Novo Resources Annual Report 2006

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FY2006 Annual Report · Novo Resources

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financial, social and environmental performance 2006

action
defines
leadership

diabetes care:
sustaining
leadership

biopharmaceuticals:
the portfolio
expands

Business results re Biophuticals Challenging workplace Values in action
Glossary

visit the online
annual report

The articles in this printed report make reference to the online Annual Report
2006, which offers additional background, context and data.

The online report is available at novonordisk.com/annual-report.

Browse the six sections
highlighted in the top bar
to find topics of interest.

Online Annual Report at a glance

Online highlights

Who we are
Provides information about the manage-
ment, governance, ownership structure and
history of Novo Nordisk.

The world of Novo Nordisk
See where Novo Nordisk’s production sites,
R&D facilities and clinical development
centres are located around the world.

Game for a challenge?
Try the three interactive challenges, which
represent topics of specific focus in 2006:
business ethics, climate change and eco -
nomics & health.

Try the three
interactive challenges
in the online
annual report.

What we do
Gives an overview of Novo Nordisk’s product
areas and pipeline.

How we perform
Accounts for performance during 2006
from access to health to workplace quality.

How we work
Introduces Novo Nordisk’s approach to
doing business, its vision and strategy, and
stakeholder engagement.

How we are accountable
Provides insight into the details of account-
ability and assurance.

Downloads
View, download or order the printed Annual
Report 2006.

Reader’s guide

Novo N

Welcome inside! This is Novo Nordisk’s Annual
Report 2006. It accounts for the company’s per-
formance during the year and presents achieve-
ments and challenges. We trust you will find that
we have done so in a fair and balanced way.

People at Novo Nordisk are guided by the com-
pany’s vision and its values. There is a strong sense
of shared purpose across the organisation, and a
commitment to pursuing the goals set out in the
vision: to achieve competitive business results, to
sustain leadership in diabetes care, to expand the
biopharmaceuticals business, to be a challenging
workplace, and to put values into action.

This year’s Annual Report seeks to capture the
essence of the Novo Nordisk way. It illustrates how
we do business and explains how we will continue
to create long-term shareholder value.

The management report and discussion pre s-
ents an overview of business performance during
2006 with highlights, five-year developments and
a commentary.

The feature articles put performance into con-
text. Organised under the vision’s five headings,
they provide insights into activities during the year,
strategies and goals, risks and opportunities. The
articles reflect the key priorities for Novo Nordisk
and topics that we have identified as material for
readers’ valuation of the company’s pos ition for
the future.

You will find a more detailed account of per-
formance in the consolidated financial and non-
financial statements.

Finally, the shareholder information presents
Novo Nordisk’s corporate governance model, and
the approach to risk management, and examples
of the current risk profile. Here you will also find
profiles of the members of the Board of Directors
and Executive Management. And if you are look-
ing for information about the share, begin reading
from the back.

Action defines leadership

Working with Novo Nordisk, you will learn what it
means to be a values-led company. Our values
underpin the commitments, principles and policies
that form our global standards for doing business.
In everything we do, we will be accountable, am-
bitious, responsible, engaged with stakeholders,
open and honest, and ready for change.

The pictures tell stories of Novo Nordisk people
putting these values into action. Action defines
leadership. Every day of the year, across the globe,
people at Novo Nordisk bring to life what leader-
ship is all about.

Our aspiration is to defeat diabetes. It is an am-
bitious goal, yet we believe it can be achieved.
Working with stakeholders, driving concerted ac-
tion and thinking out of the box, Novo Nordisk is
changing diabetes. This report provides some ex-
amples. To learn more, or to get involved in some
of the work, please get in touch.

Enjoy reading!

02–05
Welcome to

02 Actio
04 The N

06–19
Business res
we will
compet
busines

08 Mana
and d
16 The w
Novo
18 Pipeli

A year in the life
of Novo Nordisk

Factory expansion
11January: A factory expansion in
Clayton, North Carolina, results in doubled
insulin filling capabilities, a new assembly
and packaging line, and administration
and storage space. Page 12.

Goodbye to an icon
8 March: Outgoing Chairman of the
Board Mads Øvlisen, a Novo Nordisk icon,
bids farewell to shareholders at the
Annual General Meeting. Sten Scheibye
takes over as Chairman of the Board.
Pages 112–113.

Natural killer cells
5 April: Novo Nordisk and Innate
Pharma SA announce partnership to
develop medicines targeting one of the
body’s first lines of defence against
cancer and infections: natural killer
cells. Pages 34–35.

January

February

March

April

Climate agreement
23 January: Novo Nordisk and the World
Wide Fund for Nature sign an agreement
in which the company pledges to reduce
its CO2 emissions. Page 48.

CEO rings closing bell at the NYSE
7 February: Novo Nordisk celebrates the
25th anniversary of the company’s listing
on the exchange. Pages 115–116.

US research facility opens
21 February: Opening of Novo Nordisk
Research US, the first haemostasis
research facility in the United States
dedicated to life-threatening bleeding.
Page 37.

R&D agreement
14 March: Argos Therapeutics and
Novo Nordisk announce agreement to de-
velop treatment for systemic auto immune
disorders. Pages 34–35.

EU leaders prioritise diabetes
24 April: The European Parliament
passes a Novo Nordisk-supported
declaration calling for increased focus
on diabetes. Pages 28–29.

US launch of Levemir®
28 March: Announcement of the US
commercial availability of Levemir®,
a long-acting modern insulin.
Pages 24–25.

Novo Nordisk’s Vision

14 –17 September: During
the EASD annual meeting in
Copenhagen, Novo Nordisk
sponsors rickshaw bicycles to
transport conference dele-
gates around the city (left).

Novo Nordisk researchers in
the haemostasis biology unit
are exploring novel ap-
proaches to rejuvenate the
haemostasis portfolio (right).

02–05
Welcome to Novo Nordisk

02 Action defines leadership
04 The Novo Nordisk way

06–19
Business results
we will achieve
competitive
business results

08 Management report

and discussion

16 The world of
Novo Nordisk
18 Pipeline overview

20–31
Diabetes care
we will be
the world’s leading
diabetes care
company

22 Diabetes care:

sustaining leadership
24 Focused strategy in the US
targets diabetes crisis

26 Long-term presence
in emerging markets
pays off

28 Reaching across the
global health divide

30 A global drive

to change diabetes

32–39
Biopharmaceuticals
we will offer products
and services in other
areas where we can
make a difference

34 Bio pharmaceuticals:

the portfolio expands
36 Pursuing promising leads

in haemophilia

38 Growth at every level
39 Convenience matters

ls
disk and Innate
nce partnership to
s targeting one of the
f defence against
ons: natural killer
.

AERx® trials resume
1 May: The phase 3 trials for Novo
Nordisk’s AERx® resume. The trials will
involve more than 2,000 people in more
than a dozen countries. Pages 22–23.

Denmark’s best image
5 May: A Danish business magazine
publishes the results of its annual
image poll and Novo Nordisk comes out
on top. Page 40.

Strengthened patent position
5 July: Novo Nordisk and Aradigm
Corporation announce agreement
through which Novo Nordisk acquires
certain patent rights regarding
AERx® iDMS. Pages 22–23.

Fast grower in
growth hormone market
2 August: In the first six months of 2006,
the sales curve for the growth hormone
product Norditropin® increased.
Page 38.

May

June

July

August

itise diabetes
pean Parliament
disk-supported
for increased focus
s 28–29.

Diabetes on the agenda
7 June: Novo Nordisk youth panellists
share a common goal: more diabetes
awareness through a UN Resolution.
Pages 30–31.

Norditropin NordiFlex® pen launch
7 July: Novo Nordisk launches a 15 mg
version of the liquid growth hormone
delivery system Norditropin NordiFlex®
in Japan. Page 38.

Liraglutide in the news
13 June: New data on liraglutide, Novo
Nordisk’s GLP-1 analogue, is launched
at the American Diabetes Association’s
annual session. Pages 22–23.

NovoRapid® approval
31 July: The European Commission
approves NovoRapid®, a rapid-acting
modern insulin, for use by pregnant
women with diabetes. Pages 22–23.

Praise for achievements
in developing countries
23 August: According to international
organisations, Novo Nordisk makes
invaluable contributions to changing
diabetes in the world’s poorest
countries. Pages 28–29.

28 March: US diabetes care
specialists celebrate the
launch of Levemir® (left).

15 September: Novo
Nordisk executives lead the
way in the Novo Nordisk-
sponsored five-kilometre
run during the EASD annual
meeting (right).

40–43
Challenging workplace
a job here
is never
just a job

42 People bring engagement

to work

43 Learning leadership

44–49
Values in action
our values
are expressed in
all our actions

46 Business ethics training
deals with dilemmas
47 Responsible sourcing:
revisiting the strategy

48 Climate strategy

puts energy efficiency
in the spotlight

50–116
Accounts and notes
consolidated financial and
non-financial statements

52 Financial and non-financial

highlights

54 Consolidated financial statements
90 Consolidated non-financial

sta te ments

105 Management statement and

auditors’ reports

Shareholder information

108 Corporate governance
110 Risk management
112 Board of Directors
114 Executive Management
115 Shareholder information

The Changing Diabetes Bus
13 September: Novo Nordisk launches
the Changing Diabetes Bus – an initiative
to create more awareness of the diabetes
pandemic. Pages 30–31.

Congress in Copenhagen
14 September: Copenhagen hosts the
EASD annual meeting, and Novo Nordisk
welcomes doctors, researchers and others
interested in diabetes. Pages 30–31.

Liraglutide obesity trial
6 October: Novo Nordisk announces that
liraglutide will now be tested for use as a
treatment for obesity. Page 11.

Upper-gastrointestinal bleedings
6 October: Due to a lack of statistical
difference in treatment, Novo Nordisk
decides not to pursue further clinical
development of NovoSeven® within UGI
bleedings. Page 11.

Montes Claros handover
9 November: Novo Nordisk’s newest
filling plant, located in Montes Claros,
Brazil, becomes an operational
production site. Pages 26–27.

New research programmes
12 December: EASD, the Juvenile Diabetes
Research Foundation and Novo Nordisk
announce two new studies that will focus
on type 1 and type 2 diabetes.
Pages 22–23.

September

October

November

December

NovoSeven® approval
27 October: The FDA approves a new
indication for NovoSeven® – acquired
haemophilia, a rare and potentially fatal
bleeding disorder. Pages 36–37.

Diabetes care field force expansion
30 November: In the US, plans are
announced to expand the diabetes care
sales force from around 1,200 to approxi-
mately 1,900 people. The expansion will
take place during the first half of 2007.
Pages 24–25.

UN Resolution on diabetes
20 December: United Nations adopts a
Resolution on diabetes. Novo Nordisk is
committed to continuing to play an active
role in the ‘Unite for Diabetes’ campaign.
Pages 30–31.

Novo Nordisk Annual Report 2006

Welcome letter

action
defines
leadership

Today, one-tenth of the world’s population – more
than 550 million individuals – has diabetes or the
prestages of diabetes, and the numbers are grow-
ing day by day. This will prove to be the most signif -
icant public health challenge of the 21st century.

Put into this perspective, the promise of Novo Nordisk to change dia-
betes could not be more appropriate. It is therefore with great humil-
ity and satisfaction that we reflect on what we accomplished in 2006.
A few years ago a young woman gave voice to her dream: What if
the world’s eyes were opened to the stark facts that diabetes is a
chronic, debilitating and costly disease that kills at least as many peo-
ple as HIV/AIDS? A disease that not only affects those families whose
members have to come to terms with diabetes as part of their lives
and need lifelong medical treatment and care, but also has huge
social and economic implications for the global society. If that hap-
pened, wouldn’t it make a world of difference?

A few weeks ago the United Nations passed a resolution making
World Diabetes Day a United Nations Day to be observed by the mem-
ber states, organisations and people around the world as an occasion
to raise public awareness of diabetes and its consequences. This is an
important milestone on the way to making that dream come true.

Clare Rosenfeld, the young woman mentioned above, was seven
years old when she was diagnosed with type 1 diabetes. Since the age
of 12 she has been campaigning to bring attention to what diabetes
does to people, and – more importantly – the urgency to defeat it. To
make proper care available to everyone who needs it. And to relent-
lessly pursue every possible avenue to prevent it.

A movement gaining momentum

The successful ‘Unite for Diabetes’ campaign, effectively orchestrated
by the International Diabetes Federation, will stand as a milestone for
this effort. It was sparked by Clare Rosenfeld’s bold vision, and, thanks
to the tireless efforts of thousands of people, the diabetes community
has come together as a powerful coalition with a voice that resonates
with policy-makers throughout the world.

Novo Nordisk is proud to be a part of this movement. Our aspiration
is to defeat diabetes by finding better methods of diabetes preven-
tion, detection and treatment. We work actively to promote collabor -
ation between all parties in the healthcare system to achieve common
goals. In the fight against diabetes, industry can take the lead, offer it-
self as a partner and be a catalyst for change, but governments must
do their part to achieve sustainable impact.

The leadership challenge

Stopping the pandemic spread of diabetes and securing access to
proper care for all who need it are daunting tasks – but not unsur-

Novo Nordisk Annual Report 2006

mountable. We will change the future of diabetes. To be successful,
we need to bring the best of our competences, technologies and
collect ive resources to bear. We need to continually improve perform-
ance and stay focused on targets. We also need to find other ways to
stimulate creativity, challenge assumptions, and imagine bold, new
possibilities. That is the task at hand for the people at Novo Nordisk
and our partners.

At Novo Nordisk we are determined to sustain our leadership. But
the leadership challenge is one that is ever-present on our agenda,
and we will stay vigilant to retain and reinforce our position.

In 2006, we paid particular attention to five key business chal-
lenges: quality, competition, innovation, organisational development
and business ethics.

The quality imperative

The quality of our products and services and the way we all perform in
our jobs are crucial for the prosperity of our company and, increasingly,
as a differentiating factor as well. Our customers’ lives depend on the
safety and efficacy of our products. It has therefore been reassuring
and rewarding to see the continued strong focus on quality processes
and activities. Product quality has remained high, with a declining
complaint rate. And the level of regulatory compliance, as witnessed
by the outcomes of numerous internal and external inspections, is
also very high.

Tougher competition

Considering the magnitude of the diabetes challenge and the fact
that current therapies alone cannot solve the problem, it is only nat -
ural that many companies see business opportunities in this field. For
Novo Nordisk this means increased competition from established in-
novation-based pharmaceutical companies and from biosimilar
manu facturers. To get our message across in this increasingly ‘noisy’
environment, we need to speak louder and expand our presence
globally. In other words, the costs of doing business are going up. In
the course of the year we have managed to improve our market posi-
tion in all therapy areas and in all markets, which has helped us to
achieve our goals.

The innovation challenge

Discovering new therapies for unmet medical needs in serious illnesses
is what dreams are made of. There are still plenty of improvements to
be made in each of the therapy areas in which Novo Nordisk has
unique expertise. It has been encouraging to see the progress of our
early research pipeline, giving great hopes of being able to retain our
leadership within diabetes, haemostasis and growth disorders, while
at the same time potentially opening up new fields such as inflamma-
tion and oncology. Furthermore, we are expanding our late-stage
clinical activities to a level never seen before in our company. Product
innovation is crucial for long-term value creation. And it is accom -
panied by innovation in many other parts of our company, including
new manufacturing processes, the provision of shared services,
administrative procedures, ways of interacting with our stakeholders,
and many more. Innovation is made up of small and big strides alike
that improve our productivity and long-term competitiveness, and
give hope to and improve the lives of our customers. Just as

importantly, it is a key factor in making our company an exciting place
to work.

These business principles find a lot of resonance across the organ-
isation and help us make the company stand out both as a business
partner and as an employer.

Transformational growth

Globalisation is a huge opportunity for our company to gain access to
more markets, to recruit new talents and to source our products and
services from where they can be most efficiently produced. This re-
quires a clear strategy that determines how and where functions are
best performed. We believe that certain jobs, particularly in Denmark,
will be more specialised, and at the same time we anti cipate that job
creation will predominantly take place abroad. This transformation is
ongoing in our company; thousands of people are upgrading their
competences for the benefit of Novo Nordisk and to secure their
future employability.

Global growth underlines the need for a clear values-oriented
company culture. The Novo Nordisk Way of Management and our
vision set the direction for where Novo Nordisk wants to go and how
we are going to get there. It aims to inspire everyone at Novo Nordisk
to make their contribution to shaping the future of the company.

Ethical business conduct

Remaining a trusted business partner requires transparency in all as-
pects of our business. We disclose our activities in clinical trials. We have
procedures in place and offer training for everyone within purchasing,
marketing practices and management. We will ensure that governance
of third-party contracts lives up to the current standards described in
our Business Ethics Policy. This is a long-term process aimed at pro-
tecting our company’s reputation and the integrity of our people.

Competitive business results

Being focused is a particular strength of Novo Nordisk. We will
achieve competitive business results so that we can build a sustain-
able business. Strong business growth combined with productivity
improvements in manufacturing, administration and corporate func-
tions has allowed us to increase our investment in research and devel-
opment as well as our presence in the marketplace to strengthen our
long-term prospects. Most notably, we have been able to better
utilise our plants and equipment, with the result that we have ex-
panded our capacity, decreased our unit costs, sustained quality, and
postponed significant future capital expenditures.

This achievement is in spite of adverse developments in Novo
Nordisk’s basket of currencies versus the Danish krone emphasising
that financial performance in 2006 was very strong. Sales growth ex-
ceeded our expectations and, combined with the substantial produc-
tivity improvements, has allowed us to invest for the future while still
improving our return on invested capital in line with our long-term fi-
nancial goals.

Consequently, we note with great pleasure that our shareholders
have seen a significant appreciation of their holdings in Novo Nordisk
– and we are grateful for their continued commitment and trust in the
company.

Novo Nordisk enters 2007 as a very healthy business, well posi-
tioned for future growth and prosperity. This is the result of the efforts
of 23,613 Novo Nordisk people working together on a mission. It is
thanks to their imagination, ingenuity, dedication and hard work that
Novo Nordisk continues to be a very special company.

And it is through examples like Clare Rosenfeld that we all at Novo
Nordisk find a strong sense of direction and mobilise personal leader-
ship, which makes our jobs truly rewarding.

Lars Rebien Sørensen
President and CEO

Sten Scheibye
Chairman of the Board of Directors

Novo Nordisk Annual Report 2006

The Novo Nordisk way

Pioneers in diabetes care
Novo Nordisk’s strong background
in diabetes care builds on more than
80 years’ experience in this area.
It began in 1922 when August
Krogh, Danish Nobel laureate in
physiology, and his wife, Marie,
who had type 2 diabetes, visited
Professor J J R Macleod, head of
the institute in Toronto, where the
world’s first insulin extract had
been produced.

Macleod granted Krogh permission
to produce insulin. The Kroghs
returned home and the following
year August Krogh set up a com pany
in Den mark called Nordisk Insulin -
lab ora torium with Dr Hans Christian
Hagedorn and began producing
insulin for the treatment of diabetes.

the
novo nordisk
way

The Novo Nordisk Way of Management is the framework for how the
company does business. It consists of three elements: the Vision, the
Charter, and a set of 13 global company policies.

The Vision sets out the direction for Novo Nordisk. It expresses what
Novo Nordisk is striving for, how the company works, and how it is
guided by its values in its endeavours to find the right balance between
commercial interests and the obligations of a responsible business.

The Charter describes the company’s values, which underpin its
commitment to the Triple Bottom Line and sustainable development,
its Fundamentals – 11 management principles – and follow-up meth-
ods to provide on going systematic and validated documentation of
performance in respect of the Novo Nordisk Way of Management.

The global company policies set global standards and give oper -
ational guidelines within 13 specific areas: bioethics, business ethics,
communication, environment, finance, global health, health and
safety, information technology, legal, people, purchasing, quality and
risk management.

The follow-up methodology has three key components:
Facilitation is a specific follow-up method that is unique to com-
panies in the Novo Group. It is used to provide systematic and validat-
ed documentation of how the values are lived in the company and of
the compliance levels with the Novo Nordisk Way of Management.
The result of facilitations is part of the annual Organisational Audit.

The head of Facilitation & Development reports to Lise Kingo,
executive vice president and chief of staffs (COS), and, like the head of
Group Internal Audit, has a formal reporting line to the chairman of
the Audit Committee.

The global facilitator team consists of senior people with deep in-
sight into the business who focus on broad themes that are central to
the business such as business ethics, diversity and globalisation. The
team also helps educate new managers in the Novo Nordisk Way of
Management and how it is applied in practice.

novonordisk.com/annual-report Click: who we are/management

Novo Nordisk Annual Report 2006

Organisational development is assessed through an annual
Organisational Audit, commissioned by the Board of Directors and
Executive Management. This process, conducted at the senior man-
agement level, includes an assessment of ‘linking business and organ-
isation’ and succession management, and takes both a retrospective
and a forward-looking perspective.

Annual reporting accounts for financial and non-financial per-
formance against short-term and long-term targets, strategies, activ-
ities, and key business risks and opportunities. Novo Nordisk has
adopted the Balanced Scorecard as the company-wide management
tool for measuring progress. As part of the remuneration package, in-
dividuals are rewarded for performance that meets or exceeds the fi-
nancial and non-financial targets in the Balanced Scorecard, which
comprise corporate, unit-specific and individual targets.

The Novo Nordisk
Way of Management

The Vision

The Charter
Values
Commitments
Fundamentals
Follow-up
methodology

Policies

Values
Accountable
Ambitious
Responsible
Engaged with
stakeholders
Open and honest
Ready for change

Commitments
Financial,
environmental
and social
responsibility

Fundamentals
Management
principles

Follow-up
methodology
Facilitation
Organisational
Audit
Annual
reporting

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

The Triple Bottom Line business principle

Novo Nordisk ‘strives to conduct its activities in a financially, environ-
mentally and socially responsible way’. This statement is anchored in
the Articles of Association and embraces the principles upon which
the company was founded.

This formal commitment to sustainable development and bal-
anced growth has been built into the corporate governance struc-
tures, management tools and individual performance assessments.

The Triple Bottom Line is a broad business principle that ensures
that decision-making balances financial growth with corporate
responsibility, short-term gains with long-term profitability and share-
holder return with other stakeholder interests. It implies that any
decision should always seek to balance three considerations: Is it eco-
nomically viable? Is it socially responsible?
And is it environmentally sound?

Economically viable

Diabetes care

Biopharmaceuticals

Socially responsible

Environ men tally sound

Economically viable means managing
the business in a way that ensures corpor -
ate profitability and growth and seeks to
leave a positive economic footprint in the
community. Examples are consistent deliv-
ery of solid financial results, business-

ethical conduct and health-economic considerations.

Socially responsible implies caring for people. For Novo Nordisk,
this applies to the people who rely on the company’s products and to
employees. It also considers the impact of the business on society.
Examples include initiatives to improve access to health, diversity and
equal opportunities in the workplace, health and safety, human rights
and community engagement.

Novo Nordisk’s Vision

Environmentally sound decisions address the company's impact on
the external environment as well as the bioethical implications of its
activities. Examples are environmental management, safe uses of
gen etic engineering, a strategy to combat climate change, and con-
sideration for the welfare of experimental animals.

Priorities and targets

Long-term priorities and objectives are identified through a 10-year
Strategic Planning Process, which is updated annually and informed
by trendspotting and 20-year diabetes scenarios, which are revisited
every three years. This plan identifies opportunities for growth, risks
and mitigations, and forms the basis for annual target-setting in the
company’s Balanced Scorecards. To ensure focus on shareholder value,
long-term targets are set for financial and non-financial performance.

Engaged with stakeholders

Novo Nordisk holds itself accountable to the company’s shareholders
and other stakeholders, including individuals or groups affected by its
business in local communities. Key stakeholder groups are people
with diabetes and others whose healthcare needs it serves, healthcare
professionals, policy-makers, educators, employees, investors, sup -
pliers and other business partners as well as media, interest groups
and other opinion-formers. To better manage emerging risks and act
on opportunities, Novo Nordisk proactively maintains engagement
with a broad range of stakeholders within its sphere of influence.

We will be the
world’s leading
diabetes care
company

Our as pi ration is to defeat dia-
betes by finding better methods
of diabetes prevention, detec-
tion and treatment. We will
work actively to promote collab-
oration 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
disco very of new, innovative
products, also outside diabetes.
We will develop and market
such products ourselves
whenever we can do it as well
as, or better than, others.

We will achieve
competitive
business results

A job here
is never just
a job

Our values
are expressed in
all our actions

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

We are committed to being
there for our customers when-
ever 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.

Decency is what counts. Every
day we strive to find the right
balance between compassion
and competi tiveness, the short
and the long term, self and
commitment to colleagues and
society, work and family life.

Novo Nordisk Annual Report 2006

Business results

we will achieve
competitive
business results

Delivering value to shareholders is one key measure of business suc-
cess. Another is earning and maintaining the trust that sustains the
company’s licence to operate and innovate. At Novo Nordisk we hold
ourselves accountable to the company’s shareholders and other
stakeholders and proactively maintain engagements with a broad
range of stakeholders. This approach is a way to better manage risks
and act on opportunities.

In a global economy, the competition for market share is increas-
ingly fierce. The challenge of sustaining diabetes leadership while
building a broader business is vividly present to everyone in the com-
pany. There is competition in the marketplace. There is pressure from
public healthcare systems to contain costs, paired with a demand for
improved treatment and better access to care that is bigger than ever.
And there is pressure from regulatory bodies for compliance and con-
trol. These challenges translate into an increased focus on high per-
formance, cost consciousness and a quality mindset, but even more
so, they highlight the need to stimulate innovation and the ability to
put new ideas into action.

Operational excellence is one response that is delivering value on
the bottom line and takes the long-term view. By eliminating activities
that do not create value, resources can be directed at those activities
that stimulate innovation. An improved operating margin and effi-
ciency gains in production make it possible to allocate additional
funds to research and development and strengthen sales forces as an
investment for the future.

Novo Nordisk’s global expansion has been achieved with just a few
redundancies in the Danish organisation. We have expanded the pro-
duction capacity to meet current and future demands for our prod-
ucts, and more efficient production methods secure continued
growth at competitive costs.

Focus is our strength

Being a global healthcare company and a leader in our field entails a
responsibility to maximise profitability and contribute to sustainable
development and balanced growth. This is the foundation for the
Novo Nordisk way of doing business.

Novo Nordisk is poised for continued growth, with a strong pres-
ence in mature markets, in emerging economies and also in less re-
sourceful parts of the world. We believe that the company’s solid and
sustained performance demonstrates the business rationale for tak-
ing a broad, long-term approach. It helps us navigate in a complex
business environment, and it is a way to maintain the licence to oper-
ate and innovate.

Focus is of the essence. Our priorities are clear: We will sustain the
lead in the fight against diabetes and expand the biopharmaceuticals
business. We will strengthen our global presence. And we will take an
active part in the society of which we are part. That way we will stay a
healthy business.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Management report and discussion

2006 in brief

Novo Nordisk is pleased to report on yet another year with solid double-digit growth in sales. The key contributors to growth are
Novo Nordisk’s strategic products: the complete portfolio of modern insulins, NovoSeven® and growth hormone.

Sales
n Reported sales increased by 15%.
n Sales of modern insulins (insulin analogues) increased by 48%.
n Sales of NovoSeven® increased by 11% and sales of Norditropin® increased by 19%.
n Sales in North America increased by 29%, and sales in International Operations increased by 17%.

Profit
n Reported gross profit increased by 19%, reflecting continuous productivity improvements, thereby expanding the gross margin

by 2.5 percentage points to 75.3%.

n Operating profit increased by 13% to DKK 9,119 million. Measured in local currencies operating profit increased by 15%.
n Net profit increased by 10% to DKK 6,452 million, and earnings per share (diluted) increased by 12% to DKK 19.99.

Equity
n The ongoing share repurchase programme has been increased to DKK10 billion and is now expected to be finalised before the
end of 2008. At the Annual General Meeting on 7 March, the Board of Directors will propose a 17% increase in dividend to
DKK 7.00 per share of DKK 2.

Research and development
n Within diabetes care, patient recruitment was completed in the phase 3 trial for liraglutide, the once-daily human GLP-1 ana-

logue, and AERx® iDMS, the inhalable insulin, entered phase 3 clinical trials.

n Within biopharmaceuticals, patient recruitment was completed in the phase 3 trial for the use of NovoSeven® in intracerebral
haemorrhage (ICH). Three NovoSeven® phase 2 trials were completed: traumatic brain injury, spinal surgery and upper-
gastrointestinal bleeds.

Changing diabetes campaign
n In 2006 Novo Nordisk communicated its changing diabetes messages globally and drove initiatives to improve prevention,
treatment and care. Novo Nordisk actively supported the campaign for a UN Resolution on diabetes, which was adopted on
20 December, and intends to take active leadership in its implementation.

Climate strategy
n Significant progress was made towards achieving the CO2 reduction goal as part of the Climate Savers agreement; energy sav-

ings and cost optimisations were identified following energy screenings at 10 of the 13 production sites.

Operating margin

Growth in operating profit

Return on invested capital
(ROIC)
%

Cash to earnings
(three-year average)
%

100

Target
Realised during the year

Novo Nordisk Annual Report 2006

Business performance

2006 was another year of solid double-digit sales growth for Novo
Nordisk in an industry otherwise characterised by patent expiries and
a challenging growth outlook. Reported sales increased by 15% to
DKK 38,743 million and by 16% measured in local currencies, signifi-
cantly higher than the expectations for growth in sales communicated
in January 2006.

The underlying growth in the insulin market and the conversion to
modern insulins in easy-to-use prefilled devices were the main con-
tributors to the continued strong demand for Novo Nordisk’s insulin
products in 2006. The company has seen significant sales growth for
all products in the complete portfolio of modern insulins: Levemir®,
the long-acting insulin, NovoMix® 30, the premixed formulation of
rapid-acting and intermediate-acting insulin, and NovoRapid®, the
rapid-acting insulin.

Within biopharmaceuticals, NovoSeven® continued to be the lead-
ing product and is the only recombinant treatment option for
haemophilia patients with inhibitors. In the growth hormone market
Novo Nordisk is gaining market share and now has 22% of the global
market, driven by Norditropin NordiFlex®, a liquid formulation of
growth hormone in an easy-to-use prefilled device.

Operating profit increased by 13% to DKK 9,119 million from DKK
8,088 million in 2005, significantly higher than the expectations for
growth in operating profit communicated in January 2006. Measured
in local currencies operating profit increased by 15%.

The operating margin for 2006 was realised at 23.5%, slightly
below the 24.0% achieved in 2005. This development reflects a neg-
ative currency impact as well as the absence of non-recurring income
in 2006.

Return on invested capital (ROIC) was 25.8% compared to 24.7%
in 2005 and thereby continued the positive trend, which led Novo
Nordisk to increase the long-term target to 30% in connection with
the release of the annual results for 2005.

The cash to earnings ratio for the year was 73%, down from 82%
in 2005 being impacted by significant tax-related payments in 2006.
The cash generation has thus been consistently ahead of the long-
term financial target since the large capital expenditure programme

was completed in 2002. See the financial highlights on p 52 and the
consolidated financial statement on pp 54–89.

The solid business performance was underpinned by good progress
towards non-financial goals. See the non-financial highlights on p 53
and the consolidated non-financial statements on pp 90–99.

Diabetes care

The strategy in diabetes care is to sustain leadership via focus on mod-
ern insulins and delivery devices, while developing novel antidiabetic
agents and next-generation insulins. See pp 22–23.

Sales of diabetes care products increased by 16% in Danish kroner
to DKK 27,866 million compared to 2005. Measured in local cur -
rencies the increase was 17%.

The operating profit from the diabetes care segment increased by
23% following solid sales growth and significantly improved produc-
tion costs. Sales and distribution costs increased mainly as a result of
the sales force expansion in the US and other key markets and promo-
tion activities related to the global roll-out of Levemir®. Research and
development costs increased by 23% reflecting significant invest-
ments in the two key late-stage development projects, liraglutide and
AERx® iDMS.

Sales performance
Modern insulins, human insulin and insulin-related products
Sales of modern insulins (insulin analogues), human insulin and in-
sulin-related products increased by 16% to DKK 25,882 million in
Danish kroner and by 17% measured in local currencies. All regions
contributed to the sales growth and the largest contributors were
North America and Europe. Novo Nordisk is the global leader within
the insulin segment, with 52% of the total insulin market and 39% of
the modern insulin segment, both measured by volume.

Sales of modern insulins increased by 48% in Danish kroner in
2006 to DKK 10,825 million and by 50% measured in local cur -
rencies. Sales of modern insulins contributed with 69% of the overall
growth in local currencies, and all regions contributed to growth.

Sales by therapy area

Sales by geographical area

DKK billion

Number of active clinical trials
Diabetes care and biopharmaceuticals
Indexed

Climate strategy
CO2 emissions
1,000 tons CO2

150

140

130

120

110

100

300

280

260

240

220

200

Diabetes care
Haemostasis management (NovoSeven®)
Growth hormone therapy
Hormone replacement therapy (HRT)
Other products

Europe
North America
International Operations
Japan & Oceania

2003 = index 100

Realised CO2 emissions

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Management report and discussion

North America
Sales in North America increased by 41% in both Danish kroner and
local currencies in 2006. The complete portfolio of modern insulins,
NovoLog®, NovoLog® Mix 70/30 and Levemir®, continues to be the
main contributor to growth. In addition, more than one-third of mod-
ern insulin sales in the US are in the leading, prefilled, ready-to-use
device, FlexPen®. Novo Nordisk is the leader in the US insulin market,
holding more than 41% volume market share of the total market,
and has also increased volume market share in the market for modern
insulins to more than 27%, reflecting market share gains in all three
segments, short-acting, premixed and long-acting. Sales of human
insulin products also increased due to higher volume as well as higher
average prices. See pp 24–25.

As previously communicated Novo Nordisk has decided to expand
the US diabetes field force from 1,200 to 1,900 people. The expan-
sion process has been initiated and is still expected to be finalised dur-
ing the first half of 2007. The expanded field force will make it pos -
sible to reach more primary care physicians and increase the frequency
of visits to both primary care physicians and diabetes care specialists.

International Operations
Sales in International Operations increased by 14% in both Danish
kroner and local currencies. The sales development during 2006
reflects robust performance of primarily modern insulins, but also
human insulin contributed to growth. Whereas Russia and Turkey are
the main contributors to growth for modern insulins in International
Operations, China continued to be the most significant overall
growth driver in 2006, contributing more than 40% of the total in-
sulin sales growth in International Operations. In 2006, the quarterly
distribution of sales in International Operations was more even com-
pared to previous years, in line with the expectation communicated
at the beginning of 2006. Sales in the second half of the year were
negatively impacted by the loss of a federal tender in Brazil. See
pp 26–27.

Europe
Sales in Europe increased by 10% measured in both Danish kroner
and in local currencies. The complete portfolio of modern insulins,
NovoRapid®, NovoMix® 30 and Levemir®, was the primary contributor
to growth during 2006. Novo Nordisk is the market leader in the
European insulin market with a 57% share of the total market and
48% of the modern insulin segment, both measured by volume.

Clinical trials by therapy area – 2006 highlights

Diabetes care
Sales development
DKK billion

Market volume share
development in the US
%

Modern insulins
Human insulin and insulin-related products
Oral antidiabetic products (OAD)

Modern insulins
Human insulin
US total

In Germany Novo Nordisk has agreed new rebate structures for
rapid-acting modern insulins with a majority of healthcare funds,
thereby securing access to modern insulins for the majority of people
with type 2 diabetes. See pp 28–29.

Japan & Oceania
Sales in Japan & Oceania were largely unchanged measured in Danish
kroner and increased by 6% in local currencies. Sales in Japan were
negatively impacted by a mandatory reduction in reimbursement
prices as of 1 April 2006. The sales development reflects sales growth
of modern insulins, NovoRapid® and NovoRapid Mix® 30. Novo
Nordisk continues to be the clear market leader in the Japanese mar-
ket holding 74% of the insulin market and 62% of the modern in-
sulin segment, both measured by volume.

Oral antidiabetic products (NovoNorm®/Prandin®)
Sales of oral antidiabetic products increased by 16% in Danish kroner
to DKK 1,984 million and by 17% in local currencies compared to last
year, primarily reflecting increased sales in North America and
International Operations. While North America benefited from higher
volumes and higher average prices, the positive sales performance in
International Operations was primarily due to higher sales in China,
where the reimbursement conditions improved compared to 2005.

Diabetes care

Biopharmaceuticals

Seven phase 3 programmes

Human GLP-1: liraglutide
Inhalable insulin: AERx® iDMS
Metformin-fixed combination tablet: NovoNorm®

New NovoSeven® indications: intracerebral haemorrhage (ICH) and trauma
Hormone replacement therapy: Vagifem® low-dose and Activelle® low-dose

Seven phase 2 programmes

New liraglutide indication:
obesity; prepared for phase 2 programme

Five phase 1 programmes

Second-generation modern insulin: NN5401, NN344

New NovoSeven® indications: spinal surgery, cardiac surgery,
traumatic brain injury and prophylactic treatment
Human growth hormone – new indication: adult patients in chronic dialysis
Oncology, malignant melanoma: IL-21

NovoSeven® analogue: NN1731
Factor XIII: cardiac surgery
Oncology, acute myeloid leukaemia: anti-KIR

Novo Nordisk Annual Report 2006

Research and development progress
During 2006, Novo Nordisk initiated a global phase 3 study for the
use of liraglutide, the human GLP-1 analogue, in people with type 2
diabetes, and recruitment of all 3,800 patients was completed. Novo
Nordisk also decided to initiate a phase 2 dose-ranging study for the
potential use of liraglutide as an antiobesity agent for obese, non-dia -
betic persons. Furthermore, a global phase 3 study for AERx® iDMS,
the pulmonary insulin, was initiated, and recruitment is ongoing.

As communicated on 15 January 2007, Novo Nordisk has decided
to discontinue research and development activities within the oral
antidiabetic (OAD) segment and, instead, focus exclusively on thera-
peutic proteins, a key competence area for the company. As a conse-
quence, all existing preclinical OAD projects and NN9101 (a glucokinase
activator project currently in phase 1 clinical testing) are expected to
be out-licensed.

Regulatory approvals
In 2006, Novo Nordisk received marketing authorisation from the
European Commission for a label extension for NovoMix® 30, enabling
diabetes patients in Europe to begin insulin therapy with a simple
once-daily injection regimen.

The European Commission also approved a label expansion for
NovoRapid® to be used during pregnancy. The label expansion is a re-
sult of Novo Nordisk’s continued focus on expanding labels for the
portfolio of modern insulins.

In Europe, Novo Nordisk has received a positive opinion from the
regulatory authorities for the use of Levemir® in combination treat-
ment with oral antidiabetics (OAD) for people with type 2 diabetes.
Following this, Novo Nordisk expects to receive marketing authorisa-
tion from the European Commission during the first half of 2007.

Biopharmaceuticals

The strategy in biopharmaceuticals is to expand the portfolio within
haemostasis management, growth deficiency and hormone replace-
ment therapy, and to build a presence in immunotherapies. Sales of
biopharmaceutical products increased by 12% measured in Danish
kroner to DKK 10,877 million and by 13% in local currencies com-
pared to last year.

The operating profit from the biopharmaceuticals segment in-
creased by 3%, reflecting solid sales growth and significant invest-
ments in clinical development activities. Research and development
costs increased by 27% reflecting investments in key late-stage devel-
opment projects with NovoSeven® as well as in building a portfolio of
projects in immunotherapies. See pp 34–35.

Sales performance
NovoSeven®
Sales of NovoSeven® increased by 11% in Danish kroner to DKK
5,635 million and by 12% in local currencies compared to 2005. Sales
growth for NovoSeven® in 2006 was realised in all regions with
International Operations and Europe as the main contributors. In the
fourth quarter of 2006, sales growth of NovoSeven® in North America
picked up but was partially countered by a lower level of tender sales
in International Operations. The growth in sales of NovoSeven® dur-
ing 2006 reflected increased sales within the congenital inhibitor and
acquired haemophilia segments as well as a perceived higher level of
investigational use. Treatment of spontaneous bleeds for congenital
inhibitor patients remains the largest area of use.

Growth hormone therapy (Norditropin®)
Sales of Norditropin® (ie growth hormone in a liquid, ready-to-use for-
mulation) increased by 19% measured in Danish kroner to DKK 3,309
million and by 21% measured in local currencies. While all regions
contributed to growth, supported by the continued success of the
prefilled delivery device, NordiFlex®, North America remains the pri-
mary growth driver. Sales in Japan were negatively impacted by a
mandatory reduction in reimbursement prices as of 1 April 2006.
Novo Nordisk continues to consolidate its position as the second-
largest company in the global growth hormone therapy market hold-
ing 22% of the total market measured in value.

Other products
Sales of other products within biopharmaceuticals, which predom -
inantly consist of hormone replacement therapy-related products, in-
creased by 2% in Danish kroner to DKK 1,933 million and by 3%
measured in local currencies. Novo Nordisk continued to gain market
share in an overall flat market for hormone replacement therapy-
related products during 2006.

Research and development progress
Recruitment for the phase 3 trial for use of NovoSeven® in ICH was com-
pleted in 2006. Furthermore, Novo Nordisk has finalised three phase 2
trials for NovoSeven® in traumatic brain injury, upper-gastrointestinal
bleeds and spinal surgery. In 2007, the first phase 3 data for the use of
NovoSeven® outside of haemophilia are expected to be presented.

Based on positive results from a phase 2 clinical trial, Novo Nordisk
decided to initiate phase 3 for use of Norditropin® in adult patients in
chronic dialysis (APCD). The trial is expected to be initiated in 2007.

Further, the company will continue to offer a range of improved,
low-dose products for hormone replacement therapy (HRT). See key
pipeline progress on pp 18–19.

Regulatory approvals
In 2006, the FDA approved NovoSeven® in the US for the treatment of
bleeding episodes and the prevention of bleeding in surgical interven-
tions or invasive procedures in patients with acquired haemophilia
with inhibitors. NovoSeven® was approved for the treatment of ac-
quired haemophilia in Europe in 1997 and Japan in 2004.

Biopharmaceuticals
Sales development
DKK billion

Research & development
costs
DKK billion

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

Diabetes care
Biopharmaceuticals

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Management report and discussion

In Europe, Novo Nordisk has received a positive opinion from the
regulatory authorities for the use of a single high dose of NovoSeven®
for the treatment of mild and moderate bleeding events in
haemophilia patients with inhibitors. This new regimen is expected to
reduce the need for repeated dosing, minimise disruption to daily life
and, hence, to be a convenient alternative for haemophilia patients
with inhibitors. Novo Nordisk expects to receive marketing authorisa-
tion from the European Commission during the first half of 2007.

Within hormone replacement therapy, Novo Nordisk has received
a marketing approval from the FDA for a low-dose version of
Activella® (Activelle® in Europe), a continuous-combined hormone
replacement therapy product.

Operating performance

The gross margin improved significantly in 2006 to 75.3%, up from
72.8% in 2005. The improvement in the gross margin reflects con -
tinued productivity improvements, but also an improved product line
and higher average prices in the US. The ongoing efforts to increase
productivity cover all key processes in manufacturing: fermentation,
recovery and purification at the sites in Denmark, and formulation,
filling and packaging at sites in Denmark, the US, France, Brazil, Japan
and China.

Part of the productivity improvement is also continued efforts to
utilise energy and water more efficiently in the production processes.
In 2006, a new measure of water and energy efficiency relative to
production, Eco Intensity Ratios (EIR), showed improved performance
in both diabetes care and biopharmaceuticals.

Total non-production-related costs increased by 20% to DKK
20,311 million. Sales and distribution costs increased by 20% in
2006, primarily reflecting the expansion during the fourth quarter of
2005 of the US diabetes care sales force and costs related to the US
launch of Levemir®, which was initiated by the end of the first quarter
of 2006. Also included in sales and distribution costs are financial pro-
visions and costs for ongoing legal disputes. Research and develop-
ment costs increased by 24% in 2006, which primarily reflects a high
number of late-stage clinical trials as well as a higher level of spending
on research projects in both diabetes care and biopharmaceuticals.

Total costs related to depreciation, amortisation and impairment
losses in 2006 were DKK 2,142 million compared to DKK 1,930 mil-
lion in 2005.

Licence fees and other operating income in 2006 were DKK 272
million, compared to DKK 403 million in 2005, reflecting a lower level
of non-recurring income in 2006.

Net financials and tax
Net financials showed a net income of DKK 45 million in 2006 com-
pared to an income of DKK 146 million in 2005. Included in net finan-
cials is the result from associated companies with an expense of DKK
260 million, primarily related to Novo Nordisk’s share of losses in
ZymoGenetics, Inc., compared to an income in 2005 of DKK 319 mil-
lion. The income in 2005 included a non-recurring gain in the first
quarter of 2005 of around DKK 250 million from a sale of shares in
Ferrosan A/S as well as a non-recurring accounting gain of around
DKK 200 million from a secondary offering of shares
in
ZymoGenetics, Inc. in August 2005. Also included in net financials in
2006 were non-recurring capital gains of around DKK 150 million
from divestment of shares in other companies, primarily realised during
the fourth quarter when a gain of more than DKK 100 million was

Novo Nordisk Annual Report 2006

recorded from the sale of a minority shareholding in Domantis Ltd, a
UK biotechnology company.

The foreign exchange result was an income of DKK 141 million
compared to a loss of DKK 40 million in 2005, primarily reflecting a
higher level of foreign exchange hedging gains in 2006, in particular
during the fourth quarter as a consequence of the depreciation of
especially the US dollar and the Japanese yen versus the Danish
krone.

The effective tax rate for 2006 was 29.6%, an increase from
28.8% in 2005 and in line with the previously communicated expec-
tations for the year. The slightly higher effective tax rate for 2006 is
partly reflecting a positive impact from the re-evaluation of the com-
pany’s deferred tax liabilities in connection with the reduction of the
Danish corporate income tax rate from 30% to 28% in 2005.

Net profit was realised at DKK 6,452 million, an increase of 10%

compared to 2005.

Capital expenditure and free cash flow
Net capital expenditure for property, plant and equipment for 2006
was DKK 2.8 billion, slightly below the expectations communicated in
January 2006. The lower investment level is due to the solid produc-
tion base built in previous years and productivity improvements at ex-
isting facilities. The main investment projects in 2006 were the expan-
sion of purification and filling capacity for insulin products, as well as
purification capacity for liraglutide.

Free cash flow for 2006 was DKK 4.7 billion, significantly above

the expectations communicated in January 2006.

Novo Nordisk’s financial resources at the end of 2006 were DKK
11.4 billion; unchanged compared to 2005. Included in the financial
resources are undrawn committed credit facilities of approximately
DKK 7.5 billion.

Equity
Total equity was DKK 30,122 million at the end of 2006, equal to
67.4% of total assets, compared to 65.9% in 2005.
Proposed dividend and reduction of share capital
At the Annual General Meeting on 7 March 2007, the Board of
Directors will propose a 17% increase in dividend to DKK 7.00 per

Gross margin

Investments in tangible
assets as share of sale
%

Development in gross margin

Development in investments
in tangible assets

share of DKK 2, corresponding to a pay-out ratio of 34.4% compared
to 33.2% for the financial year 2005. No dividend will be paid on the
company’s holding of treasury B shares.

In order to maintain capital structure flexibility the Board of
Directors will also propose a reduction in the B share capital, by can-
cellation of nominally DKK 26.96 million (13,480,000 shares of DKK 2)
of current treasury B shares, to DKK 539,472,800. This corresponds
to a 4% reduction of the total share capital.

Treasury shares and share repurchase programme
As per 30 January 2007, Novo Nordisk A/S and its wholly-owned af -
filiates owned 19,713,069 of its own B shares, corresponding to
5.85% of the total share capital.

During 2006, Novo Nordisk repurchased 7,468,957 B shares at an
average price of DKK 402 per share, equal to a cash value of DKK 3.0
billion. The Board of Directors has approved an increase by DKK 4 bil-
lion in the ongoing DKK 6 billion share repurchase programme, bring-
ing the total value of the share repurchase programme to DKK 10 bil-
lion. The programme is now expected to be finalised by the end of
2008 as compared to the previously communicated completion time
by the end of 2007.

Legal issues
Novo Nordisk is party to a number of legal cases. See an overview of
current legal issues and information on contingencies for pending liti -
gation on pp 87–88.

Non-financial performance

In 2006, Novo Nordisk continued the good performance in terms of
managing direct and indirect economic, environmental and social im-
pacts in areas of strategic importance.

Economic impacts
In 2006, Novo Nordisk created 1,165 new positions globally and had
23,172 full-time positions, measured as full-time equivalents (FTE) at
the end of the year. This is an increase of 5% compared to 2005 and
reflects increased activities in all business areas. These positions trans-

late into 59,100 indirect global jobs in the supply chain. Novo Nordisk’s
economic contribution to overall economic wealth for the Danish
society was 2.2% of Gross Value Added (GVA) in 2006. See the cash
value distribution on p 94.

Environmental impacts
A long-term goal was set in 2006 for an absolute reduction of CO2
emissions: by 2014 to have reduced CO2 emissions by 10% compared
to 2004 emission levels. In 2006, total emissions were 235,000 tons,
compared with 228,000 tons in 2005. As part of the reduction strat-
egy, energy screenings were initiated at 10 of the 13 production sites,
and projects with significant CO2 reduction potentials were identi-
fied. These projects are expected to be implemented during 2007.

In 2006, Eco Intensity Ratios (EIR) showed improved performance

in both diabetes care and biopharmaceuticals for energy and water.

Screening reports show a potential for energy savings of at least
16,000 tons CO2. Novo Nordisk is confident that in the period
2005–2014 the company will be able to identify energy efficiency
projects with reduction potential of 30,000 tons CO2 with a pay-back
time of less than four years.

Compliance remains a high priority. Preventive measures are be-
ginning to show results: the number of breaches of regulatory limit
values has decreased by 30% from 2005 to 2006. In the same period,
however, the number of accidental releases has increased by 29%.
This increasing number reflects particular efforts focused on cooling
equipment, improved registration, and hence also a higher number of
reported releases than previously. It is assessed that the registered
breaches and accidental releases have had no or only minor impact on
the external environment. There will be continued focus on legal
compliance and preventive measures in 2007.

During 2006, a total of 256 suppliers were evaluated on their envir -
onmental and social performance, accounting for 18.4% of the total
value of Novo Nordisk’s purchases. All of them had a satisfactory
performance.

Social impacts
By the end of 2006, Novo Nordisk employed 23,613 persons – an in-
crease of 5% compared to 2005. The number of employees outside

US dollar
Currency
Months Rate

Japanese yen
Currency
Months Rate

Full-time employees
Geographical areas
1,000 full-time employees

Remuneration
Geographical areas
%

650

625

600

575

550

525

5.75

5.50

5.25

5.00

4.75

4.50

100

12/05

3/06

6/06

9/06

12/06

12/05

3/06

6/06

9/06

12/06

Rate (right)
Cover (left)

Denmark
Rest of Europe
North America
International Operations
Japan & Oceania

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Management report and discussion

Denmark reached 47%, and it is expected that in 2007 the ratio of
employees outside Denmark will exceed those working in Denmark.
This development underscores the priority on sustaining an en -
gaging culture. The company-wide adherence to the Novo Nordisk
Way of Management continues to be highly prioritised, and in 2006,
99% of the action points arising from the facilitations were closed.

Engagement at work is a measure of people performance. Using
results of the employee survey, eVoice, the target is for the parameter
‘engaging culture’ to remain at a level of 4.0 or above on a scale from
1 to 5, with 5 being the highest score. In 2006, the consoli dated score
was 4.0. In 2007, units scoring below 3.5 on average on engage-
ment-related eVoice questions must have an action plan in place
before the end of the year. See p 42.

Leadership development and lifelong learning are strategic param-
eters for business success. Novo Nordisk invests in continued educa-
tion for all, talent pools and leadership training. In 2006, the annual
spending for training, measured as average spend per employee, in-
creased by 14% to DKK 11,293. This does not fully reflect invest-
ments in training, since on-the-job training, internal seminars and
other such activities are not included. See p 43.

Changing diabetes, Novo Nordisk’s global campaign to improve
prevention, detection and care, helped put diabetes on the public and
political agenda. Through its support to the International Diabetes
Federation’s campaign for a UN Resolution on diabetes, Unite for
Diabetes, which was adopted by the General Assembly of the United
Nations in December 2006, Novo Nordisk has been engaging stake-
holders and driving awareness initiatives with an estimated outreach
to 31 million people in 66 countries. Other community actions, such
as the Global Diabetes Walk in collaboration with the World Diabetes
Foundation, support this effort. See pp 30–31.

Novo Nordisk’s strategy to improve access to diabetes care focuses
on education and advocacy (see pp 28–29). A measure of the com -
pany’s contribution to global health is the number of healthcare pro-
fessionals directly educated, and direct training or treatment offered
to people with diabetes. In 2006, Novo Nordisk initiated activities that
brought the number of healthcare professionals directly trained or
educated and the number of people with diabetes directly trained or
treated up to 297,000 and 1,060,000, respectively. Novo Nordisk pro-
vided insulin for 13–15 million people with diabetes worldwide. Of
these, 7 million live in Europe, North America, Japan & Oceania, the re-
maining 6–8 million people live in the International Operations region.

Key drivers for success
The Triple Bottom Line approach enables Novo Nordisk to deliver
long-term value to the business and contribute to the global society. It
has two dimensions: risk mitigation and innovation. Novo Nordisk ac-
knowledges the company’s social contribution to the markets in
which it earns its profits and seeks to make a positive economic, envir -
onmental and social footprint via its operations, global management
standards, community engagement, partnerships, technology trans-
fers and knowledge exchange. Key examples of long-term efforts
with significant positive impacts are changing diabetes and the com-
pany’s climate strategy.

Evidence of good governance and full compliance is a precondi-
tion for maintaining the licence to operate and innovate. Consistent
behaviour in accordance with the Novo Nordisk Way of Management
will drive adherence to global standards, ethical business practices
and transparency. Stakeholder trust is another key parameter for suc-
cess. To better manage emerging risks and act on opportunities, Novo

Novo Nordisk Annual Report 2006

Nordisk proactively maintains engagement with a broad range of
stakeholders within its sphere of influence.

Climate change presents significant business risks in the long term,
with implications for economic growth, eco-balance and social devel-
opment. Novo Nordisk’s climate strategy aims to make the company
better prepared for a carbon-constrained future and less vulnerable to
fluctuations in energy prices. Underpinned by the cLEAN® programme,
energy-saving initiatives and more use of renewable energy will result in
reduced environmental impacts as well as productivity improvements.
Innovation and high performance hinge on people’s engagement
at work, leadership development and lifelong learning. These are the
key parameters for success addressed by the people strategy and
monitored via regular facilitations of units’ performance and annual
company-wide surveys. Fair and globally consistent standards and
competitive remuneration aim to attract and retain talent globally.

Long-term incentive programmes

Share-based programme
As from 2004, Novo Nordisk’s Executive Management and Senior
Management Board (27 in total) participate in a performance-based
incentive programme where Novo Nordisk B shares are allocated an-
nually to a bonus pool when certain predefined business-related tar-
gets 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 2006
as well as the performance of the R&D portfolio and key sustainability
projects, the Board of Directors on 30 January 2007 approved the
establishment of a bonus pool for 2006 by allocating a total of
130,750 Novo Nordisk B shares, corresponding to a cash value of
DKK 45.8 million. This allocation amounts to eight months of salary
on average per participant.

Share option programme
The grant of share options to approximately 425 senior employees,
excluding the members 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 2006, targets
were established for operating profit and return on invested capital,
respectively, in addition to a number of non-financial targets.

As the non-financial targets and the two financial targets for 2006
were achieved, a total of 1,114,542 share options will be granted at an
exercise price of DKK 350 per option. This exercise price is equal to the
average trading price for Novo Nordisk B shares on the Copenhagen
Stock Exchange for the trading window from 28 January to11 February
2006, following the company’s release of financial results for 2005,
when the terms of the option programme, including financial and
non-financial targets, were approved by the Board of Directors. The
options can be exercised in the period 31 January 2010–30 January
2015. The value of the share option programme is estimated to be
DKK 99 million, based on the Black–Scholes model. The company’s
holding of its own shares will cover this commitment.

As from 2007, it has been decided to replace the share option pro-
gramme for the approximately 425 senior employees, excluding the
members of Executive Management and the Senior Management

Board, with a share-based incentive plan in line with the plan for the
members of Executive Management and the Senior Management
Board implemented in 2004, as described above. The share-based in-
centive programme for key employees will, as is the case for the plan
for the top-level executives, be based on an annual calculation of
shareholder value creation compared to the planned performance for
the year. The share bonus pool will operate with a maximum contri-
bution per participant equal to four months’ salary.

Outlook 2007

Novo Nordisk expects the fundamental growth drivers of the business
to remain intact in 2007. Novo Nordisk expects at least 10% growth
in sales measured in local currencies for 2007. This is based on expect -
ations of continued market penetration of Novo Nordisk’s key stra -
tegic products within diabetes care and biopharmaceuticals, as well
as expectations of increased competition in the diabetes care area
during 2007 due to competitors’ product launches. Given the current
level of exchange rates versus Danish kroner, the sales growth rate for
2007 measured in Danish kroner is expected to be lower than the
growth rate measured in local currencies.

For 2007, operating profit measured in local currencies is expected
to increase by around 15%, including an expected higher spending
on the portfolio of research and development projects as well as a
continued high level of spending on sales and marketing. Measured
in Danish kroner the growth in operating profit is expected to be
around 10%, reflecting a negative currency impact in 2007.

For 2007, Novo Nordisk expects a net financial income of DKK 50

million.

Given the prevailing Danish corporate tax regime, the effective tax
rate for 2007 is expected to be approximately 28%, a reduction of
more than one percentage point compared to the realised tax rate for
2006.

Capital expenditure is expected to be around DKK 3 billion in
2007. Expectations for depreciations, amortisation and impairment
losses are around DKK 2.3 billion, and free cash flow is expected to be
around DKK 5 billion.

All of the above expectations are provided that currency exchange
rates, especially the US dollar and related currencies, remain at the
current level versus the Danish krone for the rest of 2007. All other
things being equal, movements in key invoicing currencies will impact
Novo Nordisk’s operating profit as illustrated below:

Invoicing currency

Annual impact on operating profit in 2007
of a 5% movement in currency

USD
JPY
GBP
US-related

DKK 400 million
DKK 150 million
DKK 90 million
DKK 110 million

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

Novo Nordisk has hedged expected net cash flows in relation to US
dollars, Japanese yen and British pounds for 15, 12 and 11 months, re-
spectively. The financial impact from foreign exchange hedging is in-
cluded in ‘Net financials’.

Forward-looking
statement

This Annual Report contains forward-looking statements as the term is
defined in the US Private Securities Litigation Reform Act of 1995.

This relates in particular to information included under the headings
‘Risk management’, ‘management report and discussion’ and note 32,
‘Financial risk’ with reference to plans, forecasts, expectations, strate-
gies, projections and assessment of risks.

Words such as ‘believe’, ‘expect’, ‘may’, ‘will’, ‘plan’, ’strategy’,
’prospect’, ’foresee’, ’estimate’, ’project’, ’anticipate’, ’can’, ’intend’ and
similar words identify forward-looking statements. Examples of such
forward-looking statements include, but are not limited to:
n statements of plans, objectives or goals for future operations, includ-
ing those related to Novo Nordisk’s products, product research, prod-
uct introductions and product approvals as well as co-operations in
relation thereto

n statements containing projections of sales, revenues, income (or
loss), earnings per share, capital expenditures, dividends, capital
structure or other net financials

n statements of future economic performance
n statements of the assumptions underlying or relating to such state-

ments.

These statements are based on current plans, estimates and projections,
and therefore undue reliance should not be placed on them. Moreover,
such statements are not guarantees of future results. By their very na-
ture, forward-looking statements involve inherent risks and uncertain-
ties, both general and specific, and risks exist that the predictions, fore-
casts, projections and other forward-looking statements will not be
achieved. Novo Nordisk cautions that a number of important factors
could cause actual results to differ materially from the plans, objectives,
expectations, estimates and intentions expressed in such forward-look-
ing statements.

Factors that may affect future results include, but are not limited to,
interest rate and currency exchange rate fluctuations, delay or failure of
development projects, interruptions of supplies and production, prod-
uct recall, pressure on insulin prices, unexpected contract breaches or
terminations, government-mandated or market-driven price decreases
for Novo Nordisk’s products, introduction of competing products, Novo
Nordisk’s ability to successfully market current and new products,
exposure to product liability and other legal proceedings and investiga-
tions, changes in reimbursement rules and governmental laws and
related interpretation thereof, perceived or actual failure to adhere to
ethical marketing practices, developments in international activities,
which also involve certain political risks, investments in and divestitures
of domestic and foreign com panies, and unexpected growth in costs
and expenses. Please also refer to pp 110–111.

Risks and uncertainties are further described in reports filed by Novo
Nordisk with the US Securities and Exchange Commission (SEC), includ-
ing the company’s Form 20-F, expected to be filed with the SEC in mid-
February 2007.

Forward-looking statements speak only as of the date they were
made, and unless required by law Novo Nordisk is under no duty and
undertakes no obligation to update or revise any of them, after the dis-
tribution of this Annual Report, whether as a result of new information,
future events or otherwise.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

the world of
novo nordisk

Novo Nordisk is a focused healthcare company
headquartered in Denmark. The company is the
world leader in diabetes care and has the broadest
diabetes product portfolio in the industry, including
advanced insulin delivery systems.

In its other business segment, biopharmaceuticals, Novo Nordisk has a
leading position within the therapeutic areas of haemostasis manage-
ment, growth hormone therapy and hormone replacement therapy.
Novo Nordisk’s products are marketed in 179 countries.

Novo Nordisk has 23,613 employees in 79 countries. Of these, 4,105
work in R&D, 8,402 work in production, 6,995 work in sales and
distribution, and 4,111 work in administration. The majority of the
workforce, 53%, is in Denmark, where the largest production sites
are located. Since 2000, the company has grown significantly and ex-
panded globally, particularly in the US and International Operations.
In 2000, Novo Nordisk employed 13,752 people; 65% were based in
Denmark.

Novo Nordisk Annual Report 2006

Production sites
Bagsværd, Denmark
Chartres, France
Clayton, US
Gentofte, Denmark
Hillerød, Denmark
Hjørring, Denmark
Kalundborg, Denmark
Koriyama, Japan
Køge, Denmark
Montes Claros, Brazil
Måløv, Denmark
Tianjin, China
Værløse, Denmark

R&D facilities
Bagsværd, Denmark
Beijing, China
Gentofte, Denmark
Hayward, US
Måløv, Denmark
New Brunswick, US

Clinical development centres
Beijing, China
Princeton, US
Tokyo, Japan
Zurich, Switzerland

For an overview of the
Novo Nordisk subsidiaries,
see pp 100–101.

Europe

North America

International
Operations

Japan & Oceania

Sales in Europe account for 38% of
total sales.

Sales in North America account for
32% of total sales.

Sales in International Operations
account for 18% of total sales.

Sales in Japan & Oceania account
for 12% of total sales.

Performance in Europe is primarily
driven by the complete portfolio of
modern insulins (insulin analogues),
NovoRapid®, NovoMix® 30 and
Levemir®. Novo Nordisk continues
to consolidate its leadership
position in the European insulin
market with a 57% volume share
of the total market and 48% of
the modern insulin segment.

30 million people living in Europe
are estimated to have diabetes,
and 7 million of these are currently
being treated with insulin.

Novo Nordisk has directly trained
or educated 45,000 healthcare
professionals through its National
Changing Diabetes Programmes.

Performance in North America is
driven by the modern insulins
NovoLog®, NovoLog® Mix 70/30
and Levemir®, launched in 2006.
More than one-third of the sales of
modern insulins are in the leading
prefilled, ready-to-use device,
FlexPen®. Novo Nordisk remains
the leader in the US insulin market,
holding more than 40% of the
total volume market, and now
accounts for more than 27% of
the modern insulin segment.

21 million people living in North
America are estimated to have dia-
betes, and 6 million of these are
currently being treated with insulin.

Novo Nordisk has directly trained
or educated 70,000 healthcare
professionals through its National
Changing Diabetes ProgramSM.

Performance in International
Operations is driven by modern
insulins as well as human insulin.
In some countries sales are based
on public tenders, and outcomes
of these can have a notable
positive or negative impact on a
year’s sales. China continues to
be a significant growth driver,
contributing more than 40% of
the insulin sales growth.

187 million people living in coun-
tries within International
Operations are estimated to have
diabetes, and 10–13 million of
these are currently being treated
with insulin.

Novo Nordisk has directly trained
or educated 124,000 healthcare
professionals through its National
Changing Diabetes Programmes.

Performance in Japan & Oceania
reflects the sales growth of the
modern insulins NovoRapid® and
NovoRapid Mix® 30.

8 million people living in Japan &
Oceania are estimated to have
diabetes, and 1 million of these are
currently being treated with
insulin.

Novo Nordisk has directly trained
or educated 58,000 healthcare
professionals through its National
Changing Diabetes Programmes.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

Therapeutic area

Compound

Indication

Diabetes care

i
l

u
s
n

Levemir®
Insulin detemir

NovoMix® 50 and
NovoMix® 70
Insulin aspart mix

Types 1 and 2 diabetes

Biopharmaceuticals

AERx® iDMS

Types 1 and 2 diabetes

NN344

NN5401

Types 1 and 2 diabetes

Liraglutide (NN2211)

Type 2 diabetes

Liraglutide

Obese, non-diabetic people

NovoNorm® Fixed Combo
(NN4440)

Type 2 diabetes

NovoSeven®
Intracerebral haemorrhage

Bleeding in emergencies,
intracerebral haemorrhage

NovoSeven®
Trauma

NovoSeven®
Cardiac surgery

NovoSeven®
Spinal surgery

NovoSeven®
Traumatic brain injury

NovoSeven®
Prophylactic treatment

rFVIIa
Analogue

rFXIII
Cardiac surgery

Norditropin®
Dialysis patients

Activelle®
Low-dose

Vagifem®
Low-dose

IL-21

Anti-KIR

Bleeding in emergencies, trauma

Elective surgery, cardiac surgery

Elective surgery, spinal surgery

Bleeding in emergencies,
traumatic brain injury

People with haemophilia with
inhibitors

Haemostatic agent

Elective surgery, cardiac surgery

Adult patients in chronic dialysis
(APCD)

Hormone replacement therapy

Oncology, malignant melanoma

Oncology, acute myeloid leukaemia

1
-
P
L
G

a
r
O

s
i
s
a
t
s
o
m
e
a
H

H
G
h

T
R
H

y
g
o
o
c
n
O

pipeline
overview

Novo Nordisk’s research and
development efforts focus on
offering superior therapies
that help save people’s lives or
improve their quality of life.

In diabetes care the aim is to maintain the
company’s position as the world leader. In
biopharma ceuticals the aims are to expand
the franchise within haemostasis and
growth hormone deficiency, and to build a
presence in inflammation and oncology.

The strategy is to address unmet medical
needs by leveraging the company’s core
capabilities within diabetes research, pro-
tein delivery and therapeutic proteins.

Phase 1
Studies in a small group of healthy volunteers,
and sometimes patients, usually between 10 and
100, to test a new drug for best dosage and
potential side effects.

Phase 2
Testing a drug at various dose levels in a larger
group of patients to learn about side effects, the
body’s use of the drug and its effect on the condi-
tion.

Phase 3
Studies in large groups of patients all over the
world, comparing the new medication with a
commonly used drug or placebo for both safety
and efficacy.

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

The R&D pipeline is updated quarterly at
novonordisk.com/investors

Novo Nordisk Annual Report 2006

Description

Phase 1

Phase 2

Phase 3

Filed

A soluble basal modern insulin with neutral pH and a mechanism of protraction that pro-
vides a smooth and predictable action profile and offers a longer dur ation of action com-
pared with conventional NPH. Approved in Europe and the US. Filed in Japan.

Premixed formulations of the rapid-acting modern insulin, insulin aspart. Provide a
combined rapid- and intermediate-acting insulin effect (at the ratio of 50/50 or 70/30).

The AERx® insulin Diabetes Management System is a delivery system for inhalable
insulin.

A neutral, soluble, long-acting modern insulin with a very flat and predictable action
profile.

A next-generation insulin.

A once-daily, long-acting analogue of human GLP-1.

Potential benefits: reduced food intake and induced weight loss.

A tablet formulation combining the short-acting insulin secretagogue repaglinide with
an insulin-sensitising agent, metformin, in a single tablet.

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

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

Potential benefits: improved haemostasis.

In a phase 2a study NovoSeven® has been demonstrated to reduce blood loss during
spinal surgery.

Potential benefits: reduced intracranial bleeding.

Potential benefits: prevention of bleeding.

Potential benefits: further reduced bleeding in people with and without haemophilia.

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

Potential benefits: reduced mortality.

Low-dose continuous-combined product. Approved in the US. Filed in Europe.

Low-dose topical product for vaginal application.

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

A fully human IgG4 monoclonal antibody.

Novo Nordisk Annual Report 2006

Diabetes care

we will be
the world’s leading
diabetes care
company

Diabetes is a pandemic. The International Diabetes Federation (IDF)
projects an increase from the current 246 million people with dia betes
to 380 million in 2025. Some 70% of this growth is predicted to oc-
cur in the developing world, driven by increased urbanisation, seden-
tary lifestyles and the adoption of diets high in fat, sugar and salt.
Type 2 diabetes is now also affecting children and adolescents.

Impaired glucose tolerance, often referred to as ‘prediabetes’, is
also on the rise. IDF estimates that there could now be more than 308
million people with this condition worldwide, 60% of whom could
develop diabetes. The problem is greatest in Asia, but in Africa too
the data are alarming. If nothing is done to reverse the trend, many
poor countries already overstretched by infectious diseases will face
an insurmountable health crisis.

Diabetes is a serious, chronic disease, but if it is detected early and
treated properly, a person can lead a near-normal life. If not, it causes
severe long-term complications and leads to premature death. It is
also a costly disease, not so much in terms of medical costs, but be-
cause of the cost of treating late-stage complications and indirect
costs borne by the individual.

Maintaining the edge

With a global insulin market share of 52% and an outreach to 13–15
million people, Novo Nordisk is clearly the leader in diabetes care. And
even though the marketplace is getting crowded, our biggest and
toughest competitor is diabetes. It is our aspiration to defeat diabetes
by finding better methods of prevention, detection and treatment.
That is what lies behind our promise of changing diabetes.

For any person with diabetes, whether type 1 or type 2, intensive
blood sugar control is of critical importance to successful treatment.
And here insulin remains the only consistently effective treatment.

We are determined to maintain our edge, aiming to offer superior
treatment and delivery systems. We are the world’s largest private
sponsor of diabetes research, and our research efforts focus on pre-
vention as well as improved medical treatment. We also see a clear
need for collaboration between all parties in healthcare, and we
therefore seek to drive more holistic approaches centred on the needs
of the person with diabetes.

Diabetes research offers many effective tools, but science and
technology alone are not the solution. To pave the way for real
changes, we need to apply our knowledge and existing technologies
in radically new ways by organising our efforts, partnerships and care
strategies around the best value for people with diabetes. That is why
we develop scenarios to explore the options. The current pharma
business model is being challenged, and the healthcare system as we
know it today seems unsustainable. Rather than adapting to what the
future might bring, we have chosen a more proactive stance. We will
shape the future of diabetes.

Novo Nordisk Annual Report 2006

Having arrived in the US from Central America as a teenager,
Odette Chida is now helping Spanish-speaking patients in a
Novo Nordisk-sponsored study of diabetes among low-income
minorities. The study is being conducted at the University of
California at Irvine. Odette has an interest in helping people
with diabetes because the disease runs in her family.

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

The diabetes pandemic
is a runaway train
gaining speed.
Focus is on slowing the
train – ultimate success
is to make it reverse.

Jakob Riis
senior vice president
International Marketing

diabetes care:
sustaining
leadership

The vision of eventually defeating diabetes defines the strategic direc-
tion of Novo Nordisk’s research efforts as well as the market approach
to providing improved diabetes prevention, detection and care. And
with the latest discoveries there is even renewed hope that the pro-
gression of the disease may be halted.

“We have framed our strategy around the promise of changing dia-
betes. It is about improving the quality of life for people living with dia-
betes today. That is an achievable goal. With modern insulin therapy
that serves individuals’ varying needs and lifestyles, people with dia-
betes can bring their blood sugar in control to avoid the devastating
long-term complications. This is the focus of our strategy and our
portfolio of advanced products and delivery systems,” says Kåre
Schultz, executive vice president and chief operating officer (COO).

Longer-term efforts will focus on research to find the cure for type 1
diabetes, and on ways of intervening to prevent the onset of type 2 dia -
betes. Novo Nordisk’s 20-year scenario planning helps to identify alter-
native futures that can shape strategic initiatives and innovative ap-
proaches. As the world leader in diabetes care, Novo Nordisk wants to
be the preferred partner of healthcare professionals and policy-makers.
“We have more than 80 years’ experience, knowledge and re-
sources and the commitment needed for the long-term view to drive
the change we want to see in diabetes,” says Kåre Schultz.

Control matters

In 2006, the American Diabetes Association (ADA) and the European
Association for the Study of Diabetes (EASD) issued a joint consensus
statement on the treatment of type 2 diabetes. They recommended
tight blood sugar control and early addition of insulin therapy in pa-
tients who do not meet target goals. The two associations also con-
cluded that insulin is the most effective of all glucose-lowering
agents, with the potential to reduce any level of HbA1c in people with
diabetes to, or close to, the therapeutic goal. HbA1c is a measure of a

Novo Nordisk Annual Report 2006

Diabetes highlights

World leader in insulin sales, with a 52% market share.

Levemir® launched in the US.

Liraglutide, a GLP-1 product for treatment of
type 2 diabetes, has entered phase 3 trials.

AERx® iDMS, a delivery system for inhalable insulin,
has entered phase 3 trials.

Next-generation modern insulins have entered
phase 1 trials.

FlexPen®, an insulin delivery system, is the most
sold insulin delivery device in the world.

person’s average blood sugar level over a period of two to three
months. Today, an estimated two-thirds of people with diabetes are
not in good control.

Tailored solutions

It all comes down to choice. People with diabetes require different
treatments, and requirements may change over time. By choosing the
treatment best suited to the individual, there is a greater chance of an
optimal outcome. Novo Nordisk’s deep knowledge of the needs of
people with diabetes is an asset in a competitive environment.

“The insulin market is growing by around 5% measured in vol-
ume, and Novo Nordisk is currently outperforming this. We are deter-
mined to keep that edge. There is evidently a potential for additional
growth that we will seek to capitalise,” says Jakob Riis, senior vice
president, International Marketing.

In 2006, Novo Nordisk launched its latest modern insulin, Levemir®
– already on the market in Europe for almost two years – in the US. At
the ADA meeting in 2006, Novo Nordisk presented results from the
German arm of the PREDICTIVE™ study, a global observational study
of Levemir® in more than 30,000 people with type 1 or type 2 diabetes.
The results show that treatment with Levemir® improves total gly-
caemic control, and reduces weight gain.

More convenient insulin delivery

Insulin delivery is a key strategic area of diabetes research at Novo
Nordisk, addressing demands for devices that offer a combination of
convenience and accurate dosing. For some people with diabetes, in-
jections are a significant barrier to insulin initiation, and therefore to
optimal diabetes control. That is why the company is strongly com-
mitted to pursuing inhalable insulin as an additional delivery option.
Novo Nordisk’s inhalable insulin project, AERx® iDMS, entered into
phase 3 clinical trials in 2006. A smaller, more compact successor
device to the first-generation product is in the design phase.

Liraglutide shows solid potential

The diabetes care pipeline is built around further improving Novo
Nordisk’s modern insulins and new treatment options. Type 2 dia-
betes usually progresses over several years as the pancreas gradually

The liraglutide molecule (left).

1 May: Researchers at Novo Nordisk
Delivery Technologies in Hayward,
California, celebrate the resumption
of the phase 3 trials for AERx® iDMS
(right).

Kylie Sims has type 1 diabetes and lives
in Australia. She has reached a level of
control both she and her doctor are
proud of (below).

loses the ability to produce insulin and treatments lose their
effectiveness.

“Today, people diagnosed with type 2 diabetes in its early phase
are first offered lifestyle intervention, then oral antidiabetic agents,
and eventually insulin. We believe that we can soon offer a range of
new protein-based options that could dramatically change diabetes
treatment,” says Peter Kurtzhals, senior vice president, Diabetes
Research Unit.

Such treatment options include liraglutide, the first human com-
pound in a new class of therapies for type 2 diabetes. It is a modifica-
tion of the natural hormone GLP-1 (Glucagon-Like Peptide) produced
in the gut. It can be described as restoring the function of ‘tired’ or
worn-out insulin-producing cells.

Liraglutide is expected to be the first human, once-daily GLP-1
product available on the market. Results from phase 2b trials presented
in 2006 show improved glycaemic control and significant weight loss,
which will be evaluated further during phase 3 clinical studies.

“Liraglutide’s effect on the pancreas depends on the level of glu-
cose in the blood,” says Peter Kristensen, project vice president for
liraglutide. “For example, when glucose levels are normal or high,
liraglutide improves the secretion of insulin, but if blood glucose
levels are below normal, the compound has no effect. No other anti -
diabetic medication can achieve that.

“With liraglutide we have for the first time the potential to inter-
vene in the disease progression. This will have to be investigated in
long-term clinical studies,” he says.

Next-generation insulins

An additional area of diabetes research is next-generation insulins: In
2006, Novo Nordisk entered into phase 1 clinical trials with two next-
generation insulins. Next-generation insulins are offering even better
safety and efficacy than previous generations.

Obesity is a major risk factor for diabetes. That is why in 2007 Novo
Nordisk plans to launch a phase 2 trial of liraglutide as an antiobesity
agent for treatment of obese, non-diabetic people.

novonordisk.com/annual-report Click: what we do

What is modern insulin?
A look at the Novo Nordisk
diabetes portfolio

Modern insulins, also called insulin analogues, are designed
to mimic the body’s own physiological insulin regulation of
blood glucose levels more closely than human insulin. Modern
insulins offer better glucose control, less hypoglycaemia and
increased convenience, leading to fewer serious complica-
tions and better treatment outcomes.

Modern insulins are classified by how fast they start to
work in the body and how long their effects last. Different
types of insulin work differently, depending on many factors
such as the body’s individualised response to insulin, lifestyle
choices, including type of diet and amount of exercise, and
how well blood sugar levels are managed.

Because there is no ‘one-size-fits-all’ approach to diabetes
treatment, Novo Nordisk offers a full portfolio covering fast-
acting, long-acting and premixed modern insulins:
n Levemir®, a long-acting basal insulin that provides effective

control and less weight gain.

n NovoRapid®, which gives tighter blood glucose control at

mealtimes without increased risk of hypoglycaemia.

n NovoMix® 30, a dual-release modern insulin that covers

both mealtime and basal requirements.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

28 March: Martin Soeters,
president, Novo Nordisk Inc.,
celebrates the US launch of
Levemir® with a crowd of
diabetes care specialists (left).

6 October: Kåre Schultz,
executive vice president
and chief operating officer,
discusses the company’s
US activities with investors
and analysts on Capital
Markets Day (right).

focused strategy
in the US targets
diabetes crisis

Novo Nordisk employees in the US are on a mission. They are working
to slow down one of the biggest public health issues faced by
Americans: diabetes.

The numbers are staggering. According to the National Institutes
of Health, close to 21 million Americans have diabetes and nearly a
third of those are unaware they have it. Another 54 million are esti-
mated to be at risk of developing diabetes. The US Centers for
Disease Control and Prevention predict that by 2025 the number of
Americans with diabetes will rise to 50 million.

Given the enormous scale of the diabetes epidemic in the US, it is
not surprising that the US is a key growth driver for Novo Nordisk. But
the way that Novo Nordisk is building its business in the US is not just
a matter of presenting a robust portfolio of products. A broad strat -
egy, underpinned by the company’s Triple Bottom Line approach,
aims to make Novo Nordisk stand out in an increasingly competitive
environment.

Multi-faceted strategy

The main elements of the strategy are:
n Products and devices. With the launch of its long-acting basal
insulin Levemir® in the US in 2006, Novo Nordisk is the only com-
pany offering a complete portfolio of modern insulins and insulin
delivery systems.

n Dedicated field force with extended reach. To be competitive in an
environment of several, much larger companies, Novo Nordisk has
been steadily expanding its field force in the US. An additional 400
individuals were hired in preparation for the Levemir® launch, and
during the first half of 2007 another 700 people will be hired,
bringing the total sales force to 1,900.

n Strong values-based culture. The Triple Bottom Line as a business

Novo Nordisk Annual Report 2006

principle plays a big part in attracting and retaining talented peo-
ple and enhancing relationships with stakeholders.

n Focus on health economics. Demonstrating the health and socio-
economic benefits of improved diabetes treatment is the key to
achieving a high rate of access and reimbursement for Novo
Nordisk products.

n Public policy initiatives. Through the Novo Nordisk National
Changing Diabetes ProgramSM and the Novo Nordisk US Govern -
ment Affairs office, Novo Nordisk is working with partners to
make positive changes in the prevention, detection and treatment
of diabetes.

The strategy appears to be successful. Today, Novo Nordisk claims the
leading insulin volume share in the US, outpacing much larger
competitors.

“Novo Nordisk is committed to changing diabetes on a broad
scale, in partnership with all the key players in the diabetes field. For
us, changing diabetes means more focus on prevention and earlier
detection of diabetes as well as improved quality of life for people
with diabetes,” says Martin Soeters, president, Novo Nordisk Inc.

Approach tailored to the individual

A complete portfolio of modern insulins and devices has been instru-
mental in building leadership in the US, according to Camille Lee, vice
president, Diabetes Brand Marketing, Novo Nordisk, Inc. “This ap-
proach makes a big difference not only to people with diabetes, but
also to physicians, who find that individually tailored solutions often
produce better outcomes among their patients,” says Camille Lee.

“The launch of Levemir® in the US is progressing well. It has been
well received by healthcare professionals, people with diabetes, and
managed care organisations, thereby increasing the use of our mod-
ern insulins to enhance patient care,” she adds.

Looking at the cost of diabetes

Meanwhile, other parts of the organisation have been working hard
to secure access and reimbursement of Novo Nordisk products from
both managed care and government health insurance providers in

Getting people
in good control
is what drives us.
Our competition
is diabetes – not
other companies.

Camille Lee
vice president
Diabetes Brand Marketing,
Novo Nordisk Inc.

Beverly Owens lives in
Los Angeles, California.
She was diagnosed with
type 2 diabetes in 2004,
and is continually working
to stay in good control.

the US. This has included ensuring that Novo Nordisk products are on
the managed care ‘formularies’, or restricted lists of reimbursable
drugs. Today, more than 75% of all Americans with health insurance
can choose a modern insulin from Novo Nordisk and claim reimburse-
ment in full or in part.

Strong health-economic arguments have played a key role in the
success in obtaining a high level of formulary coverage for both in-
sulin products and devices, according to Garrett Ingram, senior dir -
ector, Managed Markets Strategy and Health Economics Outcomes
Research. In fact, such arguments were critical to Levemir® receiving a
high level of coverage as early as at the time of launch. In comparison,
it usually takes 12 to 18 months for a newly launched product to even
get reviewed by managed care plans.

“We were able to show that in actual clinical practice Levemir®
carries a number of clinical benefits such as improved glycaemic con-
trol, a low rate of glycaemic episodes, and less weight gain,” says
Garrett Ingram. “As healthcare costs continue to rise, it will be in-
creasingly vital for companies to demonstrate the overall value of a
product,” she adds.

A catalyst for change

Effective diabetes care relies on more than access and availability of
advanced products. Novo Nordisk is working with many different
partners to make changes in the US system of healthcare to help im-
prove detection and treatment of diabetes.

The Novo Nordisk Government Affairs office in Washington DC,
for instance, is advocating for legislation that would remove barriers
to and provide new incentives for diabetes care, enhance medical
training, and help people with diabetes manage their condition more
effectively. It is also developing a national effort, together with the
American Diabetes Association and other partners, to promote dia-
betes and prediabetes screening among Americans 65 years and old-
er. Novo Nordisk has made a three-year, million-dollar commitment to
pursue this as part of the Clinton Global Initiative.

Through the Novo Nordisk National Changing Diabetes ProgramSM,
Novo Nordisk is working as a catalyst and collaborator to create
change in the US system of healthcare that will provide dramatic im-
provements in the prevention and care of diabetes. This includes pro-

viding patient education, implementing a system to track the state of
diabetes, overcoming barriers and offering incentives for quality dia-
betes care, supporting medical education and training in chronic care.
In 2006, this led, among other things, to the initiation of a study to
assess the impact of federal spending on diabetes in the US, the intro-
duction of a National Report Card to assess the current status of dia-
betes in the US, and the launch of DiabetesXchange, a national re-
sources website to share diabetes projects, ideas and learnings across
the country.

“The National Changing Diabetes ProgramSM is one of the ways in
which we act on our social responsibility,” says Dana Haza, senior dir -
ector of the programme. “We are a nation facing a diabetes crisis. As
leaders in diabetes care, we have to try to reverse the alarming trend
and change things for the better.”

Challenges ahead

In a diabetes market that is getting ever more crowded, it is this multi-
faceted strategy that will sustain Novo Nordisk’s lead, according to
Martin Soeters.

By the end of 2006, North America represented 32% of Novo
Nordisk’s global sales. Martin Soeters wants to see that number rising
in the coming years so that Novo Nordisk’s sales in North America get
closer to reflecting the 50% share that North America has of the
global market for pharmaceuticals. Given the urgency of the diabetes
crisis and Novo Nordisk’s deep and long-standing commitment to dia-
betes, combined with the success of other key products such as
NovoSeven® and Norditropin®, he believes that such a goal is achiev-
able – even in a fiercely competitive environment.

“There is still a long way to go to optimal diagnosis and treat-
ment,” says Martin Soeters. “With two out of three people not in
good control of their diabetes, there is still a great deal more that
needs to be done. I am excited by the progress we have made in help-
ing more people achieve better control and raising the awareness of
diabetes for so many others. But this is only the beginning.”

novonordisk-us.com

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

Hannelore Meyer
has type 2 diabetes
and lives with her
husband in São Paulo,
Brazil, one of the four
BRIC countries (Brazil,
Russia, India and China)
with high economic
growth.
.

Novo Nordisk is well
positioned for significant
value upgrades in
the IO region and for
future growth in
all therapy areas.

Jesper Høiland
senior vice president
International Operations

long-term presence
in emerging
markets pays off

In Montes Claros, Brazil, Novo Nordisk is on the fast track. With an in-
vestment of more than 200 million US dollars and the exemplary
teamwork, with around 2,200 locally hired labourers, craftsmen,
technicians and engineers, working alongside Novo Nordisk’s own
staff of 760 people, the first batch of Penfill® cartridges went into cold
storage in October 2006 at the company’s newest insulin filling plant.
Marcelo Zuculin, vice president at site Montes Claros, and his team
are in business.

This milestone completes a project that began in April 2004 when
11 senior project managers and their families arrived from Denmark.
Using the ‘fast-track’ method, construction was completed in just 18
months – ahead of schedule and below budget. After extensive tests,
training and validation, concluded by a successful five-day inspection,
Novo Nordisk received the formal approval to begin production.
Process validation is expected to finish in April 2007.

And the site’s insulin products are in great demand. An estimated
7 million people in Brazil have diabetes, and the country’s prevalence
of diabetes is at 6–8% and growing fast. With its scaled-up presence
in the region, Novo Nordisk is prepared to improve prevention, detec-
tion and treatment of diabetes.

Focus on opportunities in BRIC countries

This commitment is just one example of the investments that Novo
Nordisk is making in emerging markets, where access to medicine
and healthcare is often limited. Helping to create a sustainable health-
care infrastructure is therefore crucial to building the business. Over
the years, the company has invested in the education of healthcare
professionals and awareness-raising among policy-makers, and has
helped build diabetes clinics in many parts of the world. These efforts
have helped position the company well for the future in a market with
much commercial potential and a significant need for improved dia-
betes care.

Novo Nordisk Annual Report 2006

Brazil is one of the 150 countries covered by what Novo Nordisk
refers to as International Operations (IO). It encompasses markets
outside North America, the EU, Japan & Oceania. The population of
the IO countries is 5.2 billion people or some 80% of the world’s pop-
ulation, and includes 80% – 197 million – of all people with diabetes.
The region represents 50% of the GDP growth in the world today, but
it is a growth that is very unevenly distributed.

For years, Novo Nordisk has been a leader in the diabetes care mar-
ket in this region. Jesper Høiland, senior vice president of Inter -
national Operations, expects that the company will outperform its
current 14% annual growth in sales in the coming years. Today, people
using oral antidiabetics (OAD) in the IO region outnumber those who
use insulin in line with the joint consensus from ADA and EMEA. Even
though Novo Nordisk does have a share of the OAD market with
NovoNorm®, the company recommends early initiation of insulin
therapy.

The strategy is to continue the roll-out of modern insulins, which
have so far been introduced in 25 IO markets. The growing middle
and upper classes in countries such as China and India represent a
vast potential market for optimal treatment.

Financial analysts have been particularly interested in the BRIC
countries: Brazil, Russia, India and China. Analyst projections indicate
that the market here for top-line treatment will grow from the current
3 million to 28 million people with diabetes by 2030. That would
make the combined BRIC market for diabetes care greater than in the
United States, with a predicted increase from 16 to 27 million.

Novo Nordisk’s own analysis of the BRIC markets shows a com-
pound annual sales growth rate of 43% from 2002 to 2006. Other
markets outside BRIC – Turkey in particular – have also shown strong
growth and potential.

Staying power

Among the reasons for Novo Nordisk’s insulin leadership in IO mar-
kets is the company’s presence at a time when no one else has taken
an interest in the market and its perseverance through challenging
times. Presence is not just about marketing goods. With expanding
production sites in Brazil and China as well as a research facility in
China, Novo Nordisk contributes to economic growth and social devel-
opment in the communities. With its holistic and long-term view of the
business, Novo Nordisk has earned invaluable trust among local author-
ities, customer loyalty and brand recognition in these strategic markets.

Novo Nordisk sales representatives
from India celebrate a good month
for sales in India (left).

27 October: The filling plant in
Mon tes Claros, Brazil, becomes
a fully operational production site
and celebrates the successful con-
clusion of a five-day inspection by
the Danish Medicines Agency (right).

“Novo Nordisk’s global standards for environmental management,
workplace quality and ethical business conduct demonstrate how we
strive to do business in a sustainable way, and they are important to
win the support of payers, policy-makers and the public to help pro-
vide better diabetes care in their countries,” says Jesper Høiland.

Performance at a glance

This approach is likely to pave the way for sustained success in the IO
region. A dual structure, with a growing private market alongside the
public tender market, characterised by relatively high volume and low
prices, makes for a volatile market in which business forecasting can
be a challenge. That is why Novo Nordisk pursues a multi-pronged
market strategy based on engagements with key stakeholders and a
combin ation of products and services.

In Brazil, where 7 million people have diabetes and only 10% are
receiving proper treatment, there is a huge market potential. Here,
Novo Nordisk offers its full range of modern insulins and has an over-
all insulin volume market share of 68% in the private market.

In Russia, an estimated 10 million people have diabetes. L’gota, a
state-funded healthcare programme, is seeking to catch up with the
population’s needs for improved care and has had a positive impact
on the market. More recently, diabetes has been given special priority.
Novo Nordisk’s insulin volume market share is around 50%.

India has about 41 million people with diabetes and no public
healthcare plan to support their treatment. This is the largest IO mar-
ket in terms of sales volume, but prices are low. Novo Nordisk offers
its full portfolio of modern insulins, and although penetration re-
mains modest, the company is maintaining its leadership with some
57% volume market share, despite tough competition from lower-
priced, biosimilar products.

In China, the estimated number of people with diabetes is about
40 million. Only 130 million of its 1.3 billion inhabitants have health
insurance. This is the largest IO market with an insulin value market
share of 75%, and a volume market share of 60%. Many biosimilar
insulin manufacturers reside here, but their market share does not ap-
pear threatening.

In Turkey, more than 3 million people have diabetes. It is one of the
fastest-growing IO markets, and modern insulins are rapidly pene -
trating this market. In fact, Turkey represents one-third of all Novo
Nordisk’s sales of modern insulins in IO, driven by NovoMix® 30. The
company has a value market share of 58%.

17 March: Novo Nordisk inaugurates a major expansion of its produc-
tion facilities in Tianjin, China.

A strong presence in China

In just over a decade Novo Nordisk has built up a stronghold in
China, where it is now the largest company engaged in dia-
betes care. Company revenues passed 1 billion Danish kroner
in 2005, and with an insulin value market share of 75% in
2006, Novo Nordisk is the clear market leader.

Today, Novo Nordisk China employs close to 1,000 people.
This includes a sales and marketing force with representatives
in each of the country’s 31 provinces, plus employees at the
recently-expanded NovoPen® 3 production site in Tianjin and
at the Novo Nordisk research facility in Beijing – the first R&D
centre to be established by an international biopharmaceut -
icals company in China.

Novo Nordisk China boasts an impressive compound an-
nual sales growth rate of 44% since 2002. This is the result of
concerted efforts to put diabetes on the agenda and to pres-
ent the company as having the best products and the most ex-
tensive knowledge of diabetes. Novo Nordisk is working on a
five-year programme with the Chinese Ministry of Health to
provide diabetes education and establish models of diabetes
care in hospitals and community health centres. Every year, an
average of 80,000 physicians receive diabetes training in a
Novo Nordisk education programme, and the patient net-
work NovoCare Club has more than 400,000 members.

“Chinese patients want the best possible treatment, and
Novo Nordisk is seen as the company with the most sophis -
ticated products and devices,” notes General Manager Ron
Christie, Novo Nordisk China. “We have also helped establish
and support organisations for physicians and patients, and
we offer professional diabetes training. All of this is appreciat-
ed by the diabetes community and contributes to the percep-
tion of Novo Nordisk as the leading diabetes company here.”

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

reaching
across the global
health divide

Changing diabetes is no easy task. The crisis is evident: the number of
people with diabetes in the world is expected to grow from the current
246 million to 380 million in 2025. Today, 80% of all people with dia-
betes are living in the developing world.

Most developing countries lack the resources to provide the health-
care that their populations need. But, doing nothing is also costly: the
burden of chronic disease has major economic effects on families,
communities and societies. The same is true for much of the devel-
oped world, where people with diabetes are more likely to receive
care, but still more often than not do not achieve their treatment tar-
gets, with devastating effects in both human and economic terms.

For example, the World Health Organization has estimated that
China will forego 558 billion US dollars in national income over the
next 10 years as a result of premature deaths caused by heart disease,
stroke and diabetes.

Strategic approach

Novo Nordisk’s strategic response to the challenges of inadequate ac-
cess to proper healthcare is embedded in the approach to doing busi-
ness in local markets. In 2001, the company launched several initiatives
to drive change by coordinated efforts using the four levers recom-

mended by the World Health Organization: development of national
health strategies, build-up of national healthcare capacity, best possi-
ble pricing and additional funding. Key elements in the programmes
are public awareness and education, not only of healthcare profes-
sionals, but also people with diabetes and those at risk of getting it.

Changing diabetes in the world’s poorest countries

Novo Nordisk supports the United Nations Millennium Development
Goals, and its strategy on access to health recognises the link be-
tween poverty and ill health.

In the past decade Novo Nordisk has demonstrated leadership in
driving measurable improvements in access to diabetes care in the
world’s poorest countries. It has also managed to do the right things
from the beginning, even under difficult conditions and despite limit-
ed resources. That was the conclusion of an independent internation-
al advisory board.

Overcoming the global health divide relies on a mix of on-the-
ground initiatives and structural changes. Medicines are just one ele-
ment. That is why Novo Nordisk’s World Partner Project (WPP) engages
with local partners, typically health ministries and patient organisations,
to help build healthcare strategies. It focuses on eight developing
countries: Bangladesh, India, Malaysia, China, Costa Rica, El Salvador,
Tanzania and Zambia. New funding has been reserved in 2007 for
projects in three new focus areas: Nigeria, Mexico and Indonesia.

Since 2001, WPP has delivered proposals for innovative and sus-
tainable models of diabetes care in developing countries. Three
ingredients are essential: drivers of the process, awareness and
knowledge of diabetes, and a healthcare infrastructure. Among other
things, WPP has enabled distance-learning for doctors, foot clinics for

advocating
sustainable healthcare

Novo Nordisk advocates a more seamless system of care in which
medical treatment is just one element. Equally important are educa-
tion, effective data management and clarity on roles and responsibil -
ities. The objective is health policies that focus on optimal patient out-
comes. The company has laid out a new, global Public Affairs strategy
with the overall ambition of breaking the diabetes pandemic curve.
Special attention is given to halting the debilitating, costly and largely
preventable late-stage complications. The aim is to encourage a more
collaborative approach with industry as part of the solution for better
health outcomes. This implies an approach that goes beyond debates
on costs in the annual budgets.

Challenging views on the cost of diabetes care

Governments and politicians across Europe are facing a dilemma. They
need to curb public spending and surging healthcare costs, but at the
same time populations are aging and lifestyle-related diseases abound.
In this environment, acknowledging the diabetes pandemic appears

Novo Nordisk Annual Report 2006

as yet another cost burden. Reimbursement of advanced pharmaceut -
ical products becomes an issue of concern.

Diabetes is a chronic condition that requires attention every single
day. Proper care relies on self-management as well as consultations
with general practitioners and specialist doctors and nurses. Even
modest investments in improved medical treatment and care pay off
as significantly reduced total healthcare costs, in particular for hospi-
talisation to treat late-stage
complications. And the poten-
tial gains would benefit public
healthcare budgets as well as quality of life and personal costs for in-
dividuals. Such a long-term view, however, is rarely taken in practice.

Try the interactive challenge
‘The Convincer’ at
novonordisk.com/annual-report

Diabetes on the political agenda in Germany

In 2006, the German healthcare authorities decided they would no
longer reimburse rapid-acting modern insulins for type 2 diabetes,
stating that the higher price as compared with human insulin was not
justified. Novo Nordisk opposes this decision, arguing that modern in-
sulins provide greater predictability and improved glucose control. The
company is now negotiating individually with more than 250 health
insurance funds to win reimbursement by offering rebates and demon-
strating the benefits of modern insulins in terms of patient outcome.

Bich-Chan Thran (left) and
Molan Doan are long-time
best friends and volunteers
at a diabetes clinic with a
special programme for
people of Vietnamese origin.

treatment of diabetic foot complications in Bangladesh, and diagno-
sis and treatment of diabetes for thousands of Tanzanians in a net-
work of newly established diabetes clinics.

Low-income minorities in the developed world

A new initiative aims to bridge disparities in the developed world, tar-
geting low-income minorities such as various ethnic, cultural and reli-
gious groups as well as persons who are marginalised due to age or
social standing. In some cases these groups have a significantly high-
er risk of developing diabetes, and their chances of successfully man-
aging their condition are limited. The project assesses the special
needs of these groups and offers sustainable solutions. A report en -
titled Dealing with difference, maps the situation, as identified at
workshops with stakeholders and offers practical examples of ways
to help low-income minorities. The report will serve as the platform
for a series of follow-up activities in 2007.

Tangible results

Results in 2006 include:
n Currently 329 National Changing Diabetes Programme activities

in 66 countries – reaching out to 31 million people.

n A total of 297,000 healthcare professionals were directly trained
or educated, and 1,060,000 people with diabetes were directly
trained or treated.

n Pricing policy offered in the 50 least developed countries. In 2006,
Novo Nordisk sold insulin at or below a price of 20% of the aver-
age prices for insulin in the western world in 34 of these countries.

novonordisk.com/annual-report Click: how we perform/access to health

Decisions such as that of the German government may impede the
growing recognition that diabetes is one of Europe’s major health
challenges. In 2006, the European Union’s Health Council unani-
mously adopted a document calling for prevention of type 2 diabetes.

improving
diabetes care in the
poorest nations

Closing the gap saves lives and money

A recent study conducted by researchers at the University of Southern
Denmark and the University of Aarhus in collaboration with Novo
Nordisk looked at the socio-economic costs of diabetes care.

The hospitalisation costs for a person with severe complications
are 10 times higher than the costs for people with well-controlled dia -
betes. On average people with diabetes have five years shorter life ex-
pectancy and cost almost three times more in hospitalisation cost
than the general population. Moreover, the indirect costs are at least
as high as the direct costs of treatment and in some countries even
higher.

The findings show that the complications of diabetes can be
avoided by closing the gap between the treatment currently offered
to people with diabetes and what could be offered based on available
guidelines and scientific knowledge. Closing that gap would save
both money and lives.

Sustainability is the key when the World Diabetes Foundation
(WDF) grants support for the fight against diabetes in the
world’s poorest countries. Projects funded by WDF must be
designed to remain sustainable and benefit local capacity
building once the support ends. The objective is to reach out
to people with diabetes and to get diabetes care and preven-
tion on the agenda, locally and globally. The ability to facili-
tate concerted efforts makes a tangible difference.

At the end of 2006, WDF had funded 95 projects in more
than 69 countries. If all projects have the intended impact,
they could have a direct influence on some 40.5 million peo-
ple affected by new initiatives in diabetes awareness, advoca-
cy and treatment. WDF is an independent trust, launched by
Novo Nordisk in 2001 with a grant of 500 million Danish kro-
ner (about 67 million euros) to be spent over 10 years to im-
prove diagnosis, treatment and capacity building of diabetes in
places where lack of funding is apparent.

See more at www. worlddiabetesfoundation.org.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

The UN Resolution
on diabetes
provides legitimacy
to grassroots efforts:
governments will
recognise that diabetes
is a silent killer and
it deserves
global
attention.

Clare Rosenfeld
IDF youth ambassador

a global drive
to change
diabetes

With diabetes fast becoming the biggest pandemic of the 21st century
and now causing at least as many deaths as HIV/AIDS, the Inter -
national Diabetes Federation (IDF) has stepped up its efforts to bring
this to the attention of policy-makers across the world. The global
federation of 200 diabetes representative organisations therefore
launched the ‘Unite for Diabetes’ campaign in June 2006 with the
ambition to have the United Nations pass a Resolution on diabetes
before World Diabetes Day 2007 (14 November) and make World
Diabetes Day an official UN healthcare day. To this end, the IDF has suc-
cessfully formed an alliance with patient associations, medical associa-
tions and industry to rally for this cause.

On 20 December 2006, only six months after the launch of the
campaign, the General Assembly of the United Nations adopted, by
consensus, a Resolution on diabetes. The Resolution designates
World Diabetes Day as a United Nations Day, to be observed every
year beginning in 2007, and encourages member states to develop
national policies for the prevention, treatment and care of diabetes in
line with the sustainable development of their healthcare systems.

Novo Nordisk is committed to continuing to play an active leader-
ship role in the ‘Unite for Diabetes’ campaign to ensure that action is
taken and that each UN member state establishes national policies on
the treatment, prevention and care of diabetes. The company will also
establish high-level groups of experts to facilitate new solutions for
change and drive better health outcomes for people with diabetes.

Youth ambassadors carry the message

Sponsored by Novo Nordisk, a group of youth ambassadors came to-
gether for the first time in December 2006 in Cape Town, South

Novo Nordisk Annual Report 2006

Africa, just prior to the IDF World Diabetes Congress, to develop their
leadership skills and frame individual plans of action. At a Novo
Nordisk-sponsored forum entitled ‘Challenge for Change’, Lars Rebien
Sørensen, president and CEO, invited the group to challenge the sta-
tus quo in diabetes care and brainstorm new ways of addressing the
global burden of diabetes. At a later meeting with the international
press, they made three clear demands to today’s leaders: treat diabetes
care as a basic human right; raise diabetes on the political agenda; and
establish a basic understanding of diabetes through education.

“We want to be seen as a resource, not as a burden. We know bet-
ter than most what diabetes means, we know how big an undertak-
ing it is to live with, and we know how to take good care of our health
to stay fit and in control. We would like to
share this insight, and we have our own stories
to contribute,” said 21-year-old Clare Rosen -
feld from the United States, who first con-
ceived the idea that led to the UN Resolution.
Clare has had type 1 diabetes since she was
seven years old, and since she was 12, she has been a vocal cam-
paigner for diabetes awareness.

Each of the youth ambassadors came up with their personal 100-

day plan of action for continuing advocacy in their home countries.

Access to diabetes care is a human right

Many of the youth ambassadors represented countries with a start -
ling lack of knowledge about diabetes, resulting in poor access to
care and treatment. This is not just a developing world issue, and the
youth ambassadors have concluded that access to diabetes care is a
human right which should no longer be violated.

Novo Nordisk is addressing the need to provide better access to
dia betes care and has already seen significant achievements in devel-
oping countries through its World Partner Project and the World
Diabetes Foundation. However, Lars Rebien Sørensen highlights that
this is a task for governments: “Industry can take the lead, offer our-
selves as partners and be catalysts for change, but we cannot and
should not play the role of governments.” He acknowledges the im-

5 December: Martin Gatehi, John
Felix Kusnawidjaja and Anja Nielsen,
IDF youth ambassadors, share their
vision for diabetes in 2012 at the
Challenge for Change Forum
in Cape Town, South Africa (far left).

14 September: The Changing
Diabetes Bus began its journey with
a visit to the Danish Parliament (left).

14 September: Lise Kingo,
executive vice president and chief
of staffs, talks with Danish MP
Lone Møller about the journey of
the Changing Diabetes Bus (right).

portance of grassroots and the role that the young diabetes leaders
will have in shaping a different agenda for people with diabetes.

A rally for change

As a participant at the IDF congress, Novo Nordisk expressed the urge
for change. “Changing diabetes is a rallying cry; it is time to think dif-
ferently and create new solutions to curb this silent pandemic,” said
Charlotte Ersbøll, vice president of Corporate Branding and driver of
the company’s long-term global changing diabetes effort.

A sign of Novo Nordisk’s commitment to change diabetes was
launched in September 2006 at the European Association for the Study
of Diabetes (EASD) congress: the Changing Diabetes Bus, a rolling
63 m2 communication vehicle, will cross five continents in 18 months
to reach out to people worldwide with diabetes awareness and edu-
cation. Starting in Copenhagen, the bus has toured Germany, the
Netherlands, Belgium, France and South Africa. The bus has reached
policy- makers, the public, media, healthcare professionals and peo-
ple with diabetes at every stop of its journey, and by the end of 2006
more than 28,000 people had visited the Changing Diabetes Bus and
more than 25,000 of them signed the petition supporting a UN
Resolution on diabetes.

Senior public health figures have been engaged in the need for pri-
oritising diabetes on the public health agendas and have signed a pe-
tition to support a UN Resolution on diabetes. In Cape Town the bus
was the centre stage of a Changing Diabetes Village. Here 5,600
guests, including conference delegates, media, policy-makers and
local visit ors took the opportunity to have their blood sugar measured
and learn about healthy living and ways of getting into good diabetes
control. They were also encouraged to support the IDF ‘Unite for
Diabetes’ campaign. The bus is continuing its journey to cities in
Australia, Asia and Northern America. It will stop in New York on the
first UN-observed World Diabetes Day in 2007.

novonordisk.com/annual-report Click: how we perform/advocacy

OxHA:
new partnerships –
new solutions

The Oxford Health Alliance is a public-private partnership
launched in 2003 by Novo Nordisk and the University of
Oxford to promote innovative action around preventing and
reducing the global impact of chronic diseases such as dia-
betes, cardiovascular disease, lung disease and some cancers.
The OxHA Annual Summit 2006 was held in Cape Town,
South Africa, in November. The Summit was co-hosted by the
Medical Research Council of South Africa and the University
of Cape Town. It was attended by more than 100 high-level
representatives from business, academia, press and public
policy-makers, veterans of the anti-tobacco campaigns, econ-
omists, nurses, urban planners and youth organisations. More
than 20 countries from Africa, North and South America, Asia
Pacific and Europe were represented. The overall theme was
‘Health in transition: working together’.

The OxHA Summit produced a set of goals to be achieved
by next year’s summit in Sydney, Australia. The goals evolve
around four themes: workplace health programmes; political
priority to the economic case for change; design of healthy
cities and an Urban Health Index; and, finally, engaging youth
in communicating health. A new website, www.3four50.com,
will promote chronic disease prevention.

Lise Kingo, executive vice president and chief of staffs
(COS), attended the OxHA Summit. “We are on the lookout
for the type of partner projects that can drive sustainable
change in diabetes. The Oxford Health Alliance is a forum
where new ideas and social innovation see the light of day
and where opportunities for new partnerships will evolve,”
she comments. See more at www.oxha.org.

Novo Nordisk Annual Report 2006

Biopharmaceuticals

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

The promise of breakthrough discoveries in biotechnology that can
benefit many people’s lives is a factor that attracts both talent and
venture capital to companies offering the environment, the resources
and the critical mass to drive ideas through the pipeline. Few scien-
tists will experience the privilege of seeing their own discoveries bene-
fit patients, or perhaps even become blockbuster drugs with dramat-
ic impacts. But the excitement that it could happen is ever-present.

In today’s global healthcare market, it is imperative to focus exclu-
sively on areas where leadership is possible. Market leadership is
about competence as well as scale. Novo Nordisk is well placed for
leadership in biopharmaceuticals; we have strong positions in the
markets for congenital haemophilia with inhibitors, human growth
hormone and hormone replacement therapy.

Novo Nordisk is building a biopharmaceuticals franchise by ex-
tending existing therapeutic products to new indications and estab-
lishing a portfolio of offerings based on the approach that has suc-
cessfully made us the leader in diabetes care. From the positions we
have established in haemophilia, growth hormone therapy and hor-
mone replacement therapy, we will explore new potential in other
therapy areas that rely on the protein technology platform and so-
phisticated protein delivery devices that are Novo Nordisk’s core com-
petences. Building a presence within oncology and inflammation is a
strategic investment in areas of unmet medical needs in which we can
leverage our core competences.

Innovation through partnerships

Partnerships, both project-related and longer-term commitments, are
one way of bridging gaps in areas where Novo Nordisk sees room to
pursue business opportunities. In-licensing agreements, contract re-
search and co-funded studies stimulate cross-fertilisation and mutual
organisational learning as well as contributing to innovation for the
benefit of patients.

We pursue leads that appear medically and commercially viable. At
the same time we are strategically scouting for suitable drug candi-
dates discovered by others and seeking to form partnerships to help
bring them to market.

The entrepreneurial approach requires a greater appetite for risk
and a sharp eye for making the prudent ‘go’ or ‘no go’ judgements.
‘Not invented here’ must not be a barrier to meeting medical needs.
Novo Nordisk managers are encouraged to foster an environment of
learning from others, and their perspective must be wide. It takes a
global outlook to excel in biotechnology. And it takes patience to reap
the rewards.

Novo Nordisk Annual Report 2006

At the Novo Nordisk research
facility Novo Nordisk Park
located in Måløv, Denmark,
843 researchers are working
on innovative solutions in the
areas of diabetes, critical
bleeding, oncology, inflam -
mation and growth hormone
therapy.

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

We have turbocharged the
portfolio of drug candidates
in oncology and inflammation.
We expect that most of the
compounds we have selected
will be in the clinic
before the end of
this decade.

Terje Kalland
senior vice president
Biopharmaceuticals Research Unit

Biopharmaceuticals highlights

Thirteen clinical development projects with
biopharmaceutical products are underway.

The world’s second-largest provider of
human growth hormone.

A study for a novel indication in
human growth hormone: adult patients
in chronic dialysis, is in phase 2 trials.

Low-dose version of Activella™
(Activelle® in Europe) approved by the FDA.

Partnerships within oncology and inflam -
mation have increased from one to four.

biopharmaceuticals:
the portfolio expands

Some molecules have the potential to build a business. Using the ac-
tive ingredient in NovoSeven®, recombinant factor VIIa (rFVIIa), as a
basis, Novo Nordisk is expanding its franchise within haemostasis.
New NovoSeven® formulations are in the pipeline, along with second-
generation versions of rFVIIa. With NovoSeven® the company has the
potential to gain a leadership position in haemophilia and to continue
to pioneer the field of critical bleeding. “Our strategy is to expand in
this area by modelling the biopharmaceuticals business on the full-
portfolio franchise that the company has built over the years around
another valuable molecule – insulin,” explains Mads Krogsgaard
Thomsen, executive vice president and chief science officer (CSO).

In October 2006, NovoSeven® was approved by the FDA for use in
the US for acquired haemophilia, a rare and potentially fatal bleeding
disorder. Sales potential for this indication was thus expanded beyond
the markets in Europe and Japan, where the product was already ap-
proved for this bleeding disorder.

Exploiting the potentials of NovoSeven®

Competition is as tough in the haemophilia business as anywhere
else. Plasma-derived products are still being widely used for the treat-
ment of people with haemophilia with inhibitors. NovoSeven® is a fast
and effective alternative that is not plasma-derived, which improves
its general safety profile. Another competitive parameter is price,
which is why health-economic studies are gaining ground as decision-
making tools for payers. Novo Nordisk sees a potential to gain market
share by promoting the advantages of first-line use of NovoSeven®
more widely.

Thorough knowledge of the market is a key to successfully build-
ing the haemophilia franchise. By adding new indications and follow-
on versions of NovoSeven® to its portfolio, Novo Nordisk will be able

Novo Nordisk Annual Report 2006

to meet customer needs even better. For example, the future has the
potential for Novo Nordisk to be able to reduce, or even avoid, uncon-
trolled bleeds for people who have haemophilia with inhibitors.

Within development, the company has assigned high priority to
further rejuvenating the portfolio with new and patent-protected
molecular entities that offer additional benefits to people with
haemophilia. One such example is an improved, next-generation
factor VII analogue known as NN1731. The engineered analogue re-
combinant molecule will mimic normal clot formation in the patient
more closely than the original rFVIIa molecule.

Growing strong

In the biopharmaceuticals segment, growth hormone showed the
strongest growth in 2006; in just six years Novo Nordisk has effective-
ly placed itself in the US market, steadily capturing an increasing
share of the world’s biggest market for growth hormone. Novo
Nordisk’s market share is 13%. A consistent upward trend in global
sales solidly places Novo Nordisk as the world’s second-largest player,
with an approximate 22% market share. The aspiration is to become
number one, and the strategy to get there includes improving con-
venience and efficacy as well as exploring new indications. Fuelling
this ambition is the liquid Norditropin® product and the prefilled,
ready-to-use NordiFlex® device, the convenience of which has been a
major selling point.

Development achievements in 2006 include phase 2 data from a
novel Norditropin® indication targeting a large, unmet medical need
among adult patients in chronic dialysis (APCD). An increased mor-
bidity is typical for this patient group, and the annual mortality rate is
around 20%. So far, it appears that growth hormone may improve this
prognosis. Phase 3 clinical development is set to begin in mid-2007.

New HRT products

Prescriptions and sales of hormone replacement therapy (HRT) prod-
ucts in general, including Novo Nordisk products, declined following
the publication of results from the Women’s Health Initiative in 2003.
Novo Nordisk’s position is that HRT should be prescribed at the lowest

Nagisa Kishimoto has taken
growth hormone injections
and lives in Japan (left).

Helen Farrelly from Ireland
has benefited from hormone
replacement therapy (right).

The IL-21 molecule (below).

effective doses and for the shortest duration consistent with treat-
ment goals and risks for the individual woman. To help meet patient
needs, the company is complementing its existing portfolio of HRT
products with low-dose versions of Activelle® (Activella® in the US),
approved by the FDA in 2006, and Vagifem®, which is currently in
late-stage phase 3 development.

Building a presence in immunotherapies

A few years ago Novo Nordisk announced its intention to also build a
presence within inflammation and oncology. “At that time, we had
just one compound in the pipeline, namely IL-21. But we have set
quite ambitious goals,” says Terje Kalland, senior vice president, Bio -
pharmaceuticals Research Unit. Work is still in the early stages, but he
is satisfied with progress. There is an on-track goal of having several
products in the clinical pipeline by 2008.

The strategy is firstly to use and develop the company’s existing
knowledge of proteins and autoimmune diseases and secondly, to
position Novo Nordisk as a preferred biotech partner for firms with
complementary skills, for instance to gain a critical mass of product
candidates for cancer therapies.

In just one year, the company’s R&D partnerships in the areas of
oncology and inflammation have increased from one to four. Two
compounds are now in clinical trials. One is IL-21, in-licensed from
ZymoGenetics, Inc. The compound is in phase 2a development for
treatment of malignant melanoma and renal cell carcinoma, and in
phase 1 for treatment of non-Hodgkin’s lymphoma. The other com-
pound is anti-KIR, a fully human IgG4 monoclonal antibody, in-
licensed from Innate Pharma. Novo Nordisk has obtained regulatory
approval to initiate a phase 1 study to evaluate the safety of anti-KIR
in patients with acute myeloid leukemia.

In inflammation, preclinical work includes studies targeting rheuma -
toid arthritis, psoriasis, atopic dermatitis and SLE, an autoimmune dis-
ease that attacks the body’s joints, kidneys, heart, lungs and brain.

novonordisk.com/annual-report Click: what we do

The successes
carry you on

It takes a special kind of person to work in research and devel-
opment. Someone with lots of ideas, of course, but also
someone who can live with the fact that only a fraction of
their, or anyone else’s, ideas will ever make it all the way to the
market.

In leading the Biopharmaceuticals Research Unit, Terje
Kalland tries to encourage this special way of thinking by con-
gratulating people when their projects fail.

“I am not happy that they failed, but I am happy to see their
drive and the commitment they invest in the project. And I tell
them to please continue to run the risk of failing,” he says.
“You can reward people who never make mistakes for their
solid performance, but innovation is about taking risks.”

Even so, how can one be prepared to accept such high risks?
“I have been part of putting two products on the market,
and the sweet taste of that success is totally dominating. That
is what drives you. The rate of project attrition is overwhelm-
ing. Failure is a part of daily life. If there is no real benefit to
the patient, or if there is even the slightest risk of significant
adverse effects, we must discontinue the project. But the suc-
cesses carry you on.”

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

NovoSeven® highlights

Sales of NovoSeven® increased by
11% to DKK 5,635 million.

NovoSeven® approved in the US
for acquired haemophilia.

Recruitment of patients completed
for the phase 3 study on NovoSeven®
for the treatment of intracerebral
haemorrhage (ICH).

Phase 1 studies of the compound
NN1731, an improved rFVIIa
analogue, completed.

pursuing
promising leads
in haemophilia

The effective treatment of haemophilia with NovoSeven® is at the
core of Novo Nordisk’s strategy to expand the business and gain global
leadership in haemostasis management. Research into the use of
NovoSeven® both within and beyond haemophilia has opened up
new prospects and is a key priority. The product is currently approved
for treatment of haemophilia for patients with inhibitors in Europe,
the US and Japan as well as certain markets in the Middle East, Africa,
Asia and South America.

The company has invested in research programmes within several
potential indications with significant medical and commercial oppor-
tunities. The results of these studies are avidly awaited. Novo Nordisk
expects to complete a phase 3 trial with NovoSeven® in intracerebral
haemorrhage (ICH) by the end of the first quarter of 2007, and a filing
for regulatory approval is expected by mid-2007 in the EU and the US.
At the same time, efforts are being focused on the existing
haemophilia business. The main NovoSeven® patents expire in
November 2010 (in the US) and February 2011 (in the EU). Novo
Nordisk has given high priority to further rejuvenating its haemostasis
port folio with new, patent-protected molecules. The development of
a heat-stable version of NovoSeven® and studies on the use of
NovoSeven® to prevent bleeds in people with haemophilia with in-
hibitors are top priorities in this area.

Unmet medical needs in haemophilia

A heat-stable NovoSeven® product requiring no refrigeration would,
for instance, make it possible for a boy with haemophilia with in-
hibitors to carry a NovoSeven® kit, ready for quick action in the event

Novo Nordisk Annual Report 2006

of acute bleeding episodes. Quick response to bleeding episodes is
critical because delays can cause debilitating joint damage. An appli-
cation for product approval is expected to be ready by mid-2007.

Prophylactic treatment has particular benefits for young people in
their teens and early 20s, as it allows them to be active at school, in
sports clubs and with friends. It also affects their prognosis for a life
without complications due to fewer bleeding episodes and subse-
quent risk of joint damage.

The short duration of action of NovoSeven® has been considered a
barrier to using this product prophylactically for long-term preven-
tion. Phase 2 trials with NovoSeven® have shown encouraging possi-
bilities, and a phase 3 study is now being prepared.

News in the pipeline

Another high priority is the development of an analogue of
NovoSeven®, NN1731, that might be used in future indications; the
project is now moving towards phase 2. This is a modified NovoSeven®
molecule with a faster action and stronger effect that could more
closely mimic normal clotting. Encouraging preclinical data suggest
that it might also have the potential to be developed for use instead
of the current NovoSeven® in various indications. In 2006, Novo
Nordisk completed phase 1 studies aimed at amplifying the clotting
effect solely at the site of a bleeding.

Pioneering efforts

Beyond haemophilia, Novo Nordisk is pioneering research in critical
bleeds in connection with intracerebral haemorrhage (ICH), trauma
and cardiac surgery. All these indications represent unmet medical
needs and short-term potential value for the company.

The results of the ongoing phase 3 study on ICH are expected in
the first quarter of 2007 following successful completion of a phase 2
study. Altogether, 1,309 individuals from 25 countries on 5 continents
have been enrolled in these studies, which were initiated in 2001.

A study of the use of NovoSeven® in cardiac surgery is in phase 2;

We are dedicated to
addressing high, unmet
medical needs in people with
haemophilia with inhibitors.
That is the starting point
for continually defending
and expanding our
business in haemostasis.

Michael Shalmi
project vice president
NovoSeven® Key Projects

Codey Huckstepp from
Australia has haemophilia
with inhibitors (far left).

21 February: Novo Nordisk
celebrates the opening of
Novo Nordisk Research US,
the first haemostasis
research facility in the
United States dedicated to
life-threatening bleeding
(right).

milestone results from this study are also expected during 2007.

A study on upper-gastrointestinal bleeds was discontinued in
October 2006 because treatment outcomes did not offer significant
benefits for the patients. At this time, clinical development of the use
of NovoSeven® for two other indications, traumatic brain injury and
spinal surgery, has been temporarily put on hold after phase 2. “We
need to focus and to prioritise resources, so we have postponed the
decision on whether or not to continue clinical development within
these two indications until we know the results of the ICH and cardiac
surgery trials,” says Mads Krogsgaard Thomsen, executive vice presi-
dent and chief science officer (CSO).

Finally, phase 1 studies in the field of preoperative cardiac surgical
care have begun with the recombinant factor XIII molecule, in-licensed
from ZymoGenetics, Inc., Novo Nordisk’s long-standing biotech part-
ner in the US.

Health-economic studies to aid decision-making

Healthcare professionals increasingly focus on pricing and reimburse-
ment issues. Novo Nordisk has conducted research to assess pharma-
coeconomic outcomes following treatment with NovoSeven®.

The right to care

Lack of access to haemophilia care can be a challenge, particularly in
developing countries where this disease is not a priority. The patient
organisation World Federation of Hemophilia estimates that the dis-
ease affects the lives of some 400,000 people globally, and that only
30% of these receive proper treatment.

The Novo Nordisk Haemophilia Foundation (NNHF) was estab-
lished in 2005 to address this need with development projects such as
patient education, training of healthcare professionals and establish-
ment of diagnostic facilities. It is funded by Novo Nordisk donations

novonordisk.com/annual-report Click: what we do

and works in partnership with healthcare authorities, NGOs and pa-
tient organisations. Activities in 2006 centred around the campaign
‘the right to care’. Efforts were documented on film as compelling
personal stories, which were shared with Novo Nordisk employees
and external stakeholders.

“We have a social responsibility to reach out to people, wherever
they live, whose survival and quality of life depend on proper detec-
tion, diagnosis and treatment. Currently, we are supporting projects
in seven countries and setting up projects in another eight countries,”
says Stephen Robinson, general manager of the Novo Nordisk
Haemophilia Foundation.

Media debate
about use of NovoSeven®
in combat zones

In September 2006, an article in the British newspaper The
Guardian sparked worldwide media coverage by calling into
question the use of NovoSeven® by the military to treat com-
bat-related trauma.
Novo Nordisk is aware of investigational uses of NovoSeven®,
including by military surgeons in Iraq. However, the company
does not encourage or promote the use of NovoSeven® or any
other of its products for indications other than those ap-
proved by the regulatory authorities.
NovoSeven® is in phase 3 development for trauma, primarily
due to traffic and fall accidents. However, Novo Nordisk is not
conducting any studies involving combat-related trauma.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

Growth hormone highlights

Solid number two position worldwide:
market share of approximately 22%.

Sales driven by product and delivery device:
Norditropin® and NordiFlex® pen.

Phase 3 study of more than 2,000
adult patients in chronic dialysis (APCD)
expected to begin in 2007.

7 July: Norditropin®
team members
from headquarters
and Japan celebrate
the launch of the new
15 mg product.

growth
at every
level

The year 2006 was exceptional for the growth hormone business, first
of all because of a steadily growing market penetration that is fuelling
the company’s long-term ambition of world market leadership.

Underscoring this trend was the 13% value market share in the
highly competitive environment in the US, where Novo Nordisk has
been building its presence since 2000.

It was also the year in which the company was able to present en-
couraging phase 2 trial results from a new growth hormone indication
for adult patients in chronic dialysis (APCD) that may save lives and
help grow the business. Phase 3 trials are expected to begin in 2007;
this will be Novo Nordisk’s largest study of growth hormone to date.

Potential treatment for dialysis patients

The liquid growth hormone Norditropin® may become a future treat-
ment for adult patients in chronic dialysis. Currently, the outlook for
dialysis patients is bleak. Despite the life-saving treatment they receive
for kidney failure, the annual mortality rate is 20%, a rate which is as-
sociated with malnutrition, inflammation and other complications.

No available treatment has been able to change this. Growth hor-
mone therapy, however, may offer an improvement. Among other
things, the phase 2 data reveal that patients treated with Norditropin®
showed a significant increase in the ratio of lean body mass to body
weight and increased serum albumin. Both of these biomarkers have
been linked to increased likelihood of survival.

An estimated 400,000 patients worldwide could benefit from this

treatment.

Product preference and market credibility

avenue is to optimise treatment and meet patients’ needs, for example
by seeking to reduce injection frequency and by the continued
development of devices.

This year’s robust sales were linked to the convenience of both the
liquid, ready-to-use product Norditropin® and the prefilled NordiFlex®
pen. This trend is evident in the US, where the sales curve rose with
the introduction of Norditropin® in 2000, supported by a dedicated
growth hormone sales force. The upward trend was reinforced after
NordiFlex® arrived on the market in 2005.

Novo Nordisk’s share of voice in the US does not yet match the
company’s overall worldwide performance, but the current develop-
ment is encouraging. Novo Nordisk is maintaining its ambition for
worldwide leadership despite some investor concern about generic
competition. Kåre Schultz, executive vice president and chief operat -
ing officer (COO) points out that the current sales growth has taken
place despite the fact that the Norditropin®/NordiFlex® combination is
only one of many growth hormone products in the market.

“We have made a new, convenient product with significant bene-
fits of use. And the market has been very receptive to this,” he notes.
Senior Medical Director Anne-Marie Kappelgaard, Growth Hor -
mone Scientific Marketing, points to several initiatives that have con-
tributed to the overall sales picture by enhancing Novo Nordisk’s com-
mitment in the marketplace.

Among these are clinical activities in the US (growth hormone
dosage trials), a sponsorship of the US-based Judson van Wyk prize in
paediatric endocrinology, and the ongoing work to combat the mis-
use of growth hormone at sporting events.

The company strongly advises against any use of growth hormone
outside of its labelled indication. There is no scientific evidence of its
effect as a performance-enhancer, and the long-term side effects are
unknown and could be serious.

Novo Nordisk is the only pharmaceutical company that continues
to co-sponsor development projects of tests for misuse of growth
hormone. Collaborators include the World Anti-Doping Agency, the
International Olympic Committee, the European Union and the
Australian and Japanese Institutes of Sports Sciences.

Exploring new indications to expand the label is a key to extending
the company’s presence in the growth hormone area. Another

novonordisk.com/annual-report Click: what we do

Novo Nordisk Annual Report 2006

We trust that our delivery
platform and parallel approach
are winning formulas.
They can take us
much further in driving
patient convenience and
business growth.

Kim Steengaard
vice president
Device Innovation and Development

Søren Lilleøre from
Denmark has type 1
diabetes. To him,
diabetes is not a
limitation to physical
activity, and using
insulin pens for
injections provides him
with the most flexible
solution for an active
lifestyle.

convenience
matters

Users prefer delivery systems that enable them to manage their ther-
apy conveniently. Twenty years’ published evidence of the use of the
NovoPen® devices testifies to the user-related benefits of Novo
Nordisk’s delivery systems. Also, customers’ buying behaviour proves
their preference for prefilled delivery systems.

Novo Nordisk is committed to continuing its user-focused ap-
proach, and to making a difference in the lives of people relying on its
products. Not only by engineering proteins into safe and effective
therapies, but also by developing new and improved delivery systems
for proteins.

This is a strategic route that the company is pursuing to further en-
hance user convenience and adherence to therapy. To this end Novo
Nordisk is leveraging a unique competence: developing proteins from
inception to injection.

Proteins from a to z

Novo Nordisk is a world leader in combining protein research with the
development of new delivery systems. Since 1985, when the intro-
duction of the NovoPen® insulin pen device pioneered this area, Novo
Nordisk has developed more than 20 injection systems. The company
has built up profound experience in providing safe products and a sol-
id understanding of user needs. Based on this knowledge, ongoing
development efforts are focusing on improved reliability.

Creating convenient delivery systems is a matter of combining pro-
tein insight with an understanding of the user’s situation. By taking
this perspective into account from the outset, the protein can be opti-
mally developed for convenient administration. That is why Novo
Nordisk is today undertaking parallel development of proteins and
dedicated delivery systems.

administration to be easier, more convenient and quicker. The com -
pany’s discreet devices also facilitate adherence to intensive insulin
therapy, support lifestyle flexibility and reduce injection pain.

Growing market shares

Convenience matters to patients. It also grows market share for Novo
Nordisk.

Novo Nordisk is growing market penetration of insulin sold with
pen devices. In the developed world, around 60% of all insulin is sold
in or for a pen device. Novo Nordisk holds a 60% market share of this
segment. In 2006, the prefilled FlexPen® device, which was launched
in 2001, became the world’s most-sold device.

Also, sales of the Norditropin® growth hormone are primarily driven
by the NordiFlex® prefilled delivery device, which was launched in
2003. To further improve this product, NordiFlex PenMate™ was
launched in 2006. This new accessory simplifies injection by hiding
and automatically inserting the needle.

Winning formula

Novo Nordisk’s strategy is to expand its position within protein deliv-
ery systems while engineering therapeutic proteins in diabetes and
human growth hormone. “We have a three-pronged approach to our
device pipeline,” says Kim Steengaard, vice president for Device
Innovation and Development.

First, an array of innovative successors is in place for the products
currently available. This enables Novo Nordisk to quickly accommo-
date new user preferences or market dynamics and maintain its mar-
ket position.

Secondly, Novo Nordisk is pursuing exploratory research into new
forms of protein delivery that will further improve user convenience.
Finally, the company will leverage its proven ability to deliver in-
sulin and growth hormone by applying this competence to other
therapy areas as well.

A large body of evidence has shown that this benefits users of
Novo Nordisk’s insulin delivery devices: patients consider this insulin

novonordisk.com Click: diabetes care

Novo Nordisk Annual Report 2006

Challenging workplace

a job here
is never
just a job

Being an attractive and challenging workplace is essential to Novo
Nordisk’s long-term performance. With growth in the number of
people of 72% in just six years, it is important to focus on our values,
our Vision and the Novo Nordisk Way of Management. The culture
needs to be strong enough to embrace new members, encourage di-
versity and adapt to what new people can bring to the team.

There is shortage of the kind of talent needed to excel in a highly
specialised pharmaceutical business, and attracting and retaining this
talent is critical. The consequences of globalisation define the playing
field: talent-scouting must have a global scope. The company must
demonstrate brand value and reputation, locally and internationally.
And the workplace must show itself to be attractive. Quality and
workplace spirit are as important as the pay-cheque.

Several studies show the importance of alignment between
corpor ate and personal values: it is far more attractive to work for a
company that demonstrates social responsibility and takes an active
part in the global and local community. That is why Novo Nordisk con-
sistently ranks at the top in surveys among graduates in Denmark and
the other Nordic countries as their preferred future employer. In the
US and China, the company has also successfully earned a reputation
as a workplace with a very special culture, and as the company ex-
tends its global reach, this parameter is becoming increasingly impor-
tant for success.

Engaging culture

The Novo Nordisk Way of Management is the foundation for an en-
gaging culture which, in turn, drives performance and retention.
Three factors determine success: when people understand the con-
nection between their work and the company’s goals, when they see
how they contribute to its success, and when they perceive the organ-
isation as trustworthy and credible.

That is why sustaining an engaging culture and stimulating per-
sonal leadership are high on the agenda. The corporate culture must
be reinforced by authentic leaders who act in character and bring out
the best in others by playing to their strengths and treating them as
individuals.

Lifelong learning is not just a mantra, but a requirement of every-
one. Leaders must embody the responsible business approach and a
learning culture, be alert to emerging challenges and ready for change.
Novo Nordisk is focused on finding leaders who can take the com-

pany through its international expansion.

Global presence and local execution calls for globalised solutions
and seamless operations across functions. Leadership programmes
take people away from their known environment and enable them to
build networks within the organisation, share better practices and
make the link between corporate goals and local execution. More
import antly, they make them see the bigger picture.

Novo Nordisk Annual Report 2006

A group of employees working with device manufacturing get some exercise
during a break at the production facility in Hillerød, Denmark.

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

6 July: Hansruedi Stahel organised
campD, a diabetes camp for 650 young
people, for which Novo Nordisk Germany
won the TakeAction! Award 2006 (left).

28 August: In Copenhagen, 3,000
runners from Novo Nordisk took part in
the DHL relay, Europe’s largest fitness
run (right).

14 November: On World Diabetes Day,
employees in Korea made a donation to
benefit patients in the developing world
(far right).

people bring
engagement
to work

Engagement at work involves knowing what is expected of you, being
empowered and able to do your best and feeling valued. In an engag-
ing culture people have a strong rational and emotional commitment
to their job, their manager and their team, and to the company.

This is the philosophy that drives performance at Novo Nordisk.
There is a strong culture of personal commitment to achieving the
goals set for the company. To stay successful, the sense of purpose
and values needs to be shared across the organisation.The people
strategy supports the values and aims to enable the company to be
competitive in the market. It focuses on two key challenges: globali-
sation and talent development.

“Globalisation sets two forces in motion. We must strengthen a
cross-border mindset and reinforce the Novo Nordisk Way of Manage-
ment in times of strong global expansion. We also need to demon-
strate local presence and an ability to adapt in diverse environments,”
says Lars Christian Lassen, senior vice president, Corporate People &
Organisation.

Shared mission

Key drivers of performance include having a common mission and
feeling connected to co-workers and management through shared
work standards and recognition of a job well done.

Recognising this, Novo Nordisk is taking a strategic approach to
nurturing an engaging culture that will drive passion and perform-
ance. To measure this, questions are built into eVoice, the annual
company-wide employee survey. As of 2007, a new index will be intro-
duced, and performance will be reported in the Balanced Scorecard.

Results from eVoice consistently confirm that people at Novo
Nordisk strongly support the company’s Vision and values, and its
Triple Bottom Line approach to doing business.

“Novo Nordisk is its people, and every single employee contributes
to making Novo Nordisk a very special company. This is felt by people

Novo Nordisk Annual Report 2006

seeking to work with us. ‘Changing Diabetes’ is embraced by people
across functions and locations, and this will be a focal point for Novo
Nordisk’s talent attraction,” says Lars Christian Lassen.

Global systems for seamless operations

Novo Nordisk believes that a remuneration approach based on fair
and globally consistent standards is a key component in attracting,
engaging and retaining top talent worldwide.

By the end of 2006, uniform job classification principles were in
place for all management and specialist positions. A new remunera-
tion strategy was initiated in 2006, and roll-out continued for an
international system of employee evaluation that ties individual goals
into the corporate Balanced Scorecard. Taken together these create a
more transparent link between job, performance and competitive pay.
In 2006, Novo Nordisk gave priority to initiatives to enhance em-
ployee mobility across functions or locations in response to business
needs and as part of individual development plans. The new global
systems make it easier to accept short-term assignments, job swaps
or two to three year ‘expat’ contracts.

A new Occupational Health and Safety Manual has been adopted
to deal more effectively with safety issues for the growing number of
employees working at production sites outside Denmark. The manual
spells out roles and responsibilities for ensuring safe and healthy
working environments. It builds on the well-established standards for
the Danish parts of the organisation.

A diversity mindset

“To stay competitive we need an international workforce and a multi-
cultural mindset. Ensuring diversity within the organisation is an
expression of our social responsibility to be an inclusive workplace,
but it also enables us to run a better business. We serve customers
from around the world. In order to truly understand their needs, our
workforce must reflect this diversity,” says Ove Munch Ovesen, senior
specialist, Global Talent Development. Initiatives to drive diversity
management include a focus on women in management, inclusion
of ethnic minorities in Denmark, and development and mentor
programmes.

Leadership
training initiatives

Lighthouse:
48 current members.

Spotlight:
284 attendees by June 2007.

Greenhouse:
167 current members.

New managers’ programme:
Approximately 200 annually.

learning
leadership

As Novo Nordisk expands its global reach, having the right leaders is
vital. Leaders must not only deliver business results, they must also af-
firm the values of the Novo Nordisk Way of Management and ensure
that their teams adhere to its principles. Equally importantly, they
must constantly nourish and reinvigorate the corporate culture – the
glue that binds the organisation together.

Perhaps the single most critical people-related challenge for Novo
Nordisk’s continued growth is ensuring leadership capabilities at all
levels. The response to this challenge is two-fold: internally it requires
solid selection of talents, and a strong line of leaders ready to move up
the ranks or fill new positions, while externally, the company needs to
build and maintain a strong brand as a leader in its field in order to at-
tract talented people to locations where Novo Nordisk operates.

Personal leadership

‘Living the values’ is one of Novo Nordisk’s 10 global leadership com-
petences and an indicator of performance. In a competitive environ-
ment a winning culture can drive results, but if this is done at the ex-
pense of employee development and a good work–life balance,
success will be unsustainable.

Leadership requires more than the ability to set business targets
and manage resources. Leadership is more about mindset than about
techniques. That is why Corporate People & Organisation is placing a
focus on personal leadership – the ability to lead by example and to
help others achieve results and develop their potential.

Palle Thorsen, president, Novo Nordisk Delivery Technologies, Inc.,
California, is one of 20 Novo Nordisk managers who took part in the
first Novo Nordisk Spotlight programme, a four-day course specifical-
ly designed to teach personal leadership. For him, it all starts with ac-
knowledging one’s own strengths and weaknesses.

“Leadership is not about memorising instructions or guidelines,
but about knowing and being yourself,” he says. “That way you de-
velop a credible and personal style of leadership that can inspire others.

The Lighthouse programme aims
to accelerate the development of
talented senior managers. A key
element of the programme, which
has a two-year cycle, is a trip to an
unknown environment. In 2006,
the Lighthouse group went to
China and the trip included an
overnight stay on the Great Wall.

Having a leader you respect and believe in is a big part of what moti-
vates you as an employee to do your best.”

By June 2007, all vice presidents and general managers, a total of

284 at the end of 2006, will have completed the programme.

Stepping up education

The company’s strong growth has increased the need to educate new
managers worldwide. At the core of all training programmes is the
Novo Nordisk Way of Management and how it is applied in practice.
All new managers undergo mandatory leadership training on ap-
pointment. Other initiatives include the Greenhouse programme for
young managers, the Lighthouse programme for senior managers and
a planned programme for members of the Senior Management Board.
“Effective leadership development is about learning by doing.
Therefore our programmes focus on application rather than theo -
retical input. Participants practise a variety of skills such as coaching,
giving feedback and delegating responsiblity,” says Bård Grande, vice
president, Global Talent Development.

Development opportunities for all

Novo Nordisk aims to offer learning and development opportunities
for all employees.

While Novo Nordisk’s industrial workforce continues to grow out-
side Denmark, some 4,000 operators at Danish production sites have
embarked on a comprehensive educational programme covering a
variety of subjects, from PC proficiency courses to training in the prin-
ciples and mindset of cLEAN® production.

In 2006, management and Danish trade union representatives
agreed on an ambitious programme which will allow operators to
learn tasks previously performed by skilled craftsmen. This can, for ex-
ample, reduce down-time in the event of problems with machinery.

“Increased productivity is vital to our ability to stay competitive. At
the same time, we have a responsibility to upgrade the skills of our
people in Denmark so that they can remain competitive in the future
globalised workplace,” says Per Valstorp, senior vice president,
Product Supply.

novonordisk.com/annual-report Click: how we perform/workplace quality

Novo Nordisk Annual Report 2006

Vibeke Burchard and Jens Frederik Studstrup are charged with the
task to drive the implementation of Novo Nordisk’s climate strategy.
Their first mission was to identify potentials for energy savings that
can help reduce CO2 emissions.

Values in action

our values
are expressed in
all our actions

In 1992, when Novo Nordisk and other corporate leaders attended
the United Nations Earth Summit in Rio de Janeiro, the key issues
were protection of the natural environment and limits to growth.
That event effectively put sustainable development on the agenda,
and in its wake the environmental impact of the industry became
more closely regulated.

Today, 15 years later, this debate has been reinvigorated by the
challenges of climate change. And the sustainability agenda contin-
ues to evolve. Growing social and economic inequities and the im -
plications of globalisation are main trends that require business re-
sponses. Companies with global reach are key decision-makers with
the power to impact economic development and an obligation to
contribute to balanced growth. A particular challenge lies in framing
and upscaling sustainability-driven initiatives that can add long-term
value to the business and to society.

For Novo Nordisk, corporate responsibility is a driver of innovation
as well as an effective means of mitigating risks. One example that
demonstrates Novo Nordisk’s leadership as an environmentally re-
sponsible business is its strategic response to the implications of cli-
mate change. We are constantly exploring business opportunities for
value creation via initiatives that address social needs or help reduce
environmental impacts. Often, the business case is clear when consid-
ering long-term profitability rather than short-term gains.

Responding to business challenges

Over the years, we have developed an approach to the sustainability
agenda based on a learning process. It begins with trendspotting and
issues identification, then proceeds to external review, stakeholder
dialogue, and integration into management. As management of
the issue matures, the strategy is revised to ensure continuous
improvement.

A number of key challenges for the pharmaceutical industry stand
out: it must demonstrate not only patient safety and high quality
standards, but ethical business practices too. These include a firm
stance against bribery and corruption, global standards throughout
the value chain and transparency in business operations – from re-
search priorities to public policy activities.

Throughout the company, decision-making is guided by a values-
driven approach to doing business. This includes our commitment to
the United Nations Global Compact and to communicate on progress.
Values must be put into action, and everyone at Novo Nordisk
must be constantly vigilant to keep them in sight. We need to adapt
to diverse cultural and social environments, and at the same time stay
the course. In the daily interactions of the company there will always
be dilemmas and answers will not always be clear-cut. This is where
management has a particular role to lead by example and to em -
power employees to make the right decisions. The message is clear:
we will compete to win, but not at any cost.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

business ethics
training deals with
dilemmas

Each day, Novo Nordisk employees bring ethical standards to work.
Doing business globally entails many challenges, particularly when
working in diverse cultures where appropriate business conduct can
vary widely. Making the right choices becomes more complex – and
more important – in the pressures of a competitive business environ-
ment. Torben Skindballe, vice president of the Regional Office Near
East, knows this first-hand. “It is vital to understand and respect the
local customs and practices of the countries we operate in. Giving
gifts, for example, is important in many cultures and we must remain
respectful in our business relationships. At the same time, we must
never compromise personal integrity and the principles that guide
Novo Nordisk’s way of doing business. That makes it all the more im-
portant to be clear on our Business Ethics Policy, not only among people
working at Novo Nordisk, but also with anyone with whom we do
business,” he says.

Ethical business conduct is about values and integrity as well as
compliance and risk mitigation. Taking a proactive approach also
presents opportunities such as enhanced trust in the company and
improved relationships with customers and other key stakeholders.

See examples from the current risk profile regarding ethical mar-

keting practices on pp 110–111.

Passing the ethical test

When is a gift appropriate? Would the gift cause another person to
behave inappropriately and provide Novo Nordisk employees with an
inappropriate business advantage? Would the decision be considered
fair? These questions illustrate some of the dilemmas that employees
can be confronted with in work situations.

Novo Nordisk’s Business Ethics programme includes compliance
with legislation and offers guidance on individual judgements. The
Business Ethics Policy sets direction and states that bribery and cor-
ruption are unacceptable. It is backed by three procedures for ethical
business conduct, product promotion and contracting with agents
and other third parties.

The company’s president and CEO, Lars Rebien Sørensen, the
Executive Management team and the members of the Senior
Management Board attended training workshops during 2006, as did
all line managers within procurement and sales and marketing – a to-
tal of 297 individuals representing 79 countries. The aim was to pro-
vide guidance on how to live up to the Business Ethics Policy, which
was introduced in 2005. In addition, all Novo Nordisk managers and
relevant employees in their units have completed an e-learning mod-
ule on business ethics. This programme is now also a mandatory part
of new managers’ training. Any employee may complete the e-learn-
ing programme, and during 2006 nearly 2,700 employees (close to
10% of the total workforce) did so.

”We are judged by what we do, not only by what we say. The pro-
cedures explain the global standards of behaviour that people can ex-
pect from us. However, we recognise that despite clear policies and

Novo Nordisk Annual Report 2006

procedures, there are dilemmas, and we think it is important to ad-
dress these openly,” says Lars Rebien Sørensen.

Addressing dilemmas

For instance, doctors from underfunded hospitals or clinics, particu larly
in emerging or developing countries, sometimes request donations of
funds, equipment or medicine from pharmaceutical com panies. From
the doctor’s point of view, the company has the financial ability, ex-
pertise and social obligation to contribute. The company also sees an
obvious need and has a desire to help. If a donation is made, it must
adhere to the company’s ethical standards. It may not lead to undue
advantage or benefit for the company, such as inclusion in a list of the
hospital’s preferred suppliers. Novo Nordisk’s pol icy clearly states that
managers and employees must be careful to ensure that charitable
contributions and sponsorships do not constitute bribery. If the policy
is not adhered to, the consequence can be job termination.

“The workshop is an excellent forum for clarifying questions that
individuals bring from their work situations. It gives an opportunity to
ask questions, have an open and frank discussion and to learn how to
stay in compliance,” says Torben Skindballe.

Audit and whistleblower

Group Internal Audit oversees compliance with the Business Ethics
Policy and procedures. The audit team conducts both announced and
unannounced reviews of business units worldwide. In 2006, more
than 25 such reviews were conducted, and recommendations result-
ing from these reviews will be followed up in 2007. Business ethics is
also included in regular facilita-
tions that serve as audits of ad-
herence to the Novo Nordisk

Try the interactive
‘Business Ethics Challenge’ at
novonordisk.com/annual-report

Way of Management, including company policies.

Concerns over possible breaches of ethical business conduct can
be raised via the Board of Directors’ Audit Committee anonymously
and with no subsequent disciplinary or retaliatory action towards the
whistleblower. In 2006, 12 concerns related to business ethics were
raised through the whistleblower reporting system.

Measuring progress

Also in 2007, the business ethics programme will be anchored within
the corporate Balanced Scorecard against which individual managers’
performance is assessed annually. All country managers are evaluated
based on their ability to undertake local risk assessment, develop a lo-
cal procedure on business ethics, and ensure continued training for all
relevant employees.

Monitoring the progress and continued development of the pro-
gramme ensures that it is responsive to the most relevant and press-
ing concerns as viewed by Novo Nordisk and its stakeholders.

See an overview of current legal issues at novonordisk.com/annual-report
Click: how we perform/legal issues

responsible sourcing:
revisiting
the strategy

The quality of a pharmaceutical product must be unquestionable. To
Novo Nordisk this also implies assurance that the product was made
with high focus on the environmental impact and with respect for in-
ternational labour standards.

“Our social and environmental responsibility extends throughout
the value chain. By investing in initiatives that drive improved per-
formance by our suppliers and subsuppliers we achieve two things:
we mitigate risks and we act on our responsibility,” says Lise Kingo,
executive vice president and chief of staffs (COS).

Global sourcing is an intricate web of interconnected parties, from
suppliers of raw materials to agents purchasing goods on the com -
pany’s behalf. Often, supply chain relationships are long-lasting and
close, with skills and knowledge being developed and shared. This
makes fertile ground for sharing better practices, including respon -
sible business principles.

Novo Nordisk expects suppliers to adhere to the company’s stand-
ards for managing environmental impacts and respecting human and
labour rights. Selected suppliers are assessed before contracting into
a business relationship. All existing suppliers are regularly evaluated
on their performance.

The company prefers to engage with suppliers to address breach-
es of quality, social and environmental standards. However, if a supplier
repeatedly demonstrates a lack of interest or unwillingness to im-
prove its standards, Novo Nordisk will take appropriate action, which
could eventually mean withdrawal from the relationship.

Evaluation of performance

Systematic evaluation was introduced in 2001 for the company’s
more than 300 key suppliers in production. This was based on annual
self-evaluation questionnaires, supplemented by audits conducted by
Novo Nordisk’s internal auditors. As of 2005, all significant purchasing,

including via service companies, has been incorporated in varying
forms in this programme. In 2006, 11 audits were carried out, the ma-
jority of them in China.

Managing a global supply chain

As Novo Nordisk expands its supply chain operations globally, there
are cost benefits to be gained. However, this must not compromise
company standards and the Novo Nordisk Way of Management.

In 2006, the supply chain programme was reviewed to assess its
effectiveness in mitigating risks and improving social and environ-
mental performance. As part of the review, the company consulted
selected suppliers in China and Brazil to obtain feedback on the cur-
rent programme and to identify areas for improvement. Stakeholder
engagement has contributed to framing this new approach.

The conclusion of the review was to strengthen risk management
and place greater emphasis on suppliers of Novo Nordisk branded
products and suppliers with production in countries where enforce-
ment of social and environmental legislation is weak.

“Since a higher share of our supplier base will be shifting to devel-
oping countries, business risks will increase, but so will the opportun -
ity to engage with suppliers with a view to ensuring compliance with
Novo Nordisk and global standards, thereby often raising the bar lo-
cally,” says Kim Tosti, senior vice president, Devices and Sourcing.

This more focused approach aligns well with Novo Nordisk’s global
sourcing strategy. Any prospective supplier regarded as high-risk will
be pre-screened and assessed prior to approval. Approved suppliers
regarded as high-risk will be evaluated periodically on their social, en-
vironmental and ethical performance as part of the annual business
evaluation, which covers both commercial and quality aspects.

Roll-out of standards

In 2007, Novo Nordisk will issue Responsible Sourcing standards.
These standards will be an integral part of doing business with Novo
Nordisk. The standards will be classified in six categories: general
compliance with laws and regulations; environment; health and safe-
ty; labour practices; ethics; and subsup pliers. The new standards will
also cover clinical trials and animal welfare, so that suppliers and con-
tractors to different parts of the organisation will be informed of all
the company’s expectations in a single standard.

The aim is to engage with suppliers to promote implementation of
these standards. The company recognises that while standards and
assessments may uncover areas in need of improvement, they will not
necessarily result in improvements per se. Therefore, the company
will develop an engagement programme, targeted at a few key sup-
pliers that face challenges in implementing these standards. This pro-
gramme will be piloted in 2008 and will build on Novo Nordisk’s expe-
rience in working with stakeholders to drive change.

“It is critical to our business that our suppliers, anywhere in the
world, are absolutely reliable in terms of quality, environmental and
social standards and commercial stability. Without such strong supply
chain, we could jeopardise our ability to deliver our products in a
timely manner to people who rely on them. That is a risk we are not
willing to take,” says Kim Tosti.

With the new insulin filling plant in Montes Claros, Brazil, Novo Nordisk
has also extended its supplier base in South America.

Novo Nordisk Annual Report 2006

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action

climate strategy
puts energy efficiency
in the spotlight

On two Sunday mornings in November 2006, Novo Nordisk employ-
ees crowded into a movie theatre in Copenhagen transformed into
an Arctic landscape of facts and figures on climate change – the
greatest environmental challenge of our time with major social and
economic implications. The company had invited all the employees
from the Danish organisation to see the documentary film An
Inconvenient Truth, along with their spouse, a teenage child or a
friend. The ticket office was taken by storm, and more than 1,800
people attended the events.

The film was an ideal occasion to kick off internal awareness and
debate on climate change and what it means for Novo Nordisk. The
company’s climate strategy ties in with its responsible business ap-
proach and environmental management. This work already involves
many employees, but individuals’ actions and behaviour count as well.
The world’s increasing consumption of fossil fuels has accelerated
emissions of CO2
that con-
tribute to global warming.
Climate change presents signif-
icant business risks in the long-term. Novo Nordisk believes that de -
cisive action is an obligation and also an opportunity to be better pre-
pared for a carbon-constrained future and less vulnerable to
fluctuations in energy prices.

Try the interactive challenge
‘The EnviroMan’ at
novonordisk.com/annual-report

A need to act

In January 2006, Novo Nordisk signed an agreement with WWF that
made the company a member of the Climate Savers programme. This
programme invites leading global businesses to demonstrate that in-
vesting in reduction options can benefit the long-term health of the
business. Under this agreement, Novo Nordisk has set an ambitious
target for the company’s CO2 reductions: to achieve a reduction of
10% by 2014 as compared with 2004. To do so, the projected signifi-

Climate strategy for CO2 emissions
1,000 tons CO2

700

600

500

400

300

200

2004 CO2 emissions
Target 2014: 10% reduction as compared with 2004
With cLEAN®, without CO2 strategy
Without cLEAN®, without CO2 strategy

Novo Nordisk Annual Report 2006

cant growth in production needs to be decoupled from the levels of
energy needed in the processes.

Business focus drives change

The climate strategy has two elements: energy savings initiatives, and
more use of renewable energy. Novo Nordisk is looking into oppor -
tunities such as windmills, solar power and geothermal energy.

The ongoing cLEAN® programme – an adapted LEAN manufactur-
ing programme to increase productivity – in Product Supply underpins
the climate strategy and will contribute to lowering the level of CO2
emissions. As a result of this programme Novo Nordisk will achieve a
lower energy consumption per produced unit.

Energy screenings identify potential

Significant progress has been made in identifying opportunities for
energy savings at individual production sites. By the end of 2006
Novo Nordisk Product Supply had conducted energy screenings at 10
of its 13 production sites. Sites in Brazil, China and Japan will be
screened in 2007.

“These screenings have revealed an enormous amount of easy
wins with short pay-back times,” says Per Valstorp, senior vice presi-
dent, Product Supply. Funding has been secured for sites to conduct
feasibility studies, and each site has appointed energy stewards. An
internal value on CO2 reductions has also been introduced to promote
implementation of energy-saving projects.

Small measures, big savings

The insulin filling facility in Clayton, North Carolina, US, has identified
eight projects ranging from more efficient use of boilers to minimising
energy losses in the steam system. All measures will be implemented
in 2007 with a total CO2 reduction of 1,033 tons per year and an aver-
age pay-back period of 18 months.

Substantial savings opportunities were also identified following en-
ergy screenings at the production sites in Denmark, where 87% of the
company’s CO2 emissions occur. At the factor VIIa factory in Hillerød,
significant energy and cost savings are expected to result from im-
provements in the ventilation system, which contributes to 40–50% of
total energy use. Lessons learned can be transferred to other sites.

“The energy screening has taught us to take a step back and see
new angles on how we can change the way we do things,” says Asbjørn
Christensen, chemist and energy steward at the Hillerød factory.

Strategies for long-term environmental challenges

Climate change is the primary focus of Novo Nordisk’s environmental
strategy, which addresses the use of natural resources and pollution pre-
vention throughout the value chain. Other focus areas include the safe
use of genetically modified organisms (GMOs), sustainable processes,
product stewardship, transportation and responsible sourcing.

Environmental management is organised through ISO 14001-certi-
fied processes at the sites. Through the Balanced Scorecard managers
are held accountable – and rewarded – for performance against specif-
ic targets for compliance, pollution prevention and energy efficiency.

novonordisk.com/annual-report
Click: how we perform/environmental management

Environmental protection projects come
in all sizes: at the Kalundborg production
facility in Denmark, which among other
things produces insulin crystals, cooling
towers erected in 2003 have provided Novo
Nordisk with more effective, resource-
saving cooling.

Novo Nordisk Annual Report 2006

Accounts and notes

consolidated financial
and non-financial
statements 2006

52 Financial and

non-financial highlights

54 Consolidated

income statement

55 Consolidated
balance sheet
56 Consolidated

cash flow statement
and financial resources

57 Consolidated statement
of changes in equity

58 Notes:

Accounting policies
63 Financial definitions
64 Notes:

Consolidated
income statement

68 Notes:

Consolidated
balance sheet

75 Notes:

Consolidated
cash flow and
financial resources

76 Notes:

Additional information

90 Overview of

non-financial reporting

91 Notes:

Accounting policies for
non-financial data

93 Notes:

Performance indicators

100 Companies in the

Novo Nordisk Group
102 Summary of financial data

2002–2006

104 Quarterly figures

2005 and 2006 (unaudited)

105 Management statement
106 Auditors’ reports

Shareholder information
108 Corporate governance
110 Risk management
112 Board of Directors
114 Executive Management
115 Shareholder information

7 February: Lars Rebien Sørensen, president and CEO, together with colleagues
from global headquarters and Novo Nordisk Inc., rings the closing bell at the New
York Stock Exchange as the company celebrates its 25-year listing on the exchange.

Novo Nordisk Annual Report 2006

Financial highlights

Sales

2002

2003

2004

2005

2006

2005–2006

2005

2006

DKK million

Change

EUR million

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

1,187
14,651
1,620

2,553
14,492
1,430

4,507
14,383
1,643

7,298
15,006
1,708

10,825
15,057
1,984

Diabetes care total

17,458

18,475

20,533

24,012

27,866

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

Biopharmaceuticals total

Total sales by segments

Europe
North America
International Operations
Japan & Oceania

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

5,635
3,309
1,607
326

10,877

24,866

26,158

29,031

33,760

38,743

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

14,708
12,280
7,086
4,669

Total sales by geographical areas

24,866

26,158

29,031

33,760

38,743

48%
0%
16%

16%

11%
19%
3%
(4%)

12%

15%

9%
29%
17%
(1%)

15%

979
2,015
229

3,223

680
373
210
45

1,308

4,531

1,805
1,279
815
632

4,531

1,451
2,019
266

3,736

755
444
215
44

1,458

5,194

1,972
1,646
950
626

5,194

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

11%
(5%)

15%
(10%)

15%
(4%)

11%

15%
1%

16%

16%
(1%)

15%

DKK million

Change

EUR million

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

DKK

17.89
17.83
6.00
355

15.9
11.0
24.0
24.7
82.4
82.4
17.4
65.9

9,119
45
9,164
6,452

30,122
44,692
2,787
4,707

13%
(69%)
11%
10%

9%
7%
(24%)
(3%)

DKK

Change

12%
12%
17%
33%

20.10
19.99
7.00
471

12.7
12.4
23.5
25.8
73.0
80.2
16.7
67.4

1,085
20
1,105
787

3,704
5,624
492
649

EUR

2.41
2.40
0.81
47.73

1,223
6
1,229
865

4,040
5,994
374
631

EUR

2.69
2.68
0.94
63.17

Long-term financial target in%

25
30

Key figures are translated into EUR as supplementary information – the translation of income statement items is based on the average exchange rate in 2006 (EUR 1 = DKK 7.45912) and the
translation of balance sheet items is based on the exchange rate at the end of 2006 (EUR 1 = DKK 7.45600).

Novo Nordisk Annual Report 2006

Non-financial highlights

Economics

R&D

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

2002

1:1
15.9

2003

1.8:1
15.5

2004

1.5:1
15.0

2005

1.3:1
15.1

2006

2.3:1
16.3

Investments

Total tangible investments

DKK million

3,893

2,273

2,999

4,009

2,811

Remuneration

Remuneration as share of cash received

Employment

Employment impact worldwide (direct and indirect)

Number of jobs

65,1001)

67,9001)

73,1001)

78,0001)

82,700

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

Wastewater

COD
Nitrogen
Phosphorus

Waste

Total waste
Recycling percentage

Emissions to air

CO2
Organic solvents

Diabetes care
Biopharmaceuticals

Breaches of regulatory limit values
Accidental releases

EIR6) Water

EIR6) Energy

Compliance

Social

Living our values Importance of social and environmental issues for the future

of the company8)
Managers’ behaviour consistent with Novo Nordisk’s values8)
Fulfilment of action points from facilitations of NNWoM

People

Employees (total)
Rate of absence
Rate of employee turnover
Engaging culture
Opportunity to use and develop employee competences/skills8)
People from diverse backgrounds have equal opportunities8)

Health & safety

Frequency of occupational injuries per million working hours
Fatalities

Training costs

Annual training costs per employee

Access to health LDCs where Novo Nordisk operates

LDCs where Novo Nordisk sells insulin at or below
the policy price
Healthcare professionals directly trained or educated
People with diabetes directly trained or treated

Patent families

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

Animals

Animals purchased

m3/MU
m3/g API

GJ/MU
GJ/g API

Number
Number

Number
%
%

Number

DKK

Number

Number
Number
Number

Number
Number

Number

1) Multipliers have been updated.
2) Estimated number changed to factual number.
3) Previously reported as 2,408 (2004) and 2,591 (2005). Reporting error now corrected.
4) Previously reported as 150. Reporting error now corrected.
5) Minor adjustments to all historic CO2 emissions due to changed emission factors from sites outside Denmark.
6) EIR = eco-intensity ratio. See pp 92 and 96.
7) Previously reported as 83. Reporting error now corrected.
8) On a scale of 1–5, with 5 being the highest.

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

Tons
Tons
Tons

Tons
%

8.9

4.4

9.7

4.4

8.4

3.9

7.0

4.72)

9.1

4.0

2,044
2,083
93

971
111
17

2,621
2,299
110

1,187
122
21

2,756
2,3973)
111

1,448
121
21

3,014
2,7183)
1354)

1,303
126
22

2,995
2,666
142

1,000
107
19

12,935
41

21,356
41

21,855
40

23,776
33

24,165
35

1,000 tons
Tons

1985)
149

2055)
137

2105)
115

2285)
124

–
–

30
12

4.1
3.7
95

18,372
2.7
6.4
–
3.7
3.8

8.9
–

–
–

105
20

4.0
3.8
99

19,241
3.1
7.1
–
3.7
3.7

5.4
0

235
102

7.8
4.8

5.5
9.2

122
134

–
–

74
29

–
–

174
1047)

4.2
4.0
96

20,725
3.2
7.3
–
3.8
3.8

5.6
1

4.2
4.0
100

22,460
3.2
8.0
–
3.8
3.9

7.3
0

4.3
4.1
99

23,613
3.0
10.0
4.0
3.9
3.9

6.2
0

8,189

7,518

8,992

9,899

11,293

19
–
–

654
114

16
–
–

701
140

33
–
–

778
145

32
34
–
297,000
– 1,060,000

812
130

913
149

48,128

42,869

47,311

57,905

56,533

Novo Nordisk Annual Report 2006

Consolidated financial statements
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

16
10
11

13
13

2006

2005

2004

38,743
9,585

29,158

11,608
6,316
2,387
272

9,119

(260)
931
626

9,164

2,712

6,452

20.10
19.99

33,760
9,177

24,583

29,031
8,050

20,981

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

Novo Nordisk Annual Report 2006

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
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 financial statements
Consolidated balance sheet

Note

31 Dec 2006

31 Dec 2005

14
15
16
23
17

18
19

20
17
30

22
23
24
25

27
25

639
20,350
788
1,911
169

23,857

8,400
5,163
385
1,784
1,833
3,270

485
19,941
926
879
169

22,400

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

20,835

19,560

44,692

41,960

674
(39)
28,810
677

709
(61)
26,962
24

30,122

27,634

1,174
1,998
330
911

4,413

338
1,712
788
4,863
2,456

10,157

14,570

1,248
1,846
316
335

3,745

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

10,581

14,326

44,692

41,960

Novo Nordisk Annual Report 2006

Consolidated financial statements
Consolidated cash flow statement and financial resources

DKK million

Net profit

Adjustment for non-cash items:

Income taxes
Depreciation, amortisation and impairment losses
Interest income and interest expenses
Other adjustments for non-cash items

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)

Net cash used in 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

Supplemental information:
Cash and cash equivalents at the end of the year
Bonds with original term to maturity exceeding three months
Undrawn committed credit facilities

Note

2006

2005

2004

6,452

5,864

5,013

2,712
2,142
(73)
959
(3,514)
95

8,773

(804)
(686)
455

7,738

–
175
(419)
111
(2,898)
514

(2,517)

–
(23)
(3,000)
210
(1,945)

(4,758)

463

502

2,483

2,985

2,985
1,001
7,456

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

7,589

–
–
(312)
140
(3,139)
1,310

(2,001)

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

(3,452)

(634)

2,136

154

(480)

2,963

2,483

2,483
1,502
7,461

(14)

2,122

841

2,963

2,963
508
6,694

30
17
26

Financial resources at the end of the year

11,442

11,446

10,165

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

Free cash flow

7,738
(2,517)
514

4,707

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

4,833

7,589
(2,001)
1,310

4,278

Novo Nordisk Annual Report 2006

Consolidated financial statements
Consolidated statement of changes in equity

Share
capital

Treasury
shares

Share
premium
account

Retained
earnings

DKK million

2006

Balance at the beginning of the year

709

(61)

–

26,962

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

Share-based payment
Purchase of treasury shares
Sale of treasury shares
Reduction of the B share capital
Dividends

Balance at the end of the year

–

(35)

–

(15)
2
35

–

6,452

6,457

113
(2,985)
208

(1,945)

Other comprehensive income

Total

Exchange

Deferred
rate gain/loss on
cash flow
hedges

adjust-
ments

Other
adjust-
ments

142

(345)

227

27,634

345
420

765

(126)

345
420
(121)

658

6,452

765

(126)

7,110

113
(3,000)
210
–
(1,945)

At the end of the year proposed dividends (not yet declared) of DKK 2,221 million are included in Retained earnings. No dividend is declared on treasury shares.

674

(39)

–

28,810

156

420

101

30,122

2005

Balance at the beginning of the year

709

(45)

2,565

22,671

Net income recognised directly in equity for the year

Net profit for the year

Total income for the year

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

(40)

182

461

183

26,504

(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 (declared in 2006) 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.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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.

The Financial statements of the Parent company, Novo Nordisk A/S are in-

cluded on the attached cd-rom and are available at www.novonordisk.com.

Effects of new accounting pronouncements
In 2006 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 2006.

In 2006 the following standards and interpretations were implemented in

accordance with the effective date 1 January 2006:
n Amendment to IAS 21 ‘The Effects of Changes in Foreign Exchange Rates’

The implementation of this standard did not result in any changes to amounts
reported for 2006 or prior periods.

The following standards and interpretations were implemented before the

effective date 1 January 2007:
n IFRS 7 ‘Financial Instruments: Disclosures’
n Amendment to IAS 1 ‘Presentation of Financial Statements – Capital

Disclosures’

The implementation of IFRS 7 ‘Financial Instruments: Disclosures’ and Amend-
ment to IAS 1 ‘Presentation of Financial Statements – Capital Disclosures’ has
resulted in increased disclosure regarding the Group’s financial instruments and
policies for managing capital (see notes 19 and 32).

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 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 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.

Novo Nordisk Annual Report 2006

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

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

measured reliably.

These conditions are usually met by the time the products are delivered to the
customers.

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.

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 rec-
ognised directly in 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 applies the hedge accounting requirements to interest rate
swaps hedging forecasted transactions. Consequently, the fair value on interest
rate adjustments of these contracts is recognised in equity.

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.

Summary of significant accounting policies (continued)

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
Financial 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.

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

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 and financial derivatives’, 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.

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

Consolidated financial statements
Notes – Accounting policies

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

testing.

Other intangible assets
Patents and licences that include acquired patents and licences to in-process
research and development projects and other intangibles are carried at his-
torical cost less accumulated amortisation and any impairment loss.

Internal development costs and the related software in connection with

major IT projects for internal use are capitalised under Other intangible assets.

Amortisation is provided under the straight-line method over the estimated
useful life of the asset (up to 10 years). For the patents and in-process research
and development projects the amortisation starts when the products are put
into use.

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 asset’s
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.

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.

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

translated at the exchange rates at the balance sheet date.

associated companies.

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.

Impairment of assets
The Group assesses the carrying amount of 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.

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Accounting policies

Summary of significant accounting policies (continued)

This impairment test is based upon management’s projections and antici-
pated 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 and the useful lives of the underlying assets.

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. The cash-
generating-units are the smallest group of identifiable assets that generates
cash inflows from continuing use which are largely independent of the cash
inflows from other assets or groups of assets.

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 included
in ‘Other financial assets’ unless Management intends to dispose of the invest-
ment 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.

Novo Nordisk Annual Report 2006

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 income 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.

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.

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.

Summary of significant accounting policies (continued)

2 Changes in the scope of consolidation

Consolidated financial statements
Notes – Accounting policies

In 2006, no changes in the scope of consolidation occurred.

In January 2005, Novo Nordisk completed the acquisition of a business unit
from Aradigm Corporation related to the AERx ® insulin Diabetes Management
System (iDMS). 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 were included in the consolida-
tion as from 26 January 2005.

In 2004, no changes in the scope of consolidation occurred.

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.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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
assumptions 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 time lag 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 US market has the most complex arrangements for rebates, discounts
and allowances. A reconciliation of gross sales to net sales for North America is
as follows:

DKK million

Gross sales

Gross-to-net sales adjustments:
Prime vendor charge-backs
Managed health care rebates
Medicaid and Medicare rebates
Cash discounts
Sales returns
Other rebates and allowances

2006

2005

2004

17,196

13,893

10,748

(2,074)
(1,073)
(1,186)
(310)
(116)
(157)

(1,729)
(798)
(1,161)
(244)
(105)
(324)

(1,508)
(511)
(746)
(177)
(132)
(196)

Total gross-to-net sales adjustments

(4,916)

(4,361)

(3,270)

Net sales

12,280

9,532

7,478

The carrying amount of sales rebate accruals and provisions is DKK 1,847 million
at 31 December 2006; 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 4,104 million at 31 December 2006.

Allowances for doubtful trade receivables
Trade receivables are stated at amortised cost less allowances for potential
losses on doubtful trade receivables.

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 con-
centrations, 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 459 million at 31 December 2006.

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 1,911 million and DKK 1,998 million respectively at 31
December 2006.

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 statis-
tical 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 609 million at

31 December 2006.

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.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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 denom-
inator 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 2006

Consolidated financial statements
Notes – Consolidated income statement

Segment information

Primary reporting format – Business segments

At 31 December 2006, the 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
Modern insulins (insulin analogues)
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)

Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy (HRT)
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.

2006

2005

2004

Diabetes care

10,825
15,057
1,984

7,298
15,006
1,708

4,507
14,383
1,643

27,866

24,012

20,533

27,866
16.1%
17.0%
4,982

24,012
16.9%
15.9%
4,055

20,533
11.1%
14.7%
3,404

3,898
1,632
45
2,499
–
17,606
29,714
7,470

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

Geographical segments

2006

2005

2004

2006

2005

2004

DKK million

Sales

Change in DKK (%)
Change in local currencies (%)

Additions to property, plant and equipment and intangible assets (net)
Property, plant and equipment
Total assets

Europe

13,447
8.3%
7.6%
2,332
16,946
32,523

14,708
9.4%
9.2%
2,065
16,765
35,232

North America

12,411
6.1%
5.9%
2,831
16,519
31,198

12,280
28.8%
29.4%
460
1,480
3,819

9,532
27.5%
26.7%
801
1,212
4,205

7,478
20.2%
31.9%
133
425
2,725

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated income statement

Secondary reporting format – Geographical segments

The Group operates in four main geographical areas (the secondary reporting
format):

Europe: EU, EFTA
North America: USA and Canada
Japan & Oceania: Japan, Australia and New Zealand
International Operations: All other countries

Sales are attributed to geographical segments based on the location of the
customer. There are no sales between segments.

Total assets and additions to property, plant and equipment and intangible

assets are based on the location of the assets.

The segments and regions are the same as those used for internal reporting,
allowing a reliable assessment of risk and returns.

2006

2005

2004

2006

2005

2004

2006

2005

2004

Biopharmaceuticals

Corporate/unallocated

Total

5,635
3,309
1,607
326

10,877

10,877
11.6%
12.7%
4,137

5,064
2,781
1,565
338

9,748

9,748
14.7%
14.2%
4,033

4,359
2,317
1,488
334

8,498

8,498
10.6%
15.4%
3,576

(260)
305

319
(173)

(117)
594

2,712

2,370

2,444

2,418
291
–
509
–
3,684
6,783
2,269

1,908
309
–
727
–
3,625
6,566
1,959

1,420
254
6
583
–
3,185
5,644
1,581

–
40
134
1
112
2,567
8,195
4,831

–
4
–
4
–
1,273
6,910
5,732

–
–
–
–
18
1,229
6,792
4,560

10,825
15,057
1,984

7,298
15,006
1,708

4,507
14,383
1,643

27,866

24,012

20,533

5,635
3,309
1,607
326

10,877

38,743
14.8%
15.7%
9,119

(260)
305
9,164
2,712

6,452

6,316
1,963
179
3,009
112
23,857
44,692
14,570

5,064
2,781
1,565
338

9,748

33,760
16.3%
15.4%
8,088

319
(173)
8,234
2,370

5,864

5,085
1,759
171
4,241
–
22,400
41,960
14,326

4,359
2,317
1,488
334

8,498

29,031
11.0%
14.9%
6,980

(117)
594
7,457
2,444

5,013

4,352
1,566
326
3,235
18
19,684
37,433
10,929

2006

2005

2004

2006

2005

2004

2006

2005

2004

International Operations

Japan & Oceania

7,086
16.7%
17.2%
465
1,897
4,618

6,070
25.3%
22.2%
1,088
1,546
4,212

4,844
14.6%
20.7%

252
376
2,387

4,669
(0.9%)
5.0%
19
208
1,023

4,711
9.6%
10.5%
20
237
1,020

4,298
7.0%
9.0%
19
239
1,123

38,743
14.8%
15.7%
3,009
20,350
44,692

Total

33,760
16.3%
15.4%
4,241
19,941
41,960

29,031
11.0%
14.9%
3,235
17,559
37,433

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated income statement

Sales rebate accruals and provisions

7 Depreciation, amortisation and impairment losses

DKK million

2006

2005

2004

DKK million

2006

2005

2004

At the beginning of the year
Additional rebates deducted from sales
Payments and grants of rebates
during the year
Exchange rate adjustments

1,872
2,543

1,031
2,637

745
1,600

(2,372)
(196)

(1,943)
147

(1,258)
(56)

At the end of the year

1,847

1,872

1,031

Specification of sales rebate accruals
and provisions:
Other liabilities
Current provisions

72
1,775

77
1,795

107
924

Included in the Income statement
under the following headings:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses

Total depreciation, amortisation
and impairment losses

1,682
56
302
102

1,525
67
231
107

1,322
226
218
126

2,142

1,930

1,892

Total sales rebate accruals and provisions

1,847

1,872

1,031

Fees to statutory auditors

Employee costs

DKK million

2006

2005

2004

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

10,161
113
761

111
668
962

9,101
223
660

137
584
793

8,119
104
592

100
488
660

Total employee costs

12,776

11,498

10,063

Included in the Income statement
under the following headings:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses

3,656
3,904
2,424
2,055

3,664
3,380
2,095
1,751

3,219
2,868
1,713
1,523

DKK million

2006

2005

2004

Statutory audit
Audit-related services
Tax advisory services
Other services

Total

24
7
16
1

24
6
20
1

17
5
18
3

Licence fees and other operating income (net)

DKK million

2006

2005

2004

Licence fees and settlements
Net income from IT, engineering and
other services
Other income

Total licence fees and other operating
income (net)

148

55
69

164

51
188

382

58
135

272

403

575

Total included in the Income statement

12,039

10,890

9,323

10 Financial income

DKK million

2006

2005

2004

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

660

737

605

608

598

142

740

Interest income
Capital gain on investments etc (net)
Foreign exchange gain (net)
Foreign exchange gain on derivative
financial instruments (net)

Total employee costs

12,776

11,498

10,063

Total financial income

For information on remuneration to the Board of Directors and
Executive Management, please refer to note 35.

11 Financial expenses

Average number of full-time employees
Year-end number of full-time employees

22,590
23,172

21,146
22,007

19,520
20,285

DKK million

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

Novo Nordisk Annual Report 2006

369
153
–

409

931

210
–
288

–

498

235
–
–

663

898

2006

2005

2004

296
–
268

–
62

626

254
20
–

328
69

671

107
12
130

–
55

304

Consolidated financial statements
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 – current tax
Adjustments related to previous years – deferred tax

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 change in the Danish tax rate in 2005
Other

2006

2,832
(213)

2,619
964
(871)

2,712

4
125

129

28.0%
2.1%
(0.4%)
–
(0.1%)

2005

2,389
40

2,429
(45)
(14)

2,370

18
(70)

(52)

28.0%
3.6%
(1.6%)
(0.7%)
(0.5%)

2004

2,293
125

2,418
34
(8)

2,444

–
8

30.0%
3.8%
(0.5%)
–
(0.5%)

Effective tax rate

29.6%

28.8%

32.8%

13 Earnings per share

Net profit

DKK million

2006

6,452

2005

5,864

2004

5,013

Average number of shares outstanding
Dilutive effect of outstanding options ‘in the money’

in 1,000 shares
in 1,000 shares

320,931
1,763

327,711
1,223

336,628
1,482

Average number of shares outstanding incl dilutive effect of options ‘in the money’

in 1,000 shares

322,694

328,934

338,110

Basic earnings per share
Diluted earnings per share

DKK
DKK

20.10
19.99

17.89
17.83

14.89
14.83

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated balance sheet

14 Intangible assets

DKK million

2006
Cost at the beginning of 2006
Additions during the year
Disposals during the year
Exchange rate adjustments

Cost at the end of 2006

Amortisation and impairment losses at the beginning of 2006
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 2006

Carrying amount at the end of 2006

2005
Cost at the beginning of 2005
Changes in consolidation
Reclassifications
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
Reclassifications
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

Goodwill

Patents and
Licences etc

Other
intangible
assets

82
–
–
–

65
–
–
–

314
–
(45)
11
(276)
78

289
(20)
–
(276)
72

297
194
(2)
(3)

486

13
9
–
–

464

177
–
(1)
122
(1)
–

297

8
(1)
8
(1)
(1)

284

470
28
(3)
(4)

491

286
54
(3)
(4)

333

158

327
8
46
89
(3)
3

470

207
21
57
(3)
4

286

184

Total

849
222
(5)
(7)

1,059

364
63
(3)
(4)

420

639

818
8
–
222
(280)
81

849

504
–
65
(280)
75

364

485

Novo Nordisk Annual Report 2006

15 Property, plant and equipment

DKK million

2006
Cost at the beginning of 2006
Additions during the year
Disposals during the year
Transfer from/(to) other items
Exchange rate adjustments

Cost at the end of 2006

Depreciation and impairment losses at the beginning of 2006
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 2006

Consolidated financial statements
Notes – Consolidated balance sheet

Land and
buildings

Plant and
machinery

Other
equipment

Total

Payments on
account and
assets in
course of
construction

10,017
285
(90)
1,389
(76)

12,670
400
(770)
1,810
(44)

11,525

14,066

2,817
486
15
(62)
(25)

3,231

5,957
1,188
164
(593)
(39)

6,677

2,492
184
(165)
148
(36)

2,623

1,659
226
–
(125)
(29)

1,731

5,195
2,029
–
(3,347)
(102)

30,374
2,898
(1,025)
–
(258)

3,775

31,989

–
–
–
–
–

–

10,433
1,900
179
(780)
(93)

11,639

Carrying amount at the end of 2006

8,294

7,389

892

3,775

20,350

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

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

3,997
235
3,397
–
(2,525)
91

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

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated balance sheet

16 Investments in associated companies

18 Inventories

DKK million

2006

2005

DKK million

Raw materials and consumables
Work in progress
Finished goods

Total inventories

Indirect production costs included in work
in progress and finished goods

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

Trade receivables (net) are equal to an
average credit period of (days)

Overdue by:
Between 1 and 179 days
Between 180 and 359 days
More than 360 days

Total trade receivables (gross)

20 Other receivables

DKK million

Prepayments
Interest receivable
Amounts owed by affiliated companies
Other receivables

Total other receivables

2006

2005

1,088
4,697
2,615

1,131
4,581
2,070

8,400

7,782

4,104

3,536

443

548

146

2006

2005

5,622

5,213

419
55
(15)

459

369
72
(22)

419

4,319

4,111

873
184
246

815
127
160

5,622

5,213

2006

2005

835
34
99
816

522
53
94
786

1,784

1,455

Total trade receivables

5,163

4,794

2006

2005

Trade receivables (gross) can be specified as follows:
Not due

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)
– Innate Pharma SA (Euronext symbol: IPH)

1,825
(782)
4,272
1,942

(260)

788

1,948
(446)
4,828
2,051

319

926

1,842
219

2,248
–

In 2006 Novo Nordisk acquired additional shares in the French company Innate
Pharma SA and at the end of the year holds 19% of the share capital. As
Novo Nordisk and Innate Pharma SA furthermore have a research and develop-
ment collaboration Innate Pharma SA is considered an associated company of
Novo Nordisk.

In 2006, Novo Nordisk’s share of profit/(loss) in associated companies includes
unrealised capital loss amounting to DKK 16 million net related to Zymo-
Genetics, Inc. In 2005, Novo Nordisk’s share of profit/(loss) in associated com-
panies included unrealised capital gains amounting to DKK 186 million net
related to ZymoGenetics, Inc. In 2005 Novo Nordisk divested all of its share-
holding in Ferrosan A/S and recorded a gain of DKK 260 million.

The carrying value of investments in associated companies include intangible
assets and goodwill amounting to DKK 82 million at the end of the year
(DKK 13 million in 2005).

Please refer to page 101 for a list of Novo Nordisk’s associated companies.

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:
– Listed shares
– Unlisted shares
– Bonds

Loans:
– Amounts owed by affiliated companies
– Amounts owed by third parties

814

198

9
91
1,001

36
51

85
56
1,502

50
–

Total financial assets

2,002

1,891

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

169
1,833

169
1,722

2,002

1,891

(27)

–
–
–

1,001
0.7
2.9%

Novo Nordisk Annual Report 2006

21 Share capital

DKK million

Development in share capital:
A share capital
B share capital

At the end of the year

Consolidated financial statements
Notes – Consolidated balance sheet

2006

2005

107
567

674

107
602

709

The A share capital remained unchanged at DKK 107 million from 2002 to 2006. In 2006 the B share capital was reduced by DKK 35 million from DKK 602 million to
DKK 567 million. The B share capital remained 602 million from 2002 to 2005.

At the end of 2006 the share capital amounted to DKK 107,487,200 in A share capital (equal to 53,743,600 shares of DKK 2) and DKK 566,432,800 in B share capital
(equal to 283,216,400 shares of DKK 2).

Treasury shares:
Holding at the beginning of the year
Cancellation of treasury shares
Holding of treasury shares, adjusted for cancellation
Purchase during the year
Sale during the year
Value adjustment

Number of B
shares of DKK 2

As % of share
capital before
cancellation

As % of share
capital after
cancellation

Market value
DKK million

30,979,219
(17,734,160)
13,245,059
7,468,957
(1,000,947)

8.73%
(5.00%)
3.73%

3.93%
2.22%
(0.30%)

10,984
6,288
4,696
3,000
(210)
1,799

Holding at the end of the year

19,713,069

5.85%

9,285

Acquisition of treasury shares during the year is part of the share buy-back programme of up to DKK 6 billion worth of Novo Nordisk B shares announced in January
2006, which was initiated in order to align the capital structure with the expected development in free cash flow. Sale of treasury shares relates to exercised share
options.

Of the treasury B shareholding at the end of the year 5,421,309 shares are regarded as hedge for the share-based incentive schemes.

22 Long-term debt

DKK million

Mortgage debt and other secured loans *)

Unsecured loans and other long-term loans **)

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

Adjustment of the above loans to market value at year-end 2006 would result in a loss of DKK 6 million (a gain of DKK 14 million in 2005).

*) Terms to maturity between 2008 – 2016 and a weighted average interest rate of 4.07%
**) Terms to maturity between 2010 – 2011 and a weighted average interest rate of 5.46%

2006

2005

658

516

659

589

1,174

1,248

159
1
1
510
503

1,174

3
657
510
–
4

16
158
–
–
1,074

1,248

3
656
570
12
7

1,174

1,248

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated balance sheet

23 Deferred income tax assets and 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)

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
Intangible assets
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)

(188)
(904)
–
(1,561)
(110)
(7)
(915)

(3,685)

1,425
141
1,149
–
–
–
1,057

3,772

1,774

(1,774)

(1,911)

1,998

2006
Total

1,237
(763)
1,149
(1,561)
(110)
(7)
142

–

2006

2005

967
(213)
(871)
125
79

Assets

Liabilities

(147)
(321)
–
(1,861)
(87)
(14)
(443)

(2,873)

1,371
102
998
–
–
–
1,369

3,840

1,994

(1,994)

(879)

1,846

1,084
40
(14 )
(70)
(73)

967

2005
Total

1,224
(219)
998
(1,861)
(87)
(14)
926

967

–

967

Unremitted earnings have been retained by subsidiary companies for reinvestment. No provision is made for income taxes that would be payable upon the distribution
of such earnings. If the earnings were remitted, an immaterial income tax charge would result, based on the tax statutes currently in effect.

No deferred tax has been calculated on differences associated with investments in subsidiaries, branches and associates as the differences by nature are permanent
differences. However, deferred tax has been calculated if the differences are tax deductible.

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 214
million (DKK 137 million in 2005) have not been recognised in the Balance sheet. Hereof DKK 27 million expire within three years.

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated balance sheet

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.

24 Provisions for pensions

Most employees in the 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.

DKK million

2006

2005

DKK million

2006

2005

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

875
–
107
30
7
(2)
(26)
(5)
(48)

609
70
104
27
77
(11)
(27)
(7)
33

Present value of defined benefit obligations
at the end of the year

938

875

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

648
290

938

435
–
16
3
65
(17)
9
(16)

495

576
299

875

313
53
15
(6)
72
(21)
6
3

435

The Group expects to contribute DKK 74 million to its defined benefit pension
plans in 2007.

The major categories of assets held as a
percentage of total plan assets are as follows:
Equities
Bonds
Cash at bank
Property

27%
56%
12%
5%

50%
30%
18%
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

648
(495)

153

290
(110)
(3)

330

576
(435)

141

299
(120)
(4)

316

219
(39)

180

227
(57)

170

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
Curtailment/settlement gains
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

107
30
(16)
4
(18)
4

111

104
27
(15)
2
–
19

137

2.0% to 6.0%
1.0% to 6.0%
2.0% to 4.0%
2.0% to 13.0%
2.0% to 3.0%

For all major defined benefit plans actuarial computations and valuations are
performed annually.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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

496
269
–
(156)
–

609

–
609

609

1,795
2,289
–
(2,121)
(188)

1,775

–
1,775

1,775

428
634
(19)
(42)
(18)

983

911
72

983

2006
Total

2,719
3,192
(19)
(2,319)
(206)

2005
Total

1,718
2,673
(5)
(1,852)
185

3,367

2,719

911
2,456

3,367

335
2,384

2,719

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 notes 3 and 5 for further information on rebates deducted from sales.

Other provisions:
Other provisions consist of various types of provisions including provisions for legal disputes, which represents management’s best estimate. Refer to note 37, Commit-
ments and contingencies for further information.

26 Short-term debt and financial derivatives

27 Other liabilities

DKK million

2006

2005

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

285
12
41

338

18
196
57
11
56

338

820
25
599

1,444

61
199
986
25
173

1,444

At year-end, the Group had undrawn committed credit facilities amounting to
DKK 7,456 million (DKK 7,461 million in 2005). 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.

2006

1,857
447
81
86
2,392

4,863

2005

1,734
463
83
55
2,242

4,577

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Consolidated cash flow and financial resources

28 Other adjustments for non-cash items

31 Appropriation of net profit incl proposed dividends

for the Parent company

DKK million

2006

2005

2004

Proposed appropriation of net profit
in the Parent company, Novo Nordisk A/S:
Dividends
Net revaluation reserve according
to the equity method
Retained earnings

2,221

1,945

1,594

5,472
(1,246)

3,898
15

3,377
35

Net profit

6,447

5,858

5,006

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

674
–

15,932
13,342
156

709
–

709
2,565

10,460
16,310
142

6,562
16,701
(40)

Total equity

30,104

27,621

26,497

Dividends per share

7.00

6.00

4.80

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 2006 of
Novo Nordisk A/S are DKK 5 million (DKK 6 million in 2005) and DKK 18 million
(DKK 13 million in 2005) respectively lower than the net profit and equity of the
Group.

*) In accordance with changes in the Danish Companies Act, the Share premium account

was transferred to Retained earnings.

DKK million

2006

2005

2004

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, including difference between average
exchange rate and year end exchange rate

113
889

134
65

(7)
(143)
244

223
890

(64)
72

37
96
127

(186)

(352)

(86)

104
501

104
(10)

(8)
204
212

(95)

Other adjustments for non-cash items

959

1,109

1,018

29 Cash flows from acquisition of subsidiaries and business units

DKK million

2006

2005

2004

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)

–
–
–
–
–

–

30 Cash and cash equivalents

DKK million

2006

2005

2004

Cash at the end of the year

3,270

3,303

3,433

Short-term bank loans and overdrafts
at the end of the year (refer to note 26)

(285)

(820)

(470)

Cash and cash equivalents
at the end of the year

2,985

2,483

2,963

At the end of 2006, 2005 and 2004 there were no marketable securities with
original maturity of less than three months.

Novo Nordisk Annual Report 2006

The financial instruments included in the foreign exchange sensitivity analysis
are the Group’s cash, accounts receivable and payable, short- and long-term
loans, short- and long-term financial investments, foreign exchange forwards
and foreign exchange options hedging transaction exposure. Furthermore,
interest rate swaps and cross-currency swaps are included. Not included are
anticipated currency transactions, investments and fixed assets. Cross-currency
swaps hedging translation exposure are excluded from the sensitivity analysis,
as the effects of changing exchange rates hereon are recognized directly under
shareholders’ funds.

Novo Nordisk only hedges partially invested equity in major foreign affiliates.
Equity hedging takes place using long-term cross-currency swaps. At the end of
2006, hedged equity made up 14% of the Group’s JPY equity. At the end of
2005 20% of the Group’s JPY equity was hedged.

Interest rate risk
Changes in the interest rates have a limited effect on Novo Nordisk’s financial
instruments. At the end of 2006 an increase in the interest rate level of one
percentage point would, everything else being equal, increase the fair value of
Novo Nordisk’s financial instruments with DKK 53 million (DKK 51 million in
2005).

DKK and EUR interest rates rose steadily during the first half of 2006, and
continued at a more moderate pace in the second half of 2006. The Danish
2-year bond yield was 3.94% at the end of 2006, up from 2.86% at the end
of 2005.

The financial instruments included in the sensitivity analysis consist of
marketable securities, deposits, short- and long-term loans, interest rate swaps
and cross currency swaps. Not included are foreign exchange forwards and
foreign exchange options due to the limited effect that interest rate changes
have on these instruments.

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.

Capital management
Novo Nordisk’s capital structure is characterized by a substantial equity ratio.
This is in line with the overall capital structure of the pharmaceutical industry
and reflects the need for long term decision horizons in an industry with more
than 10 years development time for new products.

Novo Nordisk’s equity ratio, calculated as equity to total liabilities, was

67.4% by the end of the year (65.9% at the end of 2005).

Consolidated financial statements
Notes – Additional information

32 Financial risk

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.

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.

USD depreciated during 2006 versus DKK ending with a 10.5% decrease. In
2005 the USD increased by 15.7% versus DKK. In 2006 the JPY depreciated by
11.5% whereas the GBP appreciated by 2.0%, both versus DKK. In 2005 the
JPY and the GBP appreciated by 1.8% and 3.7% respectively versus DKK.

At year-end 2006 Novo Nordisk has covered the foreign exchange exposures
on the Balance sheet together with 16 months of expected future cash flow
in USD. For JPY and GBP the equivalent cover was 12 months and 11 months
of expected future cash flow respectively. At the end of 2005 the USD cover
was 12 months, and for JPY and GBP the cover was 11 months and 10 months
respectively.

A 5% change in the following currencies will have an impact on operating

profit in 2007 of approximately:

DKK million

USD
JPY
GBP
USD-related currencies

Estimated
for
2007

Estimated
for
2006

400
150
90
110

350
150
90
100

At the end of 2006 a 5% increase in all other currencies versus EUR and DKK
would result in a decrease of the value of the net financial instruments of the
Group, of approximately DKK 644 million (DKK 546 million in 2005). A 5%
decrease in all other currencies versus EUR and DKK would result in an increase
of the value of the net financial instruments of the Group of approximately DKK
693 million (DKK 570 million in 2005).

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

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 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 Group has had the following material transactions with related parties:

DKK million

Novo A/S
Services provided by the Group
Facilitation provided by Novo A/S
Purchase of treasury shares

The Novozymes Group
Services provided by the Group
Services provided by the Novozymes Group

Associated companies
Purchased intangible assets, fees and royalties etc
paid to associated companies by Novo Nordisk

2006
Purchase/
(sale)

2005
Purchase/
(sale)

(14)
40
1,835

(12)
35
646

(207)
157

(248)
142

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.

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

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 425 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 –2006 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 2006, 1,114,542 options were granted. This corresponds to 100% of the
maximum number of options available for grant. The exercise price is 350. 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 Senior Manage-
ment Board, where the granting of the options was subject to the successful
and timely completion of the demerger. The options are exercisable three years
after the issue date and will expire after six years. The exercise price 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 until 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 partic-
ipant, whereas the launch-share options could be exercised within a period of
three years until 31 January 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
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:

2006

2005

2004

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 80,185 with
an average exercise price of DKK 98 per share of DKK 10 and a market value of
DKK 31 million. These options are hedged by the Group’s holding of Novozymes
A/S B shares.

As from 2007 it has been decided to replace stock options for all eligible
employees with a share based incentive plan in line with the plan for senior
executives (see the description below). The maximum contribution per partici-
pant will correspond to 4 months’ salary.

Long-term share-based incentive programme
As from 2004, the 5 members of Executive Management and 22 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 2006, the allocation to
the bonus pool amounts to DKK 46 million, corresponding to 8 months’ salary.
This amount was expensed in 2006. The cash amount has been converted into
130,750 Novo Nordisk B shares using a share price of DKK 350, equal to the
average trading price for Novo Nordisk B shares on the Copenhagen Stock
Exchange from 29 January to 12 February 2006. Based on the split of partici-
pants 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,

2005 and 2006 now amounts to 373,107 shares.

As the long-term share-based incentive programme is evaluated by the Board
of Directors to have worked successfully since 2004, it will continue in 2007
with an unchanged structure.

Expected life of the option in years (average)

15%

6.00

35%

4.80

17%

7.00

3.60%

3.25%

3.50%

390

320

288

471

355

299

113

223

104

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

Share-based payment expensed
in the Income statement

Novo Nordisk Annual Report 2006

34 Share-based payment schemes (continued)

Outstanding share options in Novo Nordisk

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

Granted in respect of 2006 (issued on 31 January 2007)
Exercised in 2006:

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
of 2001 Ordinary share option plan
of 2002 Launch-share option plan
of 2005 Employee share options

Expired/cancelled in 2006
Value adjustment

Outstanding at the end of 2006

*) The market value has been calculated using the Black-Scholes model with the parameters existing at year-end 2006.

Consolidated financial statements
Notes – Additional information

Average exercise
price per option
DKK

Market value
per option
DKK

Market
value
DKK million

Share options

4,037,703

809,416

(5,500)
(55,083)
(99,166)
(143,083)
(92,280)
(6,356)

4,445,651

820,234
113,540

(9,500)
(51,500)
(103,667)
(91,624)
(134,040)
(13,208)

216

267

190
125
198
198
198
216

227

306
0

190
125
198
198
198
227

104

75
75
75
75
75
75

57
312

99
99
99
99
99
99

4,975,886

238

127

1,114,542

350

190
(13,500)
125
(80,750)
(135,200)
198
(140,208) 198
198
(422,940)
332
(141,800)
332
(18,000)
0
(175)
238
(89,653)

5,048,202

268

127
127
127
127
127
127
127
127
127

222

307

(1)
(4)
(7)
(11)
(7)
(1)
79

439

47
35

(1)
(5)
(10)
(9)
(13)
(1)
152

634

(2)
(10)
(17)
(18)
(54)
(18)
(2)
0
(11)
519

1,120 *)

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

34 Share-based payment schemes (continued)

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
2002 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
26,024

(77,500)
(259,083)
(389,033)
(374,915)
(141,800)
(649,260)
–
(18,000)

(27,000)
(50,917)
(77,167)
(23,252)
(43,394)
–
–
–

0
45,000
221,300
364,833
499,786
69,340
10,764
8,024

Exercisable at the end of 2006

3,350,368

(1,909,591)

(221,730)

1,219,047

2003 Ordinary share option plan
2004 Ordinary share option plan
2005 Ordinary share option plan
2005 Employee share options
2006 Ordinary share option plan

1,092,500
809,416
820,234
113,540
1,114,542

–
–
–
(175)
–

(38,833)
(36,500)
(30,484)
(15,085)
–

1,053,667
772,916
789,750
98,280
1,114,542

Outstanding at the end of 2006

7,300,600

(1,909,766)

(342,632)

5,048,202

Average market price of Novo Nordisk B shares per trading period in 2006

February
May
August
November

Total exercised options

190
125
198
198
332
198
332
322

195
267
306
0
350

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
31/1 2010 – 30/1 2015

Average
market price
DKK

350
388
405
445

Exercised
share
options

282,551
259,790
213,867
196,365

952,573

*) For 3,750 1998 Ordinary share option plan and 35,560 2000 Launch-share option plan, the Board of Directors has extended the exercise period to 3 August 2007.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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 112–114 of the Annual
Report.

Remuneration
It is the policy of Novo Nordisk that remuneration to the Board of Directors (11 in total), Executive Management (5 in total) and the Senior Management Board (22 in
total) must be at a competitive level compared to other major Danish companies and similar international pharmaceutical companies. Except for regulations of amounts,
no changes in the application of the policy is expected in 2007.

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 2006, the base fee was DKK 300,000. The R&D facilitator role is paid a fee according to the
actual number of working days used. In addition to the fee the members’ costs in connection with participation in the meetings and education, 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, until 8 March 2006)
Sten Scheibye (Chairman of the Board, from 8 March 2006,
Vice chairman of the board)
Göran A. Ando (Vice chairman of the board and R&D facilitator,
from 8 March 2006, board member until 8 March 2006)
Kurt Anker Nielsen (Chairman of the Audit Committee)
Other Board of Directors/Audit Committee members

Total

Board of
Directors

Audit
Committee

2006
Total

Board of
Directors

Audit
Committee

2005
Total

0.2

0.7

0.6
0.3
2.4

4.2

–

–
0.4
0.3

0.7

0.2

0.7

0.6
0.7
2.7

4.9

0.8

0.5

0.2
0.3
2.0

3.8

–

–
0.4
0.3

0.7

0.8

0.5

0.2
0.7
2.3

4.5

Executive Management and the 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, phone etc. 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

2006
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

5.7
3.1
0.7
2.9
5.5
3.1

21.0

39.8

2.1
0.9
0.6
0.9
1.6
0.8

6.9

2.0
1.0
0.4
1.0
1.2
1.0

6.6

11.3

10.7

0.3
0.3
0.1
0.3
1.6
0.3

2.9

5.3

–
–
–
–
–
–

–

45.8

10.1
5.3
1.8
5.1
9.9
5.2

37.4

67.1

45.8

Bonus paid out in 2006 related to performance in 2005.
In addition, Lars Almblom Jørgensen has received severance package in 2006 amounting to DKK 16.5 million.

*)
**)
***) The total remuneration in 2006 is reflecting costs in relation to Kåre Schultz’ expatriation to Switzerland. Out of the total remuneration approximately 20% is related to cost compensation

and associated tax effects of being expatriated.

****) 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 2006

Consolidated financial statements
Notes – Additional information

35 Management‘s remuneration, share options and shareholdings (continued)

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

–
–
–
–
–
–

–

9.2
4.8
4.8
4.8
5.7
4.5

33.8

55.9

35.5

Bonus paid out in 2005 related to performance in 2004.

*)
****) 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.

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 11.7 million and DKK 23.4 million.

Lars Rebien Sørensen serves as a member of the Board of Directors of ZymoGenetics, Inc and Scandinavian Airlines until 20 April 2006 and retains the remuneration
received from Scandinavian Airlines, which amounts to SEK 83 thousand in 2006 (SEK 300 thousand in 2005) but does not retain the compensation from ZymoGenetics,
Inc. Lars Rebien Sørensen furthermore serves as a member of the Supervisory Board of Bertelsmann AG and retains the remuneration of EUR 58 thousand in 2006
(EUR 41 thousand in 2005). Lise Kingo serves as a member of the Board of Directors of GN Store Nord and retains the remuneration of DKK 200 thousand (DKK 200
thousand in 2005). Mads Krogsgaard Thomsen serves as a member of the Board of Directors of Cellartis and DTU and retains the remuneration of SEK 50 thousand
(SEK 0 in 2005) from Cellartis and DKK 50 thousand (DKK 0 in 2005) from DTU.

Management‘s share options

Share options in Novo Nordisk

Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen

Executive Management in total

Former member of Executive Management **):
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
37,520
28,750
65,280

52,000
22,750
17,020
–
20,000

312,330

111,770

37,840

–
–
–
–
–

–

63,500
42,530
20,500
28,750
45,280

200,560

–

15.7
10.8
5.2
7.0
11.7

50.4

–

Senior Management Board in total ****)

433,744

189,230

28,525

273,039

65.6

Total

783,914

338,840

28,525

473,599

116.0

Calculation of market values at year-end has been based on the Black-Scholes option pricing model applying the assumptions shown in note 34.

*)
**) Kurt Anker Nielsen is now member of the Board of Directors.
***)
****) Additions during the year cover the holdings of share options by Senior Management Board members appointed in 2006.

In addition, Kurt Anker Nielsen has share options in Novo Nordisk, issued by Novo A/S. At the end of 2006, 21,000 of these options were outstanding.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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:
Sten Scheibye
Göran A. Ando
Anne Marie Kverneland
Henrik Gürtler
Johnny Henriksen
Jørgen Wedel
Kurt Anker Nielsen
Kurt Briner
Niels Jacobsen
Stig Strøbæk
Søren Thuesen Pedersen

Board of Directors in total

Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
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 **)

Total

At the beginning
of the year

Purchased
during the year

Sold
during the year

At the end Market value *)
DKK million
of the year

400
–
1,660
–
360
5,555
27,612
–
11,000
160
260

–
–
–
–
–
–
37,840
–
–
–
–

–
–
–
–
30
1,555
25,000
–
–
–
–

400
–
1,660
–
330
4,000
40,452
–
11,000
160
260

47,007

37,840

26,585

58,262

3,860
160
1,615
160
160

52,000
22,750
17,020
–
20,000

55,450
22,750
17,020
–
20,000

5,955

111,770

115,220

410
160
1,615
160
160

2,505

0.2
–
0.8
–
0.2
1.9
19.0
–
5.1
0.1
0.1

27.4

0.2
0.1
0.7
0.1
0.1

1.2

39,473

187,570

197,190

29,853

14.1

242,357

130,750

–

373,107

334,792

467,930

338,995

463,727

175.5

218.2

*) Calculation of the market value is based on the quoted share prices at the end of the year.
**) The annual allocation to the share bonus pool is locked up for three years before it is transferred to the participants employed at the end of each three-year period. 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 2006

Consolidated financial statements
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 2006 and 2005 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 gain of DKK 420 million is deferred via equity (a loss of DKK 345 million in 2005). 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 forward contracts

Cross currency and interest rate swaps:
EUR/EUR
EUR/USD

Total cross currency and interest rate swaps

Total hedging of forecasted transactions
qualifying for hedge accounting under IAS 39

2006

2005

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

7,029
1,847
896
357

10,129

319
460

779

254
129
–
20

403

14
20

–
–
17
–

–
–

–

5,941
1,738
807
234

8,720

–
–

–

–
18
–
–

–
–

–

348
–
6
9

363

–
–

–

10,908

437

8,720

363

Financial instruments hedging forecasted transactions qualifying for hedge accounting under IAS 39, but for which hedge accounting is not applied

Cross currency and interest rate swaps:
DKK/DKK
EUR/EUR
EUR/USD
JPY/JPY
JPY/ DKK

Total hedging of forecasted transactions
qualifying for hedge accounting under IAS 39,
but for which hedge accounting is not applied

310
183
44
380
314

–
–
2
2
99

1,231

103

14
1
–
–
–

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

1,536
–

1,536

13
–

–
–

–

310
502
–
430
–

1,242

1,056
835

1,891

Total hedging of forecasted transactions

13,675

553

11,853

–
–
–
–
–

–

3
7

34
8
–
–
–

–
–

–

405

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

36 Derivative financial instruments (continued)

2006

2005

The financial contracts existing at the end of the year (cash flow hedges)
are expected to be recognised in the Income statement within the
following number of months:
USD
JPY
GBP

The cash flows covered by the above financial contracts are expected
to occur within the following number of months:
USD
JPY
GBP

16 months
12 months
11 months

18 months
13 months
13 months

12 months
11 months
10 months

15 months
13 months
12 months

The maturity of the swaps existing at the end of 2006 is December 2007, December 2011 and December 2012 (December 2007, December 2011 and December 2012
at the end of 2005) and the interest margins are (1.46%) to 4.05% ((2.79%) to (0.22%) at year-end 2005).

Hedging of assets and liabilities
The table below shows the fair value of fair value hedging activities for 2006 and 2005 specified by hedging instrument and the major currencies. All changes in fair
values are recognised in the Income statement amounting to a gain of DKK 248 million in 2006 (a loss of DKK 35 million in 2005). As the hedges are highly effective the
net gain or loss on the hedged items is similar to the net loss or gain on the hedging instruments.

DKK million

Forward contracts, net sales:
USD
JPY
GBP
Other

Total forward contracts

Cross currency swaps:
EUR/USD
JPY/ DKK

Total currency swaps

2006

2005

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

3,137
810
312
1,795

6,054

–
–

–

166
86
–
5

257

–
–

–

–
–
9
–

–
–

–

2,399
531
273
204

3,407

504
314

818

4,225

–
14
–
–

61
84

145

159

185
–
4
5

194

–
–

–

194

Total hedging of assets and liabilities

6,054

257

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 2006

Consolidated financial statements
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 2006 and 2005 specified by hedging instrument and the
major currencies. All changes in fair values relating to currency are recognised directly under equity, amounting to DKK 4 million in 2006 (DKK 10 million in 2005). All
changes relating to interest rates are recognised in the Income statement, amounting to DKK 0 million in 2006 (DKK 1 million in 2005).

DKK million

Cross currency swaps:
JPY/ DKK

Total hedging of net investments in foreign subsidiaries

2006

2005

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

100

–

145

–

The maturity of the swap existing at the end of 2006 is October 2009 (September 2006 at the end of 2005) and the interest margin is 2.94% (2.69% at year-end 2005).

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

2006

2005

Net investment

% covered

Net investment

% covered

1,906
691
159
4,399
3,511

10,666

0%
14%
0%
0%
0%

1,762
716
128
2,114
3,066

7,786

0%
20%
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.

2006

2005

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

Contract
amount
at year-end

Positive
fair values
at year-end

Negative
fair values
at year-end

DKK million

Currency-related instruments:
Forward contracts
Currency options
Cross 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

19,829

814

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

373

437

814

Novo Nordisk Annual Report 2006

16,183
1,536
918

18,637

1,192

660
13
125

798

26
–
–

–

12,127
1,891
963

14,981

1,242

32
10
156

198

–

557
–
–

557

16,223

198

599

170

198

236

363

–

599

Consolidated financial statements
Notes – Additional information

2006

2005

Contingencies

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 46% of the commitments are related
to leases outside Denmark. The lease costs for 2006
and 2005 were DKK 806 million and DKK 752 million
respectively.

Lease commitments expiring within
the following periods as from the
balance sheet date:
Within one year
Between one and two years
Between two and three years
Between three and four years
Between four and five years
After five years

651
553
437
339
286
602

456
386
306
261
332
722

2,868

2,463

Purchase obligations

935

819

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

2,313

1,241

Novo Nordisk has engaged in research and develop-
ment projects with a number of external corporations.
The major part of the obligations comprises fees on the
NovoSeven ® expansion programmes and liraglutide
and AERx ® clinical trials.

Other guarantees

215

255

Other guarantees primarily relate to guarantees issued
by Novo Nordisk in relation to rented property.

Security for debt

2,025

1,791

Land, buildings and equipment etc at carrying amount.

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 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 62 million in 2006 is recognised in the Income
statement.

See note 3 for the principles for making accounting estimates and judgments
about pending and potential future litigation outcomes.

Pending litigation against Novo Nordisk
As of January 2007, Novo Nordisk Inc, along with a majority of the 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 43 individuals (as compared to 37 individuals in January 2006) who
allege to have used a Novo Nordisk hormone therapy product. These products
(Activella ® and Vagifem ®) have been sold and marketed in the US since 2000.
Until July 2003, the products were sold and marketed exclusively in the US
by Pharmacia & Upjohn Company (now Pfizer Inc.). According to information
received from Pfizer, an additional 21 individuals (as compared to 13 individuals
in January 2006) currently allege, in relation to similar lawsuits against Pfizer
Inc, that they also have used a Novo Nordisk hormone therapy product.

Novo Nordisk does not have any court trials scheduled for 2007 and does not
presently expect to have a trial scheduled before 2008. Novo Nordisk does not
expect the pending claims to have a material impact on Novo Nordisk’s financial
position.

Novo Nordisk Inc is currently a defendant in four 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 covered by Medicaid.
These cases have been brought by the State of Alabama, and the counties of
Oswego, Erie, and Schenectady, New York. Novo Nordisk was recently dis-
missed from a similar action brought by the State of Mississippi. Further, in
2005, Novo Nordisk was dismissed in 31 similar cases brought by counties in the
State of New York. Novo Nordisk does not expect the pending claims to have a
material impact on Novo Nordisk’s financial position.

In November 2006, Novo Nordisk A/S and its Italian affiliate Novo Nordisk
Farmaceutici s.p.a was sued by A. Menarini Industrie Farmaceutiche Riunite s.r.l.
and Laboratori Guidotti s.p.a. (‘Menarini’) in the Civil Court in Rome. Menarini
alleges that Novo Nordisk breached an alleged contract with Menarini for the
sale and distribution of insulin and insulin analogues in the Italian market or,
in the alternative, has incurred a pre-contractual or extra contractual liability
arising from negotiations between the parties.

Novo Nordisk disputes the claims made by Menarini. Currently, it is expected
that the first hearing will take place in 2007. Novo Nordisk cannot predict
how long the litigation will take or when it will be able to provide additional
information. At this point in time, Novo Nordisk does not expect the pending
claim to have a material impact on Novo Nordisk’s financial position.

Pending claims and investigations involving Novo Nordisk
The Polish Customs and Tax Authorities have been investigating a number of
international companies, alleging overstatement of the customs value of
imported 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 outcome of such legal actions
is not expected to have a material impact on Novo Nordisk’s financial position.

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 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 point
in time, Novo Nordisk cannot determine or predict the outcome of the investi-
gations. In addition, Novo Nordisk cannot predict how long the investigations
will take or when the company will be able to provide additional information.

In February 2006, Novo Nordisk received a subpoena from the US Securities and
Exchange Commission (SEC) calling for Novo Nordisk to produce documents
relating to the United Nations Oil-for-Food Programme. Other companies have
disclosed that they have received similar subpoenas. Novo Nordisk has fully co-
operated with the SEC’s investigation.

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

37 Commitments and contingencies (continued)

38 Reconciliation to US GAAP (continued)

In April 2006 the Danish Public Prosecutor initiated preliminary investigatory
steps against Novo Nordisk, and against other Danish Companies, however on
21 September 2006, The Ministry of Justice decided not to pursue potential
criminal charges against Novo Nordisk and other companies due to expiry of the
limitation period, but the Danish Prosecutor continues to investigate the pos-
sibility of disgorging profits earned under the Programme. Novo Nordisk cannot
determine or predict the outcome of these investigations, nor how long they
will take.

Other litigation proceedings
In addition to the above, the Novo Nordisk Group is engaged in certain litigation
proceedings. In the opinion of management, settlement or continuation of
these proceedings will not have a material effect on the financial position.

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 connec-
tion with the demerger in November 2000.

Disclosure regarding Change of Control
The EU Take-Over Directive, as implemented by the Danish Financial Statements
Act contains certain rules relating to listed companies on disclosure of informa-
tion that may be of interest to the market and potential takeover bidders.

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.
In 2006 acquired in-process research and development projects amounts

to DKK 190 million and the amortisation amounts to DKK 8 million.

c) 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.

The future amortisation of the assets is therefore reversed under US GAAP.
In 2006 acquired single-purpose tangible assets used in research and
development projects amounts to DKK 131 million and the amortisation
amounts to DKK 4 million.

d) 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 retained earnings where the
issued securities are not common stock or the main activity of the investee
is research and development.

e) 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.

In 2006 gains on assets sold in a sale and lease-back transaction amounts

to DKK 0 million and the amortisation amounts to DKK 11 million.

For information on the ownership structure of Novo Nordisk, please see ‘Share-
holder information’ on pp 115–116.

f) Impairment of goodwill

Novo Nordisk discloses that the company has significant agreements to which
the company is a party and which take effect, alter or terminate upon a change
of control of the company following a straight takeover bid. If effected, a
takeover could – at the discretion of the counterparty – lead to the termination
of such agreements and the loss of approximately 5% of Novo Nordisk’s turn-
over, corresponding to approximately 4% of Novo Nordisk‘s gross profit.

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 ap-
plication 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.

In 2006 capitalised borrowing costs under US GAAP amounts to DKK 49

million and the amortisation amounts to DKK 28 million.

b) 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.

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”.

g) Provision for pensions

The methodology for accounting for defined benefit plans in the income
statement is similar under IFRS and US GAAP. However there are some minor
differences in the details relating to the actuarial assumptions and past
service costs.

In 2006 the difference in the income statement amounts to DKK 2

million.

Amounts recognised in the balance sheet under IFRS are the net total of
the present value of the defined benefit obligation minus the fair value of
plan assets, plus/minus any unrecognised past service costs and unrecog-
nised actuarial gains and losses.

Full recognition in the balance sheet of defined benefit obligation less fair
value of plan assets applies under US GAAP as from 2006 according to SFAS
158. Any past service costs and actuarial gains and losses which are not
recognised in the income statement are recognised in other comprehensive
income. The implementation of SFAS 158 has resulted in recognition of
defined benefit obligation amounting to DKK 129 million in the beginning of
2006, and DKK 116 million at the end of 2006.

In 2006 actuarial gains/losses and past service costs not recognised under
IFRS, but recognised under US GAAP amounts to DKK 113 million of which
DKK 116 million relates to SFAS 158 and DKK (3) million relates to previous
difference in recognition of past service costs.

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
considered a contingent liability and is not recognised. Any additional pay-
ments to cover the deficits are expensed under US GAAP

In 2006 deficits recognised under IFRS amounts to DKK 43 million and

additional payments expenses under US GAAP amounts to DKK 7 million.

Novo Nordisk Annual Report 2006

Consolidated financial statements
Notes – Additional information

38 Reconciliation to US GAAP (continued)

h) Deferred taxes related to intercompany profits

i) Tax arising from the difference between IFRS and US GAAP

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 cal-
culated with reference to the local tax rate in the seller’s or manufacturer’s
jurisdiction.

Before 2005 the differences between the IFRS and US GAAP calculations
have been immaterial; hence no reconciliation item had been reported. Due
to a significant increase in internal profits in 2005, Novo Nordisk has in-
corporated the difference between IFRS and US GAAP figures as from 2005.
In 2006 the difference amounted to DKK 407 million.

This reconciliation item includes all tax effects due to the above-mentioned
reconciling items.

j) Statement of cash flow and financial resources

In the Statement of cash flow and financial resources, cash and cash equiva-
lents comprise marketable securities with a remaining term to maturity of
less than three months and cash less short-term bank loans. According to
US GAAP, cash and cash equivalents consist solely of marketable securities
with a remaining term to maturity of less than three months and cash.

The application of the US GAAP described would have resulted in the following adjustments:

DKK million

2006

2005

2004

Adjustments to net profit:
Net profit in accordance with IFRS
Borrowing costs
Acquired in-process R&D projects
Acquired single-purpose R&D assets
Unrealised capital gain on investments in research and development companies
Sale and lease-back transactions
Impairment of goodwill
Provisions for pensions
Deferred taxes related to intercompany profits
Tax on the above-mentioned differences between IFRS and US GAAP

Net profit in accordance with US GAAP

Adjustments to equity:
Equity in accordance with IFRS
Borrowing costs
Acquired in-process R&D projects
Acquired single-purpose R&D assets
Sale and lease-back transactions
Impairment of goodwill
Provisions for pensions
Deferred taxes related to intercompany profits
Tax arising from the difference between IFRS and US GAAP

a)
b)
c)
d)
e)
f)
g)
h)
i)

a)
b)
c)
e)
f)
g)
h)
i)

6,452
21
(182)
(127)
–
11
–
(9)
59
85

6,310

30,122
416
(483)
(278)
(125)
–
(70)
(407)
60

5,864
15
(131)
(160)
(186)
(110)
–
6
(466)
66

4,898

27,634
395
(301)
(160)
(136)
–
58
(466)
(40)

5,013
(2)
(170)
–
(96)
(26)
(53)
–
–
19

4,685

26,504
380
(170)
–
(26)
–
–
–
(106)

Equity in accordance with US GAAP

29,235

26,984

26,582

The application of the described US GAAP would have resulted
in the following adjustments to balance sheet items:
Total assets in accordance with IFRS
Intangible assets
Property, plant and equipment
Total assets in accordance with US GAAP

Total liabilities in accordance with IFRS
Deferred income tax liabilities
Provision for pensions
Other liabilities
Total liabilities in accordance with US GAAP

US GAAP earnings per share:
Earnings per ADR from continued operations and in accordance with US GAAP
Earnings per ADR from continued operations and in accordance with US GAAP diluted

44,692
(483)
138
44,347

14,570
347
70
125
15,112

41,960
(301)
228
41,887

14,326
499
(58)
136
14,903

37,433
(170)
380
37,643

10,929
106
–
26
11,061

19.66
19.55

14.92
14.86

13.92
13.86

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Overview of non-financial reporting

This is the third year that Novo Nordisk reports on the company’s financial and
non-financial performance in one, inclusive document, the Annual Report.
Novo Nordisk continues the process to drive integration of the financial and
non-financial perspectives to business and seeks to reflect this in the approach
to reporting. In the absence of global standards for inclusive reporting, this ap-
proach takes its point of departure in current standards for mandatory, financial
reporting and current guidelines for voluntary, non-financial reporting. The aim
is to drive business performance and enhance shareholder value by exploring
the interactions between financial and non-financial objectives. This entails
alignment of key priorities, target-setting and definition of key performance
indicators, in consultations that involve internal and external stakeholders.

The Annual Report is prepared in respect of current best practice and the prin-
ciples of materiality, completeness and responsiveness. Stakeholder engage-
ment informs the process, which also incorporates independent expert reviews
of the company’s annual reporting. The selection of information included in the
annual reporting reflects evolving priorities in response to business and societal
challenges.

Defining materiality
It is Novo Nordisk’s responsibility to ensure that those areas are addressed in
which the company has significant impact or where it has a responsibility to
and ability to act. Novo Nordisk has sought inspiration in AccountAbility’s mate-
riality test to define what is material to Novo Nordisk, what should be included
in the Annual Report and on which grounds topics should be excluded.
Applying the materiality test as a tool, sustainability-related issues are prioritised
to be reported either in the printed Annual Report or in the online report (most
material; business critical), in the online report only (material, often to specific
stakeholder interests) or not reported (not material). The same process applies
for the assurance provider’s recommendations. Read the recommendations and
Novo Nordisk’s reply to these at novonordisk.com/annual-report:how-we-
perform.

The outcomes of formal reviews, research, stakeholder engagement and inter-
nal materiality discussions are presented as a proposal for the annual reporting
to Executive Management and the Board of Directors, and subsequently ap-
proved. In addition, Novo Nordisk’s external assurance provider is requested to
assure whether the non-financial performance included in the Annual Report
covers the material aspects. The conclusion is available in the Assurance Report
on Non-financial Reporting 2006. Read more about how Novo Nordisk uses the
Five-Part Materiality Test at novonordisk.com/annual-report:how-we-perform.

Ongoing stakeholder engagement and trendspotting help identify new issues
which are or could become material to Novo Nordisk. The Novo Nordisk
learning curve is a tool that aligns the process of defining materiality with
integration into business practices. Emerging issues that are identified as rele-
vant and potentially material are included at the bottom of the learning curve.
Following a review of its implications for Novo Nordisk’s long-term business, a
strategy is framed for those issues that are deemed material and subsequently
data, indicators and targets are identified. Stakeholder engagement is part of
this process. Once management of the issue has been embedded in the organi-
sation so that it is fully integrated into business processes, the strategy will be
revisited as appropriate.

Moreover, issues that are included on the learning curve are monitored as part
of the integrated risk management process (see pp 110 –111).

Indicators and targets
In 2006, a set of new indicators and long-term goals for three material issues for
Novo Nordisk was identified; global health, people and environment. The result
was four new Triple Bottom Line indicators with targets to ensure focus and per-
formance in support of the company’s commitment to the Triple Bottom Line
and sustainable development.

These are supplemented by short-term targets that are included in the Balanced
Scorecard for 2007. For other focus areas, such as business ethics, short term
indicators and targets have been defined which focus on embedding into the
organisation.

The materiality test and the learning curve are dynamic tools that reflect the
level of knowledge and understanding of the issue as well as the level of
business integration. This implies that the non-financial reporting will be con-
tinuously adjusted to reflect current priorities.

The consolidated non-financial statements on the following pages present and
discuss performance during 2006.

Global standards
Novo Nordisk’s non-financial reporting follows the accountability standard,
AA1000 Framework. It states that reporting must provide a complete, accurate,
relevant and balanced picture of the organisation’s approach to and impact on
society.

As a signatory to the United Nations Global Compact, a platform to promote
good corporate principles and learning in the areas of human rights, labour,
environment and anti-corruption, Novo Nordisk reports on actions during 2006
to implement its 10 principles in a Communication on Progress including per-
formance metrics aligned with the GRI Guidelines.

The consolidated non-financial statements are prepared in accordance with the
Global Reporting Initiative’s (GRI’s) 2002 Sustainability Reporting Guidelines,
which require reporting according to 11 principles and against a list of indica-
tors covering economic, environmental and social aspects of the business
performance. In 2006, Novo Nordisk fully reports on 108 of the 142 indicators.

Novo Nordisk’s GRI Content Index 2006 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

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Accounting policies for non-financial data

Accounting policies for non-financial data

In 2006, there have been no significant restatements. The following changes
have been made to accounting policies applied to non-financial data:
n Four new indicators have been identified and included in the non-financial

Economic data
The economic indicators are based on data from the financial registrations. See
financial definitions.

highlights table and the accounting policies.

n The Eco Intensity Ratios (EIRs) for the two production areas Diabetes and

Biopharmaceauticals replace the Eco-Productivity Indices.

n Animal test types are no longer reported upon as the company has been un-
successful in receiving the authorities’ acceptance for omitting the remaining
two test types. Novo Nordisk is now investigating other means for replace-
ment of these test types.

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 document 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 non-
financial activities. A full coverage of the company’s non-financial activities can
be found in the online report at www.novonordisk.com. 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 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 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 subsidiaries. The activities in Novo
Nordisk Servicepartner have per 1 January 2007 been taken back into Novo
Nordisk A/S and there is therefore no longer a separate legal entity for the
future reporting. Environmental data cover the significant environmental im-
pact of the organisation’s activities at its production sites. No production sites
have been added in 2006. The activities at site Værløse have been closing down
during 2006 and reporting from this site will be discontinued in 2007. 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.

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
Denmark 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 envir-
onmental 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 (internal produced energy), eg natural gas, fuel oil and other types,
and indirect supply of external energy (external produced energy), eg elec-
tricity, steam and district heat. The consumption of fuel and external pro-
duced 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 Novo Nordisk’s stock-system.

Wastewater
n Quantities of components such as COD, nitrogen and phosphorous are cal-

culated based on test results or standard factors.

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 special
treatment.

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 2006 are the three-
year average of 2003 to 2005.

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
substances. Data are based on measurement and ensuring calculations.

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Accounting policies for non-financial data

Accounting policies for non-financial data (continued)

Eco Intensity Ratios (EIRs) for water and energy
n Environmental performance relative to production size is monitored by the

production related KPI Eco Intensity Ratio – in short EIR – defined as:

‘EIR = Resource consumption per produced or released unit’

By using the performance indicator ‘EIR’, the total performance, measured
for water and energy, of a production facility or a business area can be calcu-
lated by adding the EIR ratios in standard units from each process step or
intermediary product in the process flow from eg fermentation to packaging
of the finished product.

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 western world is defined as Europe (EU, Switzerland,
Norway), the United States, Canada and Japan.

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.
n The estimated number of healthcare professionals directly trained or edu-
cated is based on registrations by subsidiaries and corporate functions in
Novo Nordisk in the Best Practice Database of the activities conducted within
National Diabetes Programmes.

n The estimated number of people with diabetes directly trained or treated
is based on registrations by subsidiaries and corporate functions in Novo
Nordisk in the Best Practice Database of the activities conducted within
various National Diabetes Programmes. The indicator covers all activities,
hence it encompasses people with diabetes directly treated and trained in
Less Developed Countries, in developing and developed countries.

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,
absence data are registered in the SAP Human Resource system. For em-
ployees 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 to ten selected questions related to em-
ployees engagement in Novo Nordisk 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 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 subsidiaries.

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.

All data are documented and evidence has been submitted to the auditors.

Novo Nordisk Annual Report 2006

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 (2.3:1) reflects
the continued increasing importance of R&D for Novo Nordisk. In the period
2002–2005 this ratio varied from 1:1 to 1.8:1. The increase in the share of R&D
as a share of sales (from 15.1% in 2005 to 16.3% in 2006) reflects the fact that
R&D expenditure has risen by 24% while sales have risen by 15%. The wage
share of R&D (38.4%) is an indication of the company’s impact as a capacity
builder in the community.

Most production facilities, 53% of the full-time employees and 78% 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 internationalisation.
In 2006, Novo Nordisk invested DKK 2.8 billion primarily in Denmark (64%), but
also in new production facilities globally (in Brazil, the US, France and China),
down from DKK 4 billion in 2005.

Remuneration constituted 59% of the cash added value, mainly in the de-
veloped world, and particularly in Denmark (58%), where the majority of
Novo Nordisk’s workforce is located. However, the share of full-time positions
in IO has increased from 14% in 2005 to 18% in 2006. The value added per
employee is DKK 936,000 indicating a high productivity of Novo Nordisk’s
employees.

Consolidated non-financial statements
Notes – Performance indicators

In 2006, Novo Nordisk created 1,165 new positions globally and had 23,172
fulltime positions; measured as full-time equivalents (FTE). These jobs translate
into 59,100 indirect global jobs in the supply chain from production needs and
employees’ private consumption. The majority is due to production (43,000)
but also the effect of private consumption from Novo Nordisk employees is
significant (16,100).

Measured by turnover Novo Nordisk is the 10th largest company in Denmark,
up one place from last year. In terms of R&D investments Novo Nordisk is the
largest Danish company and ranks as number 33 on a European scale (in 2005
numbers). Among European pharmaceutical companies Novo Nordisk ranks as
number seven regarding R&D investments.

In 2006, total corporate taxes constituted 9.1% of sales. In Denmark 87% of
taxes are paid as local taxes and 13% as state taxes. In 2006, Novo Nordisk
accounts for 3.9% of Danish corporate taxes and an estimated 0.55% of
employment in Denmark. Novo Nordisk employees accounted for 0.6% of total
Danish income taxes.

Novo Nordisk’s sales in 2006 accounted for 2.4% measured as a share of Danish
GDP, as compared to 2.2% in 2005. In 2006, the company’s economic contri-
bution to overall economic wealth for the Danish society was 2.2% of Gross
Value Added (GVA) compared to 2.6 in 2005, and 4.0% of Danish exports com-
pared to 4.7% in 2005.

Target

Unit

2006

2005

2004

Ratio of R&D expenditure to tangible investments
R&D as share of sales
Total tangible investments
Remuneration as share of cash received
Employment impact worldwide (direct and indirect)
Total corporate tax as share of sales
Novo Nordisk exports as share of Danish exports

1) Multipliers have been updated.
2) Estimated number changed to factual number.

–
–
–
–
–
–
–

%
DKK million
%
Jobs
%
%

2.3:1
16.3
2,811
33
82,700
9.1
4.0

1.3:1
15.1
4,009
34

1.5:1
15.0
2,999
34

78,0001) 73,100 1)

7.0
8.4
4.7 2) 3.9

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Economic stakeholder model

Novo Nordisk’s economic stakeholder model

This model illustrates Novo Nordisk, 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 on 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 blue circle linking the stakeholders.

Society
As a business, Novo Nordisk impacts through sustainable business
practices, investment, employment (estimated 82,700 jobs globally),
environmental impact and contribution to GDP/export (2.4%/4.0%
in Denmark).

As a pharmaceutical company, Novo Nordisk provides knowledge,
R&D and healthcare products (insulin for 13–15 million people) and
outreach through improved awareness, diagnosis or treatment of
diabetes (for at least 31 million people).

Investors/funders
Risk capital for development and production
of new products is rewarded through divi-
dend and share prices (43% are non-Danish
investors).

v k

k v k

vk vk vk v

L
h

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 Turnover
Products f

k v k v
k v

Employees
23,613 employees’ know ledge and product -
ivity are a major part of the company’s
intangible value. 47% of employees work
outside Denmark. 33% of cash received is
remuneration.

k
v

k v

pit
e
t
u
r

s f

s
t

n
t

h Remuneration
Productivity f

h Pay m ents
M aterials f

Suppliers
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
31,300 jobs are created at suppliers in
Denmark and 43,000 globally.

e
t
a
r
e
p
o
o
t
e
c
n
e
c

f
h
t
l
a
e
W

T
a
x
e
s

h
S
e
r
v
c
e
s

vk vk vk vk vk v

k v

k vk

Public sector
Taxes are paid to fund public
activities in society. In return,
services are received. Novo
Nordisk’s tax payments are
3.9% of corporate taxes in
Denmark. Novo Nordisk’s
employees in Denmark pay
0.6% of the country’s total
income tax.

Customers
Novo Nordisk’s products provide health for
customers in inter action with the healthcare
sector. Novo Nordisk has 52% of the global
insulin market and 21% of the global
diabetes care market measured by value.

v
k

k vk v

Cash value distribution (2006)

Customers
Suppliers
Company cash
Employees
Investors/funders
Public sector
Management

a:
b:

c:
d:
e:
f:

Cash received for products and services (from sales)
Cash payments for materials, facilities and services*)
Cash added value (a minus b)
Remuneration
Dividend and interest payments
Taxes
Future growth

DKK million

Cash received

Cash added value

38,374
16,690
21,684
12,653
5,054
3,514
463

100%
44%

33%
13%
9%
1%

100%
59%
23%
16%
2%

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

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Performance indicators

Environment

Resources
For the first time since Novo Nordisk began to report on consumption of water
and energy, the performance data now show a slight decrease from 2005 to
2006 of less than 1% and 2%, respectively. It is expected that the CO2 reduction
initiatives will have a continued positive effect on the consumption of energy.

The consumption of materials increased by 5%. This increase is mainly due to
production increases in Kalundborg, Denmark, and at the sites in Chartres,
France, Clayton, US, and Montes Claros, Brazil.

Water consumption
Energy consumption
Materials

Target

–
–
–

Unit

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

2006

2005

2004

2,995
2,666
142

3,014
2,7181)
1352)

2,756
2,397 1)
111

1) Previously reported as 2,408 (2004) and 2,591 (2005). Reporting error corrected.
2) Previously reported as 150. Reporting error corrected.

Wastewater
The total volume of waste water increased by 1% from 2005 to 2006. In the
same period, the discharged quantity of COD decreased from 1,303 tons to
1,000 tons, corresponding to a 23% decrease. The quantity of nitrogen de-
creased from 126 tons to 107 tons, a 15% decrease. The discharged quantity of
phosphorus was reduced from 22 tons to 19 tons, corresponding to a decrease

of 14%. The significant reductions of COD, nitrogen and phosphorus are partly
due to improved efficiency of the waste water treatment plant in Kalundborg,
owned by Novozymes A/S, and the closing down of the insulin purification
factory in Bagsværd.

COD
Nitrogen
Phosphorus

Target

–
–
–

Unit

Tons
Tons
Tons

2006

2005

2004

1,000
107
19

1,303
126
22

1,448
121
21

Waste
In 2006, Novo Nordisk approved a new waste strategy. As a result, Novo Nordisk
has regrouped its waste data. There has been an increase in the total waste
volume of 2% compared to 2005. This is due to an increase in hazardous waste
of 17%, counterbalanced by a decrease in non-hazardous waste of 13%. The
recycling percentage has increased to 35% from 33% in 2005.

Of the 13% decrease in non-hazardous waste, 9% is due to a decrease in a
specific waste water fraction from site Hillerød. The remaining 4% decrease is
due to a decrease in the amount of paper, cardboard and mixed construction/
demolition waste at several sites. The non-hazardous waste sent for special
treatment is waste water treated at a hazardous waste treatment facility in
accordance with the precautionary principle.

The 17% increase in hazardous waste is mainly due to an increase in the
amount of contaminated soil from site Kalundborg. A significant part (66%)
of the hazardous waste is the waste fraction ethanol, which is recycled or
incinerated. A high rate of ethanol is regenerated before it becomes waste.

The 35% waste for recycling includes a large quantity of contaminated soil.
If contaminated soil was excluded from the recycling percentage, the figure
would be 26%.

Total waste
– Non-hazardous waste

Recycled
Incinerated 1)
Landfill
Special treatment
– Hazardous waste

Recycled ethanol 2)
Incinerated ethanol 3)

Recycling percentage

Target

–
–
–
–
–
–
–
–
–
–

Unit

Tons
Tons
%
%
%
%
Tons
%
%
%

2006

2005

2004

24,165
10,594
39
33
10
18
13,571
17
48
35

23,776
12,145
–
–
–
–
11,631
–
–
33

21,855
9,203
–
–
–
–
12,652
–
–
40

1) 99% with energy recovery.
2) Ethanol recycled in eg biogas or waste water treatment plants.
3) Incinerated at combined heat and power plants or at plants for special treatment of hazardous waste with energy recovery.

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Performance indicators

Environment (continued)

Emissions to air
While Novo Nordisk’s total energy consumption has decreased by 2% in 2006,
the energy-related emission of CO2 increased from 228,000 tons in 2005 to
235,000 tons 2006, corresponding to a 3% increase. The increase in CO2 is
primarily due to increased emissions from the production sites in Clayton, US;
Kalundborg, Denmark; Måløv, Denmark; and Tianjin, China, mainly due to
increased energy consumption, in combination with increases in CO2 emission
factors for some external energy suppliers, but also due to increases in the CO2
emissions from the energy purchased.

Emissions to air of organic solvents decreased from 124 tons in 2005 to 102
tons in 2006, a decrease of 18%, which is primarily due to the close down of an
insulin purification factory in Bagsværd, Denmark. The organic solvents consist
of ethanol (78%), isopropanol (13%) and acetone (9%).

CO2

Organic solvents

Target

10% reduction by 2014
compared to 2004
–

Unit

1,000 tons

Tons

2006

2005

2004

235

102

2281) 210 1)

124

115

1) Minor adjustments to all historic CO2 emissions due to changed emission factors from sites outside Denmark.

Eco Intensity Ratios (EIR)
In 2006, the EPI has been replaced by a new key performance indicator to
measure water and energy efficiency relative to production; the Eco Intensity
Ratios (EIR). EIR is reported in the Annual Report for the two business areas;
Diabetes Care and Biopharmaceuticals. The long-term EIR target for 2006 –
2010 is a 2% reduction of water and energy consumption relative to production
on average per year, which corresponds to almost 10% reduction for all four
EIR indicators. To get the best foundation for the 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. In 2006, the EIR Water and EIR Energy improved for both
Diabetes Care and Biopharmaceuticals. The EIR concept and the long-term
targets will be evaluated – and revised if necessary – in the beginning of 2007
on basis of the 2006 process. 2006 was considered as a test period for the new
EIR concept.

EIR Water

Diabetes
Biopharmaceuticals

EIREnergy

Diabetes
Biopharmaceuticals

Target

Unit

2006

2005

2004

10% reduction by 2010
10% reduction by 2010

m3/ MU
m3/g API

GJ/ MU
GJ/g API

7.8
4.8

5.5
9.2

–
–

Compliance
Compliance is a high priority. Preventive measures are beginning to show re-
sults: the number of breaches of regulatory limit values has decreased by 30%
from 2005 to 2006. Out of the 122 breaches, 97% are related to pH and waste
water temperatures, which are monitored through continuous measurements.

In the same period, however, the number of accidental releases has increased by
29% to a total of 134, of which 81 are releases of cooling agents such as
HCFC’s and HFC’s. This increasing number reflects particular efforts focused on
cooling equipment, which were initiated in 2006. This focus has resulted in im-
proved registration of releases and what causes them, and hence also a higher
number of reported releases than previously.

There were no accidental releases of GMOs in 2006.

All of these incidents have been reported to the authorities. It is assessed that
breaches of regulatory limit values and accidental releases have had no or only
minor impact on the external environment.

The target to avoid breaches of regulatory limit values and accidental releases
altogether has therefore not yet been met. Preventive measures are long-term
efforts, consisting of training of key employees, risk assessment of production
sites and technical solutions to mitigate these risks.

In 2007 and the following years there will be continued focus on compliance
and preventive measures, which can further reduce the number of breaches and
help curb the curve of accidental releases.

Breaches of regulatory limit value
– related to pH and temperature in waste water
Accidental releases
– releases of cooling agents

1) Was reported as 83. Reporting error now corrected.

Target

Unit

Number

2006

2005

2004

122
118
134
81

174
164
104 1)
67

74
58
29
10

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Performance indicators

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
importance for the future of the company’ remained at a high level of 4.3 (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’ increased by 0.1 to 4.1. Both above the target of >_3.5.
There has been 99% fulfilment of action points arising from facilitations, thus
exceeding the target of 80% fulfilment. At the end of the year all action points
except two were closed; one action point was overdue and one action point will
be dealt with later as agreed. Both action points will be finalised in the first
quarter of 2007.

Importance of social and environmental issues for
Managers’ behaviour consistent with
Fulfilment of action points planned arising from facilitations

Target

>_ 3.5 by 2007
>_ 3.5 by 2007
>_ 80% by 2007

Unit

2006

2005

2004

4.3
4.1
99

4.2
4.0
100

4.2
3.8
96

Our employees
By the end of 2006 Novo Nordisk employed 23,613 persons – an increase of 5%
compared to 2005. This number equals a full-time equivalent of 23,172. It
reflects increased activities in all business areas, particularly in Research &
Development and Sales & Marketing. The ratio between men and women has
changed slightly; at the end of 2006, 50.8% of the employees were men, as
compared with 51.2% at the end of 2005. The rate of absence is slightly lower
than in 2005 with a performance of 3.0. Employee turnover increased to 10.0
from 8.0. One of Novo Nordisk’s key risks, as described on pp 110 –111, is an in-
ability to attract and retain the right talent. The average answers of ten equally

Employees (total)
– Female
– Male
Rate of absence
Rate of employee turnover
Engaging culture
Opportunity to use and develop employee competences/skills
People from diverse backgrounds have equal opportunities

Target

–
–
–
–
–
>_ 4.0
>_ 3.5 by 2007
>_ 3.5 by 2007

weighted questions in the annual survey, eVoice, are used to calculate the level
of ‘engaging culture’. In 2006 the consolidated score was 4.0. The target is to
remain at a level of 4.0 or above on a scale from 1 to 5, with 5 being the highest
score. The average of respondents’ answers as to whether ‘my work gives me
an opportunity to use and develop my competences and skills’ increased from
3.8 to 3.9 and the average of respondents’ answers as to whether ‘people from
diverse backgrounds have equal opportunities’ remained at a high level of 3.9;
both above the target of >_3.5.

Unit

Number
%
%
%
%

2006

2005

2004

23,613
49.2
50.8
3.0
10.0
4.0
3.9
3.9

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
3.8

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Performance indicators

Social (continued)

Health & safety
Performance on the health & safety indicator ‘frequency of occupational in-
juries’ was satisfactory, as the frequency decreased from 7.3 to 6.2 in 2006,
meeting the target of a continuous decrease. There were no fatalities in 2006.
There is a continued focus on ensuring health & safety standards for employees

in Novo Nordisk. In 2006 the work to adopt a health & safety management
system certifiable according to OHSAS 18001 for Novo Nordisk in Denmark and
Product Supply globally was initiated. The first certifications are expected in
2008.

Frequency of occupational injuries
Fatalities

Continuous decrease
–

Per million working hours
Number

6.2
0

7.3
0

5.6
1

Target

Unit

2006

2005

2004

Training costs
In 2006, the annual spending on training, measured as average spent per
employee, increased by 14%, reflecting the company’s strategic priority on
talent and leadership development, and on life-long learning offered to all

employees. The average spent per employee does not fully reflect investments
in training in Novo Nordisk, since on-the-job-training, internal seminars and
other activities are not included.

Annual training per employee

Target

–

Unit

DKK

2006

2005

2004

11,293

9,899

8,992

Access to health
For 2006, Novo Nordisk offered its best possible pricing scheme, as part of the
global health initiatives, to all 50 Least Developed Countries (LDCs) as defined
by the United Nations. During 2006 Novo Nordisk sold insulin to either govern-
ments or to the private market in a total of 34 of the LDCs at or below a price
of 20% of the average prices for insulin in the western world, compared to
32 in 2005. In 15 countries Novo Nordisk is not selling insulin at all, for various
reasons. The one LDC country, in which Novo Nordisk does not sell insulin at the
policy price is Laos. The public authorities in Laos have been offered to
buy insulin at the policy price. The insulin sold in Laos in 2006 is to the private
market. 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, the company is willing to sell to private distributors and agents. The
target is to offer the best possible pricing scheme to the governments 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.

A measure of the company’s contribution to global health is the number of
healthcare professionals directly trained or educated and direct training or
treatment offered to people with diabetes. The aim is to continue activities to
educate healthcare professionals and to train and treat people with diabetes.
In 2006, 297,000 healthcare professionals were directly trained or educated,
and 1,060,000 people with diabetes were directly trained or treated.

LDCs where Novo Nordisk operates

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

Target

Best possible pricing
scheme in all LDCs

Healthcare professionals directly trained or educated

People with diabetes directly trained or treated

–

Unit

Number

2006

2005

2004

297,000

1,060,000

–

Patent families
The number of Novo Nordisk patent families has developed as expected in
2006. The number of active patent families to date has increased by 12%. The

number of new patent families (first filing) has increased from 130 in 2005 to
149 in 2006 – an increase of 15%.

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

Target

–
–

Unit

Number
Number

2006

2005

2004

913
149

812
130

778
145

Novo Nordisk Annual Report 2006

Consolidated non-financial statements
Notes – Performance indicators

Social (continued)

Animals
Novo Nordisk sets goals to reduce, refine and replace experiments on animals
and to improve animal welfare. Despite a significantly higher level of research
activity in early phases, when animal experimentation is required, the number

of animals purchased in 2006 decreased by 2% to 56,533 animals, of which
95% is mice, transgenic mice and rats. In 2006, Novo Nordisk only housed
animals in Denmark.

Animals purchased

Target

–

Unit

Number

2006

2005

2004

56,533

57,905

47,311

To ensure transparency, more details on reported data, additional non-financial reporting, an update of the complete ‘Environmental and social highlights table’ and
the ‘Triple Bottom Line performance indicators’ are available online along with interactive charts for underlying data in the online report at novonordisk.com/
annual-report Click: how-we-perform.

Novo Nordisk Annual Report 2006

Consolidated financial statements
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 N.V.
Novo Nordisk s.r.o.
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 Hungary Sales and Trading Ltd.
Novo Nordisk Limited
Novo Nordisk Farmaceutici SPA
UAB Novo Nordisk Pharma
Novo Nordisk Farma B.V.
Novo Nordisk Scandinavia AS
Novo Nordisk Pharma Sp z.o.o.
Novo Nordisk Comércio Produtos Farmacêuticos Ltda
Novo Nordisk, trzˇ enje farmacevtskih izdelkov d.o.o.
Novo Nordisk Pharma S.A.
Novo Nordisk Scandinavia AB
Novo Nordisk Femcare AG
Novo Nordisk Health Care AG
Novo Nordisk Pharma AG
Novo Nordisk Holding Ltd.
Novo Nordisk Limited

North America
Novo Nordisk Canada Inc.
Novo Nordisk Region North America A/S
Novo Nordisk Delivery Technologies Inc.
Novo Nordisk of North America Inc.
Novo Nordisk Pharmaceutical Industries Inc.
Novo Nordisk Inc.

Japan & Oceania
Novo Nordisk Pharmaceuticals Pty Ltd.
Novo Nordisk Region Japan & Oceania A/S
Novo Nordisk Pharma Ltd.
Novo Nordisk Pharmaceuticals Ltd.

Denmark

1931

DKK

673,920,000

–

Austria
Belgium
Czech Republic
Denmark
Finland
France
France
Germany
Greece
Hungary
Ireland
Italy
Lithuania
Netherlands
Norway
Poland
Portugal
Slovenia
Spain
Sweden
Switzerland
Switzerland
Switzerland
United Kingdom
United Kingdom

Canada
Denmark
United States
United States
United States
United States

Australia
Denmark
Japan
New Zealand

1974
1974
1997
2002
1972
2003
1959
1973
1979
1996
1978
1980
2005
1983
1965
1996
1984
2006
1978
1971
2003
2000
1968
1977
1978

1983
2003
2005
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
EUR
SEK
CHF
CHF
CHF
GBP
GBP

CAD
DKK
USD
USD
USD
USD

36,336
69,000
14,500,000
108,370,500
420,500
5,821,140
57,710,220
614,062
1,050,000
371,000,000
635
516,500
2,150,000
61,155
250,000
29,021,000
250,000
79,286
1,502,500
100,000
1,100,000
159,325,000
50,000
2,802,130
2,350,000

200
500,000
20,001,000
283,835,600
55,000,000
2,000

500,001
AUD
15,500,000
DKK
JPY 2,104,000,000
1,000,000
NZD

100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100

100
100
100
100
100
100

100
100
100
100

100 Novo Nordisk Annual Report 2006

Consolidated financial statements
Companies in the Novo Nordisk Group

Activity

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 Ltda.
Novo Nordisk Farmacêutica do Brasil Ltda
Novo Nordisk Pharma EAD
Novo Nordisk (China) Pharmaceuticals Co, Ltd
Beijing Novo Nordisk Pharmaceuticals Science &
Technoloy Co., Ltd.
Novo Nordisk Hrvatska d.o.o.
Novo Nordisk Region International Operation A/S
Novo Nordisk Egypt, LLC
Novo Nordisk Hong Kong Limited
Novo Nordisk India Private Limited
PT. Novo Nordisk Indonesia
Novo Nordisk Pharma Kish
Novo Nordisk Pars
Novo Nordisk Ltd
Novo Nordisk Farma dooel
Novo Nordisk Pharma (Malaysia) Sdn Bhd
Novo Nordisk Mexico S.A. de C.V.
Novo Nordisk Pharma SAS
Novo Nordisk Pharma P.V.T.
Novo Nordisk Pharmaceuticals (Philippines) Inc
Novo Nordisk Farma S.R.I.
Novo Nordisk Limited Liability Company
Novo Nordisk Pharma d.o.o Belgrade (Serbia)
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 Gulf FZ-LLC
Novo Nordisk Venezuela Casa de Representación C.A.

Other subsidiaries
FeF Chemicals A/S
NNIT A/S
NNE A/S
Novo Nordisk Servicepartner A/S

Associated companies
Dako A/S
Innate Pharma SA
ZymoGenetics, Inc

Country

Algeria
Argentina
Brazil
Brazil
Bulgaria
China

1994
1997
2002
1990
2005
1994

2006
China
2004
Croatia
2002
Denmark
2004
Egypt
2001
Hong Kong
1994
India
2003
Indonesia
2005
Iran
2005
Iran
1997
Israel
2006
Macedonia
1992
Malaysia
2004
Mexico
2006
Morocco
2005
Pakistan
1999
Philippines
2005
Romania
Russia
2003
Serbia & Mentenegro 2005
1994
Singapore
1997
Singapore
1997
Singapore
1959
South Africa
1994
South Korea
1990
Taiwan
1983
Thailand
2004
Tunisia
Turkey
1993
United Arab Emirates 2005
2004
Venezuela

Denmark
Denmark
Denmark
Denmark

Denmark
France
United States

1989
1998
1989
1998

1992
2006
1988

DZD 1,742,650,000
7,465,150
ARS
736,280,984
BRL
84,727,136
BRL
2,000,000
BGN
35,000,000
USD

2,000,000
USD
5,000,000
HRK
113,302,310
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
305,800
MKD
MYR
200,000
MXN 138,491,127
300,000
MAD
10,000,000
PKR
50,000,000
PHP
1,675,000
RON
38,243,360
RUB
640,000
EUR
12,000,000
SGD
2,000,000
SGD
200,000
SGD
ZAR
8,000
KRW 6,108,400,000
9,000,000
TWD
15,500,000
THB
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
EUR
USD

78,687,748
1,249,139
732,914,014

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
49
100
100
100
100

100
100
100
100

27
19
31

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

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

Novo Nordisk Annual Report 2006 101

Consolidated financial statements
Summary of financial data 2002– 2006

DKK million

Sales

Sales by business segments:

Modern insulins (insulin analogues)
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy (HRT)
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

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:

Modern insulins (insulin analogues)
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy (HRT)
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 *)

102 Novo Nordisk Annual Report 2006

2002

2003

2004

2005

2006

24,866

26,158

29,031

33,760

38,743

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

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

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

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

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%

10,825
15,057
1,984
27,866

5,635
3,309
1,607
326
10,877

14,708
12,280
7,086
4,669

272
9,119
45
9,164
2,712
6,452

44,692
10,157
4,413
30,122

2,787
244
4,707
463

27.9%
38.9%
5.1%
71.9%

14.5%
8.6%
4.2%
0.8%
28.1%

99.2%
30.0%
16.3%
6.2%

75.3%
23.5%
12.7%
12.4%
16.7%

29.6%
67.4%
34.4%
25.8%
25.8%
73.0%
80.2%

Consolidated financial statements
Summary of financial data 2002– 2006
Supplementary information in EUR

EUR million

Sales

Sales by business segments:

Modern insulins (insulin analogues)
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)
Diabetes care total

Haemostasis management (NovoSeven ®)
Growth hormone therapy
Hormone replacement therapy (HRT)
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

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

2002

2003

2004

2005

3,347

3,520

3,902

4,531

160
1,972
218
2,350

484
277
179
57
997

1,465
779
552
551

102
798
54
852
298
554

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

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

5,033
979
491
3,563

403
42
575
287

14.89
14.83
4.80

354.7
332.1
336.6
338.1

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

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

2006

5,194

1,451
2,019
266
3,736

755
444
215
44
1,458

1,972
1,646
950
626

36
1,223
6
1,229
364
865

5,994
1,362
592
4,040

374
33
631
62

20.10
19.99
7.00

337.0
317.2
320.9
322.7

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

22,007
12,160
2,702
2,465
3,746
934

23,172
12,214
2,944
2,846
4,188
980

*) For definitions, please refer to page 63.
**) 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).

Novo Nordisk Annual Report 2006 103

Consolidated financial statements
Quarterly figures 2005 and 2006 (unaudited)

DKK million

Sales

Sales by business segments:

Modern insulin (insulin analogues)
Human insulin and insulin-related sales
Oral antidiabetic products (OAD)

2005

2006

7,258

8,283

8,793

9,426

8,946

9,727

9,583

10,487

1,448
3,346
376

1,692
3,753
391

1,929
3,871
487

2,229
4,036
454

2,324
3,703
477

2,678
3,707
483

2,701
3,697
516

3,122
3,950
508

Diabetes care total

5,170

5,836

6,287

6,719

6,504

6,868

6,914

7,580

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

1,090
596
328
74

1,248
704
410
85

1,336
700
406
64

1,390
781
421
115

1,265
709
373
95

1,507
882
396
74

1,393
821
383
72

1,470
897
455
85

Biopharmaceuticals total

2,088

2,447

2,506

2,707

2,442

2,859

2,669

2,907

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

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

3,403
2,764
1,755
1,024

6,531
2,728
1,419
580
76
1,880

(151)
1,729
518

3,761
2,968
1,790
1,208

7,475
2,850
1,498
557
59
2,629

(138)
2,491
748

3,699
3,062
1,683
1,139

7,246
2,699
1,489
605
49
2,502

32
2,534
760

3,845
3,486
1,858
1,298

7,906
3,331
1,910
645
88
2,108

302
2,410
686

1,232

1,684

1,752

1,196

1,211

1,743

1,774

1,724

Depreciation, amortisation and impairment losses

412

422

559

537

460

508

600

574

Total equity
Total assets

Ratios

25,729
36,497

25,620
37,731

26,589
40,181

27,634
41,960

27,042
41,299

28,908
43,145

28,288
43,744

30,122
44,692

Gross margin
Sales and distribution costs as a percentage of sales
Research and development costs as a percentage of sales
Administrative expenses as a percentage of sales
Operating profit margin
Equity ratio

Share data

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

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

73.0%
30.5%
15.9%
6.5%
21.0%
65.5%

3.74
3.72

323.6
325.2

76.8%
29.3%
15.4%
5.7%
27.0%
67.0%

5.40
5.37

322.9
324.5

75.6%
28.2%
15.5%
6.3%
26.1%
64.7%

5.54
5.51

320.1
321.8

75.4%
31.8%
18.2%
6.2%
20.1%
67.4%

5.44
5.40

317.1
319.2

Employees

Number of full-time employees at the end of the period

20,942

21,246

21,631

22,007

22,556

22,792

23,071

23,172

104 Novo Nordisk Annual Report 2006

Consolidated financial statements
Management statement

The Financial Statements of the Parent Company, Novo Nordisk A/S are included on the attached cd-rom and is available at novonordisk.com

The Financial Statements of the Parent Company, Novo Nordisk A/S, form an integral part of the Annual Report.

The complete Annual Report has the below Management Statement and Auditors Reports as provided on page 106.

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 2006. The Consolidated financial statements
have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and the Financial Statements of the Parent Company, Novo
Nordisk A/S, have been prepared in accordance with the Danish Financial Statements Act and Danish Accounting Standards. Further, the Annual Report has been
prepared in accordance with the additional Danish annual report requirements for listed companies. 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 AA 1000AS, the 2002 GRI Sustainability Reporting Guidelines – and include Communication on Progress in support of the United Nations Global Compact. It repre-
sents a balanced and reasonable presentation of the organisation’s economic, environmental and social performance.

Gladsaxe, 30 January 2007

Executive Management:

Lars Rebien Sørensen
President and CEO

Jesper Brandgaard
CFO

Lise Kingo

Kåre Schultz

Mads Krogsgaard Thomsen

Board of directors:

Sten Scheibye
Chairman

Göran A Ando
Vice chairman

Kurt Briner

Henrik Gürtler

Johnny Henriksen

Niels Jacobsen
Audit Committee member

Anne Marie Kverneland

Kurt Anker Nielsen
Chairman
of the Audit Committee

Søren Thuesen Pedersen

Stig Strøbæk

Jørgen Wedel
Audit Committee member

Novo Nordisk Annual Report 2006 105

Auditors’ reports

Auditors’ report on the Annual Report for 2006

To the Shareholders of Novo Nordisk A/S
We have audited the Annual Report of Novo Nordisk A/S for the financial year
2006, which comprises Management Statement, Management’s review, signif-
icant accounting policies, income statement, balance sheet, statement of
changes in equity, cash flow statements and notes for the Group as well as for
the Parent Company. The Consolidated Financial Statements are prepared in ac-
cordance with International Financial Reporting Standards as adopted by the
EU, and the Parent company Financial Statements are prepared in accordance
with the Danish Financial Statements Act and Danish Accounting Standards.
Further, the Annual Report is prepared in accordance with additional Danish dis-
closure requirements for annual reports of listed companies.

Management’s Responsibility for the Annual Report
Management is responsible for the preparation and fair presentation of the
Annual Report in accordance with the said legislation and accounting stand-
ards. This responsibility includes: designing, implementing and maintaining
internal control relevant to the preparation and fair presentation of an Annual
Report that is free from material misstatement, whether due to fraud or error;
selecting and applying appropriate accounting policies; and making accounting
estimates that are reasonable in the circumstances.

Auditor’s Responsibility
Our responsibility is to express an opinion on the Annual Report based on our
audit. We conducted our audit in accordance with International and Danish
Auditing Standards. Those Standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable assurance
whether the Annual Report is free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the

Gladsaxe, 30 January 2007

PricewaterhouseCoopers
Statsautoriseret Revisionsaktieselskab

amounts and disclosures in the Annual Report. The procedures selected depend
on the auditor’s judgment, including the assessment of the risks of material
misstatement of the Annual Report, whether due to fraud or error. In making
those risk assessments, the auditor considers internal control relevant to the
Company’s preparation and fair presentation of the Annual Report in order to
design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the Company’s
internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made
by Management, as well as evaluating the overall presentation of the Annual
Report. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion.

Our audit has not resulted in any qualification.

Opinion
In our opinion, the Annual Report gives a true and fair view of the financial
position at 31 December 2006 of the Group and of the results of the Group
operations and consolidated cash flows for the financial year 2006 in ac-
cordance with International Financial Reporting Standards as adopted by the
EU and additional Danish disclosure requirements for annual reports of listed
companies.

In addition, in our opinion, the Annual Report gives a true and fair view of
the financial position at 31 December 2006 of the Parent company and of
the results of the Parent company operations for the financial year 2006 in
accordance with the Danish Financial Statements Act, Danish Accounting
Standards and additional Danish disclosure requirements for annual reports of
listed companies.

Lars Holtug
State-Authorised Public Accountant

Mogens Nørgaard Mogensen
State-Authorised Public Accountant

106 Novo Nordisk Annual Report 2006

Assurance Report on Non-Financial Reporting 2006

Subject, responsibilities, objective, and scope of assurance statement
We have reviewed the Novo Nordisk Annual Report 2006 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) and in accordance with the International Standard on Assurance
Engagements (ISAE) 3000 ‘Assurance Engagements other than Audits or
Review of Historical Financial Information’.

Management of Novo Nordisk is responsible for defining stakeholders and for
the collection and presentation of the non-financial information in the Annual
Report.

Basis of conclusion
Our work was undertaken to perform an evaluation of the Annual Report
against the principles of materiality, completeness and responsiveness of the
AA1000AS. Moreover, we planned and performed our work in accordance 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, 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 sample
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 asser-
tions of materiality and completeness in accordance with the Novo Nordisk
accounting policies for non-financial data. In addition, our work comprised an
assessment of stakeholder engagement and of the materiality of reporting
against peer-reporting, media reports and industry knowledge. Two major pro-
duction sites were visited in Kalundborg, Denmark and Clayton, United States.
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.

We have assessed Novo Nordisk’s statement that it reports ’in accordance’ with
the 2002 GRI Guidelines by checking that the reporting contains the required
information and indicators and whether these are consistent with the eleven
Reporting Principles of Part B in the GRI Guidelines. We have also reviewed
Novo Nordisk’s own assessment of how the reported information and the
underlying policies, systems and activities are aligned to and support the prin-
ciples of the UN Global Compact.

Conclusion
Based on the work performed we state our conclusion in relation to each of the
key principles of the AA1000 Assurance Standard: materiality, completeness
and responsiveness.

Materiality
Nothing has come to our attention that would cause us not to believe that
n the reported non-financial targets and indicators in general are used in
strategic and operational decision-making and several of these are included
in top management, management, and business units’ balanced scorecard.
n the Annual Report, designed primarily to meet the information needs of
shareholders, financial analysts and other corporate stakeholders, includes
significant information material to Novo Nordisk’s corporate stakeholders.

Auditors’ reports

Objectives, policies, processes and performance in respect of conduct of
clinical trials, animal health practices, approach to responsible lobbying,
human rights, bioethics, and product safety and quality are more compre-
hensively addressed in the online Annual Report.

n the inclusion of information is aligned with robust and well-functioning
governance and risk management structures and processes as well as
regular and informal stakeholder engagement and systematic trend spotting
activities ensuring attention to key corporate stakeholder concerns and
expectations.

Completeness
Nothing has come to our attention that would cause us not to believe that
n the Annual Report presents a fair and balanced account of Novo Nordisk’s

material non-financial performance at the corporate level.

n Novo Nordisk can identify and understand material aspects of its corporate
non-financial performance as well as significant impacts outside the
boundaries of which it has direct management control including upstream
and downstream issues such as social and environmental performance of
suppliers, animal health practices of contract research organisations, carbon
emissions of energy suppliers, training of health care professionals via the
National Diabetes Programme, and accessibility for less developed countries
to medicine at reduced prices.

n Novo Nordisk has an effective process in place at corporate level for iden-
tifying, exploring and defining its approach to material impacts while an as
effective approach is not mirrored in some local levels of the organisation.

Responsiveness
Nothing has come to our attention that would cause us not to believe that
n through the Annual Report, the online report and other communications,
Novo Nordisk is responsive to significant issues raised by corporate stake-
holders in an accessible manner.

n Novo Nordisk has an effective process and relevant governance structures in
place for defining its response to corporate stakeholders as well as processes
in place to promote integration in management and business processes
although registration, controls and reporting processes for some environ-
mental and health and safety data at site level can be strengthened.

n Novo Nordisk has policies, programmes and procedures to address material
stakeholder concerns and recently processes have been initiated to develop
a response to the issue of ‘responsible lobbying’ as well as a comprehensive
approach to human rights beyond existing key human rights initiatives
relating to diversity, including non-discrimination, access to health and re-
sponsible purchasing.

Based on our work nothing has come to our attention that disproves Novo
Nordisk’s statement that it has met the conditions for reporting ‘in accordance’
with the GRI guidelines. In addition, we consider that Novo Nordisk’s policies,
systems and activities taken as a whole support Management’s commitment to
the UN Global Compact.

Commentary
According to AA1000AS, we are required to include recommendations for
improvements in relation to environmental and social responsibility. The recom-
mendations as well as our statement of independence and competencies are
stated in the online report in the ‘How we are accountable’ section. Our recom-
mendations do not affect the above stated conclusion.

Gladsaxe, January 30 2007

PricewaterhouseCoopers
Statsautoriseret Revisionsaktieselskab

PricewaterhouseCoopers AG
Switzerland

Lars Holtug
Danish State-Authorised Public Accountant

Thomas Scheiwiller
Dr Sc.nat

Novo Nordisk Annual Report 2006 107

Corporate governance

The Novo Nordisk Way of Management forms the
values-based governance framework for the com -
pany and is an integrated part of the company’s
corporate governance.

Novo Nordisk’s share capital is divided between A shares and B shares.
All A shares are held by Novo A/S, a Danish private limited liability
company fully owned by the Novo Nordisk Foundation, which is a pri-
vate self-governing institution. The B shares are traded on the stock
exchanges in Copenhagen and London and in the form of ADRs on
the New York Stock Exchange. Each A share carries 10 votes, where-
as each B share carries one vote (see p 116).

Novo Nordisk is not aware of the existence of any agreements be-

tween shareholders on the exercise of votes or control.

Novo Nordisk is of the opinion that the current share and owner-
ship structure is appropriate and preferable for the long-term devel-
opment of the company. The current differentiation of voting rights
cannot be revoked as this would violate the Articles of Association of
the Foundation as approved by the Danish authorities.

The Board may issue new shares or buy back shares in accordance

with authorisations granted by the general meeting.

Shareholders’ general meeting
Shareholders have the ultimate authority over the company, and exer-
cise their right to make decisions regarding Novo Nordisk at general
meetings. The annual general meeting approves the annual report
and amendments to the Articles of Association. The general meeting
elects 4–10 directors, plus the auditor. All shareholders may, no later
than 1 February, request that proposals for resolution be included in
the agenda. Shareholders may also ask questions at the general
meetings. Simultaneous interpretation from Danish into English is
available and the meeting is webcast live.

Management structure
The company has a two-tier board structure consisting of the Board
of Directors and Executive Management. The two bodies are separ -
ate, and no person serves as a member of both.

The Board of Directors
On behalf of the shareholders, the Board actively contributes to de-
veloping the company as a focused global pharmaceutical company
and supervises Executive Management in its decisions and oper -
ations. Hence, the aim is to compose a Board consisting of individuals
whose particular knowledge and experience enable the Board as a
whole to attend to the interests of shareholders, employees and
other stakeholders.

New board members undergo an induction programme equivalent
to two full days during their first year on the board and subsequently
participate in educational activities as required.

The Board has 11 members, of whom seven are elected by share-
holders at general meetings. Shareholder-elected board members
serve a one-year term and can be re-elected at the general meeting.
Board members must retire at the first general meeting after reaching
the age of 70. A proposal for nomination of shareholder-elected
board members is presented by the chairmanship to the Board taking
into account required competences and the result of the self-assess-
ment process. A balance between renewal and continuity will be en-

108 Novo Nordisk Annual Report 2006

sured when nominating candidates. An executive search has helped
identify board members that meet such criteria.

Four shareholder-elected board members are independent as de-
fined by the Danish Corporate Governance Recommendations; three
shareholder-elected board members are related to the majority share-
holder through board or executive positions, and two of these have
also previously been executives at Novo Nordisk. See pp 112–113.

Under Danish law, Novo Nordisk employees in Denmark are en -
titled to be represented by half of the total number of board members
elected at the general meeting. Thus, in 2006, employees elected
from among themselves four board members for a four-year term.
Board members elected by the employees have the same rights, dut ies
and responsibilities as shareholder-elected board members.

Board meetings
The Board ordinarily meets seven times a year, including a strategic
session over two to three days. In 2006, the Board met eight times
and all board members attended all board meetings and the Annual
General Meeting, except for one member being absent on one occa-
sion. With the exception of agenda items reserved for the Board’s in-
ternal discussion at each meeting, executives attend and may speak,
without voting rights, at board meetings to ensure that the Board is
adequately informed of the company’s operations. Executives’ regu-
lar feedback from meetings with investors allows board members an
insight into major shareholders' views of Novo Nordisk.

Chairmanship
A chairman and a vice chairman elected by the Board from among its
members form the Chairmanship of the Board. They carry out admin-
istrative tasks, such as planning board meetings, to ensure a balance
between determination of strategy and the financial and managerial
supervision of the company. The Chairmanship reviews the fixed asset
investment portfolio. Other tasks include recommending remunera-
tion of directors and executives, and suggesting candidates for elec-
tion by the general meeting. In practice, the Chairmanship has the
role and responsibility of a nomination committee and a remune -
ration committee.

The Audit Committee
The Audit Committee has three members elected by the Board from
among its members. All members qualify as independent as defined
by the US Securities and Exchange Commission (SEC). One member is
designated as chairman and two members are designated as Audit
Committee financial experts. One member is not regarded as inde-
pendent under the Danish Corporate Governance Recommen -
dations. In 2006, the Audit Committee held four meetings and all
members attended all meetings. The Audit Committee assists the
Board with oversight of a) the external audit ors, b) the internal audi-
tors, c) the procedure for handling complaints regarding accounting,
internal controls, auditing or financial reporting matters (whistle-
blower function), d) the accounting policies, and e) internal control
systems. In 2006, its responsibility was extended to include a post-
completion review of fixed asset investments previously approved by
the Board.

Research & development facilitator
In 2006, the Board appointed a research & development facilitator to
assist the Board and Executive Management in preparing the Board's
discussions in the R&D area. The key tasks comprise review of R&D

strategies, and evaluation of the competitiveness of the R&D organ -
isation, processes and projects.

Executive Management
Executive Management is responsible for the day-to-day management.
It consists of the president and CEO, and four other executives.

Executive Management’s responsibilities include organisation of
the company as well as allocation of resources, determination and im-
plementation of strategies and policies, direction-setting and ensuring
timely reporting and provision of information to the Board and the
stakeholders of Novo Nordisk. The Board appoints Executive Manage -
ment and determines its remuneration. The Chairmanship reviews
the performance of the executives. As part of the Organisational
Audit process, the Board identifies potential successors to executives.
Executives must retire on reaching the age of 62 (see p 114).

Remuneration policy
The Remuneration Policy is designed to attract, retain and motivate
board members and executives. Board members receive a fixed
amount, and the Chairmanship and Audit Committee members re-
ceive a multiplier thereof. Board members are not offered stock op-
tions, warrants or participation in other incentive schemes. Executive
remuneration must be competitive, and is evaluated against Danish
and international benchmarks. It consists of a basic salary, a cash
bonus, pensions, non-monetary benefits and a long-term incentive,
designed to align the interests of the executive with those of the
shareholders (see pp 81–83).

Assessment
The Board conducts an annual self-assessment procedure to improve
the performance of the Board and its cooperation with Executive
Management. This process is directed by the Chairmanship and may
be facilitated by an external consultant. Written questionnaires form
the basis for the process, which evaluates whether each board mem-
ber and executive participates actively in the board discussions and
contributes with independent judgement. It is further assessed
whether the board member is inspirational and whether the environ-

The Novo Nordisk model for corporate governance

ment supports open discussion at board meetings. The Audit
Committee also conducts an annual self-assessment based on written
questionnaires. The performance of each executive is continuously
assessed by the Board, and formally once a year the Chairman also
conducts an interview with each executive.

Risk management
Executive Management is responsible for the risk management process,
including risk identification, assessment of likelihood and potential
impact, and initiation of mitigating actions. Major risks are systemat -
ically identified and regularly reported to the Board (see pp 110–111).

Internal controls
Novo Nordisk is in compliance with section 404 of the Sarbanes–Oxley
Act, which requires detailed documentation of the design and opera-
tion of financial reporting processes. Novo Nordisk must ensure that
there are no material weaknesses in the internal controls which could
lead to a material misstatement in its financial reporting. The com -
pany’s conclusion and the auditors' evaluation of these processes are
included in its Form 20-F filing.

External audit
The annual report and the internal controls over financial reporting
processes are audited by an external auditor elected at the annual
general meeting. The auditor acts in the interest of the shareholders
and the public (see p 106). The auditor reports any significant findings
regarding accounting matters and 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 independent and objective assur-
ance, primarily within internal control and governance. To ensure 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.

Framework

Governance structure

Assurance

Codes and
regulations

Novo Nordisk
Way of Management

Risk managememt

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 codes
and practices
As a 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 Corporate Governance
Recommendations, and in general with applicable
corporate governance standards on the New York
and London Stock Exchanges.

For a detailed review of Novo Nordisk’s compli-
ance with and deviations from the codes on
corpor ate governance designated by the stock ex-
changes in Copenhagen, New York and London, see
novonordisk.com/annual-report Click: who we are.

Novo Nordisk Annual Report 2006 109

Risk management

Identifying and mitigating risks is a key part of any
manager’s job. At Novo Nordisk a formal risk identi-
fication process encourages everyone to keep an
eye on both immediate risks and those emerging
on the horizon.

opportunities. Through this process, risk factors and mitigations are
identified and factored into the individual units’ business plans. This
disciplined questioning of the context for identified risks and assess-
ment of which objectives may be threatened enables Novo Nordisk
to be more attentive to factors that help or hinder long-term value
creation.

Strategic risk management is high on the agenda of the Board of
Directors and Executive Management. The aim is not to avoid risks,
but to ensure that key risks are proactively managed. This allows Novo
Nordisk to better allocate resources and to target future growth op-
portunities. An analytical and systematic approach to risk manage-
ment makes the assumptions behind decisions more transparent. It
allows management to discuss risks and choose whether to accept,
transfer, share or eliminate the individual risk in order to align Novo
Nordisk’s consolidated risk profile with the readiness of Executive
Management and the Board of Directors to take risks. Clearly, the ap-
petite to take calculated risks will be higher in early discovery phases,
while in other areas such as quality and patient safety the tolerance of
risks will be close to zero.

Novo Nordisk defines risks as ‘events or developments which could
reduce our ability to meet our overall objectives’. This broad definition
includes all types of risk, both financial and non-financial, ranging
from discovery and development, through manufacturing, sales and
support functions that might impede the long-term objectives set out
in the company’s Vision and reflected in its business plans.

Novo Nordisk is operating in an industry that is impacted by consol-
idation, cost containment and intensified competition. Articulating
risks can improve decision-making, and Novo Nordisk has developed
an integrated and systematic risk reporting approach, which is
aligned with existing reporting and recurs on a quarterly basis. It is de-
signed to ensure that key business risks are identified, assessed and
reported to Novo Nordisk’s Executive Management and Board of
Directors.

Once a year Novo Nordisk undertakes a strategic planning process
involving in-depth identification and evaluation of long-term growth

Assessing risks

In all assessment of risks two factors are considered: the likelihood of
the event and its potential impact on the business. Impacts are quan-
tified and assessed in terms of potential financial loss and reputation-
al damage. The risks are assessed at both gross level and net level. The
gross level is the assessment of the risk with the assumption that no
mitigating actions have been implemented. The net risk level is the
residual risk when taking into account the mitigating actions and
their anticipated effect.

Impact in terms of reputational damage is included because Novo
Nordisk sees its repu tation as one of its most valuable assets. A good
reputation, based on solid performance and the business principles
laid down in the Novo Nordisk Way of Management, helps the com-
pany to attract talented people, investments and collaboration part-
ners – and opens doors to customers and regulators. Consequently,
any significant damage to its reputation impairs Novo Nordisk’s ability
to meet its business goals in the longer term.

In 2006, Novo Nordisk developed a more comprehensive and sys-
tematic method for assessing the reputational impact of potential
risks. It aims to make more fact-based assessments of the likelihood
and impact of a risk from a reputation perspective. As such, the tool
serves as a common starting point for management’s discussion on
specific risks.

Examples from the current risk profile

To provide an understanding of the factors that constitute key risks to
Novo Nordisk, some examples of critical assets, risk factors and their
contexts are given below.

Current risk profile – examples

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

Examples of key risks for illustrative purposes:
1 Inability to attract and retain talent
2 Insufficient production capacity
3 Biosimilar competition
4 Healthcare cost containment
5 Ethical marketing practices
6 Currency exposure

Legal issues are not included in the illustration of the risk profile
examples. See the list of current legal issues on pp 87–88.

1 Gross risk
1 Net risk

t
c
a
p
m

Critical

Major

6
6

Moderate

Minor

5
4

4
3

110 Novo Nordisk Annual Report 2006

Unlikely

Possible

Likely

Very likely

Likelihood

Board of Directors

Executive
Management

Risk Management Board

Risk Office

Organisation

Inability to attract and retain talent
The ability to drive innovative products into and through the pipeline
and to ensure cost-effective, high-output performance relies on at-
tracting and developing the right people. In areas where Novo
Nordisk does not currently have a leadership position, recruiting tal-
ent is a constant challenge. Another potential risk factor is loss of key
talents to big pharma companies seeking to build a strong platform
within the diabetes therapeutic segment. Novo Nordisk focuses on
the individual employee by investing in ongoing career development
and a high degree of empowerment.

Insufficient production capacity
There is a risk of failure or breakdown in any of the company’s vital
production facilities, which, in addition to the potential physical dam-
age or loss of life, could affect the supply of products. Fire-prevention
design, alarms and fire instructions, annual inspections, back-up fa -
cilities and minimum safety inventories help mitigate this risk.

To spread risks and optimise costs and logistics, Novo Nordisk is
building up a global sourcing programme, with major investments in
expanding production capacity in for example the US, Brazil and
China. This also entails contracting with local suppliers. To mitigate
risks of non-compliance with Novo Nordisk’s environmental and so-
cial standards, specific requirements are made and audits conducted.
In pharmaceutical production, quality is paramount. The gross risk
of a potential failure in quality levels is very high because ultimately
patient safety could be put at risk. The net risk is low, because Novo
Nordisk has a corporate-wide quality system in place, ensuring com-
pliance with all external and internal standards, maintaining product
quality at the highest levels, and continuously surveying and improv-
ing products, processes and training.

Biosimilar competition
The market for therapeutic proteins is becoming more attractive to
biosimilar producers as more lenient regulatory rules in Europe and in
the US give biosimilar companies an easier pathway to these markets,
when branded products go off-patent. Low-priced biosimilar human
insulin from producers in China, India and Poland is one example.
Novo Nordisk’s exposure to this risk factor is diminishing due to the in-
creasing use of patented modern insulins in Novo Nordisk’s portfolio.

Healthcare cost containment
In mature markets the increased government focus on rising healthcare
costs is putting pressure on pharmaceutical companies’ commercial
pricing structures. Such a situation may discourage investments in re-
search into therapeutic areas with limited prospects for commercialisa-
tion. Government price regulation and other healthcare reforms would
most likely result in lower prices on products if their benefits are not
well-documented. Novo Nordisk is therefore conducting several clini-
cal and health-economic studies of the benefits of modern insulins to
further support its product claims by pharmaco-economical evidence.

Ethical marketing practices
In a competitive environment with increasing public scrutiny and regu -
lation, the risk of legal action related to marketing practices is ever
present. A Business Ethics Policy and related audits as well as other
initiatives to reinforce the Novo Nordisk Way of Management paired
with close monitoring of performance and enhanced reporting
requirements help to mitigate such risks.

The policy supplements existing local ethics and compliance pol -

icies. However, cases may occur in which the policy is violated. In
December 2005, Novo Nordisk was served with a subpoena request-
ing documents relating to the company's US marketing and promo-
tional practices. Investigations of potential criminal offences relating
to healthcare benefit programmes are ongoing.

Novo Nordisk is also under investigation for a possible breach of

the UN sanctions related to the Oil-for-Food programme in Iraq.

Legal issues
Vigilant compliance with regulations and legislation is expected of
any pharmaceutical company. Patient safety must never be comprom -
ised. Any questioning of this entails a violation of Novo Nordisk’s
values as well as major financial and reputational risks. A related risk
is product liability claims. The most significant risk for Novo Nordisk in
this context is in relation to HRT products, where Novo Nordisk Inc.,
together with the majority of hormone therapy product manufactur-
ers in the US, is a defendant in product liability lawsuits related to hor-
mone therapy products. There is a risk of an unfavourable outcome
for Novo Nordisk in the HRT litigation. Also, Menarini, Italy, has sued
Novo Nordisk for damages relating to distribution on the Italian mar-
ket. At this point in time, Novo Nordisk does not expect the pending
claim to have a material impact on Novo Nordisk’s financial outlook.
See the list of current legal issues on pp 87–88.

Currency exposure
Foreign exchange risk is the principal financial risk to Novo Nordisk.
To limit the short-term negative impact on earnings and cash flow
from exchange rate fluctuations, the company undertakes currency
hedging based on expectations of future exchange rates and cash
flows. Hedging is mainly done by using foreign exchange forwards
and foreign exchange options matching the due dates of the hedged
items. Novo Nordisk only hedges commercial exposures and does not
enter into derivative transactions for trading or speculative purposes.
See p 76.

Risk management
set-up

Executive Management has established a dedicated Risk Management
Board of senior executives representing all key business activities and
selected support functions. Chaired by the chief financial officer, it re-
ports to Executive Management and the Board of Directors. The Risk
Management Board meets at least four times a year.

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 to reduce blind spots and consider
potential cross-functional impacts. In quarterly reports to Executive
Management and the Board of Directors, risks are assessed and quanti-
fied in terms of potential financial impact and reputational damage. For
each risk the potential impact is specified, as are mitigating actions.

The Risk Office is the secretariat of the Risk Management Board. It
drives and consolidates risk reporting from discovery and development,
through manufacturing and logistics, to marketing and sales. In addi-
tion, risks related to support functions such as regulatory, business de-
velopment, finance, legal & IT and people & organisation are included.
This is done in consultation with relevant Novo Nordisk committees,
boards and management groups.

Novo Nordisk Annual Report 2006 111

Board of Directors

Sten Scheibye
Sten Scheibye is chairman of the Board of Directors of Novo Nordisk A/S. Since
1995, he has been president and CEO of Coloplast A/S, Denmark.

Besides being a member of the boards of various Coloplast companies, Mr
Scheibye is a member of the Board of Danske Bank A/S, Denmark. Furthermore,
he holds a seat on the Central Board and the Executive Committee of the
Confederation of Danish Industries.

Mr Scheibye has an MSc in Chemistry and Physics from 1978 and a PhD in
Organic Chemistry from 1981, both from the University of Aarhus, Denmark, and a
BComm from the Copenhagen Business School, Denmark, from 1983. 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 2003 and re-
elected several times, most recently in 2006. His term as a board member
expires in March 2007.

Mr Scheibye is regarded as an independent* board member.
Mr Scheibye is a Danish national, born on 3 October 1951.

Göran A Ando
Göran A Ando, MD, is vice-chairman of the Board of Directors of Novo Nordisk
A/S. Dr Ando is a former CEO of Celltech Group plc, UK, until 2004. He joined
Celltech from Pharmacia, now Pfizer, US, where he was executive vice president
and president of R&D with additional responsibilities for manufacturing, IT, busi-
ness development and M&A from 1995 to 2003.

From 1989 to 1995, Dr Ando was medical director, moving to deputy R&D
director and then R&D director of Glaxo Group, UK. He was also a member of the
Glaxo Group Executive Committee.

Dr Ando is a specialist in general medicine and is a founding fellow of the
American College of Rheumatology in the US. Dr Ando serves as chairman of the
boards of Novexel SA, France, and Inion Oy, Finland, as vice chairman of the
Board of S*Bio Pte Ltd, Singapore, and as a board member of Novo A/S, Denmark,
Bio*One Capital Pte Ltd, Singapore, A-Bio Pharma Pte Ltd, Singapore, NicOx SA,
France, and Enzon Pharmaceuticals, Inc, US.

Dr Ando qualified as a medical doctor at Linköping Medical University, Sweden,

Kurt Briner
Kurt Briner works as an independent consultant to the pharmaceutical and
biotech industries and is a board member of OM Pharma, Switzerland, Progenics
Pharmaceuticals Inc, US, and GALENICA SA, Switzerland. From 1988 to 1998, he
was president and CEO of Sanofi Pharma, France. He has been chairman of the
European Federation of Pharmaceutical Industries and Associations (EFPIA).

Mr Briner holds a Diploma of the Commercial Schools of Basel and Lausanne,

Switzerland.

Mr Briner was elected to the Board of Novo Nordisk A/S in 2000 and re-elected
several times, most recently in 2006. His term as a board member expires in
March 2007.

Mr Briner is regarded as an independent* board member.
Mr Briner is a Swiss national, born on 18 July 1944.

Henrik Gürtler
Henrik Gürtler has been president and CEO of Novo A/S, Denmark, since 2000.
He was employed in Novo Industri A/S, Denmark, 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, Mr Gürtler was appointed corporate vice president of Human Resource
Development in Novo Nordisk A/S in 1991, and in 1993 corporate vice president
of Health Care Production. In 1996, he became a member of Corporate
Management of Novo Nordisk A/S with special responsibility for Corporate Staffs.
Mr Gürtler is chairman of the boards of Novozymes A/S, Denmark, and
Copenhagen Airports A/S, Denmark, and a member of the boards of COWI A/S
and Brødrene Hartmanns Fond, both Denmark.

Mr Gürtler has an MSc in Chemical Engineering from the Technical University

of Denmark from 1976.

Mr Gürtler was elected to the Board of Novo Nordisk A/S in 2005 and re-elected

in 2006. His term as a board member expires in March 2007.

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 present position as
president and CEO of Novo A/S.

in 1973 and as a specialist in general medicine at the same institution in 1978.

Mr Gürtler is a Danish national, born on 11 August 1953.

Dr Ando was elected to the Board of Novo Nordisk A/S in 2005 and re-elected
in 2006. His term as a board member expires in March 2007. Dr Ando is designat-
ed Research and Development Facilitator by the Board of Novo Nordisk A/S.

Dr Ando is not regarded as an independent* board member due to his mem-

bership of the board of Novo A/S.

Dr Ando is a Swedish national, born on 6 March 1949.

112 Novo Nordisk Annual Report 2006

Kurt Anker Nielsen
Kurt Anker Nielsen is former CFO and deputy CEO of Novo Nordisk A/S and for-
mer CEO of Novo A/S. He serves as chairman of the Board of Reliance A/S,
Denmark, as vice chairman of the Board of Novozymes A/S and of Dako A/S,
Denmark, and as a member of the Board of Directors of the Novo Nordisk
Foundation, and as a member of the boards of LifeCycle Pharma A/S, Denmark,
ZymoGenetics, Inc, US, Norsk Hydro ASA, Norway, and Vestas Wind Systems A/S,
Denmark. In the four last-mentioned companies and in Dako A/S he is also the
elected Audit Committee chairman. Mr Nielsen serves as chairman of the Board
of Directors of Collstrup’s Mindelegat, Denmark.

Mr Nielsen has an MSc in Commerce and Business Administration from the

Copenhagen Business School, Denmark, from 1972.

Mr Nielsen was elected to the Board of Novo Nordisk A/S in 2000 and has been
re-elected several times, most recently in 2006. His term as a board member
expires in March 2007.

Mr Nielsen is chairman of the Audit Committee at Novo Nordisk A/S and is also

designated as Audit Committee financial expert.

Mr Nielsen qualifies as independent Audit Committee member as defined by
the US Securities and Exchange Commission (SEC). He is not regarded as an inde-
pendent* board member under the Danish Corporate Governance Recommen -
dations due to his former position as an executive in Novo Nordisk A/S and his
membership of the Board of the Novo Nordisk Foundation.
Mr Nielsen is a Danish national, born on 8 August 1945.

Søren Thuesen Pedersen
Søren Thuesen Pedersen has been an employee-elected member of the Board of
Directors of Novo Nordisk A/S since 2006 and a member of the Board of Directors
of the Novo Nordisk Foundation since 2002. His term as a board member of
Novo Nordisk A/S expires in March 2010.

Mr Pedersen is currently working as a specialist in Global Quality Development.

He joined Novo Nordisk in January 1994.

Mr Pedersen has a BSc in Chemical Engineering from the Danish Academy of

Engineers from 1988.

From left to right
Henrik Gürtler
Stig Strøbæk
Kurt Briner
Søren Thuesen Pedersen
Göran A Ando
Sten Scheibye (chairman)
Niels Jacobsen
Anne Marie Kverneland
Jørgen Wedel
Johnny Henriksen
Kurt Anker Nielsen

Johnny Henriksen
Johnny Henriksen has been an employee-elected member of the Board of
Directors of Novo Nordisk A/S since 2002 and was re-elected in 2006. He joined
Novo Nordisk in January 1986 and currently works as an environmental adviser in
Product Supply. His term as a board member expires in March 2010.

Mr Henriksen has an MSc in Biology from the University of Copenhagen,

Mr Pedersen is a Danish national, born on 18 December 1964.

Denmark, from 1977.

Mr Henriksen is a Danish national, born on 19 April 1950.

Niels Jacobsen
Niels Jacobsen has been president & CEO of William Demant Holding A/S and
Oticon A/S, both Denmark, since 1998. He is a board member of Nielsen & Nielsen
Holding A/S, Denmark, and is also a board member of a number of companies
wholly or partly owned by the William Demant Group, including Sennheiser
Communications A/S, Himsa A/S, Himsa II A/S, Hearing Instrument Manufacturers
Patent Partnership A/S (chairman), William Demant Invest A/S (chairman), all in
Denmark, and Össur hf. (chairman), Iceland. Mr Jacobsen also holds a seat on the
Central Board of the Confederation of Danish Industries.

Mr Jacobsen has an MSc in Business Administration from the University of

Aarhus, Denmark, from 1983.

Mr Jacobsen was elected to the Board of Novo Nordisk A/S in 2000 and re-
elected several times, most recently in 2006. His term as a board member expires
in March 2007. Mr Jacobsen is a member of the Audit Committee at Novo Nordisk
A/S and is designated as Audit Committee financial expert.

Mr Jacobsen qualifies as independent Audit Committee member as defined by
the US Securities and Exchange Commission (SEC) and is regarded as an inde-
pendent* board member under
the Danish Corporate Governance
Recommendations.

Mr Jacobsen is a Danish national, born on 31 August 1957.

Anne Marie Kverneland
Anne Marie Kverneland has been an employee-elected member of the Board of
Directors of Novo Nordisk A/S since 2000. Ms Kverneland works as a laboratory
technician in Discovery. She was re-elected by the employees in 2002 and in
2006. Her term as a board member expires in March 2010.

Ms Kverneland has a degree in medical laboratory technology from the

Copenhagen University Hospital, Denmark, from 1980.

Ms Kverneland is a Danish national, born on 24 July 1956.

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 Directors of the Novo Nordisk Foundation
since 1998. He is currently working in Product Supply as an electrician. Mr
Strøbæk was re-elected by the employees in 2002 and in 2006. His term as a
board member expires in March 2010.

Mr Strøbæk has a diploma as an electrician. He also has a diploma in further
training for board members from the Danish Employees’ Capital Pension Fund
(LD) from 2003.

Mr Strøbæk is a Danish national, born on 24 January 1964.

Jørgen Wedel
Jørgen Wedel was executive vice president of the Gillette Company, US, until
2001. He was responsible for Commercial Operations, International, and was a
member of Gillette’s Corporate Management Group. Since 2004, he has been a
board member of ELOPAK AS, Norway.

Mr Wedel has an MSc in Commerce and Business Administration from the
Copenhagen Business School, Denmark, from 1972 and an MBA from the
University of Wisconsin, US, from 1974.

Mr Wedel was elected to the Board of Novo Nordisk A/S in 2000 and has been
re-elected several times, most recently in 2006. His term as a board member
expires in March 2007. Mr Wedel is a member of the Audit Committee at Novo
Nordisk A/S.

Mr Wedel qualifies as independent Audit Committee member as defined by
the US Securities and Exchange Commission (SEC) and is regarded as an inde-
the Danish Corporate Governance
pendent* board member under
Recommendations.

Mr Wedel is a Danish national, born on 10 August 1948.

* In accordance with Section V4 of Recommendations for corporate governance

designated by the Copenhagen Stock Exchange.

Novo Nordisk Annual Report 2006 113

Executive Management

From left to right
Jesper Brandgaard
Lise Kingo
Lars Rebien Sørensen
Kåre Schultz
Mads Krogsgaard Thomsen

Lars Rebien Sørensen
President and chief executive officer (CEO)

Lars Rebien Sørensen joined Novo Nordisk’s Enzymes Marketing in 1982. Over
the years, 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 responsibility within Corporate Management for
Health Care in December 1994. He was appointed president and CEO in
November 2000. Mr Sørensen is a member of the Board of ZymoGenetics, Inc,
US, and in May 2005, he was elected a member of the Bertelsmann AG
Supervisory Board, Germany. Mr Sørensen received the French award Chevalier
de l’Ordre National de la Légion d’Honneur in 2005.

Mr Sørensen has an MSc in Forestry from the Royal Veterinary and Agricultural
University in Denmark from 1981, and a BSc in International Economics from the
Copenhagen Business School, Denmark, from 1983.

Mr Sørensen is a Danish national, born on 10 October 1954.

Jesper Brandgaard
Executive vice president and chief financial officer (CFO)

Jesper Brandgaard joined Novo Nordisk in 1999 as corporate vice president of
Corporate Finance and was appointed CFO in November 2000. He serves as
chairman of the boards of NNE A/S and NNIT A/S, both Denmark.

Mr Brandgaard has an MSc in Economics and Auditing from 1990 as well as an

MBA from 1995, both from the Copenhagen Business School, Denmark.

Mr Brandgaard is a Danish national, born on 12 October 1963.

Lise Kingo
Executive vice president and chief of staffs (COS)

Lise Kingo joined Novo Nordisk’s Enzymes Promotion in 1988 and over the years
worked to build up the company’s Triple Bottom Line approach. In 1999, she was
appointed corporate vice president, Stakeholder Relations. She was appointed
executive vice president, Corporate Relations in March 2002.

Ms Kingo is a member of the Board of GN Store Nord A/S, Denmark, and asso-
ciate professor at the Medical Faculty, Innovation and Sustainability, Vrije
Universiteit, Amsterdam, the Netherlands.

Ms Kingo has a BA in Religions and a BA in Ancient Greek Art from the
University of Aarhus, Denmark, from 1986, a BComm in Marketing Economics
from the Copenhagen Business School, Denmark, from 1991, and an MSc in
Responsibility and Business Practice from the University of Bath, UK, from 2000.

Ms Kingo is a Danish national, born on 3 August 1961.

Kåre Schultz
Executive vice president and chief operating officer (COO)

Kåre Schultz joined Novo Nordisk in 1989 as an economist in Health Care,
Economy & Planning. In November 2000, he was appointed chief of staffs. In
March 2002, he took over the responsibility of COO.

Mr Schultz has an MSc in Economics from the University of Copenhagen,

Denmark, from 1987.

Mr Schultz is a Danish national, born on 21 May 1961.

Mads Krogsgaard Thomsen
Executive vice president and chief science officer (CSO)

Mads Thomsen joined Novo Nordisk in 1991. He was appointed CSO in Novem -
ber 2000. He sits on the editorial boards of three international journals and is a
member of the Board of Governors of the Technical University of Denmark. He is
also a non-executive director of the Board of Cellartis AB, Sweden.

Dr Thomsen has a DVM from the Royal Veterinary and Agricultural University,
Denmark, from 1986, where he also obtained a PhD degree in 1989 and a DSc in
1991, and became professor of pharmacology in 2000. He is a former president
of the National Academy of Technical Sciences (ATV), Denmark.
Dr Thomsen is a Danish national, born on 27 December 1960.

Other members of the Senior Management Board
Jesper Bøving – Preclinical and CMC Supply, Mariann Strid Christensen – Quality, Flemming Dahl – Product Supply, Biopharmaceuticals, Eric Drapé – Diabetes
Finished Products, Peter Bonne Eriksen – Regulatory Affairs, Per Kogut – NNIT (effective1January 2007), 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 – Corporate People & Organisation, Claus Eilersen
– 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

114 Novo Nordisk Annual Report 2006

Shareholder information

Share highlights
n The closing share price for Novo Nordisk’s B shares was DKK 470.5 at the end of 2006.
n The total turnover in 2006 for Novo Nordisk’s B shares on the OMX Nordic Exchange was DKK 90.2 billion.
n DKK 7.00 dividend is proposed for 2006.
n 25.5% of shares belong to Novo A/S.
n 42.9% of share capital is held outside Denmark.

To keep investors updated on financial and operating performance as
well as the progression of clinical programmes, Executive Management
and Investor Relations travel extensively to meet investors and attend
investor conferences after each quarterly financial announcement.
Moreover, meetings and presentations directed specifically at investors
and focusing on non-financial performance factors (environment, so-
cial and governance) are undertaken once or twice a year.

Share price performance

In 2006, the price of the Novo Nordisk B shares increased from
DKK 354.5 to DKK 470.5 corresponding to 33%. The dividend for
2005 paid in March 2006 was DKK 6 per share, corresponding to an
additional yield of 1.7%. The return was significantly higher than the
return on the OMX Copenhagen 20 Index at 12% and the return on
the MSCI Europe Health Care Index at 2%, both measured in DKK.
Measured in USD, the price of the Novo Nordisk B shares increased by
48%, which compared favourably with a modest USD return of 5%
for the MSCI US Health Care Index.

The strong share price performance of Novo Nordisk is perceived to
reflect the underlying strong operating performance as well as positive
results and new initiatives within research and development. The foun-
dation for the strong share price performance is believed to have been
laid by solid overall growth in sales of all strategic products. The gross
margin improvement of 250 basis points in 2006, due to significant
improvements in operating efficiency and a more favourable product
mix, exceeded expectations. The complete set of data from the phase
2b study of liraglutide presented at the American Diabetes Association
meeting in Washington in June and at the European Association for
the Study of Diabetes meeting in Copenhagen in September raised
expectations for the future potential of this product. Finally, the

announcement of expected initiation of three new clinical trials at the
Capital Markets Day in October was positively received.

Capital Markets Day 2006

Capital Markets Day, which was held on 6 October at the primary
Novo Nordisk research facility in Måløv, just outside Copenhagen,
was well attended by more than 125 people. The presentations and
Q&A sessions provided insights into the company’s overall strategy as
well as key operational and R&D value drivers. The growth potential
within North America and International Operations was substantiat-
ed, along with the underlying factors driving the continued improve-
ment of the gross margin.

The strong liraglutide phase 2b data were presented along with
data and priorities for the NovoSeven® clinical expansion programme.
The focus of attention was on the announcement of the initiation of
three new clinical trials: a phase 2 dose-ranging trial for the use of li-
raglutide as an antiobesity agent, a phase 3 study for the use of
NovoSeven® in prophylactic treatment of people with haemophilia
with inhibitors and a phase 3 programme for Norditropin® in adult
patients in chronic dialysis.

Capital structure

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 the event of excess capital after funding
of organic growth opportunities and potential acquisitions, in gene ral
Novo Nordisk will return capital to investors through dividend pay-
ments and/or share repurchase programmes.

As part of the agenda for the Annual General Meeting 2007, the

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 OMX Nordic Exchange 2006
DKK

DKK billion

500

400

300

200

100

Novo A/S 25.5%
Novo Nordisk A/S 5.9%
The Capital Group Companies 13.0%
Danish ATP pension fund 3.9%
Other 51.7%

Denmark 57.1%
UK 15.1%
North America 24.8%
Other 3.0%

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 billion

* In August Novo Nordisk A/S repurchased shares worth DKK 1.8 billion from Novo A/S.

Novo Nordisk Annual Report 2006 115

Shareholder information

Board of Directors will propose a reduction of the company’s B share
capital, corresponding to approximately 4% of the total share capital,
using treasury shares. In 2006, Novo Nordisk repurchased shares
worth DKK 3 billion. In 2007–2008, the company expects to repur-
chase DKK 7 billion worth of shares.

Share capital and ownership

Novo Nordisk’s share capital is divided into A share capital of nominally
DKK 107,487,200 and B share capital of nominally DKK 566,432,800
of which DKK 39,426,138 is held as treasury shares. Novo Nordisk’s A
shares are non-listed shares and held by Novo A/S, a Danish private
limited company which is 100% owned by the Novo Nordisk
Foundation. According to the Articles of Association of the Founda -
tion, the A shares cannot be divested by Novo A/S or the foundation.
In addition, Novo A/S holds DKK 64,362,400 of B share capital. Each
holding of DKK 2 of the A share capital carries 20 votes. Each holding
of DKK 2 of the B share capital carries two votes. With 25.5% of the
total share capital, Novo A/S controls 71% of the total number of votes
excluding treasury shares. The total market value of Novo Nordisk’s
outstanding share capital (A and B shares excluding treasury shares)
was DKK 143 billion at the end of 2006.

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 ADRs. The B shares are traded in units of DKK 2. The ratio of
Novo Nordisk’s B shares to ADRs is 1:1. The B shares are issued to the
bearer but may, on request, be registered in the holder’s name in
Novo Nordisk’s register of shareholders.

As Novo Nordisk B shares are in bearer form, no official record of
all shareholders exists. Based on the available sources of information
on the company’s shareholders, it is estimated that Novo Nordisk’s
shares at the end of 2006 were distributed as shown in the charts on
p 115. At the end of 2006 the free float is 73%.

Form 20-F

The Form 20-F Report for 2006 is expected to be filed in mid-February
2007 with the United States Securities and Exchange Commission.
Copies can be downloaded from novonordisk.com/investors.

Payment of dividends

Shareholders’ enquiries concerning dividend 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 2006, the proposed dividend payments for Novo Nordisk
shares are illustrated in the table below. Novo Nordisk does not pay a
dividend on its own holding of treasury shares.

Dividend payment

A shares of DKK 2

B shares of DKK 2

ADRs

DKK 7.00

Internet

investors can be

Novo Nordisk’s homepage
found at
for
novonordisk.com. It includes historical and updated information
about Novo Nordisk’s activities: press releases from 1995 onwards,
financial results, a calendar of investor-relevant events, investor pre-
sentations, background information and recent annual reports.

See the 2006 online report at novonordisk.com/annual-report.

Financial calendar 2007

Annual General Meeting

7 March 2007

Dividend
Ex-dividend
Record date
Payment

B shares
8 March
12 March
13 March

ADRs
8 March
12 March
20 March

Announcement of financial results 2007
First three months
Half year
Nine months
Full year

2 May
3 August
31 October
31 January 2008

Price development of Novo Nordisk’s B shares relative to
the MSCI Europe Health Care Index measured in DKK
Index 1 January 2002 = 100

Price development of Novo Nordisk’s B shares relative to
the MSCI US Health Care Index measured in USD
Index 1 January 2002 = 100

2002

2003

2004

2005

2006

300

250

200

150

100

2002

2003

2004

2005

2006

300

250

200

150

100

Novo Nordisk’s B shares (prices in DKK)
MSCI Europe Health Care Index

116 Novo Nordisk Annual Report 2006

Novo Nordisk’s B shares (prices in USD)
MSCI US Health Care Index

Get in touch

Novo Nordisk values stakeholders’ reviews of the company’s reporting
and welcomes any questions or comments concerning the report or
the company’s performance.

Visit the corporate website at novonordisk.com.

This report is about how we do business. When it comes to building
relations – that is what Novo Nordisk people across the globe are doing
every day. If reading the report inspires you to learn more or to get
involved in some of the work, please get in touch.

Enquiries, comments and suggestions are very welcome.

Investor Relations
Mads Veggerby Lausten
Tel +45 4443 7919
E-mail: mlau@novonordisk.com

Hans Rommer
Tel +45 4442 4765
E-mail: hrmm@novonordisk.com

In North America:
Christian Qvist Frandsen
Tel +1 609 919 7937
E-mail: cqfr@novonordisk.com

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
E-mail: mike@novonordisk.com

Transfer agents
Shareholders’ enquiries concerning dividend payments, transfer of
share certificates, consolidation 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:
JP Morgan Chase Bank
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

Produced by: Corporate Branding, February 2007
Contributing writers: Amy Brown and Anne Nielsen
Translation and proofreading: Corporate Communications
Photos: Jesper Westley, Willi Hansen, Torben Flindt, Lars E Andreasen,
Finn Fons, Asger Carlsen and Novo Nordisk
Design and production: Branded Design ApS
Accounts and notes production: team2graphics
Printed in Denmark by Bording A/S (DS/EN ISO 14001:1996)

Accounting
for performance

The Novo Nordisk Annual Report covers the fiscal year 2006. It is issued in
February 2007 for approval by shareholders at the Annual General Meeting
in March. In note 31, p 75, the appropriation of net profit including pro-
posed dividends of the Parent company, Novo Nordisk A/S, is included. The
Annual Report is filed with the Danish Commerce and Companies Agency.

Enclosed with the Annual Report is the Financial Statements 2006 of the
Parent company, Novo Nordisk A/S, on a CD-ROM. A printed version can be
obtained from Investor Relations on request.

The Annual Review contains the same information as the Annual Report,

but does not include the consolidated financial and non-financial state-
ments. This document is intended for shareholders and other readers want-
ing a quick overview of the company’s activities.

The Annual Report and the Financial Statements 2006 of the Parent com-

pany are available for online reading and downloads at novonordisk.com.

As a supplement, the company provides additional information and a full
data set on environmental and social performance in its online reporting.
See novonordisk.com/annual-report.

The accuracy, completeness and reliability of the company’s reporting is
verified through internal controls, assurance and independent audits.
Compliance with codes and regulations is further supported by manage-
ment processes such as the Quality Management System, assurance and
internal and external audits.

Business results Diabetes care Biopharmaceuticals Challenging workplace Values in action
Index at your fingertips

Are you looking for specific information and do not immediately see it when leafing through the pages of the Annual Report
2006? If so, this index might be of help; the list below includes the topics covered in the online annual report. Go to
novonordisk.com/annual-report and look up the topic of interest in the index overview.

Topic of interest

Advocacy

Audit and assurance

About Novo Nordisk

Access to health

Accountability

Animal welfare

Awards and recognitions

Biopharmaceuticals

Board of Directors

Business ethics

Business strategy

Where in printed report?

Where in online report?

pp 30–31

pp 106–107

pp 4–5

pp 28–29

pp 90, 107

p 99

pp 34–38

pp 112–113

p 46

how-we-perform/advocacy

how-we-are-accountable/audit-and-assurance

who-we-are/about-novo-nordisk

how-we-perform/access-to-health

how-we-are-accountable

how-we-perform/animal-welfare

how-we-perform/awards-and-recognitions

what-we-do/haemostasis-management

who-we-are/management

how-we-perform/business-ethics

pp 8–15, 22–23, 34–35

how-we-work/vision-and-strategy

Brand and reputation management

how-we-work/brand-and-reputation-management

Capital structure

Changing diabetes

Climate change

Clinical trials

Compliance

p 115

who-we-are/ownerships

pp 8, 15, 22–25, 28–31

how-we-work/brand-and-reputation-management

pp 48, 96

p 10

how-we-perform/climate-change

how-we-perform/bio-ethics/clinical-trials

pp 13, 46, 96, 108–109

how-we-work/compliance

Community engagement

how-we-perform/community-engagement

Corporate governance

pp 108–109

who-we-are/corporate-governance

Definitions

Diabetes care

Diversity

Donations

p 63

pp 20–31

p 42

how-we-work/definitions

what-we-do/diabetes-care

how-we-perform/workplace-quality/diversity

pp 29, 37, 46

how-we-perform/donations

Economic footprint

p 94

how-we-perform/socio-economics/economic-footprint

Environment

pp 45, 47, 48

how-we-perform/environmental-management

Executive Management

Financial performance

Gene technology

Global Compact

GRI

Health and safety

Human rights

Legal issues

Materiality

Memberships

p 114

pp 8–15

p 48

p 45, 90, 105

pp 90, 105

pp 42, 98

who-we-are/management

how-we-perform/financial-performance

how-we-perform/bio-ethics/gene-technology

how-we-are-accountable/global-compact

how-we-are-accountable/gri

how-we-perform/workplace-quality/health-and-safety

how-we-perform/human-rights

pp 13, 87, 111

how-we-perform/legal-issues

p 90

how-we-are-accountable/materiality

how-we-work/stakeholder-engagement/memberships

The Novo Nordisk Way

pp 4–5

who-we-are/about-novo-nordisk

Partnerships

People strategy

Pipeline

Product stewardship

Quality

Remuneration

Responsible sourcing

Risk management

Social responsibility

Socio-economics

Share information

pp 30–31, 32, 34–35

how-we-work/stakeholder-engagement/partnerships

pp 40–43

pp 18–19

p 48

pp 110–111

how-we-perform/workplace-quality/people-strategy

what-we-do/pipeline

how-we-perform/environmental-management

how-we-perform/quality

pp 4–5, 42, 76–83, 108–109 who-we-are/corporate-governance

p 47

pp 110–111

how-we-perform/responsible-sourcing

how-we-work/risk management

pp 24–25, 36–37, 40, 42

how-we-work/triple-bottom-line

pp 24–25, 28–29, 94

how-we-perform/socio-economics

pp 115–117

how-we-perform/financial-performance

Stakeholder engagement

p 5

how-we-work/stakeholder-engagement

Stem cell research

Sustainability

Talent development

Triple Bottom Line

Workplace quality

pp 45, 90

pp 40, 43

how-we-perform/bio-ethics/stem-cell-research

how-we-work/sustainability

how-we-perform/workplace-quality/talent-development

pp 4–5, 24–25, 42

how-we-work/triple-bottom-line

how-we-perform/workplace-quality

Novo Nordisk key products

In the report, reference is made throughout to European product trade names. The list below provides an
overview of European trade names with accompanying generic names. In other countries, trade and generic
names may differ. For a complete overview of country-specific product names, please visit novonordisk.com
Click: Your COUNTRY.

Therapeutic area

Trade name

Generic name

Diabetes care

Modern insulins

(insulin detemir)

Levemir®

NovoRapid®

NovoMix®

Human insulin

Insulatard®

Actrapid®

Mixtard®

Diabetes devices

FlexPen®

NovoPen® 4

InnoLet®

NovoFine®

GlucaGen®

Insulin detemir

Insulin aspart

Biphasic insulin aspart

Insulin human

Prefilled insulin delivery system

Durable insulin delivery system

Prefilled insulin delivery system

Needles

Glucagon

Oral antidiabetic agent

NovoNorm®

Repaglinide

Biopharmaceuticals

Haemostasis

NovoSeven®

Recombinant factor VIIa

Human growth hormone

Norditropin®

NordiFlex®

Somatropin (rDNA origin)

Prefilled multi-dose delivery system

NordiFlex PenMate™

Auto-insertion accessory

NordiLet®

HRT

Activelle®

Estrofem®

Novofem®

Vagifem®

Prefilled multi-dose delivery system

Estradiol/norethisterone acetate

Estradiol

Estradiol/norethisterone acetate

Estradiol hemihydrate

5 December: Erik Dunham, Sergi Vernet i Mañe, Zinnea Ethel Rivas, Karen Rae Siegel
and Alex Chapman are members of the Novo Nordisk Youth Panel (cover). Through
their work in the Youth Panel, together with another 12 young people, they are
dedicated to raising awareness of diabetes in their respective countries. The young
people represent 14 countries.

The youth panellists take turns on board the Changing Diabetes Bus on its journey
around the world. They report on activities via websites and blogs, editorials, media
contacts and engagements with politicians and other stakeholders.

Starting out in Denmark in September 2006, the Changing Diabetes Bus is travelling
through Europe, Africa, Australia, Asia and the US. The journey will end in New York
on World Diabetes Day, 14 November 2007, to celebrate the UN Resolution on
diabetes.

Novo Nordisk has set up the Youth Panel to engage with those who are most at risk
of being affected by the diabetes pandemic: today’s young people. Working through
the Youth Panel offers insights into how to communicate with the generation of
tomorrow, and a better understanding of the attitudes, wishes and needs of young
people with diabetes.

Follow the journey at www.diabetesbus.novonordisk.com.

Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark

CVR No 24 25 67 90

novonordisk.com