.00 USD 0.88

Novo Nordisk does not pay a dividend on its
own holding of treasury shares. The proposed
dividend for 2005 is DKK 6.00 for each Novo
Nordisk B share and for each Novo Nordisk A
share.

Internet
Novo Nordisk’s website for investors can be
found at novonordisk.com/investors. It includes
historic and updated information about Novo
Nordisk’s activities: press releases and stock
exchange announcements from 1995 and on-
wards, financial results, investor presentations,
background information, recent annual reports
and accounts, parent company accounts and
sustainability reports.

Novo Nordisk Investor Relations
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

Mogens Thorsager Jensen
Tel (+45) 4442 7945
E-mail: mtj@novonordisk.com

Christian Qvist Frandsen
Tel (+45) 4443 5182
E-mail: cqfr@novonordisk.com

In North America
Mads Veggerby Lausten
Tel (+1) 609 919 7937
E-mail: mlau@novonordisk.com

Transfer agents
Shareholders’ enquiries concerning dividend
payments, transfer of share certificates, con-
solidation of shareholder accounts and
tracking 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:
JPMorgan Chase Bank, NA
PO Box 3408
South Hackensack, NJ 07606
USA
Tel (+1) 800 990 1135
Tel (+1) 201 680 6630 for enquiries from
outside the United States

Financial calendar 2006

Annual General Meeting

08 March 2006

Dividend

Ex-dividend
Record date
Payment

B shares

ADRs

09 March 2006
13 March 2006
14 March 2006

09 March 2006
13 March 2006
21 March 2006

Announcement of financial results 2006

First three months

28 April

Half year

2 August

Nine months

Full year

27 October

31 January 2007

Price development of Novo Nordisk’s B shares on the Copenhagen Stock Exchange
relative to the European pharma index.
Index 1 January 2001= 100

Price development of Novo Nordisk’s ADRs on the New York Stock Exchange
relative to the US pharma index.
Index 1 January 2001= 100

250

200

150

100

112

2001

2002

2003

2004

2005

2001

2002

2003

2004

2005

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 2005

contact

Get in touch

Novo Nordisk values stakeholders’ review of
the company’s reporting and welcomes any
questions or comments concerning the report
or the company’s performance. Visit the cor-
porate website at novonordisk.com/annual-
report Click: How we are accountable.

This report is about how we do business.
When it comes to building relations – that’s
what Novo Nordisk people across the globe
are doing every day. If reading this report in-
spires you to learn more or to get involved in
some of this work, please get in touch.

Contact

Enquiries, comments and suggestions
are very welcome.

Headquarters
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

Tel +45 4444 8888
webmaster@novonordisk.com

Media
Corporate Communications
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

Mike Rulis
Tel +45 4442 3573
mike@novonordisk.com

Job
Staffing
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

Tel +45 4444 8888

Produced by: Corporate Branding, January 2006
Contributing writer: Amy Brown
Translation and proofreading:
Corporate Communications
Photos: Jesper Westley, Finn Fønns, Willi Hansen,
François Couderc and the World Diabetes Foundation
Design and production: Branded Design ApS
Accounts and notes production: team2graphics
Printed in Denmark by Bording A /S
DS/EN ISO14001:1996

Li Guang Jun creates the Chinese character for China with a flashlight in the dark.

Novo Nordisk key products

Diabetes care

Biopharmaceuticals

Trade name

Generic name

NovoMix®
NovoRapid®
Levemir®
Mixtard®
Actrapid®
Insulatard®
NovoNorm®

NovoSeven®
Norditropin®
Activelle®
Vagifem®

Biphasic insulin aspart
Insulin aspart
Insulin detemir
Insulin
Insulin
Insulin
Repaglinide

Recombinant factor VIIa
Somatropin (rDNA origin)
Estradiol/norethindrone acetate
Estradiol

Throughout the report referral is often made to the approved product trade names. In the above box is a list of trade
names with accompanying generic names. For more information about Novo Nordisk's products, please visit
novonordisk.com/annual-report Click: What we do

Novo Nordisk Annual Report 2005

113

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At Novo Nordisk, we are changing diabetes.
In our approach to developing treatments.
In our commitment to operate profitably and
ethically. In our search for a cure. We know
we are not simply treating diabetes. We are
helping people live better. That understand-
ing is behind every decision or action we
take, and fuels our passion to change the
treatment, perception and future of diabetes
for good.

Sabrina Trujillo Smith
Clinical technical support coordinator ll,
Novo Nordisk Delivery Technologies, Inc.

Rodney Nicholas
Manager, Pharmaceutical
Manufacturing, Novo Nordisk
Delivery Technologies, Inc.

Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

novonordisk.com