Financial, social and environmental performance
Key fi gures
2010
Financial performance
Sales total
Diabetes care
– of which modern insulins
Biopharmaceuticals
Gross profi t
Gross margin
Sales and distribution costs
Research and development costs
Administrative expenses
Operating profi t
Net profi t
Effective tax rate
Capital expenditure, net
Return on equity (ROE)
Free cash fl ow
Long-term fi nancial targets
Operating profi t growth
Operating profi t margin
Return on invested capital (ROIC)
Return on invested capital (ROIC) excl non-recurring impact
from divestment of ZymoGenetics, Inc. in 2010
Cash to earnings (three-year average)
Non-fi nancial performance
Donations
Least developed countries where Novo Nordisk
sells insulin according to the differential pricing policy1
New patent families (fi rst fi lings)
Employees (total)
Employee turnover
Energy consumption
Total waste
Non-fi nancial targets
Maintain a level of engaging culture of 4.0 or above up to 20142
Diversity in all 28 senior management teams by 20143
Water consumption: 11% reduction by 2011 compared to 2007
CO2 emissions: 10% reduction by 2014 compared to 2004
Share performance
Diluted earnings per share/ADR
Dividend per share (proposed)
Closing share price (B shares)
Market capitalisation (B shares)4
DKK million
DKK million
DKK million
DKK million
DKK million
% of sales
% of sales
% of sales
% of sales
DKK million
DKK million
%
DKK million
%
DKK million
%
%
%
%
%
DKK million
%
Number
Number
%
1,000 GJ
Tons
Scale 1– 5
%
%
%
DKK
DKK
DKK
DKK billion
2010
2009
Change
60,776
45,710
26,601
15,066
49,096
80.8
29.9
15.8
5.0
18,891
14,403
21.2
3,308
39.6
17,013
26.5
31.1
63.6
62.4
115.6
84
67
62
30,483
9.1
2,234
20,565
4.3
54
(37)
(55)
24.60
10.00
629
292
19.0%
21.9%
23.9%
11.0%
20.8%
26.5%
33.8%
25.7%
38.0%
51,078
37,502
21,471
13,576
40,640
79.6
30.2
15.4
5.4
14,933
10,768
23.0
2,631
31.3
12,332
20.7
29.2
47.3
47.3
111.5
83
1.2%
73
55
29,329
8.3
2,246
21,019
4.3
50
(34)
(31)
17.82
7.50
332
159
12.7%
3.9%
(0.5)%
(2.2)%
38.0%
33.3%
89.5%
83.7%
1. Novo Nordisk offers insulin at a price not exceeding 20% of the average western world price to least developed countries as defi ned by the United Nations.
2. Based on eVoice, an employee survey using a scale of 1–5, with 5 being the best.
3. Diverse in gender and nationality.
4. Novo Nordisk B shares (excluding treasury shares).
See more fi nancial and non-fi nancial highlights and non-fi nancial targets on pp 14 –15.
For nearly 90 years, Novo Nordisk has combined drug discovery with
technology to turn science into solutions for people with diabetes.
We also provide treatments for people with haemophilia and growth
hormone deficiency and for women experiencing the symptoms of
menopause. We leverage our expertise with protein molecules,
chronic disease management and device technology to provide
innovative treatments that make a difference in quality of care.
Novo Nordisk has more than 30,000 employees in 74 countries
and markets products in about 180 countries. Our B shares are
listed on NASDAQ OMX Copenhagen and our ADRs are listed on
the New York Stock Exchange under the symbol NVO. For more
information about our company, visit novonordisk.com.
Since 2004, we have reported on financial, social and environmental
performance in one integrated report, with both financial and
non-financial statements. We report additional information online.1
The most material and business critical information is reported in the
annual report. Information for specific stakeholder groups is reported
at annualreport2010.novonordisk.com. We value feedback and
welcome questions or comments about this report or our
performance at annualreport@novonordisk.com.
2 Our 2010 accomplishments
and results
2 Letter from the Chairman
3 Letter from the CEO
5 Valuing therapeutic innovation
6 Performance in 2010
11 Outlook 2011
12 Managing performance using long-term targets
14 Performance highlights
16 Our business
17 Strategic focus areas
19 Delivering on our strategy
21 Creating long-term value
22 The Novo Nordisk Way
24 Pipeline overview
26 Novo Nordisk at a glance
28 Diabetes care
29 Modern insulin portfolio
31 Victoza®: innovative early treatment
31 Changing Diabetes®
31 Expanding access to care
32 Public awareness and action
34 Prevention and early detection
35 Improvements in diabetes care
36 Biopharmaceuticals
37 Commitment to haemophilia
37 Changing Possibilities in Haemophilia®
38 Expanding access to care
39 Other therapy areas
39 Recruitment for clinical trials
40 Corporate governance,
remuneration and leadership
40 Corporate governance
43 Risk management
46 Remuneration report
50 Board of Directors
53 Executive Management
54 Shares and capital structure
57 Consolidated financial and
non-financial statements 2010
58 Consolidated financial statements
93 Supplementary information
93 Consolidated non-financial statement
100 Summary of financial data 2006–2010 in EUR
101 Quarterly financial figures 2009 and 2010
102 Financial statements of the Parent company
109 Management’s statement
110 Auditor’s reports
112 Additional information
1. This public filing contains references and links to information posted on the company’s
website; such information is not incorporated by reference into the public filing.
112 Index
113 Our products
Novo Nordisk Annual Report 2010 1
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Letter
from the
Chairman
Sten Scheibye
Chairman of the Board of Directors
The world economy was on the mend in 2010. Much of the rebound
has been due to strong fiscal stimulus provided by governments,
which has put pressure on public budgets, particularly in Europe and
the US. This may in due course put further pressure on the already
strained healthcare environment in these parts of the world.
Economic growth has been maintained in emerging markets,
and many of these countries are investing in improved services,
including healthcare.
As part of the global response to the recent financial crisis, efforts
have been made to improve corporate governance systems and
make companies more transparent. In Denmark, new corporate
governance recommendations were introduced in early 2010.
While Novo Nordisk’s practices are in accordance with the majority
of the new recommendations, the company’s remuneration
principles have been revised to ensure that long-term management
incentives and shareholder interests remain aligned, and these
will be presented to the 2011 Annual General Meeting for approval.
The proposed remuneration principles include incentive guidelines
and introduce claw-back provisions allowing Novo Nordisk to
recover variable remuneration paid on the basis of data that is
subsequently determined to be misstated.
2 Novo Nordisk Annual Report 2010
The Board of Directors oversees the strategic direction of the
company, and in this capacity we have approved new long-term
financial targets. The business and competitive environment has
been quite favourable for Novo Nordisk recently, as have exchange
rates, allowing the company to achieve the previous targets in an
unusually short time frame.
In recognition of Novo Nordisk’s strong balance sheet, sustainable
significant cash flow and the Board’s confidence in the strategic
direction and long-term prospects for the business, we have
consistently increased the dividend paid over the last five years.
During 2010, dividends paid to Novo Nordisk shareholders increased
by 25% to 7.50 Danish kroner per share. The proposed dividend
for 2011 is up 33% to 10.00 Danish kroner per share. Also in 2010
Novo Nordisk repurchased shares worth 9.5 billion Danish kroner
in 2010, helped by the 1.1 billion kroner profit from sale of shares
in ZymoGenetics, Inc. In continuation of this, Novo Nordisk intends
to buy back 10 billion kroner worth of shares in 2011.
As Novo Nordisk marks its 10th year as a focused pharmaceutical
company, the Board would like to express its appreciation of the
leadership shown by President and CEO Lars Rebien Sørensen and
the Executive Management team. On behalf of the Board, I would
also like to thank all Novo Nordisk employees around the world for
their contribution to what has been an outstanding year.
Sten Scheibye
Chairman of the Board of Directors
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Letter
from
the CEO
Lars Rebien Sørensen
President and chief executive officer
Novo Nordisk continued to deliver on our commitment to improve
the lives of people with diabetes and other chronic diseases during
2010, with very positive performance for the year.
related to the development of innovative new treatments for
haemophilia, and continued our build-up of a robust pipeline of
therapies for chronic inflammatory diseases.
As the global leader in diabetes care, with 51% of the insulin
market measured by volume, the success of our core business is
linked to innovations and improvements in global diabetes care.
• Our strong sales growth has been driven by sales of our modern
insulins, particularly in North America and our International
Operations region, and by Victoza®.
• Modern insulins accounted for close to 70% of our total insulin
sales in 2010. These therapies have the potential to improve
glucose control compared with human insulins, lowering the
risk of hypoglycemia.
We achieved the long-term financial targets we set in our 2008
Annual Report with growth in operating profit of 27%. Sales
increased by 19% in Danish kroner and 13% measured in local
currencies. Our diabetes care sales increased 22% in 2010, while
sales of our biopharmaceutical products increased 11%, both
measured in kroner.
• Victoza®, our new Glucagon-Like Peptide-1 treatment, which
is an analogue of the naturally occurring hormone involved in
glucose regulation, has expanded the market for GLP-1 treatment.
Victoza® is used for treating type 2 diabetes when oral antidiabetic
therapy will no longer suffice, offering another option for
managing this progressive disease at early stages.
Uncertainties in early 2010, such as the pending approval of Victoza®
and the potential for generic competition to our oral antidiabetic
agent Prandin® in the US, made us cautious from the beginning
of the year. Victoza® was approved in the US in January 2010 and
the launch came off to a very good start, while Prandin® remained
uncontested in the US throughout the year. This, combined with
our strong business performance, allowed us to exceed our
expectations for 2010.
We saw tremendous progress in 2010 in our development pipeline,
with positive results from phase 3 trials for our next-generation
insulins, Degludec (insulin degludec) and DegludecPlus (insulin
degludec/insulin aspart). We also achieved significant milestones
• We have continued our efforts to improve access to care through-
out the world, donating a portion of income from our net insulin
sales to the World Diabetes Foundation and supporting
improvements in the ability of healthcare systems to diagnose
and treat diabetes.
• As part of our Changing Diabetes ® in Children programme, we
established 13 new clinics to improve diagnosis and treatment
of children with type 1 diabetes in developing countries.
Our manufacturing organisation reached a very ambitious milestone,
increasing productivity to the extent that our cost of goods sold
in 2010 fell to less than 20% of the sales volume. As the efficiency
Novo Nordisk Annual Report 2010 3
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of our production activities has increased, we have also reduced
our environmental impact. We reduced energy and water consumed
for production activities during the year and CO2 emissions from
energy consumption fell 35% compared with 2009 levels.
• We are anticipating a continued successful roll-out of Victoza®
worldwide as well as continued market penetration of our
portfolio of modern insulins.
• Finally, we will continue to pursue further productivity
improvements throughout our organisation.
Succeeding in these areas requires that we attract, retain and
engage the most talented people to support global growth and as
well as continuously improving our ability to manage innovation.
I want to thank everyone at Novo Nordisk for their contributions
to our success. With the capabilities of our talented employees
around the world, I believe 2011 will be yet another successful
year for Novo Nordisk, one with significant growth and continued
innovation for the benefit of all of our stakeholders.
Lars Rebien Sørensen
President and chief executive officer
Pursuing new ambitions
Ten years ago, when I was first appointed CEO, I went on an
educational journey to study what our customers, employees
and other stakeholders expected from our company. This led
to the establishment of our values-based management system
called the Novo Nordisk Way of Management.
I made this journey again in 2010 and was pleased to find that
despite having tripled our workforce and sales and becoming
a much more global business over the past decade, the values
expressed in the Novo Nordisk Way of Management are more
ingrained than ever. In the words of our people, we are continuing
to manage our business in a responsible and sustainable way, with
a focus not only on improving the company’s finances but also on
improving our social and environmental performance.
Part of the Novo Nordisk Way of Management framework has been
our vision to become the world’s leading diabetes care company.
I am proud to report that we have realised this vision and are
introducing a new set of milestones reflecting the challenges of
the next decade. As part of our 2010 update of what is now called
the Novo Nordisk Way, we are now focusing on strengthening our
leadership in diabetes and aspiring to change possibilities in
haemophilia and other serious chronic conditions where we can
make a difference.
What has not changed is our dedication to achieving good business
results in a responsible way. Our newly updated values-based
management system holds all employees accountable for working
in accordance with our principles and provides concise, clear
guidance on how we work. The update is the outcome of an
extensive, inclusive process involving consultation of employees
from all over the world, patient organisations, healthcare providers
and other stakeholders.
Preparing for future growth
In 2011, we will work to solidify our leadership in diabetes care
and expand into new markets and therapy areas. Our future
success will depend on our performance in a number of key areas:
• We expect to file for regulatory approval of Degludec (insulin
degludec) and DegludecPlus (insulin degludec/insulin aspart)
this year.
• We are exploring entry into the obesity market, following the
first phase 3 clinical results for liraglutide in obesity, which
demonstrated weight loss in people with severe obesity and
other co-morbidities.
• We will initiate phase 3 trials for a fixed combination of Degludec
(insulin degludec) and Victoza® which may offer the benefits of
both compounds in a fixed, convenient solution.
• We will initiate the final clinical and regulatory studies for a new
recombinant factor VIIa analogue to treat people with
haemophilia who have developed inhibitors. This new analogue
offers the possibility of forming even stronger clots in less time.
4 Novo Nordisk Annual Report 2010
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Valuing
therapeutic
innovation
Interview with Lars Rebien Sørensen,
Novo Nordisk’s chief executive officer
What are the benefits of therapeutic innovations?
The research-based pharmaceutical industry’s continued efforts
to discover new therapeutic offers are intended to benefit
patients as well as society. In our field of business, we have
seen how treatment of diabetes has improved dramatically
since insulin was discovered nearly 90 years ago. Through
a combination of incremental development and more radical
breakthroughs, significant improvements have been achieved
over just one generation, enabling people with diabetes to
lead their lives in full and achieve a normal life expectancy.
Improvements have been made possible because products were
priced in a way that allows for reinvestment into research in new
products. Our modern insulins are now widely available, and
the improvements they entail will have a cumulative impact on
chronic disease treatment over decades. In our view, innovations
will eventually benefit all people with diabetes.
Our diabetes care portfolio today includes human insulins
as well as modern insulins, which makes it possible for Novo
Nordisk to offer life-saving treatments at affordable prices
and continue to improve treatment regimes that meet individual
needs. Our goal is to develop the best diabetes care portfolio
for healthcare systems in all parts of the world.
What do you consider to be reasonable price
levels for new pharmaceutical products?
The price of a new therapeutic treatment reflects the clinical
benefit as well as the societal value of the therapeutic
innovation, but also takes into account the cost of innovation.
If pharmaceutical companies cannot recoup their investments
in research and development, the business of pharmaceutical
innovation will not be sustainable. And in the long run it would
be patients who would pay the price.
To conduct business responsibly, we have to be profitable and
provide economically viable solutions. For example, Novo
Nordisk’s newest product, Victoza®, was in development for
nearly two decades. When planning development projects,
we know we must finance larger and more complex trials
over longer and longer trial periods before we can hope to
receive product approval.
How should innovation be valued?
Ideally, a product would be priced on the basis of an assessment
of its benefits in a real world setting. Today, this is not the
case. It is difficult to get sufficient information about the
relative treatment benefit before a new product is launched.
Allowing for conditional pricing when new products are
launched would be an option to ensure that the price is
right based on clinical utility and benefits to the patients.
In such a pricing model, prices for new therapies could be
subsequently increased or decreased based on efficacy
when compared with other treatment options.
What role does pricing play for Novo Nordisk
in terms of ensuring availability of treatment?
When looking at the full impact of diabetes on healthcare
budgets, the price of diabetes treatment is a fraction of that.
The most costly part of diabetes lies with the late-stage
complications that require hospitalisation, costly interventions
and leave people incapacitated for longer periods of time.
That said, we do recognise that availability and affordability of
medicines are preconditions for expanding access to health care.
Our premise is that access to essential medicines is a human
right, and we acknowledge our responsibility in addressing the
barriers for proper diagnosis, treatment and care.
In the world’s poorest countries, as defined by the United
Nations, we sell human insulin through our long-standing
differential pricing policy, offering products at a price not
more than 20% of the average prices in the western world.
In other countries, we market the full Novo Nordisk portfolio
of insulins with the goal of reaching the majority of patients
with diabetes with a product mix of human and modern insulins
and a range of devices to suit the affordability levels of both
public and private customers as well as patients who may pay
out of pocket.
Why does Novo Nordisk remove products from the market?
We make every effort to ensure that life-saving medicines are
available to patients. This year, as several governments in Europe
mandated price cuts to address their economic problems, we
faced dilemmas between operating profitably and continuing
to serve people who rely on our products.
In May 2010, the Greek government announced temporary
price cuts of up to 27%. As a consequence, we made a decision
to temporarily withdraw some products from the Greek market,
but we continued to offer human insulin in vials.
In a situation like this, there is a major dilemma for a company
like ours. The proposed price reductions for patented products
would not have allowed us to continue running a profitable
business in Greece. In the long term, if we cannot maintain
profitability, we will be unable to continue to provide and
improve treatment for the people who most need it. While
pricing issues remain unresolved in Greece, we have been able
to continue to offer our broad portfolio of products, including
modern insulins, with Penfill® cartridges in the NovoPen® 4
device.
How should governments assess the value of treatment?
We understand the budget constraints governments are
facing. Medical costs can be an easy target in times of tough
political choices. While there may be short-term savings, the
cost to society can be greater over a longer time frame. The
cost of treatment is usually a small fraction of overall
spending on diabetes care, with most spending allocated to
treat serious complications related to inadequate medical
care. In the US and Europe, for instance, insulin accounts for
3% of the total costs associated with treating diabetes.
Novo Nordisk Annual Report 2010 5
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Performance in 2010
2010 was another successful year for Novo Nordisk with achieve-
ment of long-term financial targets set in the 2008 Annual Report,
strong sales growth, continued improvement in gross margin
and very significant progress in the clinical development pipeline.
Following the initial 2009 launch of Victoza®, the first once-daily
human GLP-1 analogue, the roll-out has succeeded in expanding
the market for GLP-1 treatment.
Sales increased by 19% in Danish kroner and by 13% measured
in local currencies. Sales growth was realised in both diabetes care
and biopharmaceuticals. Victoza® and modern insulins were the
main contributors to growth, with modern insulin sales increasing
by 24% (18% in local currencies). NovoSeven® and Norditropin®
sales also contributed to the strong sales growth, increasing by 14%
(8% in local currencies) and 9% (4% in local currencies) respectively.
Sales growth was realised in all regions. Sales in North America
increased by 29% and International Operations by 24% in Danish
kroner, and by 22% and 15% respectively in local currencies.
Managing our business according to the Triple Bottom Line business
principle helps ensure that decisions are balanced and take a long-
term view, with the objective of protecting and enhancing
shareholder value while at the same time creating societal value.
In addition to strong financial performance, in 2010 we met
long-term targets relating to employee engagement and adherence
to our values and exceeded long-term targets for reduction of
energy and water consumption and CO2 emissions.
Financial performance
Diabetes care
We continue to be the global leader in the diabetes care market
with 51% of the total insulin market and 46% of the modern insulin
market, both measured by volume. Sales of diabetes care products
increased by 22% measured in Danish kroner to DKK 45,710 million
and by 16% in local currencies compared with 2009.
Modern insulins, human insulins
and protein-related products
In 2010, sales of modern insulins, human insulins and protein-
related products increased by 17% in Danish kroner to DKK
40,642 million and by 11% measured in local currencies compared
with 2009, with North America and International Operations
having the highest growth rates.
Our portfolio of modern insulins was the main contributor to growth
with sales increasing by 24% in Danish kroner to DKK 26,601 million
and by 18% in local currencies compared with 2009, reflecting
steady organic sales growth globally. All regions realised solid
growth rates, with North America accounting for more than half
of the growth, followed by International Operations and Europe.
Sales of modern insulins now constitute nearly 70% of Novo
Nordisk’s insulin sales.
North America
Sales in North America increased by 26% in Danish kroner and by
19% in local currencies in 2010, reflecting a continued solid market
penetration of the modern insulins, Levemir®, NovoLog® and
NovoLog® Mix 70/30. Novo Nordisk maintains its leadership position
in the US insulin market with 42% of the total insulin market and
37% of the modern insulin market, both measured in volume.
Currently, around 43% of Novo Nordisk’s modern insulin volume
in the US is being sold in the prefilled device FlexPen®.
Europe
Sales in Europe increased by 4% measured in Danish kroner and
by 2% in local currencies in 2010, reflecting continued progress
for the portfolio of modern insulins and declining human insulin
sales. Novo Nordisk holds 53% of the total insulin market and 51%
of the modern insulin market, both measured in volume. Device
penetration in Europe remains high with more than 95% of Novo
Nordisk’s insulin volume being used in devices, primarily NovoPen®
and FlexPen®.
International Operations
Sales in International Operations increased by 26% in Danish kroner
and by 17% in local currencies in 2010. The main contributor to
growth was sales of modern insulins, primarily in China. Sales of
human insulins continue to add to overall growth in the region, also
driven by China. As of 1 January 2011, a fifth Novo Nordisk region,
Region China, has been established comprising China, Taiwan and
Hong Kong; therefore, these countries are no longer part of
‘International Operations’. In China, Novo Nordisk currently holds
63% of the total insulin market and 70% of the modern insulin
market, both measured in volume.
DKK billion
Sales by
geographical area
■ Europe
■ North America
■ International Operations
incl China
■ Japan & Korea
2010
2009
2008
2007
2006
60.8
51.1
45.6
41.8
38.7
0
10 20 30 40 50 60 70
DKK billion
Sales by therapy area
■ Diabetes care
■ Haemostasis management
(NovoSeven®)
■ Growth hormone therapy
■ Hormone replacement
therapy (HRT)
■ Other products
2010
2009
2008
2007
2006
60.8
51.1
45.6
41.8
38.7
0
10 20 30 40 50 60 70
Sales growth
Local and reported rates
In DKK as reported
In local currencies
%
25
20
15
10
5
0
2006
2007
2008
2009
2010
6 Novo Nordisk Annual Report 2010
Japan & Korea
Sales in Japan & Korea increased by 10% measured in Danish
kroner and decreased by 2% in local currencies in 2010. The
sales development reflects sales growth for all three modern
insulins, Levemir®, NovoRapid® and NovoRapid Mix® 30, offset
by a decline in human insulin sales. In a continuously challenging
competitive environment, Novo Nordisk now holds 63% of the
total insulin market in Japan and 56% of the modern insulin
market. Device penetration in Japan remains high with more
than 98% of Novo Nordisk’s insulin volume being used in devices,
primarily NovoPen® and FlexPen®.
Victoza® (GLP-1 therapy for type 2 diabetes)
Victoza® sales reached DKK 2,317 million during 2010 reflecting
solid market performance in both Europe and the US. The global
launch has continued throughout 2010, most recently in Russia,
Argentina, Mexico and four countries in the Middle East. The market
performance globally has been encouraging in 2010 with Victoza®
reaching solid market shares in the GLP-1 segment as well as
significantly increasing the GLP-1 class’s share of the total diabetes
care market.
NovoNorm®/Prandin®/PrandiMet®
(Oral antidiabetic products)
In 2010, sales of oral antidiabetic products increased by 4% in Danish
kroner to DKK 2,751 million and decreased by 1% measured in local
currencies compared with 2009. The sales development reflects
sales growth in China being offset by lower sales in Europe due
to generic competition in several European markets, with the main
impact in Germany.
Insulin volume
market share
Geographical areas
Europe
North America
International Operations
Japan & Korea
Modern insulins
Global value market
share of segment
NovoRapid®
NovoMix®
Levemir®
%
100
80
60
40
20
0
%
100
80
60
40
20
0
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Research &
development costs
■ Diabetes care
(excl pulmonary
diabetes projects)
■ Biopharmaceuticals
DKK billion
2010
2009
2008
2007
2006
9.6
7.9
7.5
7.2
6.3
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Biopharmaceuticals
In 2010, sales of biopharmaceutical products increased by 11%
measured in Danish kroner to DKK 15,066 million and by 5%
measured in local currencies compared with 2009.
NovoSeven® (Bleeding disorders therapy)
Sales of NovoSeven® increased by 14% in Danish kroner to DKK
8,030 million and by 8% in local currencies compared with 2009.
Sales growth for NovoSeven® was primarily realised in North
America, but Japan & Korea and International Operations also
contributed to the growth.
Norditropin® (Growth hormone therapy)
Sales of Norditropin® increased by 9% measured in Danish kroner
to DKK 4,803 million and by 4% measured in local currencies
compared with 2009. Novo Nordisk is the second-largest company
in the global growth hormone market with a 24% market share
measured in volume.
Other products
Sales of other products within biopharmaceuticals, which pre -
dominantly consist of hormone replacement therapy related
products, increased by 6% in Danish kroner to DKK 2,233 million
and decreased by 1% measured in local currencies. This develop-
ment primarily reflects continued sales progress for Vagifem®
being partly offset by generic competition to Activella® in the US.
Development in cost
and operating profit
The cost of goods sold was DKK 11,680 million in 2010, reflecting
a gross margin of 80.8% compared with 79.6% in 2009. This
im prove ment primarily reflects a favourable product mix impact
due to increased sales of modern insulins and Victoza® and a positive
0.4 percentage point currency impact.
In 2010, total non-production-related costs increased by 18% to DKK
30,862 million and by 14% in local currencies compared with 2009.
Sales and distribution costs increased by 18% to DKK 18,195 million,
primarily reflecting the launch costs of Victoza® in Europe and the
US, as well as a continued expansion of the field sales forces in
Europe, Japan, China and the US, and an increase in the provision
level for legal cases.
Research and development costs increased by 22% to DKK 9,602
million, primarily reflecting the ongoing phase 3 programme for the
company’s next generation of insulins, Degludec1 (insulin degludec)
and DegludecPlus2 (insulin degludec/insulin aspart).
Licence fees and other operating income constituted DKK 657 million
in 2010 compared with DKK 341 million in 2009. This development
primarily reflects a sustainable higher level of licence fees as well as
non-recurring income of approximately DKK 100 million related to
a patent settlement during the first quarter of 2010.
Operating profit in 2010 increased by 27% to DKK 18,891 million
compared with 2009. In local currencies the growth was approx-
ima tely 16%.
0
2
4
6
8
10
1. Internal designation for insulin degludec.
2. Internal designation for insulin degludec/insulin aspart.
Novo Nordisk Annual Report 2010 7
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Net financials and tax
Equity
Net financials showed a net expense of DKK 605 million in 2010
compared with a net expense of DKK 945 million in 2009. For
2010, the foreign exchange result was an expense of DKK 1,341
million compared with an expense of DKK 751 million in 2009.
This development reflects losses on foreign exchange hedging,
particularly of US dollars due to the appreciation versus Danish
kroner in 2010 compared with the exchange rate level prevailing
in 2009.
Also included in net financials is the result from associated
companies with an income of DKK 1,070 million. In 2009, the result
from associated companies was an expense of DKK 55 million. In
the fourth quarter of 2010, Novo Nordisk recorded non-recurring
income of approximately DKK 1.1 billion from the sale of shares in
ZymoGenetics, Inc. as announced on 8 October 2010.
The realised effective tax rate for 2010 was 21.2%. The effective
tax rate for 2010 is lowered by a non-recurring effect of approx-
imately 1.5 percentage points from the divestment of Novo
Nordisk’s ownership share of ZymoGenetics, Inc., the income from
which is exempt from tax charges under applicable Danish tax laws.
Capital expenditure
and free cash flow
Net capital expenditure for property, plant and equipment for
2010 was DKK 3.3 billion compared with DKK 2.6 billion in 2009.
The main investment projects in 2010 were the insulin filling plant
in Tianjin, China, and new device manufacturing lines in Denmark.
Free cash flow for 2010 was DKK 17.0 billion compared with
DKK 12.3 billion in 2009. The higher cash flow is driven by higher
operating profit and the non-recurring proceeds from the
divestment of ZymoGenetics, Inc.
Gross margin
Development
in gross margin
%
85
80
75
70
65
2006
2007
2008
2009
2010
Months
US dollar and
Japanese yen
Cover and exchange rate
■ Cover USD (left)
■ Cover JPY (left)
Rate USD (right)
Rate JPY per 100 (right)
25
20
15
10
5
0
Rate
7.00
6.50
6.00
5.50
5.00
12/06 12/07 12/08 12/09 12/10
8 Novo Nordisk Annual Report 2010
Total equity was DKK 36,965 million at the end of 2010, equivalent
to 60% of total assets, compared with 65% at the end of 2009.
Treasury shares and 2010
share repurchase programme
During 2010 Novo Nordisk repurchased 19,534,528 shares at an
average price of DKK 486 per share, equivalent to a cash value of
DKK 9.5 billion. Novo Nordisk thereby concluded the previously
announced 2010 share repurchase programme.
Employee share programmes in 2010
Employees in Denmark have participated in two general employee
share programmes in 2010. Approximately 8,000 employees have
purchased 262,000 shares under a share save programme. The
shares were purchased at a price of DKK 583.16. There are no
costs to the company for this programme. Approximately
11,000 employees have purchased 567,000 shares at a price of
DKK 275. The costs of this programme, DKK 192 million, were fully
expensed in 2010.
Furthermore, approximately 15,000 international employees have
been awarded approximately 273,000 stock options in 2010, and
the cost of these, DKK 150 million, will be amortised over a 3-year
vesting period.
Holding of treasury shares
and reduction of share capital
As per 1 February 2011, Novo Nordisk A/S and its wholly owned
affiliates owned 28,206,755 of its own B shares, corresponding
to 4.7% of the total share capital.
In order to maintain capital structure flexibility, the Board of Directors
at the Annual General Meeting in 2011 will propose a reduction in
the B share capital from DKK 492,512,800 to DKK 472,512,800 by
cancelling 20,000,000 B shares of DKK 1 from the company’s own
holding of B shares at a nominal value of DKK 20,000,000,
equivalent to 3.3% of the total share capital. After implementation
of the share capital reduction, the company’s share capital will
amount to DKK 580,000,000 divided into an A share capital of DKK
107,487,200 and a B share capital of DKK 472,512,800.
Proposed dividend and 2011
share repurchase programme
At the Annual General Meeting on 23 March 2011, the Board of
Directors will propose a 33% increase in dividend to DKK 10.00 per
share of DKK 1, corresponding to a pay-out ratio of 39.6%,
compared with 40.9% for the financial year 2009. Adjusting for the
effect of the ZymoGenetics, Inc. share divestment, where the
increased cash flow was returned to shareholders via an expansion
of the 2010 share repurchase programme, the pay-out ratio is 42.8%.
No dividend will be paid on the company’s holding of treasury shares.
The Board of Directors has approved a new DKK 10 billion share
repurchase programme to be executed during 2011. Novo Nordisk
will initiate its share repurchase programme in accordance with the
provisions of the European Commission’s Regulation No. 2273/2003
of 22 December 2003 (The Safe Harbour Regulation). For that
purpose Novo Nordisk has appointed J.P. Morgan Securities Ltd. as
lead manager to execute a part of its share repurchase programme
independently and without influence from Novo Nordisk. The
purpose of the programme is to reduce the company’s share capital.
Under the agreement, J.P. Morgan Securities Ltd. will repurchase
shares on behalf of Novo Nordisk for an amount of up to DKK 2.0
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billion during the trading period starting 2 February and ending on
26 April 2011. A maximum of 155,151 shares can be bought during
one single trading day, equal to 20% of the average daily trading
volume of Novo Nordisk B shares on NASDAQ OMX Copenhagen
during the month of January 2011, and a maximum of 8,843,607
shares in total can be bought during the trading period. At least once
every seven trading days, Novo Nordisk will issue an announcement
in respect of the transactions made under the repurchase programme.
Non-financial
performance
The company’s long-term non-financial targets support efforts to
maximise positive social impact by improving access to and quality
of care, attracting and retaining employees and effectively
managing resources to minimise environmental impacts. Adoption
of our long-established differential pricing policy, a measure of our
progress to expand access to diabetes care, continued. During 2010,
we met non-financial targets related to employee engagement and
adherence to the Novo Nordisk Way and made progress towards
the target of diversity in all senior management teams. Performance
on environmental dimensions improved and we successfully
exceeded targets for reduction of energy consumption, water
con sumption and CO2 emissions.
Social
We actively manage three dimensions of social performance:
improving care for people whose healthcare needs we serve;
developing our employees and ensuring a healthy and safe work
environment; and making a positive contribution to the communities
in which we operate.
Patients
Clinical trials
The number of people participating in Novo Nordisk’s clinical trials
increased by 74% in 2010. Due to the phase 3 trials for Degludec
and DegludecPlus, which involve more than 9,000 people, 19,361
people participated in Novo Nordisk’s clinical trials in 2010,
compared with 11,130 in 2009.
Access to care
Novo Nordisk’s long-term efforts to expand access to care and
treatment include the establishment of the World Diabetes
Foundation in 2001. In 2010, the company donated DKK 69 million
to the foundation, which supports sustainable initiatives to build
healthcare capacity to prevent and treat diabetes in developing
countries. This donation, equivalent to 0.18% of net insulin sales
for the year, was in accordance with obligations previously agreed
to by the company’s shareholders.
Novo Nordisk also supports the Novo Nordisk Haemophilia Foun-
dation, established in 2005. In 2010, we donated DKK 15 million.
For more information on the foundations, see pp 32 and 38.
Pricing
Purchases through Novo Nordisk’s long-established differential
pricing policy for insulin sales in least developed countries increased
by 30% by volume compared to 2009. Our goal is for our differential
pricing policy to be accepted in all least developed countries. We
sold human insulin at or below the policy price, not to exceed
20% of the average prices in the western world, in 67% or 33 of
49 least developed countries during 2010.
Capacity building
Developing healthcare infrastructure to improve the ability to
diagnose and treat diabetes is key to achieving sustainable improve-
ments in access to care and personal health. Over the years, our
investments in training and education of healthcare professionals
have been significantly scaled up. Since 2002, a total of 1.2 million
healthcare professionals worldwide have attended training
pro grammes conducted or sponsored by Novo Nordisk. During
2010, we also reached out to nearly 500,000 people with diabetes,
providing training on how to manage their condition.
In addition to enrolling about 800 children with type 1 diabetes
in our Changing Diabetes® in Children programme during 2010,
taking the total to more than 1,300, we trained about 100 health-
care providers and established 13 clinics. The programme supports
diagnosis and treatment of children in developing countries,
par ti cularly in sub-Saharan Africa.
Employees
Our global growth continued as projected, with new employees
primarily added in International Operations and North America.
At the end of 2010, the total number of employees was 30,483,
which corresponds to 30,014 full-time positions. The total number
of employees increased by 4%. In the same period, employee
turnover increased from 8.3% to 9.1%.
Engagement
The ability to manage global growth and stimulate productivity and
innovation is tracked through a set of engagement scores from our
annual employee survey, eVoice. In 2010, the consolidated engage-
ment score (on a scale of 1 to 5, with 5 being the best score) was
4.3, which was consistent with 2009. Annual scores have
con sistently met our target of 4.0 or above since 2006.
Diversity
We believe diverse management teams and people with different
perspectives are best suited to drive performance and foster
innovative thinking. Our ambition is that by 2014 all senior
management teams will include employees of both genders and
different nationalities.
At the end of 2010, diversity in terms of gender and nationality
was reflected in 54% of the 28 senior management teams,
compared with 50% at the end of 2009. While we have chosen
to report on our progress annually, changing our organisational
culture is a long-term objective that involves training and mentoring,
talent management and succession planning.
1,000 full-time positions
Full-time positions
Geographical areas
■ Europe
■ North America
■ International Operations
■ Japan & Korea
2010
2009
2008
2007
2006
30.5
29.3
27.1
26.0
23.6
0
5
10 15 20 25 30 35
Novo Nordisk Annual Report 2010 9
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As a large employer in Denmark, Novo Nordisk has subscribed to
the Ministry of Equality's recommendations for more women on
supervisory boards. The company is thus committed to targeted
efforts to develop and recruit female managers.
Health and safety
The frequency of occupational injuries increased to 4.9 per million
working hours in 2010, compared with 4.3 per million working
hours in the previous year.
Assurance
Quality
As sales and production output have increased, quality levels,
measured in terms of inspection findings, have been maintained.
In 2010, 105 inspections of Novo Nordisk’s production facilities were
concluded with no re-inspections or warning letters.
In 2010, Novo Nordisk had four instances of product recalls from
the market, compared with two recalls in 2009. Recalls during 2010
were for Norditropin NordiFlex® 15 mg (Switzerland), Mixtard® 30
InnoLet® 100 IU/ml (several countries), and two separate recalls of
our emergency kit for treating severe hypoglycaemia, GlucaGen®
Hypokit (Canada, New Zealand and Denmark). We cooperated with
local health authorities to ensure appropriate information was
pro vided to pharmacies, medical practitioners and patients.
Values
The Novo Nordisk Way, our values-based approach to management,
outlines expectations for employee behaviour, and adherence to
the corporate values is audited as part of our ongoing internal
assurance process. Values audits, called facilitations, are conducted
by our global facilitator team, consisting of senior people with deep
understanding of our business and the business environment.
From 1 October 2009 to 30 September 2010, 58 facilitations were
conducted at unit level, covering more than 12,000 employees.
More than 2,800 employees were interviewed to determine how
corporate values are being complied with throughout the
organisation. To maintain a high level of compliance, 225 findings
were issued during the 2010 facilitation year.
Business ethics
As we grow, adding close to 4,000 new employees annually,
ongoing training helps ensure that all new employees understand
their responsibilities and the company’s values-based management
system. Training programmes are developed to address emerging
trends, such as changes in the regulatory environment. Annual
business ethics training is required for all employees throughout
the company. In total, 98% completed the required training in 2010.
Business ethics audits are conducted using a risk-based approach,
with on-site interviews and documentation reviews to assess
compliance with Novo Nordisk’s business ethics procedures. During
2010, 35 business ethics audits were conducted and 200 findings
were issued and agreed with local management.
Our employees have an obligation to report any instances of
suspected misconduct. This obligation can be met by reporting
to a manager or company legal counsel. Novo Nordisk also provides
the option to report suspected business ethics misconduct anon-
ymously through a compliance hotline monitored by the Audit
Committee. During 2010, 15 cases of suspected business ethics
misconduct were reported through the compliance hotline. These
have been investigated and three of them have been substantiated
10 Novo Nordisk Annual Report 2010
and have been determined to have no material impact for Novo
Nordisk. Consequences for employees involved in substantiated
cases ranged from counselling and training to written warnings
and have been determined to have no material impact for Novo
Nordisk.
Supplier audits
To ensure product quality and manage potential risks in our supply
chain, we conduct both quality and responsible sourcing audits.
In 2010, a total of 192 audits were conducted, compared with 196
in 2009. These audits resulted in 539 non-conformities. Follow-
up actions for these are being performed according to Novo Nordisk
procedures.
Environment
Performance on environmental dimensions improved and we
successfully exceeded long-term targets for reduction of energy
consumption, water consumption and CO2 emissions.
Water and energy consumption for production decreased in 2010
by 37% and 20% respectively compared with the 2007 baseline.
These reductions surpassed the long-term targets of 11% reductions
in both areas by 2011 compared to 2007. Consumption decreases
were mainly due to optimisations in insulin bulk production in
Denmark. Energy and water-saving projects at many other sites also
contributed.
The total volume of waste decreased 2% to 20,565 tons in 2010
from 21,019 tons in 2009, while the percentage of recycled waste
remained stable at 50%. The decrease in waste was primarily due
to a 12% reduction in hazardous waste disposal.
While sales and production increased in 2010, CO2 emissions related
to production fell by 35% compared with 2009 levels. This was due
to the full conversion to renewable power supplies for Danish
operations, including energy-intensive insulin production, and
increased energy efficiency in all production facilities globally.
DKK billion
1,000 m3
Total water
consumption
Sales (left)
Water used at all
production sites (right)
70
60
50
40
30
4.0
3.5
3.0
2.5
2.0
2006 2007 2008 2009 2010
DKK billion
1,000 tons
Climate strategy
impact
Sales (left)
CO2 emissions (right)
70
60
50
40
30
300
240
180
120
60
2006 2007 2008 2009 2010
Outlook 2011
The current expectations for 2011 are summarised in the table
below:
Expectations are as reported,
if not otherwise stated
Current expectations
2 February 2011
Sales growth
• in local currencies
• as reported
Operating profit growth
• in local currencies
• as reported
Net financials
Effective tax rate
Capital expenditure
8–10%
Around 1.5 percentage points lower
Around 15%
Around 2.5 percentage points lower
Expense of around DKK 100 million
Around 23%
Around DKK 3.5 billion
Depreciation, amortisation and impairment losses
Around DKK 2.7 billion
Free cash flow
More than DKK 16 billion
Novo Nordisk expects sales growth in 2011 of 8–10% measured in
local currencies. This is based on expectations of continued market
penetration for Novo Nordisk’s key products, as well as expectations
of continued intense competition, generic competition to oral
antidiabetic products, and an impact from the implementation of
healthcare reforms primarily in the US and Europe. Given the current
level of exchange rates versus Danish kroner, the reported sales
growth is expected to be around 1.5 percentage points lower than
growth measured in local currencies.
For 2011, growth in operating profit is expected to be around 15%
measured in local currencies. Given the current level of exchange
rates versus Danish kroner, the reported operating profit growth
is expected to be 2.5 percentage points lower than growth
measured in local currencies.
For 2011, Novo Nordisk expects a net financial expense of around
DKK 100 million. The current expectation reflects that the impact
of currency hedging contracts is approximately neutral.
The effective tax rate for 2011 is expected to be around 23%.
Capital expenditure is expected to be around DKK 3.5 billion in
2011, primarily related to investments in the new insulin formulation
and filling plant in China and a new prefilled device production
facility in Denmark. Expectations for depreciation, amortisation
and impairment losses are around DKK 2.7 billion whereas free cash
flow is expected to be more than DKK 16 billion.
All of the above expectations are based on the assumption that
the global economic environment will not significantly change
business conditions for Novo Nordisk during the remainder of
2011 and that currency exchange rates, especially the US dollar,
will remain at the current level versus the Danish krone during
the remainder of 2011.
Novo Nordisk has hedged expected net cash flows in a number of
invoicing currencies and, all other things being equal, movements
in key invoicing currencies will impact Novo Nordisk’s operating
profit as outlined in the table below:
Key
invoicing
currency
Annual impact on Novo Nordisk’s
operating profit of a 5%
movement in currency
Hedging
period
(months)
USD
JPY
CNY
GBP
* USD used as proxy when hedging Novo Nordisk’s CNY currency exposure.
DKK 620 million
DKK 155 million
DKK 120 million
DKK 85 million
15
13
12*
10
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The financial impact from foreign exchange hedging is included
in ‘Net financials’.
Forward-looking statements
Novo Nordisk’s reports filed with or furnished to the US Securities and Exchange Commission
(SEC), including this document and Form 20-F, both expected to be filed with the SEC in February
2011, and written information released, or oral statements made, to the public in the future by
or on behalf of Novo Nordisk, may contain forward-looking statements. Words such as ‘believe’,
‘expect’, ‘may’, ‘will’, ‘plan’, ‘strategy’, ‘prospect’, ‘foresee’, ‘estimate’, ‘project’, ‘anticipate’, ‘can’,
‘intend’, ‘target’ and other words and terms of similar meaning in connection with any discussion
of future operating or financial performance identify forward-looking statements. Examples of
such forward-looking statements include, but are not limited to:
• statements of plans, objectives or goals for future operations, including those related to Novo
Nordisk’s products, product research, product development, product introductions and product
approvals as well as cooperations in relation thereto
• statements containing projections of or targets for revenues, income (or loss), earnings per share,
capital expenditures, dividends, capital structure or other net financials
• statements regarding future economic performance, future actions and outcome of contingencies
such as legal proceedings
• statements regarding the assumptions underlying or relating to such statements.
In this document, examples of forward-looking statements can be found under the headings
‘Performance in 2010’, ‘Outlook 2011’, ‘Managing performance using long-term targets’
‘Strategic focus areas’ and elsewhere.
These statements are based on current plans, estimates and projections. By their very nature,
forward-looking statements involve inherent risks and uncertainties, both general and specific.
Novo Nordisk cautions that a number of important factors, including those described in this
document, could cause actual results to differ materially from those contemplated in any
forward-looking statements.
Factors that may affect future results include, but are not limited to, global as well as local political
and economic conditions, including interest rate and currency exchange rate fluctuations, delay
or failure of projects related to research and/or development, unplanned loss of patents,
interruptions of supplies and production, product recall, unexpected contract breaches
or terminations, government-mandated or market-driven price decreases for Novo Nordisk’s
products, introduction of competing products, reliance on information technology, Novo
Nordisk’s ability to successfully market current and new products, exposure to product liability
and legal proceedings and investigations, changes in governmental laws and interpretation
thereof, including on reimbursement, intellectual property protection and regulatory controls
on testing, approval, manufacturing and marketing, perceived or actual failure to adhere to
ethical marketing practices, investments in and divestitures of domestic and foreign companies,
unexpected growth in costs and expenses, failure to recruit and retain the right employees
and failure to maintain a culture of compliance.
Please also refer to the overview of risk factors on pp 43–45.
Unless required by law Novo Nordisk is under no duty and undertakes no obligation to update
or revise any forward-looking statement after the distribution of this document, whether as a
result of new information, future events or otherwise.
Novo Nordisk Annual Report 2010 11
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Managing
performance using
long-term targets
Interview with Jesper Brandgaard,
Novo Nordisk’s chief financial officer
How does Novo Nordisk use long-term
financial targets to manage the business?
The long-term financial targets are set based on a continuation
of the current organic growth strategy and the current scope of
activities. The targets help management establish a balance
between growing the business profitably in the near term while
ensuring we are able to make investments to support long-term
growth. When Novo Nordisk sets long-term targets, we have
a clearly defined ambition and a plan to achieve them.
Every year, interim targets for the long-term targets are included in
the company’s Balanced Scorecard and cascaded to relevant parts
of the business. The interim targets are set based on prior-year
performance, the prevailing currency and competitive environment.
It is also important that our activities result in cash generation,
a portion of which can be returned to shareholders as dividends.
How long has Novo Nordisk used long-term financial targets?
Financial targets, including the 15% growth target for operating
profit, were introduced in 1996. The growth target for operating
profit has been viewed as the cornerstone financial target from
the beginning. In 1996, the target for free cash flow was ‘only’
to have positive cash flow, reflecting how investment-intensive
the business was at that point in time.
The first long-term targets for Novo Nordisk in its current structure
were announced in 2001. Despite a very tough year in 2002,
including a profit warning and the termination of clinical develop-
ment of a key late-stage project, we achieved the targets in 2005
and announced new targets. At that time, it was clear that the
growth rate of the overall pharmaceutical industry was declining.
We decided to retain our growth target for operating profit,
which has been viewed as increasingly ambitious over time.
What are the key contributors to the company’s
strong performance against financial targets?
Over the past five years, two things have had a substantial impact
on our financial performance. First, there has been a very steady
positive development in our overall production economy. By
producing more in existing facilities without expanding capacity,
we have been able to reduce costs and defer investments, which
has also helped to improve our cash flows.
Second, Novo Nordisk has been especially successful in the US
over the past five years. Due to trading and rebate conditions,
funding requirements for growing our US business are lower
than in many other countries. By contrast, in many parts of the
world, accounts receivable from wholesalers may take up to
three months to be paid. The lower level of invested capital
required for expanding our business in the US has had a positive
effect on the company’s overall return on invested capital.
How is Novo Nordisk changing
its long-term financial targets?
The company’s 15% growth in operating profit target has
become ever more ambitious in the current pharmaceutical
environment. We believe that continuing to pursue this very
challenging target shows that Novo Nordisk is striving to be
among the best in the industry.
The target level for operating margin has been increased
from 30% to 35%. The increase reflects our expectation of
continued improvement in efficiencies from our manufacturing
facilities around the world and longer-term in the productivity
of our global sales force, which is approaching critical mass in
terms of scale in many countries. Over the last 10 years, we
have also made significant improvements in the ratio of our
administration costs to sales, from 8% in 2001 to 5% today,
and this will continue with a smaller relative improvement. It
should be noted that the achievement of the operating margin
target may be influenced by significant changes in market
conditions, including regulatory developments, changes in
pricing environment, healthcare reforms and exchange rate
movements.
The four targets provide
a guide to the level of
growth, profitability and
return to which we aspire.
The target level for return on invested capital measured post
tax has been increased from 50% to 70%. The raised target
reflects the expectation of continued lower growth in invested
capital relative to operating profit as well as a stable effective tax
rate. In setting the new target level Novo Nordisk has assumed
that the proposed accounting rules regarding treatment of
operating leases will be implemented. It is currently anticipated
that the introduction of this new accounting standard will have
a negative effect on return on invested capital by approximately
10 percentage points.
The target level for the cash-to-earnings ratio has been increased
from 80% to 90%, reflecting a sustained lower tangible invest-
ment level and an improved cash conversion ability. As previously,
this target will be pursued looking at the average over a three-
year period.
What is the time frame for the targets?
We establish long-term targets with the ambition of achievement
in a 4–5-year time horizon. If the business environment and
competitive environment turn out to be favourable, then we may
achieve targets earlier. That has been the case recently; currencies
and the competitive environment have been more favourable
than we envisioned in 2008. But the opposite may also happen,
leading to delays in achieving the targets.
12 Novo Nordisk Annual Report 2010
Are Novo Nordisk’s targets ambitious?
When we set targets in our 2008 Annual Report, they certainly
felt ambitious. For instance, we increased our long-term
target for return on invested capital by quite a bit in 2008,
from 30% to 50%.
It might appear, based on recent performance, that the current
cash-to-earnings target is somewhat conservative. If you look
at our history of working with this target, which is measured on a
three-year rolling average, we initially struggled to meet it because
of our heavy investments in insulin production. It is also a target
that, in a single year, may be very sensitive to external factors
beyond Novo Nordisk's control.
How do the company’s long-term financial
targets tie to the Novo Nordisk Way?
We believe that the only way we can run a sustainable business
is to generate strong results on multiple dimensions. Growing
our business profitably and delivering competitive results is the
basis of our ability to help patients live better lives, offer an
attractive return to our shareholders and serve all of our
stakeholders.
What are the uncertainties in achieving the new targets?
Exchange rates are always an unknown variable for a global
business. Regulatory approval of development projects, parti -
cularly Degludec and DegludecPlus, is critical to achieving our
ambitious targets. Price pressures from healthcare reforms in
many parts of the world will also have an impact, notably in
Europe, some emerging markets and the US. The full effect
of the implementation of the US healthcare reform will only
become apparent over the next few years. We expect com-
petition to increase, and this includes biosimilar competition
to our existing products, and this could have an impact.
I would also like to stress that the long-term targets are set given
the current scope of activities. If strategic opportunities arise that
require us to act, it could impact our ability to meet the targets.
Should this situation materialise, we may have to adjust the
targets. The long-term targets should not prevent Novo Nordisk
from pursuing initiatives which will improve our long-term
competitive situation.
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2
Results compared with
long-term financial targets
Growth in
operating profit
Target
Realised
Realised excl pulmonary
diabetes projects
Operating margin
Target
Realised
Realised excl pulmonary
diabetes projects
Return on
invested capital
(ROIC)
Target
Realised
Cash to earnings
Three-year average
Target
Realised
%
50
40
30
20
10
0
%
35
30
25
20
15
%
100
80
60
40
20
0
%
150
120
90
60
30
0
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
2006
2007
2008
2009
2010
Ratio
Growth in operating profit
Operating margin
Return on invested capital (ROIC)
Cash to earnings (three-year average)
New target
15%
35%
70%
90%
Novo Nordisk Annual Report 2010 13
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Performance highlights
DKK million
2006
2007
2008
2009
2010
2009 –2010
Sales
Modern insulin (insulin analogues)
Human insulin
Victoza®
Protein-related products
Oral antidiabetic products (OAD)
10,825
13,451
–
1,606
1,984
14,008
12,572
–
1,749
2,149
17,317
11,804
–
1,844
2,391
21,471
11,315
87
1,977
2,652
26,601
11,827
2,317
2,214
2,751
Diabetes care total
27,866
30,478
33,356
37,502
45,710
NovoSeven®
Norditropin®
Hormone replacement therapy
Other products
5,635
3,309
1,607
326
5,865
3,511
1,668
309
6,396
3,865
1,612
324
7,072
4,401
1,744
359
8,030
4,803
1,892
341
Biopharmaceuticals total
10,877
11,353
12,197
13,576
15,066
Total sales by business segment
38,743
41,831
45,553
51,078
60,776
North America
Europe
International Operations1
– of which Region China
Japan & Korea1
12,280
15,300
7,156
1,546
4,007
13,746
16,350
7,892
2,022
3,843
15,154
17,219
8,984
2,631
4,196
18,279
17,540
10,371
3,536
4,888
23,609
18,664
12,843
4,508
5,660
Total sales by geographical segment
38,743
41,831
45,553
51,078
60,776
Increase in local currencies
Currency effect (local currency impact)
Total sales increase as reported
16%
(1%)
15%
13%
(5%)
8%
12%
(3%)
9%
Financial performance
Depreciation, amortisation and impairment losses
Operating profi t
Net fi nancials
Profi t before income taxes
Net profi t
Total assets
Equity
Capital expenditure, net
Free cash fl ow2
Financial ratios
Percentage of sales
Sales outside Denmark
Sales and distribution costs
Research and development costs
Administrative expenses
Gross margin2
Net profi t margin2
Effective tax rate2
Equity ratio2
Return on equity (ROE)2
Payout ratio2
Payout ratio excl non-recurring events3
Ratios for long-term fi nancial targets
Operating profi t margin2
Operating profi t growth
Return on invested capital (ROIC)2
Return on invested capital (ROIC)
excl non-recurring events3
Cash to earnings2
Cash to earnings, three-year average
Share ratios
Basic earnings per share/ADR in DKK2
Diluted earnings per share/ADR in DKK2
Dividend per share in DKK
Total dividend
14 Novo Nordisk Annual Report 2010
2,142
9,119
45
9,164
6,452
44,692
30,122
2,787
4,707
99.2%
30.0%
16.3%
6.2%
75.3%
16.7%
29.6%
67.4%
22.3%
34.4%
34.4%
23.5%
12.7%
25.8%
25.8%
73.0%
80.2%
10.05
10.00
3.50
2,221
3,007
8,942
2,029
10,971
8,522
47,731
32,182
2,268
9,012
99.2%
29.6%
20.4%
6.0%
76.6%
20.4%
22.3%
67.4%
27.4%
32.8%
34.9%
21.4%
(1.9%)
27.2%
29.9%
105.7%
87.0%
13.49
13.39
4.50
2,795
2,442
12,373
322
12,695
9,645
50,603
32,979
1,754
11,015
99.2%
28.2%
17.2%
5.8%
77.8%
21.2%
24.0%
65.2%
29.6%
37.8%
36.6%
27.2%
38.4%
37.4%
38.4%
114.2%
97.6%
15.66
15.54
6.00
3,650
11%
1%
12%
2,551
14,933
(945)
13,988
10,768
54,742
35,734
2,631
12,332
99.2%
30.2%
15.4%
5.4%
79.6%
21.1%
23.0%
65.3%
31.3%
40.9%
40.9%
29.2%
20.7%
47.3%
47.3%
114.5%
111.5%
17.97
17.82
7.50
4,400
13%
6%
19%
2,467
18,891
(605)
18,286
14,403
61,402
36,965
3,308
17,013
99.4%
29.9%
15.8%
5.0%
80.8%
23.7%
21.2%
60.2%
39.6%
39.6%
42.8%
31.1%
26.5%
63.6%
62.4%
118.1%
115.6%
24.81
24.60
10.00
5,700
Change
23.9%
4.5%
N/A
12.0%
3.7%
21.9%
13.5%
9.1%
8.5%
(5.0%)
11.0%
19.0%
29.2%
6.4%
23.8%
27.5%
15.8%
19.0%
(3.3%)
26.5%
(36.0%)
30.7%
33.8%
12.2%
3.4%
25.7%
38.0%
Long-term
fi nancial targets4
35%
15%
70%
90%
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Change
1.5%
0%
18.8%
12.7%
3.9%
Long-term
social targets
100%
4.0 or above
100%
Improve
(or maintain)
0
80% or above
Change
(0.5)%
(4.7)%
(34.9)%
(6.2)%
(2.2)%
2006
2007
2008
2009
2010
2009 –2010
Social performance
Patients:
Donations to the World Diabetes Foundation (DKK million)
Donations to the Novo Nordisk Haemophilia
Foundation (DKK million)
Healthcare professionals trained or educated in
diabetes (1,000) (accumulated)
People with diabetes trained (1,000)
New patent families (fi rst fi lings)
Employees:
Employees (total)
Employee turnover (%)
Internal assurance and monitoring:
Employees trained in business ethics (%)
Ratios for social performance
LDCs where Novo Nordisk sells insulin
according to the differential pricing policy (%)5
Engaging culture (employee
engagement) on a scale of 1– 56
Diverse senior management teams (%)7
Company reputation with external key
stakeholders (on a scale of 0 –100)8
Warning letters and reinspections
Fulfi lment of action points from facilitations
of the Novo Nordisk Way (%) of Management
Environmental performance
Inputs:
Energy consumption (1,000 GJ)
Water consumption (1,000 m3)
62
15
297
–
149
65
11
336
–
116
68
10
380
–
71
68
15
805
416
55
69
15
1,178
494
62
23.613
10.0
26.008
11.6
27.068
12.1
29.329
8.3
30.483
9.1
–
–
–
–
98
68
4.0
–
73.8
0
88
72
4.1
–
74.0
0
91
64
4.2
43
72.4
0
92
73
4.3
50
76.3
0
93
67
4.3
54
76.1
0
93
2,712
2,995
2,784
3,231
2,533
2,684
2,246
2,149
2,234
2,047
Outputs:
CO2 emissions from energy consumption (1,000 tons)
Wastewater (1,000 m3)
Waste (tons)
229
2,583
24,165
236
2,764
17,576
215
2,542
20,346
146
2,062
21,019
95
1,935
20,565
Ratios for environmental performance
Energy consumption
(change compared to 2007 in %)
Water consumption
(change compared to 2007 in %)
CO2 emissions from energy consumption
(change compared to 2004 in %)
–
–
9
–
–
12
(9)
(17)
2
(19)
(34)
(31)
(20)
(37)
(55)
Long-term
environmental targets
11% reduction
11% reduction
10% reduction
1. As of 1 January 2010 Korea joined Japan to form Region Japan & Korea, while Australia and New Zealand became part of Region International Operations.
The historical fi gures for 2006 –2009 have been restated and are comparable to the 2010 regional setup.
2. For defi nitions, please refer to p 92.
3. Impact of ZymoGenetics, Inc. share divestment, discontinuation of all pulmonary diabetes projects and impact of DAKO A/S share divestment.
4. The long-term fi nancial targets were updated in February 2011. Please refer to pp 12–13.
5. Least developed countries, as defi ned by the UN, where Novo Nordisk sells insulin at or below 20% of the average prices for insulin in the western world.
6. Based on eVoice, an employee survey using a scale of 1– 5, with 5 being the best score.
7. Diverse in terms of gender and nationality.
8. Company reputation is measured by an independent external consultancy fi rm using a scale of 0 –100, with 100 being the best score.
Novo Nordisk Annual Report 2010 15
“ Health and exercise go
hand in hand. I wouldn’t
normally have known so
much about it if I didn’t
have diabetes.”
Jonathan Childsworth
Jonathan Childsworth of Cape Town, South Africa, was
diagnosed with type 1 diabetes at the age of 14. Today,
at 22, he works as a personal trainer, helping other people
with diabetes achieve their health goals.
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16 Novo Nordisk Annual Report 2010
Our business
Novo Nordisk is a focused healthcare company specialising in
therapeutic proteins, providing life-saving treatments for people
with diabetes and rare bleeding disorders. We also offer treatment
for growth hormone deficiency, as well as low-dose hormone
replacement therapy products. Finally, we carry out development
projects targeting treatment of inflammation and obesity.
Offering treatment for unmet medical needs and improving care
for people with chronic disease is what drives our ambition and
determines our strategic focus. We seek to leverage our core
strengths in protein engineering and chronic disease treatment
in areas where we see potential for global market leadership.
We aim to grow our business in ways that are both responsible
and sustainable, managing in accordance with the Novo Nordisk
Way and the Triple Bottom Line principle. To achieve long-term
success we must:
• continue to develop and provide innovative treatments and
delivery devices
• adapt our business to changes in societies as well as in
healthcare systems
• maintain leadership and expand into new markets
• continue to pursue production efficiencies
• recruit, develop and retain talented people to support global
growth.
Strategic focus areas
One of the key differentiators for Novo Nordisk compared with
other pharmaceutical companies is that our business is primarily
focused on protein engineering, expression and formulation
supported by innovative devices that improve treatment convenience
and accuracy. Novo Nordisk is at the forefront of innovation in
protein expression in yeast, which is used for insulins and GLP-1,
E. coli, which are used for growth hormone, as well as mammalian
cells, which are used for NovoSeven®.
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One of the key differentiators
for Novo Nordisk is that our
business is primarily focused
on protein engineering,
expression and formulation.
Diabetes care: expand leadership
Beginning with the first patients our company treated with insulin
in the 1920s, we have been dedicated to continuously improving
the safety, efficacy and convenience of diabetes treatment. Today,
as the only company with a full portfolio of human and modern
insulins, we are uniquely positioned to address the issues at the core
of the diabetes pandemic: insulin deficiency and the complexities
of treating it. For those millions of people who must live with
diabetes, our goal is to offer individualised treatment options so
that they can lead their lives in full.
Novo Nordisk’s corporate strategy
Therapeutic area
Compounds and capabilities
Strategic focus
Diabetes
Insulin and GLP-1
Expand leadership
Obesity
GLP-1
Haemophilia
Coagulation factors
Growth disorders
Human growth hormone
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Establish presence
Expand portfolio
Achieve leadership
Infl ammation
Monoclonal antibodies
Explore opportunities
The Novo Nordisk Way
Novo Nordisk Annual Report 2010 17
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While there is not yet a cure for diabetes or a means of reversing
diabetes progression, we are conducting research in cooperation
with leading academic centres to tackle the roots of the condition.
Through two key projects at our Hagedorn Research Institute for
applied research involving stem cell biology and beta cell
regeneration, we are making progress towards preventing and
ultimately curing diabetes. Hagedorn is a fully integrated part of
Novo Nordisk and a market-leading incubator for innovation to
change diabetes treatment. In 2010, we instituted a new funding
model at Hagedorn to support efforts to identify new biological-
based targets that could qualify to enter Novo Nordisk’s diabetes
pipeline. We are striving to develop treatments for the full span
of a person’s life that are as convenient and safe as possible.
We continue to invest in the expansion of insulin innovation
leadership with research activities aimed at continuous improve-
ment for all types of insulin. Our leadership position within
diabetes care is bolstered by the fact that we are the only company
with two next-generation insulins, Degludec and DegludecPlus,
in late-stage clinical development. Degludec and DegludecPlus
are engineered to be ultra-long acting. Phase 3 results are
reported on p 30.
Treatment convenience is what most people with diabetes give
highest priority in order to effectively manage their condition. We
hope to be able to radically change insulin delivery, offering tablets
in addition to injectable treatments. The development of oral
formulations for both insulin and GLP-1 is still at an early stage and
many technological challenges remain. Our current work involves
searching for the most suitable compounds and the best method
of oral delivery, one that will ensure that the active ingredients are
not destroyed or degraded in the gastrointestinal tract and move
through the gut to exert therapeutic effect on blood glucose.
We are also developing a faster-acting bolus insulin to be taken
at mealtimes. Our faster-acting insulin aspart entered phase 1
development in 2010.
Building a GLP-1 portfolio
With the successful launch of Victoza® (liraglutide), our once-daily
Glucagon-Like Peptide-1 (GLP-1) analogue, we have a strong
product offering for the earlier stages of type 2 diabetes, before
insulin is needed, expanding our diabetes product range and
potential market.
Over the past 25 years, we have built a portfolio of modern insulin
products covering the full spectrum of treatment needs for insulin.
We are now building a GLP-1 portfolio, developing oral and GLP-1/
insulin combination treatments and researching the combination
of GLP-1 with insulin, with the intention to provide an even broader
range of treatment options.
Receiving regulatory approval for antiobesity medications remains
a major challenge. Several compounds targeting obesity have
recently failed to obtain regulatory approval due to limited efficacy
outweighed by side effects. However, given the initial results seen
in randomised controlled trials with liraglutide, we believe the
compound can offer significant benefit for people challenged with
weight issues.
Given the initial results seen
in randomised controlled trials
with liraglutide, we believe the
compound can offer significant
benefit for people challenged
with weight issues.
Haemophilia: expand portfolio
We have a solid position in the treatment of haemophilia with
inhibitors due to the success of NovoSeven®, which remains the
leading recombinant bypassing agent available for these patients.
We are also working to develop two potential successors to
NovoSeven®, a long-acting recombinant factor VIIa derivative and
a fast-acting recombinant factor VIIa analogue, both in clinical
development.
Our long-term ambition is to develop more convenient treatment
and safe options for all people with rare bleeding disorders. We
are therefore leveraging our core protein capabilities to develop
recombinant and long-acting factor VIII and IX compounds for
the treatment of haemophilia A and B respectively. The primary
focus in haemophilia treatment is to prevent bleeds and sub-
sequently reduce damage to joints.
Strategies for other biopharmaceutical business areas
As the global market leader by value in growth hormone therapy,
Novo Nordisk’s strategy is to provide innovative, simple, convenient
products and devices as well as a full range of service offerings for
physicians and patients in markets where services can be delivered.
We are also seeking approval for additional uses of Norditropin®,
which is still the only liquid, room-temperature-stable growth
hormone product in a prefilled pen device. During 2010, we
launched a new prefilled, ergonomic Norditropin® FlexPro® auto-
injector pen device in some markets.
Our GLP-1 pipeline includes oral GLP-1 and a fixed combination
of Victoza® with Degludec, which may offer the benefits of both
compounds in a fixed convenient solution.
The overall strategy for our hormone replacement business is to
focus on ultra-low-dose offerings, with a particular focus on
Vagifem® 10 μg, which was launched in 2010.
Obesity: establish a presence
Obesity is known to be a major risk factor in developing type 2
diabetes, cardiovascular disease and a range of other life-threatening
diseases. Obesity has been estimated to account for 60–90% of
new cases of type 2 diabetes.1 Liraglutide has shown the potential
– in clinical studies of people with diabetes and of obese people
without diabetes – to reduce food intake and control weight. We
have therefore chosen to explore this as a potential new way to
treat obesity.
The development of an inflammation franchise is a long-term
investment to create growth opportunities. Chronic autoimmune
inflammation is a disease area where our core competences in
protein molecules and chronic disease care can be leveraged. In
the core disease areas of rheumatoid arthritis, psoriatic arthritis
and inflammatory bowel diseases, clinical use of first-generation
protein-based biologic agents that modify overactive immune
response have been shown to offer significant benefit to patients.
However, in each of these disease areas, there are also significant
18 Novo Nordisk Annual Report 2010
numbers of patients who do not adequately respond to current
treatments, so there is an opportunity for new treatments to address
these unmet medical needs.
In order to successfully build a presence in this treatment area, we
are investing in early-stage research with the hope of finding the
underlying causes of inflammatory conditions and developing new
treatments for these conditions, particularly for patients who are
unresponsive to current treatments. Our research and development
centres in the US, China and Denmark are successfully recruiting
talent and medical teams are being established to support pipeline
progression.
Device innovation
Novo Nordisk produces the world’s most widely used prefilled and
durable insulin pen devices. Striving to continuously improve chronic
disease therapy, we have designed these devices to improve dose
accuracy, convenience and general user-friendliness.2,3 The same
technologies are used for modern insulins and Norditropin®.
Our research and development priorities for device innovation are
guided by customer insight studies. The ultimate goal is convenient
and simple device technology that supports treatment compliance,
with positive implications for patients’ health.4,5 Our devices also
positively differentiate our products from competitor products.
1. Kasuga. J Clin Invest. 2006;116:1756–1760.
2. Asakura T, Seino H, Nakano R, et al. A comparison of the handling and accuracy of syringe and
vial versus prefilled insulin pen (FlexPen®). Diabetes Technol Ther. Oct 2009;11(10):657–661.
3. Korytkowski M, Bell D, Jacobsen C, Suwannasari R. A multicenter, randomized, open-label,
comparative, two-period crossover trial of preference, efficacy, and safety profiles of a
prefilled, disposable pen and conventional vial/syringe for insulin injection in patients with
type 1 or 2 diabetes mellitus. Clin Ther. 2003 Nov;25(11):2836–48.
4. Korytkowski M, Bell D, Jacobsen C, Suwannasari R. A multicenter, randomized, open-label,
comparative, two-period crossover trial of preference, efficacy, and safety profiles of a
prefilled, disposable pen and conventional vial/syringe for insulin injection in patients with
type 1 or 2 diabetes mellitus. Clin Ther. 2003 Nov;25(11):2836–48.
5. Graff MR, McClanahan MA. Assessment by patients with diabetes mellitus of two insulin pen
delivery systems versus a vial and syringe. Clin Ther. 1998 May–Jun;20(3):486–96.
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Delivering on
our strategy
We believe that the current functional organisational structure,
governance set-up, resources and competences are sufficiently
effective and robust. In support of our strategic objectives and
future growth, we are:
• improving global governance in key areas
• focusing on attracting and developing talents in key markets
to drive diversity and growth
• developing business and organisational roadmaps for new
business areas.
We are also improving our ability to manage innovation, the
globalisation of our business and supply chain, and the pursuit
of production efficiencies.
Improving global governance
Operating globally as a pharmaceutical company with a strong
patient focus means that the company is inevitably faced with
dilemmas relating to ethical business conduct and behaviour. One
clear dilemma is related to our objective of providing therapies to
patients wherever they are. Novo Nordisk consequently engages
in business in countries where the general business environment
is challenging. We have taken a number of measures to ensure
compliance with both our own and international ethical standards,
and in 2010 we strengthened governance to enhance the
monitoring of the ethical climate within our organisation.
The internal governance structure for business ethics was upgraded
to a larger board structure with representation from all regions.
Steps were also taken to strengthen the global legal compliance
structure, clearly separating compliance responsibility from other
legal tasks. We have also changed the way we track business ethics
training. Previously, we required all managers to be trained in
business ethics, as well as staff involved in sales and marketing
and regulatory and public affairs. Beginning in 2010, Novo Nordisk
required that all employees should be trained in business ethics
annually. See pp 10 and 98.
Attraction, retention and development of our people
In our knowledge-intensive business, recruiting, mentoring and
retaining talented people throughout the world is critical to
sustaining our growth. To attract the type of people we need,
we have developed a global employer branding programme,
Life-changing careers, and have strengthened our leadership
development.
During 2010, about 1,000 new leaders were appointed through-
out the company. Training and development of leadership
competences remains a focus area, and new training programmes
to develop personal leadership skills and employees identified as
having senior management potential will be introduced in 2011.
We are also building our leaders’ capacity to implement and
demon strate the Novo Nordisk Way, our values-based management
system.
Diversity
We believe that diversity is a prerequisite for staying competitive
in the global marketplace and attracting the best talent. During
Novo Nordisk Annual Report 2010 19
Globalisation
Globalisation continues to be an organisational growth driver for
our company, providing access to new markets, expansion of
existing markets and improved access to talented people and
innovation potential. Since the opening of our first office in China
in 1994, we have steadily increased our commitment to the country,
establishing it as a separate region as of the beginning of 2011.
This organisational change was made to further develop the
significant business potential in China and improve oversight of
this part of our business. The business challenges in China are
significant, with a competitive business environment, a highly
competitive labour market and increasingly complex legislation.
However, Novo Nordisk is generally well positioned in the Chinese
diabetes market, with a market share by volume of
approximately 60%.
North America, particularly the US market, is another important
growth area for our business. As our market share in the US has
increased substantially in recent years, we have increased our
efforts to attract talent and build organisational support structures
for this market.
As Novo Nordisk continues to grow and expand, we must focus
resources on organisational coordination and foster innovation
and collaboration across borders. Developing virtual workplaces
and processes which support virtual working is also critical to our
future success.
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2010, we made progress towards our diversity target, with diver sity
by gender and nationality increasing in senior management teams.
See p 10.
There are, however, significant challenges. It is clear that the
continued growth of Novo Nordisk requires the recruitment of
highly talented employees in many large markets. We are acceler-
ating the development of corporate hubs throughout the world
to provide career and development opportunities for highly
talented employees outside Denmark.
We are improving our
ability to manage innovation,
the globalisation of
our business and supply
chain, and the pursuit of
production efficiencies.
Supporting new products and therapy areas
As we pursue the strategic focus areas outlined on pp 17–19, we
must also ensure that we have the organisational competences to
support the research and development, production and sales and
marketing capabilities needed for new products and new therapy
areas.
Because development of oral insulin and oral GLP-1 requires specific
knowledge of the gastrointestinal tract, our development efforts
have involved partnerships which build on our internal capabilities.
We have developed tablet production facilities for these clinical
trials, but large-scale production will require additional facilities
and capabilities.
To support our ambitions in obesity, general haemophilia and
in flammation, we are continuing to expand capabilities, com-
petences and resources in line with progress in our business plans.
Our success in these areas will depend on our ability to ensure
sufficient leadership and commercialisation capabilities in these
new therapy areas.
Innovation
We undertook an innovation culture review in 2009 in an attempt
to enhance the organisation’s ability to deliver on process innovation
and respond to broader challenges in the business environment.
In 2010, five innovation projects were selected from 20 proposed
by senior vice presidents. The selected projects are intended to
broaden the company’s innovation culture across the value chain
and were initiated with Executive Management sponsorship.
Projects launched include: the New Sales Model project aimed at
exploring sales channel options to address changing customer needs
and behaviour; the Future Workplace project to identify and address
key challenges in attracting, retaining and developing talented
people; and the Base of the Pyramid project to develop a business
model addresses that the needs of patients in the poorest countries.
20 Novo Nordisk Annual Report 2010
Creating
long-term
value
Interview with Lise Kingo,
Novo Nordisk’s chief of staffs
Why does Novo Nordisk put so much
emphasis on the Triple Bottom Line?
We want to be a sustainable business, and this implies being
profitable to secure future growth and to make our contribution
to social and economic development. We have chosen to
translate our commitment to sustainable development as the
Triple Bottom Line principle: balancing financial, social and
environmental considerations in a responsible way.
In practice, this means that we manage and account for our
social and environmental performance in the same way as we
do for our financial performance.
A fundamental aspect of the Triple Bottom Line principle is that
we acknowledge our role as a corporate citizen and consider
the societal impacts, both positive and potentially negative of
our business. When we make decisions and priorities to secure
business success for the future, we must always take into
account the concerns and interest of all stakeholders.
What role should companies play
in addressing global challenges?
Business and society are not separate actors, but closely
interconnected. That is why sustainability challenges must be
high on board agendas: poverty and poor health, urbanisation
and migration, demographics and pandemics, climate change
and water scarcity – all of these issues need to be factored into
business strategies and risk assessments.
Our priorities are aligned with the Millennium Development
Goals. As a global leader in diabetes care we see a role for
ourselves in highlighting how some of the current global
challenges are connected and therefore need to be addressed
at their roots. Climate change and the diabetes pandemic are
examples of how unsustainable lifestyles threaten to undermine
the future for generations to come. Working in partnerships
we can leverage our core competencies to contribute to
economic prosperity, public health and low-carbon growth.
As a company with global reach, we have a key role in con tri -
buting to more balanced, sustainable growth. There is a growing
recognition that capitalism as we have known it is unsustainable,
but that market mechanisms, when effective, are the best way
to create shared value. What we will need is therefore to shift
towards what some have termed ‘sustainable capitalism’.
All economic activity is based on the use of natural and human
resources. Natural resources are scarce. Human resources are
abundant. None of them are equitably distributed, nor is their
real value reflected in the current market economy. This needs
to change. We engage in several ways, including through
partnerships and alliances with other leading companies under
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the auspices of the Global Compact LEAD initiative, to de-
monstrate how you can balance profits and non-financial
benefits for society in responsible and sustainable ways.
How can you determine whether
this approach creates business value?
Our purpose extends beyond short-term profits. We provide
long-term value by serving the needs of people whose lives
and quality of life depend on the treatments and services that
we can provide. When we do business in a responsible way,
we create value in several ways: we strengthen our company
reputation, earn stakeholder trust, build employee engagement
and customer satisfaction and through these assets a stronger
foundation for remaining a profitable business, which ultimately
benefits our shareholders.
We are seeing increasing evidence of a clear correlation of
actions as a responsible and sustainability-driven business
and our performance, measured by conventional yardsticks
such as operational profits and return on invested capital.
In what ways can you assess the benefits to society?
Together with experts and with inputs from stakeholders we
have developed a methodology that enables us to value the
contribution of our Triple Bottom Line approach in a profit and
loss perspective. We have called this initiative our Blueprint
for Change programme, and we have conducted Triple Bottom
Line reviews looking at our climate action strategy and our
business approach in China.
The China case takes its point of departure in the fact that
diabetes now affects more than 40 million people and their
families, and the number is projected to double over the next
15 years, posing a growing social, educational and economic
challenge. Our long-term business strategy, which includes
significant investments in strengthening the healthcare system
in partnership with the Ministry of Health and establishing
a strong local presence, is having a real and lasting impact.
Looking at the value created from 2005 to 2010 the study
demonstrates how we are changing diabetes in China and at
the same time building a profitable business.
Providing training for physicians and offering education and
support for people with diabetes has saved 140,000 life years,
and this number is projected to increase by 30% annually
because the benefits of effective diabetes care will be seen
over a longer time span. Our business activities have created
jobs in research and development, production and sales as
well as indirectly through our supplier base and employees’
local spending, totalling 14,600 jobs. And energy efficient
local production reduces emissions related to production by
20%, transportation emissions have fallen by a factor of six,
and unit costs have been reduced by 40%.
Novo Nordisk Annual Report 2010 21
“ Novo Nordisk empowers
employees to work together
to change people’s lives.”
Petra van den Berg
Petra is a Senior Specialist Product Advisor in Johannesburg,
South Africa. Her husband has been diagnosed with
diabetes, and his experience helps Petra better understand
the needs of people with diabetes.
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22 Novo Nordisk Annual Report 2010
The Novo Nordisk Way
The Novo Nordisk Way is the foundation of the values-based
management system in Novo Nordisk. It describes who we are,
where we want to go, and how we work. Its origins can be traced
back to when the company was founded in the 1920s, and while the
wording has been updated over time, the essence remains the same.
The continued relevance of the Novo Nordisk Way was reaffirmed
during 2010. On the occasion of the company’s 10-year anniversary
as a focused healthcare company and coinciding with his own
10-year tenure as CEO, Lars Rebien Sørensen took the opportunity
to revisit the document. With an open mind and no predetermined
outcome, he set out on a journey to engage with employees and
stakeholders to seek their inputs on what to retain and what to
renew. The journey took him to seven destinations and face-to-
face meetings with more than 350 employees and 100 patients,
healthcare providers and other stakeholders.
The response was consistent across geographical borders, organi-
sational boundaries and external partners: the messages and
the values embedded in the Novo Nordisk Way were not to be
changed. On the contrary, there was a strong wish to reinforce
the existing business principles and values. As a result, focus on
patient needs and the Triple Bottom Line has been increased. The
values-based management unifies a strong corporate culture and
guides behaviour in all parts of the organisation.
While our values have not changed, the components of the Novo
Nordisk Way have been shortened and simplified, presenting the
company’s ambitions and values in a format that is easier to under-
stand and more accessible for all employees.
As the company continues to grow and onboards several thousand
new employees each year, emphasis has been put on framing a list
of 10 Essentials which describe how the values are put into action.
As before, a follow-up methodology, called facilitations, helps us
assess and manage the degree to which the Novo Nordisk Way is
actively put into practice throughout our company.
In 2011, the new Novo Nordisk Way will be rolled out in the
organisation, strengthening a unified culture around our revised
ambitions and setting a clear direction for the next decade.
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The Novo Nordisk Way
In 1923, our Danish founders began a journey to change
diabetes. Today, we number thousands of employees across
the world with the passion, the skills and the commitment to
continue this journey to prevent, treat and ultimately cure
diabetes.
• Our ambition is to strengthen our leadership in diabetes.
• We aspire to change possibilities in haemophilia and other
serious chronic conditions where we can make a
difference.
• Our key contribution is to discover and develop innovative
biological medicines and make them accessible to patients
throughout the world.
• Growing our business and delivering competitive financial
results is what allows us to help patients live better lives,
offer an attractive return to our shareholders and
contribute to our communities.
• Our business philosophy is one of balancing financial,
social and environmental considerations – we call it the
Triple Bottom Line.
The Essentials
The Essentials are 10 statements describing what the Novo
Nordisk Way looks like in practice.
The Essentials are meant as a help for managers and
employees in evaluating the extent to which their
organisational units are acting in accordance with the Novo
Nordisk Way, ie the degree to which we are ‘walking the talk’.
The Essentials are helpful in identifying actions which
business units can take to further align processes and
procedures with the thinking and values that characterise the
Novo Nordisk Way.
• We create value by having a patient-centred business
approach.
• We set ambitious goals and strive for excellence.
• We are accountable for our financial, environmental and
social performance.
• We provide innovation to the benefit of our stakeholders.
• We build and maintain good relations with our key
stakeholders.
• We are open and honest, ambitious and accountable, and
• We treat everyone with respect.
treat everyone with respect.
• We offer opportunities for our people to realise their
potential.
• We never compromise on quality and business ethics.
Every day we must make difficult choices, always keeping in
mind what is best for patients, our employees and our
shareholders in the long run.
It’s the Novo Nordisk Way.
• We focus on personal performance and development.
• We have a healthy and engaging working environment.
• We optimise the way we work and strive for simplicity.
• We never compromise on quality and business ethics.
Novo Nordisk Annual Report 2010 23
Pipeline overview
In 2010, significant progress was made throughout Novo Nordisk’s
clinical development pipeline. This overview illustrates key
development activities, including entries into the pipeline and
progression of development compounds.
See more at novonordisk.com/investors/rd_pipeline/rd_pipeline.asp
and clinicaltrials.gov.
Phase 1
Studies in a small group of healthy volunteers, and sometimes
patients, usually between 10 and 100, to investigate how the body
handles new medication and establish maximum tolerated dose.
Phase 2
Testing a drug at various dose levels in a larger group of patients
to learn about its effect on the condition and its side effects.
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Therapy area
Indication
Compound
Description
Diabetes care
Type 1 and 2
diabetes
Type 1 and 2
diabetes
Degludec
Ultra-long-acting basal insulin. Enrolment in the phase 3a programme completed
in June 2010. First phase 3a study results announced in October 2010.
DegludecPlus
Ultra-long-acting basal insulin with a bolus boost. Enrolment in the phase 3a programme
completed in June 2010. First phase 3a study results announced in August 2010.
Type 2 diabetes
Semaglutide
Once-weekly GLP-1 analogue. Phase 3 initiation was postponed in June
2010 pending a long-acting portfolio development strategy decision.
Diabetes
Type 2 diabetes
NN9068
GLP-1 and basal insulin combination. Phase 1 studies are ongoing.
Type 1 and 2
diabetes
Type 1 and 2
diabetes
NN1218
NN1952
Type 2 diabetes NN9924
Ultra-fast-acting insulin analogue. First phase 1
studies initiated during the second quarter of 2010.
Fast-acting oral insulin analogue. First phase 1
study completed during the fourth quarter of 2010.
Long-acting oral GLP-1 analogue. First phase 1
study initiated in the fi rst quarter of 2010.
Obesity
Obesity
Liraglutide
Once-daily GLP-1 analogue. First phase 3a study completed during the third quarter
of 2010. The remaining phase 3a studies are expected to be initiated mid-2011.
Biopharmaceuticals
Congenital
FXIII defi ciency
NN1841
Recombinant coagulation factor XIII. Phase 3a study completed during the second quarter
of 2010. Regulatory submission in the US and EU is expected in the fi rst half of 2011.
Haemophilia A
NN7008
Recombinant coagulation factor VIII. Phase 3 studies ongoing throughout 2010.
Haemophilia
with inhibitors
Haemophilia
with inhibitors
NN1731
NN7128
Fast-acting recombinant coagulation factor VIIa analogue. Phase 2 studies completed
during the second quarter of 2010. Phase 3 is expected to be initiated mid-2011.
Long-acting recombinant coagulation factor VIIa
derivative. Phase 2 trial ongoing throughout 2010.
Haemophilia/
haemostasis
Cardiac surgery
NN1810
Recombinant coagulation factor XIII. Phase 2 trial ongoing throughout 2010.
Haemophilia B
NN7999
Long-acting recombinant coagulation factor IX derivative. Phase 1 trial is ongoing.
Haemophilia
with inhibitors
NN7129
Subcutaneous long-acting recombinant coagulation factor VIIa derivative.
Phase 1 study completed during the second quarter of 2010.
Haemophilia A
NN7088
Long-acting recombinant coagulation factor VIII derivative.
Phase 1 study initiated during the third quarter of 2010.
Haemophilia
NN7415
Anti-tissue factor pathway inhibitor. Phase 1 initiated during the fourth quarter of 2010.
Rheumatoid
arthritis
Rheumatoid
arthritis
Rheumatoid
arthritis
Rheumatoid
arthritis
Anti-NKG2d
Humanised recombinant monoclonal antibody.
Phase 2a study initiated during the third quarter of 2010.
Anti-IL-20
Anti-C5aR
Anti-IL-21
Humanised recombinant monoclonal antibody. Phase 1 completed in the fourth
quarter 2010. Phase 2a study is expected to be initiated during the fi rst half of 2011.
Humanised recombinant monoclonal antibody.
First phase 1 study completed during the second quarter of 2010.
Humanised recombinant monoclonal antibody.
Phase 1 study initiated during the third quarter of 2010.
Infl ammation
24 Novo Nordisk Annual Report 2010
Phase 2a
Pilot clinical trials to evaluate efficacy (and safety) in selected
populations of patients.
Phase 3a
Trials conducted after efficacy of the medicine is demonstrated,
but prior to regulatory submission.
Phase 2b
Well controlled trials to evaluate efficacy (and safety) in patients
with the disease. Sometimes referred to as pivotal trials.
Phase 3b
Clinical trials conducted after regulatory submission, but prior to
the medicine’s approval and launch.
Phase 3
Studies in large groups of patients worldwide comparing the new
medication with a commonly used drug or placebo for both safety
and efficacy in order to establish its risk–benefit relationship.
Filed/regulatory approval
A New Drug Application is submitted for review by various
government regulatory agencies.
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Intended clinical benefi t
Phase 1
Phase 2
Phase 3
Filed/regulatory
approval
Long-acting basal insulin with duration of action
of 24 hours and an improved safety profi le.
A soluble fi xed combination of fast-acting and long-acting insulin
combining 24-hour basal insulin coverage with a distinct meal peak.
Provide the pharmacological actions of a GLP-1 analogue with fewer injections.
Combination of a basal insulin and a GLP-1 analogue intended to
combine the benefi ts of the two hormones in a single preparation.
Fast-acting insulin for improvement of glycaemic control during a meal.
Insulin delivered as a tablet.
A GLP-1 analogue delivered as a tablet.
Sustainable weight loss for people with obesity,
including those at risk of developing diabetes.
Prophylactic treatment of people with FXIII congenital defi ciency.
Prevention and treatment of bleeds in people with haemophilia A.
Effective and sustained resolution of bleeds in people with haemophilia
and inhibitors, reducing the need for treatment and the time to pain relief.
Prophylactic treatment of people with haemophilia and inhibitors.
Intended to avoid allogenic blood transfusions in low- to medium-risk
patients undergoing cardiac surgery using cardiopulmonary bypass.
Routine prophylaxis and treatment of bleeds for people with haemophilia B.
Subcutaneous administration of long-acting treatment for
haemophilia patients with inhibitors to other factor replacements.
Routine prophylaxis and treatment of bleeds for people with haemophilia A.
Novel mechanism of action intended to improve treatment outcomes
in patients who do not respond adequately to existing treatments.
Novel mechanism of action intended to improve treatment outcomes
in patients who do not respond adequately to existing treatments.
Novel mechanism of action intended to improve treatment outcomes
in patients who do not respond adequately to existing treatments.
Novel mechanism of action intended to improve treatment outcomes
in patients who do not respond adequately to existing treatments.
Novel mechanism of action intended to improve treatment outcomes
in patients who do not respond adequately to existing treatments.
Novo Nordisk Annual Report 2010 25
Novo Nordisk at a glance
Novo Nordisk is a world leader in diabetes care and has a leading
position in haemophilia treatment. We also provide growth
hormone therapy and hormone replacement therapy and have
development projects targeting inflammation, obesity and the
full spectrum of rare bleeding disorders. Our more than 30,000
employees work in 74 countries.
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• Headquarters and corporate hubs
• Production sites
Ain-Allah, Dely Brahim, Algeria
Bagsværd, Denmark
Chartres, France
Clayton, North Carolina, US
Gentofte, Denmark
Hillerød, Denmark
Hjørring, Denmark
Kalundborg, Denmark
Koriyama, Japan
Køge, Denmark
Montes Claros, Brazil
Måløv, Denmark
Tianjin, China
Værløse, Denmark
• Affiliates
• Representative offices
Bangalore, India
Beijing, China
Copenhagen, Denmark
Princeton, New Jersey, US
Tokyo, Japan
Zürich, Switzerland
• Regional and business
area offices
• Research and
development facilities
Bagsværd, Denmark
Beijing, China
Gentofte, Denmark
Hillerød, Denmark
Måløv, Denmark
Princeton, New Jersey, US
Seattle, Washington, US
• Regional clinical, medical
and regulatory affairs centres
Beijing, China
Princeton, New Jersey, US
Tokyo, Japan
Zürich, Switzerland
26 Novo Nordisk Annual Report 2010
North America
Employees:
4,457
Sales:
39% of total sales
Insulin volume share:
42% of the total market
Europe
Employees:
17,752
Sales:
31% of total sales
Insulin volume share:
53% of the total market
Modern insulin volume share:
37% of the segment
Modern insulin volume share:
51% of the segment
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International Operations
Hereof Region China*
Japan & Korea
Employees:
7,279
Sales:
21% of total sales
Employees:
3,511
Sales:
7% of total sales
Employees:
995
Sales:
9% of total sales
Insulin volume share:
57% of the total market
Insulin volume share:
63% of the total Chinese market
Insulin volume share:
63% of the total market
Modern insulin volume share:
54% of the segment
Modern insulin volume share:
70% of the segment in China
Modern insulin volume share:
56% of the segment
* China was part of International Operations in 2010 but became a separate region on 1 January 2011.
Novo Nordisk Annual Report 2010 27
“ Our dedication to
quality is important to
ensure patient safety.”
Gao Lei
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Gao Lei is a Formulation Professional and works in the
formulation department in Tianjin, China, improving
aspects of the production process.
28 Novo Nordisk Annual Report 2010
Diabetes care
Novo Nordisk has pioneered many therapeutic breakthroughs in
diabetes care and today diabetes remains our primary focus. The
company is the diabetes care market leader with 51% of the total
insulin market and 46% of the modern insulin (insulin analogue)
market, based on volume, at year-end.
Diabetes is a metabolic disorder affecting the way our bodies use
digested food for growth and energy. Diabetes causes as many
deaths as HIV/AIDS, disables millions and negatively affects the
global economy. The International Diabetes Federation estimates
that the number of people with diabetes will increase from 285
million today to 438 million in 2030.
Even in countries with strong healthcare systems, the challenge
of keeping diabetes under control is significant. A survey conducted
in eight countries with 3,000 respondents during 2010 found that
a third of those surveyed miss injections of prescribed insulin doses
and that nine out of 10 wish that insulin could be dosed less than
once a day to effectively manage their diabetes.1
We are dedicated to Changing Diabetes® and improving quality
of life for people with diabetes. We do this by developing innovative
treatments intended to serve individual needs and covering all
stages of diabetes. In addition, we work with governments, health-
care providers, patient organisations and people with diabetes to
improve standards of care throughout the world.
Modern insulin
portfolio
By engineering proteins we have created a portfolio of modern
insulins that offer options for individual treatment needs to achieve
and maintain improved blood glucose control safely.
Treatment guidelines for diabetes call for different approaches at
different stages.2 For type 2 diabetes, insulin may be introduced
following lifestyle changes and initiation of tablet or GLP-1 therapy.
As a third step, treatment guidelines recommend transition to
intensive insulin therapy to maintain glucose targets.
Maintaining tight glucose control is associated with fewer serious
complications and better treatment outcomes. For insulin initiation,
treatment guidelines call for including either a long-acting basal
insulin or, in parts of the world, a modern premix insulin with dual
release to cover both mealtime and basal requirements. Insulin
treatment can be intensified in two ways, either with a modern
premix insulin or by adding a rapid-acting modern insulin to the
long-acting basal insulin at mealtimes.
Our modern insulin portfolio is unique in providing a full range
of individualised treatment options for people with diabetes,
accommodating different treatment norms and capabilities world-
wide. Treatment may also vary because people are different. In
some Asian groups, for instance, pancreatic beta cells have been
found to be more fragile, and the need for insulin in people with
these characteristics may therefore be different.
Novo Nordisk’s modern insulin portfolio includes:
• Levemir®, a soluble, long-acting modern insulin for once-daily
use for type 2 diabetes. When it is time to begin insulin, Levemir®
provides glucose control with a positive weight profile. Weight
maintenance is important because insulin has long been
associated with weight gain, a barrier to beginning insulin
treatment according to diabetes experts.
• NovoRapid® (NovoLog® in the US), the world’s most widely
used rapid-acting insulin for use at mealtimes. For people with
type 2 diabetes who have uncontrolled blood glucose levels
while on a basal insulin, intensification with NovoRapid®/
NovoLog® to a basal-bolus regimen helps attain and maintain
treatment goals.
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• NovoMix® 70/50/30 (NovoLog® Mix 70/30 in the US) is a dual-
release modern insulin that covers both mealtime and basal
requirements.
During 2010, Novo Nordisk’s long-acting insulin Levemir® joined
NovoRapid® and NovoMix® in achieving blockbuster status, with
sales exceeding 1 billion US dollars for the preceding 12-month
period. NovoRapid® achieved sales of 2 billion dollars in a one-year
period, becoming a double blockbuster.
NovoRapid® is the world’s most prescribed rapid-acting insulin, used
by people with both type 1 and type 2 diabetes. It is also approved
for women who are pregnant or breastfeeding.
All Novo Nordisk’s modern insulins on the market have been
investigated in many randomised, controlled trials and in obser-
vational studies, and they are also monitored for any safety signals
through rigorous post-marketing safety surveillance.
Key events in diabetes 2010
• Novo Nordisk acknowledged as having the ‘Best
Diabetes Care Pipeline’.3
• Levemir® achieves blockbuster status.
• NovoRapid®/NovoLog® achieves double blockbuster
status.
• Victoza® gains GLP-1 leadership and expands GLP-1
market in key markets.
• Phase 3 results for first of three obesity trials for
liraglutide.
• Phase 3 results for Degludec and DegludecPlus.
• First human dose results for oral insulin and oral GLP-1.
• Changing Diabetes® Leadership Forums facilitate
change in sub-Saharan Africa, and the Middle East
and North Africa.
• NovoDose™, the first ever mobile dosing application,
launched for iPhone and iPad in the US.
Novo Nordisk Annual Report 2010 29
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Continuous innovation for
improved blood glucose control
We are developing two new-generation insulins, Degludec and
DegludecPlus, designed to have an ultra-long action to improve
blood glucose control while reducing the risk of hypoglycaemia.
These insulins also provide greater dosing flexibility compared to
currently used insulins.
In January 2011, we completed the phase 3a programme for
Degludec and DegludecPlus. The data generated from 17
randomised, controlled treat-to-target trials in more than 10,000
type 1 and type 2 diabetes patients from more than 40 countries,
consistently revealed benefits related to efficacy, safety and con-
venience of both Degludec and DegludecPlus. The trials mostly
used insulin analogues as comparator products and the key results
are provided in this section. We expect to submit applications for
regulatory approval of Degludec and DegludecPlus in the US and
Europe in the second half of 2011.
In a 52-week trial comparing Degludec versus insulin glargine in
type 2 diabetes, 1,030 insulin naive people with type 2 diabetes
were randomised 3 to 1 to either Degludec or insulin glargine once
daily in addition to metformin with or without a DPP-IV inhibitor.
Degludec effectively improved long-term glycaemic control, sub-
stantially decreasing blood glucose from a baseline of 8.2% to
around 7% in both patient groups. For Degludec, the fasting plasma
glucose level was statistically significantly lower than observed in
the comparator group. Degludec also showed a significantly lower
risk of hypoglycaemia compared to insulin glargine. Specifically,
the rate of confirmed night-time hypoglycaemic events was statis-
tically significantly lower in the group treated with Degludec, with
a reduction of more than 35% compared to the insulin glargine
group. Degludec demonstrated a good safety and tolerability profile
and there were no apparent differences between the treatment
groups with respect to adverse events and standard safety
parameters.
In two 52-week studies comparing Degludec to insulin glargine in
basal-bolus treatment of type 1 and type 2 diabetes, significant
advantages were demonstrated with Degludec. In the study in
type 2 diabetes, both treatment arms effectively lowered blood
DKK billion
Diabetes care
Sales development
■ Modern insulins
■ Human insulins
■ Protein-related products
■ Oral antidiabetic
products (OAD)
■ Victoza®
2010
2009
2008
2007
2006
45.7
37.5
33.4
30.5
27.9
0
10
20
30
40
50
Modern insulins
Sales development
■ NovoRapid®
■ NovoMix®
■ Levemir®
DKK billion
2010
2009
2008
2007
2006
26.6
21.5
17.3
14.0
10.8
0
6
12
18
24
30
30 Novo Nordisk Annual Report 2010
glucose levels to approximately 7.1%. Degludec showed a lower
risk of overall hypoglycaemia compared to insulin glargine and an
even greater reduction in night-time hypoglycaemia. In the study
with type 1 diabetes, Degludec and insulin glargine produced
a similar reduction in blood glucose levels. Again, a significant
reduction in night-time hypoglycemia was observed with Degludec.
In a 26-week basal-bolus trial comparing Degludec with insulin
glargine in type 1 diabetes, a regimen with dosing intervals alter-
nating between eight and 40 hours for the administration of
Degludec was compared to either Degludec at the evening meal,
or insulin glargine. All patients used NovoRapid® as bolus insulin
with meals. The flexible dosing arm of Degludec demonstrated
statistically significant reduction in night-time hypoglycaemia of
around 40% when compared to the insulin glargine group.
The clinical programme also included two studies in type 2 diabetes
exploring three-times-weekly administration of Degludec compared
to a daily dose of insulin glargine. Three-times-weekly admini-
stration of Degludec effectively lowered blood glucose in both
studies, however, it did not meet pre-specified regulatory require-
ments. These studies did confirm the ultra-long action profile of
Degludec.
DegludecPlus, the first prandial basal insulin combination containing
ultra-long-acting Degludec and insulin aspart (NovoRapid®), was
also tested in phase 3a studies. In one six month study, twice-
daily DegludecPlus was compared to twice-daily NovoMix® 30 in
people with late-stage type 2 diabetes. DegludecPlus effectively
improved long-term glycaemic control by reducing blood glucose
to just above 7%. Despite similar blood glucose reductions to
NovoMix® 30, the DegludecPlus treated group demonstrated
a significantly lower risk of hypoglycaemia including a more than
70% reduction in night-time hypoglycaemia. The DegludecPlus
patients also had a significant reduction in fasting blood glucose,
achieved target control faster and required a lower total insulin dose.
Innovative devices and tools for physicians
During 2010, we launched the first ever mobile insulin dosing guide
for physicians, NovoDose™, in the US. NovoDose™, an application
available on iTunes or as a free download at novodose.com/app,
lets physicians look up dosing guidelines and blood glucose goals
for people with diabetes from an iPhone, iPad or iPod touch. The
application, only available to those who identify themselves as
healthcare professionals, also provides important safety information
on Novo Nordisk products.
This new technology is part of a trend of physicians using hand-
held devices when administering treatment. NovoDose™ will be
introduced in other markets in 2011.
FlexPen®, the world’s most widely used prefilled insulin pen, is
available for Levemir®, NovoRapid®/NovoLog® and NovoMix®/
NovoLog® Mix. It eliminates the need to manually load insulin into
a delivery device or use a separate vial and syringe. Once in use,
the prefilled pen may be stored at room temperature for 14 days
or more, which can suit flexible lifestyles. FlexPen® is made of
a recyclable plastic, which has the potential to reduce environ-
mental impact.
Our newest durable device, NovoPen Echo®, has been designed
with children in mind. It comes in two colours and features dosing
with half-unit increments, suitable for children requiring small insulin
doses. It features a simple memory function that allows the user
to see the size of the last dose and the time since injection.
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NovoPen Echo® was preferred by 80% of the participants in a
usability study that included children with diabetes, their parents
and healthcare professionals when compared to other insulin pens
for children. NovoPen Echo® was launched in Canada, Denmark,
Finland, Israel and Sweden in 2010 and will be launched in additional
markets in 2011.
We continue to focus on making the most preferred treatment
devices even better. Next-generation devices in our pipeline aim
to further enhance the competitiveness of our products.
Victoza®: innovative
early treatment
Victoza®, or liraglutide, is the first and only human Glucagon-Like
Peptide (GLP-1) analogue with 97% similarity to the natural gut
hormone. Like natural GLP-1, once-daily Victoza® works by stimu-
lating the beta cells in the pancreas to release insulin only when
blood sugar levels are high.
Until recently, most available treatments for diabetes involved trade-
offs for people with diabetes and physicians. While effective at
lowering blood glucose, they carried the risk of inducing low blood
sugar episodes (hypoglycaemia) and weight gain.
New GLP-1 therapies are a major innovation in the treatment of
type 2 diabetes because they lower glucose while having a low risk
of triggering hypoglycaemia, and in most people with diabetes
they also support weight loss. In type 2 diabetes, the ability of the
pancreas to release insulin in response to glucose is impaired. GLP-1
therapies help address this defect by directly acting on the pancreas.
Victoza®, the only once-daily GLP-1, can be used by adults with
type 2 diabetes who are unable to achieve blood glucose goals
with lifestyle changes and metformin. Treatment guidelines now
call for the use of GLP-1 as an option for early treatment of diabetes.
GLP-1 is a hormone from the human gut involved in glucose
regulation. First available in Europe in 2009, Victoza® was launched
in the US and Japan during 2010 and is now available in 24 markets.
Victoza® is steadily capturing and expanding the market for GLP-1
treatment.6
Changing Diabetes®
For millions of people living with diabetes today innovative
treatments are a privilege they cannot enjoy because healthcare
and treatment options are either insufficient or not available. With
the epidemic growth in diabetes, happening particularly fast in low-
income and emerging economies and hitting vulnerable groups all
over the world the hardest, this presents a huge social challenge.
As a world leader in diabetes care, we have a responsibility to reach
out beyond those people who already benefit from our products
and the support we offer to them, and to do everything we can
to ultimately defeat diabetes. This implies extending the scope of
our efforts to people who do not have access to proper diabetes
care as well as to people at risk of getting diabetes. Changing
Diabetes® is our promise to improve health and quality of life and
to actively contribute to a society that provides equal and non-
discriminatory support for people with chronic conditions.
Our Changing Diabetes® ambitions are to:
• provide better treatment and care for all people with diabetes
• raise public awareness of the need to take action on diabetes
• secure more resources to prevent and detect diabetes.
Better treatment and care for all
We believe that by finding better methods of prevention, detection
and treatment we will be able to defeat diabetes. To do so, we must
begin by gaining a better understanding of people with diabetes
and their needs.
The second Diabetes Attitudes, Wishes and Needs (DAWN™) study
represents one of the most significant new initiatives from Novo
Nordisk to learn from people with diabetes. A follow-up to our
landmark study in 2001, this study will be conducted over the next
few years to assess the needs of people with diabetes globally with
an aim to improve health literacy and support effective selfmanage-
ment. The largest study of its kind, the new DAWN™ study will
establish a new global understanding and awareness of the needs
of people with diabetes and those who care for them. The initiative
will build on the lessons learned and the international networks
developed in our initial, ongoing DAWN™ programme.
Expanding
access to care
Every person has a fundamental right to health. This is stated in the
Universal Declaration of Human Rights and is the underlying premise
of our efforts to improve availability, accessibility, affordability and
quality of care. We also seek to contribute to the UN Millennium
Development Goals, which set specific targets to overcome by 2015
some of the major challenges facing the world, including reducing
child mortality, improving maternal health and combating diseases
threatening social and economic development.
In addition to providing medicines to serve individual needs, we work
to improve accessibility and affordability for patients. We do this
through sustainable partnerships with governments and NGOs to
strengthen healthcare system capacity and to reverse the diabetes
pandemic, which is imposing a double burden on fragile economies
in low-income and emerging economies.
Addressing affordability barriers
The cost of therapy still constitutes a significant barrier for better
healthcare in low-income countries. Through our long-standing
differential pricing policy we offer insulin to all the least developed
countries (LDCs), as defined by the United Nations, at a price at or
below 20% of the average prices for insulin in the western world.
Novo Nordisk has operations in 34 of the LDCs, and in 2010 either
governments or non-profit organisations in 33 of these countries
chose to purchase through this offer. See p 96. Since 2006 the total
volume of insulin sold in the LDCs has increased steadily, and in 2010
the volume increased by 30% compared to 2009.
One challenge is that governments’ procurement is subject to
budget fluctuations. However, offering treatment at reduced prices
does not always ensure that end users benefit as intended. To
improve the impact of our differential pricing policy, we have con-
ducted pilot projects in eight LDCs. In 2010 we recruited sales re-
Novo Nordisk Annual Report 2010 31
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presentatives dedicated to addressing barriers throughout the supply
chain. We also carried out independent quality audits in Ghana,
Nigeria, Tanzania and Uganda to improve stock manage ment and
distribution and facilitate access to insulin in rural areas.
Providing treatment for children in poor countries
In most developing countries there are no existing facilities for
treating children with diabetes. Children with type 1 diabetes have
high mortality rates, with life expectancies of less than one year in
some countries in sub-Saharan Africa. Our Changing Diabetes® in
Children programme provides the necessary medical and laboratory
equipment, organises training of healthcare professionals, puts in
place patient education and creates systems for adequate moni-
toring and follow-up. In addition, insulin and diabetes supplies
are being provided free of charge for the duration of the pro-
gramme.
With an ambition to reach 10,000 children with diabetes within
five years, we made a 25-million US dollar commitment in 2008.
In 2010, we enrolled about 800 children and established 13 new
clinics under the Changing Diabetes® in Children programme, which
now provides treatment for more than 1,300 children.
To help improve diagnosis and treatment of diabetes in children,
we have developed a basic training manual for healthcare pro-
fessionals. This work has been informed by consultations with key
stakeholders from African countries and in collaboration with the
International Society for Pediatric and Adolescent Diabetes (ISPAD).
The manual is available free of charge at
changingdiabetesaccess.com.
Improving healthcare system capacity
We contribute to strengthening the capacity of healthcare systems
by training healthcare providers to diagnose and treat diabetes and
its complications. Since 2002, Novo Nordisk has either trained or
sponsored training for 1.2 million healthcare providers.
In 2010, we commissioned an external evaluation of the World
Partner Project (WPP) activities in Bangladesh and Tanzania during
2001–2009. The report shows how the WPP has resulted in active
and productive partnerships with other major organisations
involved in diabetes care. For example, in Bangladesh the develop-
ment and deployment of a distance learning programme for
doctors has resulted in a significant expansion of capacity, with
3,600 healthcare professionals trained in diabetology. Today the
programme continues as a self-sustainable cooperation with a local
faculty and the development of an accredited physician programme
with the ambition of extending care to other rural areas in the
country.
Our support for healthcare capacity building includes our long-term
financial commitment to the World Diabetes Foundation, including
a donation of 69 million Danish kroner in 2010 (see p 87). This
independent and non-profit foundation, set up by Novo Nordisk
in 2001, supports the prevention and treatment of diabetes in the
developing world. To date it has funded 253 projects in 96 countries.
For more information about the foundation, including its annual
report, see worlddiabetesfoundation.org.
32 Novo Nordisk Annual Report 2010
Public awareness
and action
To change the course of the diabetes pandemic and improve quality
of life for those with diabetes, we are working to put diabetes on
public health agendas by building partnerships around a shared
vision of Changing Diabetes® and implementing the UN Resolution
on diabetes. Through 39 Diabetes Leadership Forums and regional
or national round-tables in 77 countries since 2005, we have
engaged more than 7,500 key stakeholders to date, helping to
reach consensus about what it will take to address the current
challenges and change diabetes.
In 2010, we turned our focus to two regions where the diabetes
pandemic is increasing rapidly: sub-Saharan Africa and the Middle
East and Northern Africa (MENA).
A Diabetes Leadership Forum Africa 2010 focused on the social and
economic challenges related to the growing burden of diabetes in
sub-Saharan Africa. Once a rare disease, diabetes impacts more than
12 million people in the region today and its prevalence is expected
to double during the next 20 years. The meeting in Johannesburg,
attended by more than 260 government representatives, international
organisations, patient associations, non-governmental organisations,
private sector, academic institutions and healthcare professionals
from 32 countries across sub-Saharan Africa, was hosted by the
Department of Health of the Republic of South Africa and the World
Diabetes Foundation, and supported by the International Diabetes
Federation. Health ministers and senior ministerial representatives
adopted a joint statement calling for concrete actions to strengthen
health systems and address non-communicable diseases, including
diabetes, in sub-Saharan African countries. We sponsored and
co-organised the Forum.
In the MENA region diabetes is today estimated to affect more than
26 million people, and this number is set to double by 2030. At the
MENA Diabetes Leadership Forum in Dubai, more than 400
decision-makers gathered to find solutions to the growing burden
of diabetes. Delegates represented international and regional
organisations, media, experts and members of the diabetes
community from 22 countries in the region. The Forum resulted in
the adoption of the Dubai Declaration on Diabetes and Chronic
Non-Communicable Diseases in the Middle East and Northern Africa
Region. The Forum was hosted by the UAE Ministry of Health, the
executive board of the Health Ministers’ Council for Gulf Cooperation
Council States, the World Diabetes Foundation and the World Bank,
and was organised and sponsored by Novo Nordisk.
In conjunction with the Forum, the Changing Diabetes® World Tour
arrived in the United Arab Emirates. Since 2006, it has travelled
across five continents to raise awareness of diabetes. A new mobile
unit was added in 2010, developed in partnership with the Steno
Diabetes Center, offering high-quality screening and information
about diabetes to the general public. The objective is to combine
awareness, screening and research in order to drive policy change
towards early detection of diabetes. Screening data will contribute to
a better understanding of diabetes and inform recommendations for
promoting early detection and intervention.
On World Diabetes Day, 14 November, more than 2.6 million
people in 57 countries were engaged in different Novo Nordisk-
sponsored activities, including screening and educational
programmes to increase awareness.
“ I feel secure, knowing what
is happening with my body.
I can control it and I know
that these babies aren’t
going to be so affected
because I’m on treatment.”
Celeste Smith
Celeste Smith of Cape Town, South Africa, was
diagnosed with diabetes while pregnant with twins and is
being treated with tablets and insulin. She is proud of the
lifestyle changes that she and her husband have made to
manage her condition.
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Novo Nordisk Annual Report 2010 33
Promoting workplace health
Through the NovoHealth workplace health programme, Novo
Nordisk promotes and supports healthier lifestyles for employees.
The NovoHealth programme promotes and supports healthy
living as a means to prevent type 2 diabetes and other lifestyle-
related conditions. It now reaches more than 80% of our employees
and covers four global standards, ensuring that all employees
work in a smoke-free work environment, have access to healthy
food in the workplace, are supported in being physically active
and are offered an individual health check every second year. In
2010, we were among the founding partners of the workplace
Wellness Alliance, initiated by the World Economic Forum and
launched at its annual meeting in Davos in January 2011. By making
tools and better practices available, the Wellness Alliance makes it
easy to offer workplace health and wellness programmes to
employees.
We also raise awareness about the importance of regular physical
activity and healthy eating in preventing type 2 diabetes through
our National Changing Diabetes® Programmes in many countries
around the world. In Canada, more than 100,000 students in six
provinces have participated in the Everyone Jump…Kids Changing
Diabetes® programme. A cross-curricular resource designed by
teachers, the programme was introduced by Novo Nordisk in
2005 to support healthy living and type 2 diabetes awareness.
Focus on healthy pregnancies
In recent years we have found substantial evidence that when
women have or develop diabetes during pregnancy, their offspring
will also be at significantly higher risk. This, we believe, holds a
key to addressing diabetes at its roots: if we can prevent diabetes
during pregnancy, we may also prevent future generations from
developing this chronic condition.
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Prevention and
early detection
As we continue to develop better methods of preventing, detecting
and treating diabetes, we are also pursuing our dream and our
hope of ultimately finding a cure. We make substantial investments
in diabetes research, which is the foundation of our activities. The
resources of our research units are complemented by a large
international network, built over the last 10 years, of academic
institutions, clinical research centres and technology providers.
Much of this research into how diabetes could one day be controlled
by regeneration or reconstitution of the vital beta cells of the
pancreas is taking place today at the Hagedorn Research Institute
in Denmark, which is a fully integrated part of the Diabetes
Research Unit of Novo Nordisk.
Support for best practice
Our global campaign drives awareness of the personal and
societal risks of diabetes, and the importance of prevention and
early diagnosis and treatment. Through our National Changing
Diabetes® programmes, we promote better education of healthcare
professionals and wider availability of screening for diabetes to
help save lives and reduce economic costs long term.
Ask.Screen.Know is an educational programme that Novo Nordisk
launched in 2009 to support diabetes screening in the US for people
in the Medicare programme and at risk of diabetes. Medicare began
offering free diabetes screening services to those at risk of diabetes
in 2005, but it is estimated that less than 10% of those eligible have
been screened. We encourage physicians to have at-risk patients
screened and speak with patients about their blood sugar numbers
and making healthy lifestyle changes. See AskScreenKnow.com and
the Ask.Screen.Know page on Facebook.
In 2010, Novo Nordisk began working with doctors in the US to
create awareness and understanding of programmes being run
by the Diabetes Prevention and Control Alliance, a national
partnership that provides access to community- and evidence-
based interventions to help prevent and control diabetes,
pre-stages to diabetes and obesity. This initiative helps prevent
people at risk getting diabetes through support for lifestyle
changes, including healthy eating and increased activity, and
education, including support from trained pharmacists. The
programmes have been launched in six US states and will roll out
nationally through 2012.
34 Novo Nordisk Annual Report 2010
The World Health Organization estimates the worldwide prevalence
of gestational diabetes to be 3–15% of all pregnancies, but figures
from India and the United Arab Emirates put prevalence rates as
high as 18–22%. Half of the women newly diagnosed with diabetes
each year have previously had gestational diabetes. Children born
to women with gestational diabetes mellitus also have a substantially
increased risk of developing type 2 diabetes. Many cases of
gestational diabetes go undiagnosed, and most are in low- and
middle-income countries, where women often have poorer nutrition
and access to healthcare.
If we can prevent diabetes
during pregnancy, we may also
prevent future generations
from developing this chronic
condition.
Gestational diabetes can be controlled through proper diet and
regular exercise, but some women with gestational diabetes require
insulin treatment to normalise their blood glucose levels in order
to avoid complications in the infant. Gestational diabetes usually
goes away after the child is born, but 5–10% of women with
gestational diabetes are found to have type 2 diabetes after preg-
nancy. In addition, women who have had gestational diabetes
have a 20–50% chance of developing type 2 diabetes within
5–10 years.
Our task is to spread understanding of how diabetes in pregnancy
needs to be identified, and how it can be controlled with lifestyle
advice. In particular, complications to the baby can largely be
avoided if the mother’s blood glucose levels are controlled before
delivery. In up to 90% of cases, optimum control can be obtained
by diet and physical activity alone. Lifestyle education can encourage
behaviour changes to prevent future disease in the mother and
her child.
We have therefore begun activities to raise awareness of the impact
of diabetes in pregnancy, address knowledge gaps, support
community-based maternal health programmes and advocate for
sustainable change, which ultimately will increase access to diabetes
screening, treatment and lifestyle education.
We have encouraging results from on-the-ground experience.
Since 2007, the Indian state of Tamil Nadu has screened all
pregnant women for gestational diabetes and provided free
doses of NovoRapid®, approved for use during pregnancy.
Positive results have led to the inclusion of screening guidelines in
state policy and the establishment of national treatment guidelines.
In 2011, a long-term study will be launched, with support from
Novo Nordisk, to track the women diagnosed and treated and the
children born to them, with the aim of improving understanding
of the long-term consequences of gestational diabetes.
Building on this experience, we are now launching partnerships
to address diabetes in pregnancy in Nicaragua and Colombia.
UN high-level meeting on non-communicable diseases
In recognition of the increasing global impact and challenge
of non-communicable diseases, the United Nations General
Assembly will hold a high-level meeting on the prevention and
control of non-communicable diseases in September 2011.
We welcome this initiative, which reflects a recognition of the
significant negative impact of unaddressed chronic conditions,
and are committed to supporting the UN process to focus on
driving change in healthcare systems. We do this through partner-
ships, our own programmes and engagement at global, regional
and national levels.
In 2010, we pledged to provide the World Diabetes Foundation
with an additional 25 million Danish kroner to be used for activities
relating to the high-level meeting in 2011 and 2012. There have
been 27 such meetings in the history of the UN, and HIV/AIDS is
the only disease to have been a summit topic. The summit has the
potential to mobilise action for a new type of collaboration that
pursues a life-cycle approach to healthcare.
1. Global Attitudes of Patients and Physicians in Insulin Therapy (GAPP) Survey, Novo Nordisk, 2010.
2. In October 2008, a new set of treatment guidelines for type 2 diabetes was issued by a panel
of experts from the American Diabetes Association and the European Association for the
Study of Diabetes.
3. The January 2010 issue of R&D Directions magazine included Novo Nordisk in its ‘Top 10
Pipelines’ list. Novo Nordisk was recognised for the ‘Best Diabetes Care Pipeline’ for the
second year in a row.
4. Heise T et al. Insulin degludec: Less pharmacodynamic variability than insulin glargine under
steady state conditions. Poster presentation, Poster 971, presented at European Association
for the Study of Diabetes, Scientifi c Sessions 2010, Stockholm, Sweden, 2010.
5. Mathieu C et al. Insulin degludec, a New Generation Ultra-long acting Insulin, used Once
Daily or Three Times Weekly in People with Type 2 Diabetes: Comparison to Insulin Glargine.
Oral presentation no. 4, presented at European Association for the Study of Diabetes (EASD),
Scientifi c Sessions 2010, Stockholm, Sweden, September 2010.
6. IMS, weekly NPA data.
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Improvements
in diabetes care
Interview with Kåre Schultz,
Novo Nordisk’s chief operating officer
How does Novo Nordisk’s diabetes care
business benefit people with diabetes?
For decades, our company has developed insulins for people
with diabetes to help them live better lives and have better
control of their diabetes. Ninety years ago, diabetes was
inevitably fatal. Today, diabetes can be managed and, by
developing improvements to diabetes care, we can help
people with diabetes live longer, healthier lives.
Because modern insulins are made with protein molecules
engineered to work longer or faster than naturally occurring
human insulin, they can make it easier for people with
diabetes to treat their diabetes and help in managing blood
glucose levels. NovoRapid®, the world’s most prescribed
fast-acting insulin, allows people to administer treatment
with meals, reducing the need for complicated calculations
and advance planning. Our delivery devices, including
NovoFine® and NovoTwist® needles, can also contribute
to improved treatment by reducing pain or inconvenience.
How is Novo Nordisk supporting patients
affected by the diabetes pandemic?
As the diabetes pandemic is increasingly affecting people
in developing countries, the global reach of our diabetes
care business also allows us to help more people. We
estimate that our diabetes care products are used by
approximately 18 million people. This means that we are
not only the global market leader in insulin, selling 51%
based on volume, but we believe that we are also reaching
roughly half of the people with diabetes who are receiving
treatment and have been introduced to insulin therapy.
It is obvious that there are more people who are either not
diagnosed, not treated, or undertreated. While the
International Diabetes Federation estimates that there are
nearly 300 million people with diabetes globally, it also
estimates that only a quarter of that number have been
diagnosed and are receiving treatment. We therefore
advocate for better care, train doctors and support
improvements in healthcare systems. We do this both
because it helps grow our business and because the need
for more and better diabetes treatment is real and urgent.
What makes Novo Nordisk the global leader in diabetes care?
We offer a very broad product portfolio, with therapies
designed for all types and stages of diabetes, and we
combine this with the broadest geographical reach. Because
our company was founded to address the medical needs of
people with diabetes our manufacturing, distribution and
sales and marketing support for diabetes care are global.
This includes production facilities in countries where
diabetes is increasing rapidly such as Brazil and China.
Novo Nordisk Annual Report 2010 35
“ Archie is an amazing
boy and haemophilia
doesn’t restrict his life.”
Kate Hunter
Kate, of West Sussex, UK, is talking about her three-year-
old son Archie, who is a participant in our guardian™
clinical programme. The programme includes a number
of trials for a new recombinant factor VIII treatment for
people with haemophilia A.
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36 Novo Nordisk Annual Report 2010
Biopharma-
ceuticals
Our specialised expertise with proteins and our understanding of
chronic disease are leveraged in our biopharmaceuticals business
to develop innovative and improved ways to treat haemophilia
and other rare bleeding disorders, growth hormone deficiency
and inflammatory diseases.
DKK billion
Biopharmaceuticals
Sales development
■ Haemostasis management
(NovoSeven®)
■ Growth hormone therapy
■ Hormone replacement
therapy
■ Other products
2010
2009
2008
2007
2006
15.1
13.6
12.2
11.4
10.9
12
0
6
Changing Possibilities
in Haemophilia®
Commitment to science
In support of our ambition to help people with haemophilia lead
the lives they desire, we have the broadest pipeline of research
and development projects in our industry. In addition to improving
current treatment for people with inhibitors, we are developing
the next generation of activated recombinant factor VII products
and expanding our research in haemophilia and other rare
bleeding disorders.
We are developing compounds targeting faster and more efficient
treatment of episodic bleedings, long-acting compounds to allow
less frequent prophylactic infusions and products administered by
the more convenient subcutaneous route.
To offer new therapeutic approaches to the prevention and
treatment of bleeding based on the established efficacy of
recombinant factor VIIa, we are developing:
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• a new recombinant factor VIIa, analogue with a faster onset of
action and the ability to form even stronger clots in a shorter time
Commitment
to haemophilia
Haemophilia is an inherited or acquired bleeding disorder that
prevents blood from clotting. The 400,000 people worldwide
living with haemophilia lack, either partially or completely, an
essential clotting factor needed to form blood clots. Without
treatment, uncontrolled internal bleeding can cause stiffness,
pain, severe joint damage and even death.
We developed our factor VIIa product NovoSeven® for the more
than 4,000 people with haemophilia who have developed inhibitors,
or antibodies, to their normal treatment. NovoSeven® provides
effective treatment for rapid control of bleeding episodes and has
been a major advancement in the treatment of haemo philia. It was
a significant innovation when launched in 1996 and remains the only
room-temperature-stable recombinant bypassing agent available
for people with haemophilia with inhibitors.
NovoSeven® is also the only recombinant medication approved
for the treatment of bleeding episodes in acquired factor VII
deficiency and, in Europe, Glanzmann’s thrombasthenia. Due to
its special properties, 14 years after launch, NovoSeven® achieved
sales growth of 14% in Danish kroner.
We are continuing to look for ways to make NovoSeven® more
convenient and more effective. During 2010, a new 8 mg vial was
approved in the US and Europe. The new size, offered in addition
to the 1, 2 and 5 mg vials, offers an extra element of convenience
to initiate the treatment of bleeds faster. In the event of a bleeding
episode, every second counts. With the availability of the 8 mg vial,
many people living with haemophilia with inhibitors will need fewer
vials to stop a bleed. This will allow faster reconstitution and initiation
of the treatment, possibly resulting in faster bleeding control.
• a long-acting derivative of recombinant factor VIIa
The same long-acting molecule is also being investigated for
subcutaneous use. The phase 2 trial for the fast-acting analogue
was completed in 2010, while the phase 2 trials for the long-acting
derivative of factor VIIa are ongoing.
During 2010, we also made progress in the development of
solutions for the broad range of haemophilia and other rare
bleeding disorders.
Key events in
biopharmaceuticals in 2010
• Phase 3 trial results for the first recombinant factor XIII
analogue to treat congenital factor XIII deficiency.
• Phase 2 trial results for our fast-acting next-generation
factor VIIa analogue.
• Phase 1 trial completed for our long-acting recombinant
treatment for people with haemophilia B intended for
prophylactic use.
• Launch of HERO (Haemophilia Experiences, Results
and Opportunities), an international initiative exploring
psychological and social issues in haemophilia.
• New prefilled Norditropin® FlexPro® for growth
hormone deficiency with audible click to confirm
dosing launched in Europe, Japan and the US.
• New Vagifem® 10μg, the lowest effective dose
available for the treatment of vaginal atrophy, was
launched in Canada, Portugal, Scandinavia, the UK
and the US.
Novo Nordisk Annual Report 2010 37
• For haemophilia A: In order to improve upon existing treatments
using factor VIII we had to first produce a third-generation factor
VIII compound. We expect to launch this new recombinant
treatment within the next few years while we seek to develop
a longer-acting formulation.
Novo Nordisk was an official sponsor of World Haemophilia Day,
17 April, in 2010. The designated day, the 21st annual event,
promoted awareness and understanding of haemophilia. Novo
Nordisk-sponsored activities were carried out in more than 25
countries, reaching thousands of people.
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• For haemophilia B: During 2010, we completed a phase 1,
proof-of-concept trial for a long-acting recombinant factor
IX compound intended for once-weekly use.
• For congenital factor XIII deficiency: The only existing
treatment option for the 600 people diagnosed with
congenital factor XIII deficiency is made from human plasma,
which may involve risk of bloodborne viruses. Our phase 3
clinical trial for a recombinant factor XIII treatment was
completed in 2010 and we expect to file for regulatory
approval in 2011.
Commitment to community
Through our Changing Possibilities in Haemophilia® initiatives we
seek to partner with physicians, healthcare policy-makers and the
wider haemophilia community to help build a better tomorrow
for people with haemophilia. We want to increase understanding
of haemophilia and improve access to diagnosis, care and
treatment.
To strengthen our understanding of life with haemophilia, we
initiated a psychosocial study to determine how to best support
the needs of people with haemophilia. We presented the
preliminary findings of HERO (Haemophilia Experiences, Results
and Opportunities), an international survey into the psychological
and social effects of haemophilia, at the World Federation of
Haemophilia Congress in Buenos Aires, Argentina, in July 2010.
The first phase of the study includes interviews with 150 people
with haemophilia, caregivers and healthcare professionals in
seven countries. The initial findings underline the importance of
psychosocial issues in haemophilia, which include family tensions,
problems of integration at school, fear of stigmatisation, and
concerns about integration at work, forming relationships and
starting a family.
When completed in 2011, the full inquiry will include responses
from over 1,200 people from 12 countries and will be the largest
international study into the social and psychological aspects of
life with haemophilia. More information about HERO is available
at changingpossibilities.com.
Another Novo Nordisk initiative to better understand the needs
of people with haemophilia and support caregivers in providing
education about haemophilia and treatment optimisation – early
treatment to reduce joint damage – is BRUNO (Being Receptive,
Understanding the Needs of Others). Activities in 2010 included
the launch of a children’s book with all royalties donated to the
Haemophilia Society and the Novo Nordisk Haemophilia Foundation,
and educational materials developed in conjunction with an advisory
board of nurses.
Through the Novo Nordisk Haemophilia Access to Insight
programme we offer support to encourage doctors and scientists
to enhance their understanding of haemophilia and share best
practices to improve care. We also sponsor an accredited training
programme, the Haemophilia Academy, as well as scientific sessions
at major congresses.
38 Novo Nordisk Annual Report 2010
People with haemophilia with inhibitors from around the world
met in Buenos Aires in June 2010 to inaugurate the Novo Nordisk
Global Haemophilia with Inhibitors Patient Council. By establishing
a platform for ongoing communication with people with
haemophilia and their representatives, we hope to better
understand the unmet needs of people with haemophilia and
how Novo Nordisk may be able to help. The group generated
ideas about information and support that would benefit people
with inhibitors. In the US we have also established the Consumer
Council to offer better services to people with haemophilia. Their
activities have helped develop the Uninhibited Achievement
award, the Inhibitor Education Summits and the Voices
Uninhibited newsletter. The US Changing Possibilities Coalition
also has a Facebook site with several hundred fans.
During 2010, we launched a number of programmes in Turkey to
create awareness and build public support for haemophilia. To
create positive awareness of haemophilia, particularly among
healthcare providers, we were the main sponsor of the National
Patient Summit and symposium. More than 300 people with
haemophilia, healthcare professionals, associations and Ministry
of Health officials participated in the April event.
Expanding
access to care
Our ambition is to improve access to diagnosis, care and treatment
for people with haemophilia. We are working with the haemophilia
community to support the next generation of haemophilia
physicians, improve access to care today and increase treatment
options in the future.
To give surgical teams the expertise to perform needed surgeries
for people with haemophilia, we launched an ongoing training
programme in 2009. People with haemophilia may suffer joint
damage from repeated bleeds. Joint replacement may end
chronic pain, but there are special challenges in performing
surgery on people with haemophilia with inhibitors. Four-day
Excellence Training Programmes are being held at haemophilia
centres worldwide and each session accommodates up to four
surgical teams.
As our focus on haemophilia has expanded, so has our commitment
to the global haemophilia community. We established the Novo
Nordisk Haemophilia Foundation (NNHF) in 2005 to address the
significant need for improving haemophilia care and treatment in
developing countries, where haemophilia is not a healthcare
priority and many people with haemophilia go undiagnosed or
are inadequately treated.
Our donations to the NNHF, including 15 million Danish kroner in
2010, support projects and fellowships in 25 developing and
emerging countries. By working with partners across all areas of
the haemophilia community with local ownership of projects, the
NNHF aims to ensure the sustainability of development programmes.
See nnhf.org for more information.
Other therapy areas
In determining which business areas our company should operate in,
we consider our core strengths in protein engineering and chronic
disease treatment as well as the potential for global market leadership.
Growth hormone therapy
Novo Nordisk is moving into a global leadership position in
human growth hormone therapy, building on a 40-year
commitment that leverages on our expertise with protein
molecules. Norditropin® is the only liquid growth hormone
product with a formulation that does not require refrigeration
after first use and is available in a prefilled, ready-to-use device.1
Growth hormone deficiency affects the pituitary gland. If the
pituitary gland does not produce enough growth hormone,
growth is slower than normal. Children need growth hormone to
grow to normal height. In adults, growth hormone is needed to
maintain a good quality of life and the proper amounts of body fat,
muscle and bone to reduce metabolic complications. Research
shows that children of short stature are more likely to experience
difficulty at school, while adults with growth hormone deficiency
have poorer-than-average health-related quality of life.
We have drawn on our technological expertise in injection devices
to improve growth hormone delivery systems and products. During
2010, we launched a new auto-injection device, Norditropin®
FlexPro®. Among the new key features is an easy-push dose button
and a new, end-of-dose ‘click’, which lets the user know, when the
full dose has been delivered. The pen is also shorter, aiming to
make it easier to hold and handle for both children and adults.
Hormone replacement therapy
Vagifem® 10μg, a lower-dose version of Vagifem®, was
introduced in the US, Canada and Europe in 2010. VagiFem®
builds on our 35 years of experience with hormone treatment
for menopausal symptoms. Our long-standing position is that
hormone replacement therapy for women should be prescribed
at the lowest effective dose and for a time period consistent with
treatment goals and risks assessed for the individual woman.
Treating inflammatory diseases
Leveraging our protein expertise to help people with other types
of chronic disorders and add diversity to our clinical pipeline of
products, we now have projects in early clinical development
targeting chronic inflammation. In 2010, we initiated our first
phase 2 clinical inflammation trials in people with rheumatoid
arthritis. For more information on our strategy for treating
inflammatory diseases, see pp 17–19.
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Recruitment
for clinical
trials
Interview with Mads Krogsgaard Thomsen,
Novo Nordisk’s chief science officer
What are the current challenges in conducting clinical trials?
Regulators and health technology assessors are requiring
more evidence of both the clinical and economic benefit
to society of new experimental medicine. Expectations are
increasing, and to meet them we are having to increase
the number and size of our clinical trial programmes. This
makes trials longer and more complex to manage as we
are required to obtain more information from patients and
to provide more information to agencies.
It is particularly critical that we have sufficient patients from
different ethnic groups enrolled in a trial to live up to the
requirements of regulatory agencies with different wishes.
Otherwise, we may end up having too few patients overall,
or of a specific category, at the end of a trial to obtain final
evaluative data and product approval. This can lead to
non-approval or a delay in approval increasing the overall
costs for the drug candidate and preventing us from serving
patients in the best possible way.
How does this affect clinical trials for
treatment of rare bleeding disorders?
For orphan diseases, patient recruitment presents a
unique challenge. In the case of congenital factor XIII
deficiency, there are only 600 people worldwide who
have this condition. Even for trials with only 40 patients,
we are required to run a global clinical trial programme
to ensure worldwide approval.
What are the difficulties in conducting
clinical trials on a global scale?
We conduct clinical trials in more than 50 countries, and
there are many advantages in doing this. It is important
that treatments are assessed in different patient
populations, as required by regulators. To ensure that all
patients are treated equally, we have one set of global
clinical standard operating procedures in compliance with
regulatory guidelines. We conduct internal reviews, set up
safety and ethical committees for all trials, train our staff
and investigators, and perform both internal and external
audits. Also, we need to ensure that Good Clinical Practice
guidelines exist in all countries involved in any given trial.
What is Novo Nordisk doing to ensure sufficient recruitment?
Novo Nordisk has a long history of preparing and
designing successful patient recruitment strategies across
therapy areas – from identifying patients, requesting
referrals from physicians, contacting and screening
patients, and obtaining informed consent, to training
the staff responsible for patient recruitment. In fact,
developing solutions for trial recruitment has become
a competitive advantage for our organisation.
1. Only the 5μg and 10μg sizes are room-temperature stable.
Novo Nordisk Annual Report 2010 39
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Corporate
governance
The framework for our corporate governance consists of internal
principles as well as external regulations and codes, including
compliance with applicable securities laws in Denmark and the
US and the Danish Recommendations on Corporate Governance.
Our values are consistent with principles of good governance,
and the Novo Nordisk Way forms the foundation of our internal
values-based framework.
Our company is part of the Novo Group, a family of independent
companies with a common history and shared values. The holding
company of the Novo Group is Novo A/S, a Danish limited liability
company wholly owned by the Novo Nordisk Foundation,
a commercial, profit-making foundation.
Governance structure
Novo Nordisk holds itself accountable to shareholders for its
performance. The company seeks to enhance the accuracy,
completeness and reliability of the information provided in the
company’s annual financial and non-financial reporting through
internal controls, assurance and independent audits. Reporting helps
shareholders assess the actions of the Board and Management.
Shareholder rights
Novo Nordisk’s share capital is divided into A shares and B shares.
All A shares are held by Novo A/S, which also holds B shares, as
reported on p 55. The B shares are traded on the NASDAQ OMX
Copenhagen and in the form of ADRs on the New York Stock
Exchange.
Each A share (= nominal value 1 Danish krone) carries 1,000 votes
and each B share (= nominal value 1 Danish krone) carries 100
votes. Special rights attached to A shares include pre-emptive
subscription rights in the event of an increase of the A share
capital and pre-emptive purchase rights in the event of a sale
of A shares and priority dividend if the dividend is below 0.5%,
while B shares take priority for dividends between 0.5% and
5% and B shares take priority for winding-up proceedings.
Shareholders have ultimate authority over the company and
exercise their right to make decisions regarding Novo Nordisk
at general meetings, either in person, by proxy, or by
correspondence. Resolutions can generally be passed by a simple
majority, while resolutions to amend the Articles of Association
are subject to adoption by at least two-thirds of votes cast and
capital represented unless other requirements as to the adoption
are imposed by the Danish Companies Act. We are not aware of
the existence of any agreements with or between shareholders
on the exercise of votes or control.
At the annual general meeting, shareholders approve the annual
report and any amendments to the company’s Articles of
Association. Shareholders also elect board members and the
independent auditor.
General meetings are held in English; however, proposals may
be submitted and questions asked in Danish. Simultaneous
40 Novo Nordisk Annual Report 2010
interpretation between English and Danish is available and the
meeting is webcast. The Board has decided that, currently,
general meetings should be conducted by physical attendance.
Shareholders may, however, vote by proxy or correspondence,
either electronically or by mail.
General meetings must be called with three to five weeks’ notice.
The meeting agenda is sent out with a combined proxy and
voting form, allowing shareholders to vote on each agenda item
separately. A shareholder’s right to attend and vote at a general
meeting is determined by shares owned at the record date, which
is one week prior to the general meeting. All shareholders may,
no later than six weeks prior to the general meeting, request that
proposals for resolution be included on the agenda. The deadline
for applying for an admission card to a general meeting is no later
than three days prior to the general meeting. All documents
relating to general meetings are published on Novo Nordisk’s
website at least three weeks prior to the general meeting.
The Novo Nordisk Foundation
The Novo Nordisk Foundation supports Novo Nordisk’s
adherence to the Charter for Companies in the Novo Group,
which is online at novo.dk. All strategic and operational matters
are solely decided by the Board and the Management of Novo
Nordisk. Overlapping board memberships help to ensure that
the Foundation and Novo Nordisk share a common vision and
strategy.
Our values are consistent with
principles of good governance,
and the Novo Nordisk Way
forms the foundation of
our internal values-based
framework.
Board of Directors
The company has a two-tier board structure consisting of the
Board of Directors and Executive Management. The two bodies
are separate and no person serves as a member of both. On
behalf of the shareholders, the Board determines the company’s
overall strategy and actively contributes to developing the
company as a focused, sustainable global pharmaceutical
company. The Board supervises Executive Management in its
decisions and operations and may issue new shares or buy back
shares in accordance with authorisations granted by the general
meeting and recorded in the minutes.
The Board has 11 members, seven of whom are elected by
shareholders at general meetings and four by employees.
Shareholder-elected board members serve a one-year term and
may be re-elected at the general meeting. According to the Rules
of Procedure of the Board, members must retire at the first
general meeting after reaching the age of 70. At the 2011 Annual
General Meeting, it will be proposed to include the retirement
age in the articles, in accordance with the Danish Corporate
Governance Recommendations.
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A proposal for nomination of board members is presented by
the Chairmanship to the Board, taking into account required
competences as stated in the competency profile, and reflecting
the result of a self-assessment process facilitated by external
consultants. The assessment process is based on written
questionnaires and evaluates whether each board member
and executive participates actively in board discussions and
contributes with independent judgement. The self-assessment
conducted in 2010 resulted in an update of the competency
profile of the Board and an enhanced focus on the succession
preparedness of the Board, which entailed the establishment
of an ad hoc nomination team.
In nominating candidates, the Chairmanship seeks to achieve
a balance between renewal and continuity. The competency profile
is reviewed annually by the Board and disclosed on the Novo
Nordisk website. The majority of the shareholder-elected board
members, four out of seven, are independent as defined by the
Danish Corporate Governance Recommendations. See p 50.
Under Danish law, Novo Nordisk employees in Denmark are
entitled to be represented by half of the total number of board
members elected at the general meeting. In 2010, employees
elected from among themselves four board members. Board
members elected by employees serve a four-year term and have
the same rights, duties and responsibilities as shareholder-elected
board members.
The Board met seven times during 2010. Five meetings were
attended by all board members; two of the members had to be
excused from attending one meeting each during the year. With
the exception of agenda items reserved for the Board’s internal
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
provide regular feedback from meetings with investors to give
board members an insight into major shareholders’ views of the
company.
consisting of the Chairmanship, Jørgen Wedel and Henrik Gürtler,
has been established to identify new board candidates.
In March 2010, the Board re-elected Sten Scheibye as chairman
and Göran A Ando as vice chairman. See novonordisk.com/
about_us for a detailed report on the Chairmanship’s activities.
Research and development facilitator
The Board has for a number of years had an research and
development facilitator to assist the Board and Executive
Management in preparing the Board’s discussions about research
and development. The Board determined the position was no
longer needed and abolished it as of the end of 2010.
Audit Committee
The three members of the Audit Committee are elected by the
Board from among its members. All members qualify as
independent and have been designated as financial experts as
defined by the US Securities and Exchange Commission (SEC).
Under Danish law, all members qualify as financial experts and
two of the members also qualify as independent.
In 2010, the Audit Committee held four meetings attended by
all members except for one occasion when one member was
excused.
The Audit Committee assists the Board of Directors with
oversight of the external auditors, the internal audit function,
complaints regarding financial fraud and business ethics, the
financial reporting process and post-investment reviews. The
Audit Committee conducts a self-assessment annually, evaluating
whether each member participates actively in discussions and
contributes with independent judgement.
In March 2010, the Board re-elected Kurt Anker Nielsen as chairman
and re-elected Jørgen Wedel and Hannu Ryöppönen as members
of the Audit Committee. See novonordisk.com/about_us for a
detailed report on the Audit Committee’s activities.
Chairmanship
The Board elects from among its members a chairman and a vice
chairman, who form the Chairmanship of the Board. In 2010, the
annual general meeting approved that as of 2011 shareholders
will directly elect the chairman and the vice chairman. In 2010,
the Chairmanship held seven meetings and both members attended
all meetings.
Compliance hotline
Concerns of possible business ethics misconduct and financial
fraud may be raised anonymously by employees and other
stakeholders through the global compliance hotline. The compliance
hotline is managed by the Audit Committee secretariat and
monitored by the Audit Committee. The compliance hotline is
available over the telephone and on the web in nine languages.
The Chairmanship carries out administrative tasks such as planning
board meetings to ensure a balance between overall strategy-
setting and financial and managerial supervision of the company.
It also reviews the fixed asset investment portfolio. Other tasks
include recommending the remuneration of directors and
executives, and suggesting candidates for election by the general
meeting.
In practice, the Chairmanship has the roles and responsibilities
of a nomination committee and a remuneration committee, and
presents proposals to the Board. The Board has not established
separate remuneration and nomination committees, believing
that each board member must have the opportunity to contribute
actively to discussions and have access to all relevant information
about remuneration and nomination. Novo Nordisk is therefore
not in compliance with the Danish Corporate Governance
Recommendations, which recommend separate remuneration
and nomination committees. An ad hoc nomination team,
Management of the company
The Board has delegated responsibility for day-to-day
management to Executive Management. Executive Management
consists of the president and chief executive officer and four
other executives. They are responsible for organisation of the
company as well as allocation of resources, determination and
implementation of strategies and policies, direction-setting and
ensuring timely reporting and provision of information to the
Board and the stakeholders of Novo Nordisk. Executive
Management meets at least once a month and often more
frequently. The Board appoints members of Executive
Management and determines remuneration. The Chairmanship
reviews the performance of the executives.
Remuneration principles
Details about the company’s remuneration principles and the
remuneration of the Board of Directors and Executive Management
can be found in the Remuneration Report on pp 46–49.
Novo Nordisk Annual Report 2010 41
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Assurance
External audit
The company’s financial reporting and the internal controls over
financial reporting processes are audited and assessed by an
external auditor elected at the annual general meeting. The auditor
acts in the interest of shareholders and reports any significant
findings regarding accounting matters and any significant internal
control deficiencies via the Audit Committee to the Board and in
the Auditor’s Long-Form Report. As part of the company’s
commitment to financial, environmental and social responsibility,
Novo Nordisk voluntarily includes an assurance report for non-
financial reporting in its annual report. The assurance provider
reviews whether the non-financial performance information
included in the annual report is inclusive, covers aspects deemed
to be material and is responsive to company stakeholders.
The assurance process also serves to verify the internal control
processes of the non-financial information reported in the annual
report.
Internal audit
The company’s internal audit function, Group Internal Audit,
reports to the Audit Committee. The internal audit function
provides independent and objective assurance primarily within
internal control over financial processes and business ethics. To
ensure that the function works independently of management,
its charter, audit plan and budget are approved by the Audit
Committee. The Audit Committee must approve the appointment,
remuneration and dismissal of the head of the internal audit
function.
Internal control
Novo Nordisk’s risk management and internal controls in relation
to financial processes are designed with the purpose of effectively
controlling the risk of material misstatements. A detailed
description of the implemented internal controls and risk
management system in relation to financial reporting processes is
available at novonordisk.com/about_us/corporate_governance/
internal_control.asp. Novo Nordisk is in compliance with US
Sarbanes–Oxley Act section 404, which requires detailed
documentation of the design and operation of financial reporting
processes. Novo Nordisk must ensure that there are no material
weaknesses in the internal controls that could lead to a material
misstatement in the financial reporting. The company’s
conclusion and the auditor’s evaluation of these processes
are included in its Form 20-F filing to the US SEC.
The Board alsp requires that non-financial information be subject
to the same types of internal control procedures required of
financial data under the Sarbanes–Oxley Act. Novo Nordisk has
been working towards this objective since 2008.
Corporate governance
codes and practices
Framework
Governance structure
Assurance
External
codes and
regulations
(external)
Novo
Nordisk
Way
(internal)
Shareholders
Board of Directors
Chairman-
ship
Audit
Committee
Executive Management
Organisation
Financial
audit and
non-fi nancial
review
(internal and
external)
Facilitation
and
organisational
audit
(internal)
Quality audit
(internal)
New Danish Corporate Governance Recommendations were
introduced in 2010. Novo Nordisk is following the majority of the
recommendations, but does not follow three:
• The Board does not have a nomination committee.
• The Board does not have a remuneration committee.
• Existing executive employment contracts allow for severance of
more than 24 months' fixed base salary plus pension
contribution.
Explanations for deviations from these recommendations are
given on pp 41 and 48–49.
To be in line with four other recommendations, the following
proposals will be presented to the 2011 Annual General Meeting
regarding:
• retirement age for board members
• approval of remuneration principles by the general meeting
• explanation of remuneration package elements and
• a provision allowing the company to reclaim variable
remuneration paid on the basis of data proved to be manifestly
misstated.
As a foreign listed private issuer Novo Nordisk is in compliance
with the corporate governance standards of the New York Stock
Exchange, where Novo Nordisk’s ADRs are listed.
The applicable corporate governance codes for each exchange
and a detailed review of Novo Nordisk’s compliance are available
at novonordisk.com/about_us. In accordance with Section 107b
of the Danish Financial Statements Act, Novo Nordisk has
disclosed the mandatory corporate governance report at
novonordisk.com/about_us/corporate_governance/compliance.asp.
42 Novo Nordisk Annual Report 2010
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Risk management
Novo Nordisk has developed a dynamic approach to risk
management to ensure that key risks are proactively identified,
assessed and managed. Maintaining and monitoring a systematic
integrated process to continually assess business risks is the
responsibility of Executive Management. The Risk Management
Board, with representatives of Senior Management from all parts
of the business and chaired by the chief financial officer, sets the
strategic direction for the risk management process and
challenges the overall risk and control profile for Novo Nordisk.
Our policy for risk management is to proactively manage risk to
ensure continued growth of our business and to protect our
people, assets and reputation. This means that we:
• utilise an effective and integrated risk management system
while maintaining business flexibility
• identify and assess material risks associated with our business
• monitor, manage and mitigate risks.
Our risk willingness is not one specific figure or formula, but
varies depending upon the specific category of risk. The main
characteristics of Novo Nordisk’s risk willingness are:
• We innovate to help patients and to defeat diabetes by
finding better methods of diabetes prevention, detection
and treatment. We will offer products and services in other
areas where we can make a difference. We accept the
commensurate high level of risk involved in bringing new
treatments or innovative products to market that meet the
needs of patients.
• Because the safety of patients is paramount, vigorous
efforts are made to reduce product safety risks to the
lowest level possible.
• A conservative approach is taken to the management of
financial risks.
• We strive to reduce supply chain risks through proactive
business continuity planning, regular inspections and back-up
facilities.
• We have a zero tolerance approach to unethical business
conduct.
Risk management process
All major business areas are required to report their most
significant financial and non-financial risks quarterly, along with
plans or processes to manage these risks. The Risk Office, acting
as the secretariat for the Risk Management Board, challenges
business areas about reported risks. Reported risks are then
consolidated into a ranking and assessment of the company’s
key risks. This information is presented to the Risk Management
Board and then to Executive Management, the Audit
Committee and the Board of Directors.
All assessments of risk take into account the likelihood of an
event and its potential impact on the business. Impacts are
quantified and assessed in terms of potential financial loss and
reputational damage. Risks are assessed both as gross risk and
net risk. The assessment of gross risk assumes that no
mitigating actions have been implemented, whereas net risk
assessment takes into account mitigating actions already
implemented and their anticipated effect. Enterprise risk
management increases our ability to assess and understand
risks separately and in relation to each other from a global
perspective but with local control.
More information on our risk management process is available at
annualreport2010.novonordisk.com.
The risks that we deem of greatest importance to our business
are categorised and described below. They are not, however,
ranked. Many of these issues are also discussed elsewhere in the
report.
Market risks
Price pressures
As healthcare costs have risen, outstripping the pace of economic
growth, there is increasing economic, political and regulatory
pressure to contain pharmaceutical prices. The impact of the global
economic recession has further exacerbated this trend.
In the US, healthcare reform legislation passed in 2010 is likely
to impact Novo Nordisk’s business. However, uncertainties
regarding the implementation of specific aspects of the
legislation remain. In Europe, the impact of the global economic
recession coupled with budget deficits in many countries is
increasing the pressure on governments to control healthcare
spending even more tightly. As a result, we are operating in an
increasingly challenging environment with significant price
pressure.
It is increasingly imperative to document treatment benefits to
ensure that innovation is properly valued. Novo Nordisk has
therefore increased the number of clinical and health-economic
studies to substantiate the benefits of our products for patients
and society, particularly for improved diabetes treatment. For
more information on how Novo Nordisk is addressing pricing
challenges, see p 5.
Biosimilar competition
The market for therapeutic proteins is becoming more attractive
to biosimilar producers as regulatory rules in Europe and the US
are changing to allow producers to introduce biosimilar products
when patents for branded products expire. This development is
exacerbated by increasing pressures on governments to contain
healthcare costs.
Novo Nordisk anticipates that the expiration of certain patents
could impact sales within the next five years. However, with the
continuing transition from human to modern insulins, an
increasing proportion of Novo Nordisk’s diabetes care sales in
major markets are protected by patents.
Traditionally, earlier generations of insulin products have been off
patent for years so this is a risk with which Novo Nordisk is
familiar and has considerable experience addressing. Biosimilar
products have been present on the European market for several
decades but have had only a marginal impact. In countries such
as India and China, where the company has long had biosimilar
competition, Novo Nordisk has maintained an insulin volume
market share of approximately 60%.
Novo Nordisk Annual Report 2010 43
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Research and development risks
Bringing new products to market
Continued growth in our business depends on the company’s ability
to develop and offer better treatments to patients. During each
stage of the development process, which includes extensive
non-clinical tests and clinical trials as well as an elaborate regulatory
approval process, we may encounter serious obstacles which may
delay our product initiatives and add substantial expense, or which
could cause us to abandon a product initiative altogether. Delays
in bringing new products such as Degludec and DegludecPlus to
market would impact our ability to reach long-term financial targets.
In our experience, there is less than a 35% chance for a product
candidate in phase 1 in the pipeline ultimately being approved
for marketing, while the chance of success is around 40% for
Phase 2 product candidates and rises to around 70% for Phase
3 but there remains significant uncertainty regarding the timing
and success of the regulatory approval process. The reasons for
delays or failure include, for instance: failure of the product
candidate in non-clinical studies due to safety concerns;
problems in completing formulation and other testing and work
necessary to support a regulatory approval process; adverse
reactions to the product candidate or indications of other safety
concerns; failure in clinical trial data to support the safety or
efficacy of the product candidate; inability to manufacture, in
a timely and cost-efficient manner, sufficient quantities of the
product candidate for development or commercialisation
activities; and failure to obtain, or delays in obtaining, the
required regulatory approvals for the product candidate or the
facilities in which it is manufactured.
Due to the risks and uncertainties involved in progressing through
non-clinical development and clinical trials, and the time and cost
involved in obtaining regulatory approvals, we cannot reasonably
estimate the nature, timing, completion dates and costs of the
efforts necessary to complete the development.
Production and quality risks
Supply disruptions
Failure or breakdown in any of the company’s vital production
facilities could adversely affect the results of operations, as well
as possibly causing employee injuries or infrastructure damage.
Fire-prevention design, alarms and fire instructions, annual
inspections, back-up facilities and safety inventories are aimed
at mitigating this risk. To spread this risk geographically and
optimise costs and supply logistics, we have expanded
production capacity beyond the company’s European base to
the US, Brazil and China. See the map of our production
facilities on pp 26–27.
Continued growth depends on
our ability to develop and offer
better treatments to patients.
Risk of product recalls
Product safety is directly linked to patient well-being, so safety
and product quality are paramount concerns from both financial
and reputational perspectives. While the gross risk is very high,
with product safety having the potential to adversely affect
operations, we believe that our vigorous efforts to manage and
mitigate this risk effectively reduce the company’s net risk profile.
We have a global corporate quality system in place, including
quality audits, quality improvement plans and systematic Senior
Management reviews.
For information on Novo Nordisk’s product recalls during 2010,
see p 10.
Managing risks throughout our business
Board of Directors
Executive Management
Risk Management Board
Risk Offi ce
Risk coordinators in units
around the world
Risk assessment example
Critical
Major
Moderate
t
c
a
p
m
I
The entire range of
risks is consolidated
and challenged every
quarter. Key risks are
identifi ed throughout
the global organisation
while control is
maintained locally.
Minor
Likelihood
Unlikely
Possible
Likely
Very likely
• Gross assessment
• Net assessment after mitigation
44 Novo Nordisk Annual Report 2010
Further information on significant legal issues related to product
liability claims, business practices and government investigations
is included in note 31 on pp 87–88.
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Financial risks
Exchange rates
As a global business, fluctuations in currency exchange rates
impact the reported performance. Novo Nordisk’s reporting
currency and the functional currency of corporate operations is the
Danish krone, which is closely linked to the euro in a narrow range.
However, the company has substantial exposure to other
currencies, including the US dollar, Japanese yen, Chinese yuan and
British pound. For information on how the company manages
these risks, see note 27 in the financial statements on pp 80–81.
Tax disputes
During the ongoing course of business, tax disputes may arise in
relation to different jurisdictions.
Ethical risks
Marketing practices
In a competitive environment with increasing public scrutiny and
regulation, marketing practices can be the source of legal action or
reputational risk. Our reputation as a trusted healthcare partner is
integral to effectively maintaining and growing our business. At the
same time, the regulatory context for marketing activity is
constantly changing. A business ethics policy and global business
ethics procedures, paired with close monitoring of performance
and reporting requirements, all aim to mitigate these risks.
Significant resources are also dedicated to training marketing and
sales people around the world. Significant legal issues relating to
marketing practices are included in note 31 on pp 87–88.
Legal risks
Intellectual property
Patent rights are a very important tool for promoting innovation,
leading to new and better products and processes, and
stimulating long-term economic growth and job creation.
Governments may not recognise the validity of patents or may be
unable or unwilling to uphold intellectual property rights.
We will enforce our patent rights in cases of infringement when this
is deemed advisable by Executive Management after careful analysis
of the commercial and legal aspects of enforcement. Similar analysis
is applied to decisions to defend Novo Nordisk’s patent rights against
other legal challenges. Significant legal issues related to intellectual
property are included in note 31 on pp 87–88.
Other legal risks
Novo Nordisk operates in a complex global legal and regulatory
environment with diverse national, regional and international
legislation. Legal issues may arise relating to product liability
claims, company practices and government investigations.
In May 2009, Novo Nordisk entered into a Deferred Prosecution
Agreement (DPA) for a three-year period with the US Department
of Justice relating to certain actions undertaken by Novo Nordisk
under the Oil For Food Programme for Iraq. We must comply with
the terms of the DPA in order for the case to be dismissed. Novo
Nordisk has subsequently enacted a detailed programme to
ensure compliance with the DPA, including a reinforced
governance structure, enhanced third-party due diligence
systems and periodic testing of systems, policies and procedures.
Novo Nordisk Annual Report 2010 45
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Remuneration report
In keeping with our aim to attract, retain and motivate talented
employees in the competitive global pharmaceutical market,
compensation at Novo Nordisk is designed to be competitive,
reward short-term as well as long-term performance and align
interests with those of shareholders.
On a global basis, compensation packages are guided by five
broad principles:
• A total rewards approach
In addition to a fixed base salary, incentives and benefits,
non-financial remuneration such as continuing education,
career progression and working environment are important
elements of the ‘total rewards’ package.
• Market linked
Salaries, incentives and benefits are positioned and maintained
at the level required to be competitive in local markets, generally
between the local market median and upper quartile. Novo
Nordisk also provides adequate life insurance, healthcare and
pension provisions irrespective of local competitive practice.
• Performance linked
There is a transparent, direct link between employee performance
and remuneration. Variable pay is used to reward performance,
with base pay increases reflecting market conditions.
• Transparency
Clear communication of remuneration programmes is a
priority, and all costs associated with compensation practices
are known and publicly disclosed.
• Flexibility
Subject to corporate governance or legal requirements, flexibility
is encouraged. Flexible solutions must be cost neutral to Novo
Nordisk, and adequate levels of insurance must be maintained.
Remuneration principles
In accordance with new Danish Corporate Governance Recommen-
dations introduced during 2010, Novo Nordisk’s remuneration
principles have been revised to include incentive guidelines, a
description of the reasons for choosing the individual components of
the remuneration, a description of the criteria on which the balance
between the individual components of the remuneration is based
and a right for Novo Nordisk to reclaim in full or in part variable
remuneration paid on the basis of data subsequently determined to
be manifestly misstated. The revised remuneration principles will be
presented for approval to the 2011 Annual General Meeting.
Executive remuneration
Executive remuneration is proposed by the Chairmanship and
subsequently approved by the Board. On an annual basis, executive
remuneration is assessed against a benchmark of large Danish
companies with international activities, and this information is
supplemented by information on remuneration levels for similar
positions in the international pharmaceutical industry.
The 2010 assessment of executive remuneration against a
benchmark of large Danish companies determined that elements in
the remuneration package are below market benchmark levels. At
the 2011 Annual General Meeting it will be proposed that executive
remuneration be assessed against a benchmark of relevant
Scandinavian companies and European pharmaceutical companies,
which in size and complexity are more similar to Novo Nordisk.
Remuneration packages for executives consist of a fixed base
salary, a cash-based incentive, share-based incentive, a pension
contribution and other benefits. The split between fixed and
variable remuneration is intended to result in a reasonable part
of the salary being linked to performance, while promoting sound
long-term business decisions to achieve the company’s objectives.
The aggregate maximum amount that may be granted as
incentives for a given year is currently equal to 12 months’ fixed
base salary plus pension contribution.
Remuneration package components
Executive Management
Board of Directors
Fixed base salary
Yes
Cash-based incentive
Share-based incentive
Severance payment
Up to four months’ fi xed base salary
plus pension contribution per year
Up to eight months’ fi xed base salary
plus pension contribution per year
12–36 months’ fi xed base salary
plus pension contribution
Pension
25–30% of fi xed base salary and bonus
Fee for ad hoc tasks and committee work
Travel allowance
Other benefi ts
No
No
As approved by the Board by delegation
of powers to the Chairmanship
Yes
No
No
No
No
Yes
Yes
No
46 Novo Nordisk Annual Report 2010
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Fixed base salary
The fixed base salary accounts for approximately 40–60% of
the total value of the remuneration package. The base salary is
intended to attract and retain executives with the professional
and personal competences required to drive the company’s
performance.
Cash-based incentive
The cash-based incentive is designed to incentivise individual
performance and short-term achievements in line with company
needs, and may result in a maximum annual payout per year
equal to four months’ fixed base salary plus pension contribution.
The performance targets are individualised and are linked to the
Executive Management and other members of the Senior Management Board
DKK million
2010 Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen
Executive Management in total
Other members of the Senior Management Board in total1
Joint pool2
2009 Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen
Executive Management in total
Other members of the Senior Management Board in total1
Joint pool2
Fixed base
salary
Cash-based
incentive
Pensions
Other
benefi ts
Share-based
incentive
Total
remuneration
6.6
4.3
3.9
4.7
4.3
23.8
62.5
6.5
4.2
3.8
4.5
4.2
23.2
59.5
2.2
1.4
1.3
1.6
1.4
7.9
2.2
1.4
1.3
1.7
1.4
8.0
0.3
0.3
0.3
0.3
0.3
1.5
23.8
20.9
10.3
1.6
1.4
1.3
1.2
1.0
6.5
2.0
1.4
1.2
1.6
1.3
7.5
0.3
0.3
0.3
0.3
0.3
1.5
20.5
19.6
10.6
–
–
–
–
–
–
–
64.3
–
–
–
–
–
–
–
54.4
11.3
7.4
6.8
8.3
7.4
41.2
117.5
64.3
10.4
7.3
6.6
7.6
6.8
38.7
110.2
54.4
1. The total remuneration for 2010 includes remuneration to 24 senior vice presidents, three of whom retired or left the company. The 2010 remuneration for these three senior vice presidents is
included in the table above whereas a settlement of 25 million Danish kroner is not included. The total remuneration for 2009 includes remuneration to 25 senior vice presidents, none of whom
resigned during the year.
2. The joint 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 joint pool, approximately 30% of the pool will be allocated to the members
of Executive Management and 70% to other members of the Senior Management Board (2009: 30% and 70% respectively). In the lock-up period, the joint pool may potentially be reduced in the
event of lower-than-planned value creation in subsequent years.
Management’s long-term incentive programme
The shares allocated to the joint pool for 2007 (166,292 shares) were released to the individual participants following approval by the
Board of Directors on 1 February 2011. Based on the share price at the end of 2010, the value of the released shares is as follows:
Value as at 31 December 2010 of shares released 1 February 2011
Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen
Executive Management in total
Other members of the Senior Management Board in total2
1. The market value of the shares released in 2011 is based on the Novo Nordisk B share price at the end of 2010 of DKK 629.
2. In addition, 23,147 shares (market value: DKK 14.6 million) were released to retired members of management.
Number Market value1
(DKK million)
of shares
14,851
9,893
9,893
9,893
9,893
54,423
88,722
9.3
6.2
6.2
6.2
6.2
34.1
55.8
Lars Rebien Sørensen serves as a member of the Board of Directors of Danmarks Nationalbank, from which he received remuneration of DKK 20,000 in 2010 (compared with DKK 10,000 in 2009), as
a member of the Board of Directors of DONG Energy A/S, from which he received remuneration of DKK 175,000 in 2010 (compared with DKK 175,000 in 2009) and as a member of the Supervisory
Board of Bertelsmann AG, from which he received remuneration of EUR 50,000 in 2010 (compared with EUR 87,500 in 2009). Until March 2010, Mr Sørensen also served as a member of the Board of
Directors of ZymoGenetics, Inc. but did not receive any remuneration. Jesper Brandgaard serves as chairman of the Board of SimCorp A/S, from which he received remuneration of DKK 794,425 in
2010 (compared with DKK 856,400 in 2009). Kåre Schultz serves as a member of the Board of Directors of LEGO A/S, from which he received remuneration of DKK 300,000 in 2010 (compared with
DKK 250,000 in 2009). As of 11 October 2010, Kåre Schultz has also served as Chairman of the Board of Directors of Unibrew A/S, from which he received remuneration of DKK 156,250 in 2010.
Mads Krogsgaard Thomsen serves as a member of the Board of Directors of Cellartis AB, from which he received remuneration of SEK 50,000 in 2010 (SEK 50,000 in 2009).
Novo Nordisk Annual Report 2010 47
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goals in the company's Balanced Scorecard. Short-term targets
for the chief executive officer are fixed by the chairman of the
Board of Directors while the targets for executive vice presidents
are fixed by the chief executive officer. The Chairmanship of the
Board evaluates the degree of achievement for each member of
Executive Management based on input from the chief executive
officer. At the 2011 Annual General Meeting, it will be proposed
that cash-based incentives may result in a maximum payout equal
to six months’ fixed base salary plus pension contribution.
Joint pool shares for a given year are locked up for three years
before they are transferred to participants. If a participant resigns
during the lock-up period, his or her shares will remain in the joint
pool for the benefit of the other participants. In the lock-up
period, the Board may remove shares from the joint pool in the
event of lower-than-planned value creation in subsequent years.
In the lock-up period, the value of the joint pool will change
depending on the development in the share price, aligning the
interests of participants with those of shareholders.
Share-based incentives
The long-term, share-based incentive programme, designed to
promote the collective performance of Executive Management
and align the interests of executives and shareholders, may result
in an annual allocation of up to eight months’ fixed base salary
plus pension contribution.
At the beginning of each year, the Board decides whether to
establish a long-term incentive programme for that year. The
programme is based on a calculation of shareholder value
creation compared with planned performance. Aligned with
Novo Nordisk’s long-term financial targets, the calculation of
shareholder value creation is based on reported operating profit
after tax reduced by a weighted average cost of capital-based
return (WACC) requirement on average invested capital. A
proportion of the calculated shareholder value creation is
allocated to a joint pool for the participants, which include
Executive Management and other members of the Senior
Management Board. The Senior Management Board consists
of five members of Executive Management and senior vice
presidents.
The allocation to the joint pool may, subject to the Board’s
assessment, be reduced in the event of lower-than-planned
performance in significant research and development projects or
key sustainability projects. Targets for non-financial performance
may include achievement of certain milestones by set dates.
Once the joint pool has been approved by the Board, the total
cash amount is converted into Novo Nordisk B shares at market
price, which is calculated as the average trading price on NASDAQ
OMX Copenhagen in the open trading window following the
release of financial results for the prior year. The shares in the
joint pool are allocated to the participants on a pro rata basis: the
chief executive officer has three units, executive vice presidents
have two units each and other members of the Senior
Management Board have one unit each.
Compensation at Novo Nordisk
is designed to be competitive,
reward performance and
align interests with those
of shareholders.
Pension
The pension contribution is 25–30% of the fixed base salary
including bonus. Pension contributions are made to provide an
opportunity for executives to build up an income for retirement.
Other benefits
Other benefits are added to ensure that overall remuneration is
competitive and aligned to local practice. Executives receive
non-monetary benefits such as company cars and phones. Such
benefits are approved by the Board by delegation of powers to the
Chairmanship. In addition, executives may participate in employee
benefit programmes such as employee share purchase programmes.
Severance payment
Novo Nordisk may terminate employment by giving executives
12 months’ notice. Executives may terminate their employment
by giving Novo Nordisk six months’ notice.
In addition to the notice period, executives are entitled to
a severance payment. Existing employment contracts allow
severance payments of up to 36 months’ fixed base salary plus
pension contributions in the event of a merger, acquisition or
takeover of Novo Nordisk. In the case of termination by Novo
Nordisk for other reasons, the severance payment is three months’
Executive remuneration
At target performance:
fixed versus variable pay
■ Fixed base salary 52%
■ Cash-based incentive 9%
■ Share-based incentive 22%
■ Pension 15%
■ Other benefits 2%
At maximum performance:
fixed versus variable pay
■ Fixed base salary 39%
■ Cash-based incentive 13%
■ Share-based incentive 33%
■ Pension 13%
■ Other benefits 2%
48 Novo Nordisk Annual Report 2010
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fixed base salary plus pension contribution per year of employment
as an executive and taking into account previous employment
history. In no event will severance be less than 12 months’ or more
than 36 months’ fixed base salary plus pension contribution. For
new employment contracts, severance will be no more than 24
months’ fixed base salary plus pension contribution, which will
bring Novo Nordisk into alignment with the Danish Corporate
Governance Recommendations in the long term.
Remuneration of board members
Remuneration of the Board of Directors includes a fixed base
fee, a multiplier of the fixed base fee for the Chairmanship and
members of the Audit Committee, fees for ad hoc tasks and
a travel allowance. Remuneration is aligned with levels at other
major Danish companies. At the 2011 Annual General Meeting,
it will be proposed that the benchmark be changed to include
relevant Scandinavian companies and European pharmaceutical
companies.
The results of the annual remuneration benchmark are presented
to the Board at its October meeting. In 2010, the benchmark of
board remuneration included 15 large listed companies from the
OMX C20 index, Nordic companies and European pharmaceutical
companies. It was determined that the remuneration of Novo
Nordisk’s board was broadly in line with other Danish companies,
though these had not been adjusted for a period, but below
Nordic companies and significantly below board remuneration
at other European pharmaceutical companies. The gap was most
significant for the remuneration of the chairman and vice
chairman.
At the December meeting the Board agrees on recommendations
for remuneration levels for the next financial year. In connection
with the approval of the annual report, the Board approves the
recommendation for actual remuneration for the past financial
year and endorses the recommendation on remuneration levels
for the current financial year. This is then presented to the annual
general meeting for approval.
Each board member receives a fixed base fee annually. The
chairman receives 2.5 times the base fee and the vice chairman
receives 1.5 times the base fee. Service on the Audit Committee
entitles board members to an additional fee. The Audit
Committee chairman receives 1.25 times the base fee and Audit
Committee members receive 0.5 times the base fee.
Following the benchmark conducted in 2010, the proposal put
forward at the 2011 Annual General Meeting will include a
change in the base fee from 400,000 to 500,000 Danish kroner,
and a change in the multiplier for the board vice chairman from
1.5 to 2.0 times the base fee and for the board chairman from 2.5
to 3.0 times the base fee. At the same time it will be proposed to
change the multiplier for the Audit Committee chairman from
1.25 to 1.0 times the base fee.
Individual board members may take on specific ad hoc tasks
outside their normal duties. In such cases the Board determines
a fixed fee for the work carried out related to those tasks.
Travel and other expenses
All board members who do not reside in Denmark are paid a fixed
travel allowance when attending board meetings in Denmark. No
travel allowance is paid to board members when attending board
meetings outside Denmark. The travel allowance is EUR 2,500 per
meeting. At the 2011 Annual General Meeting, an increase to
EUR 3,000 for European-based board members and EUR 6,000
for US and Asia-based board members will be proposed.
Expenses such as travel and accommodation in relation to board
meetings as well as relevant education are reimbursed.
Variable remuneration
Board members are not offered stock options, warrants or
participation in other incentive schemes.
Board of Directors
In 2010, the base fee for members of the Board of Directors was DKK 400,000 (DKK 400,000 in 2009).
DKK million
Sten Scheibye (chairman of the Board)
Göran A Ando (vice chairman of the Board)2
Kurt Anker Nielsen (chairman of the Audit Committee)
Jørgen Wedel (Audit Committee member)
Hannu Ryöppönen (Audit Committee member)
Anne Marie Kverneland
Henrik Gürtler
Johnny Henriksen3
Ulrik Hjulmand-Lassen4
Pamela J Kirby
Stig Strøbæk
Søren Thuesen Pedersen
Total
2010
2009
Board of
Directors
Fee for
Board of
ad hoc tasks and
committee work1 allowance Total Directors
Travel
Fee for
ad hoc tasks and
committee work1 allowance Total
Travel
1.0
0.6
0.4
0.4
0.4
0.4
0.4
0.1
0.3
0.4
0.4
0.4
5.2
–
0.3
0.5
0.2
0.2
–
–
–
–
–
–
–
1.2
–
0.1
–
0.1
0.1
–
–
–
–
0.1
–
–
1.0
1.0
0.9
0.7
0.7
0.4
0.4
0.1
0.3
0.5
0.4
0.4
0.4
6.8
1.0
0.6
0.4
0.4
0.3
0.4
0.4
0.4
–
0.4
0.4
0.4
5.1
–
0.3
0.5
0.2
0.2
–
–
–
–
–
–
–
1.2
–
0.1
–
0.1
0.1
–
–
–
–
0.1
–
–
1.0
1.0
0.9
0.7
0.6
0.4
0.4
0.4
–
0.5
0.4
0.4
0.4
6.7
1. Ad hoc fees are for the research and development facilitator.
2. Göran A Ando was re-elected research and development facilitator in March 2010 and served throughout 2010.
3. Resigned as of March 2010.
4. Employee-elected board member as of March 2010.
Novo Nordisk Annual Report 2010 49
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Board of Directors
Sten Scheibye, picture 1
From 1995 to 2008, Mr Scheibye was president and CEO of Coloplast
A/S, Denmark. Before joining Coloplast in 1993, Mr Scheibye served
as senior vice president, sales and marketing in Leo Pharma A/S,
Denmark. He joined Leo Pharma in 1981. Mr Scheibye is chairman of
the Board of Directors of the Trade Council of Denmark and the
Board of Governors of DTU (the Technical University of Denmark) and
a member of the boards of Gambro AB, Sweden, Danske Bank A/S,
Rambøll Gruppen A/S, DADES A/S, the Danish Industry Foundation
and the Aase and Ejnar Danielsen Foundation, all in Denmark.
Furthermore, he is chairman of the Denmark-America Foundation
and vice chairman of the Danish Fulbright Commission. Mr Scheibye
has an MSc in Chemistry and Physics (1978) and a PhD in Organic
Chemistry (1981), both from the University of Aarhus, Denmark, and
a BComm from the Copenhagen Business School, Denmark (1983).
The special competences possessed by Mr Scheibye that are impor-
tant for the performance of his duties are his knowledge of the
healthcare industry, particularly in relation to people requiring
chronic care, and managerial skills relating to international organi-
sations. Mr Scheibye became vice chairman of the Novo Nordisk A/S
Board in 2004 and chairman in 2006.
Göran A Ando, picture 2
Dr Ando was 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, business 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 founding fellow of the American College of Rheuma-
tology in the US. Dr Ando serves as chairman of the Board of Novexel
SA, France, as vice chairman of the Board of S*Bio Pte Ltd, Singapore,
and as a board member of Novo A/S, Denmark, EDBI Pte Ltd,
Singapore, NicOx SA, France, EUSA Pharma, UK, CBio Ltd, Australia,
and Albea Pharmaceuticals AG, Switzerland. Dr Ando also serves as
a senior advisor to Essex Woodlands Health Ventures UK Ltd. and is
chairman of the Scientific Advisory Board, Southwest Michigan First,
US. Dr Ando qualified as a medical doctor at Linköping Medical
University, Sweden (1973) and as a specialist in general medicine at
the same institution (1978). The special competences possessed by
Dr Ando that are important for the performance of his duties are his
medical qualifications and his extensive executive background within
the international pharmaceutical industry. Dr Ando became vice
chairman of the Novo Nordisk A/S Board in 2006.
Henrik Gürtler, picture 3
Henrik Gürtler has been president and CEO of Novo A/S, Denmark,
since 2000. He was employed by 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
he was appointed corporate vice president of Health Care Production.
From 1996 to 2000, he was 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,
Copenhagen Airports A/S and COWI A/S, all in Denmark. Mr Gürtler
has an MSc in Chemical Engineering from DTU (the Technical
University of Denmark) (1976). The special competences possessed
by Mr Gürtler that are important for the performance of his duties
are his knowledge of the Novo Group’s business and its policies and
his knowledge of the international biotech industry.
Ulrik Hjulmand-Lassen, picture 4
Ulrik Hjulmand-Lassen joined Novo Nordisk in 2002 and
currently works as a senior IT quality advisor in IT Governance.
Mr Hjulmand-Lassen has a BSc from DTU (the Technical University
of Denmark)/DIA-E from 1985, trained as an ISO 9001 lead
auditor in 2006 and as an MCSA/IT Security in 2009.
Pamela J Kirby, picture 5
From 2001 to 2003, Pamela J Kirby was CEO of the contract research
organisation Quintiles Transnational Corporation, US, and before
that Dr Kirby was director of Global Strategic Marketing of F.
Hoffman-La Roche Limited, Switzerland, from 1998 to 2001. From
1996 to 1998, Dr Kirby was commercial director at British Biotech
plc, UK, and from 1979 to 1996, Dr Kirby was employed by Astra
(now AstraZeneca) in various international positions, most recently
as regional director/vice president of Corporate Strategy, Marketing
and Business Development. Dr Kirby is chairman of the Board of
Scynexis Inc, US, and a board member of Smith & Nephew plc, UK,
and Informa plc, Switzerland. Dr Kirby has a BSc in Pharmacology
(1975) and a PhD in Clinical Pharmacology (1978), both from the
University of London, UK. The special competences possessed by
Dr Kirby that are important for the performance of her duties are her
scientific qualifications and her extensive executive background
Name (male/female)
Sten Scheibye (m)
Göran A Ando (m)
Henrik Gürtler (m)
Ulrik Hjulmand-Lassen2 (m)
Pamela J Kirby (f)
Anne Marie Kverneland2 (f)
Kurt Anker Nielsen (m)
Søren Thuesen Pedersen2 (m)
Hannu Ryöppönen (m)
Stig Strøbæk2 (m)
Jørgen Wedel (m)
First elected
2003
2005
2005
2010
2008
2000
2000
2006
2009
1998
2000
Term
2011
2011
2011
2014
2011
2014
2011
2014
2011
2014
2011
Nationality
Danish
Swedish
Danish
Danish
British
Danish
Danish
Danish
Finnish
Danish
Danish
Date of birth
3 Oct 1951
6 Mar 1949
11 Aug 1953
28 Apr 1962
23 Sep 1953
24 Jul 1956
8 Aug 1945
18 Dec 1964
25 Mar 1952
24 Jan 1964
10 Aug 1948
Independence3
Independent
Not independent1
Not independent1
Not independent
Independent
Not independent
Not independent1,4
Not independent
Independent4,5
Not independent
Independent4,5
1. Member of management or the Board of Novo A/S or the Novo Nordisk Foundation.
2. Elected by employees of Novo Nordisk.
3. In accordance with section 5.4.1 of Recommendations on Corporate Governance designated by NASDAQ OMX Copenhagen.
4. Mr Nielsen, Mr Ryöppönen and Mr Wedel qualify as independent Audit Committee members as defined by the US Securities and Exchange Commission (SEC).
5. Mr Ryöppönen and Mr Wedel qualify as independent Audit Committee members as defined under part 8 of the Danish Act on Approved Auditors and Audit Firms.
50 Novo Nordisk Annual Report 2010
within the international pharmaceutical and biotech industries,
particularly in respect of marketing, strategic planning, clinical trials
and life cycle management related to pharmaceutical products.
Anne Marie Kverneland, picture 6
Anne Marie Kverneland joined Novo Nordisk in July 1981 as a
laboratory technician and is currently working as a full-time shop
steward. Ms Kverneland has a degree in medical laboratory tech -
nology from the Copenhagen University Hospital, Denmark (1980).
Kurt Anker Nielsen, picture 7
Kurt Anker Nielsen was initially employed by Novo Industri A/S in
1974 as an economist. He served as CFO and deputy CEO of Novo
Nordisk A/S until 2000, and from 2000 to 2003 he was CEO of Novo
A/S. He serves as vice chairman of the Board of Novozymes A/S and
as a member of the boards of the Novo Nordisk Foundation and
LifeCycle Pharma A/S, both in Denmark. He is chairman of the board
of Reliance A/S, Denmark, and a member of the board of Vestas
Wind Systems A/S, Denmark. He is also the elected Audit Committee
chairman for Novozymes A/S, LifeCycle Pharma A/S and Vestas
Wind Systems A/S. Mr Nielsen serves as chairman of the Board of
Directors of Collstrups Mindelegat, Denmark. Mr Nielsen has an MSc
in Commerce and Business Administration from the Copenhagen
Business School, Denmark (1972). The special competences pos-
sessed by Mr Nielsen that are important for the performance of
his duties are his in-depth knowledge of Novo Nordisk A/S and its
businesses, his working knowledge of the global pharmaceutical
industry and his experience with accounting, financial and capital
market issues. Mr Nielsen has been chairman of the Audit
Committee at Novo Nordisk A/S since 2004 and is designated
as financial expert under both Danish and US law.4
Søren Thuesen Pedersen, picture 8
Søren Thuesen Pedersen joined Novo Nordisk in January 1994
and is currently working as a specialist in Strategic Quality
Development. Mr Pedersen has been an employee-elected
member of the Board of Directors of the Novo Nordisk
Foundation since 2002. Mr Pedersen has a BSc in Chemical
Engineering from the Danish Academy of Engineers (1988).
Hannu Ryöppönen, picture 9
Hannu Ryöppönen was CFO and deputy CEO of Stora Enso Oyj,
Finland, until 2009. Before that he was CFO and an executive in
Royal Ahold, the Netherlands, from 2003 to 2005, and served
on the Board of Directors of the ICA Group, Sweden, including
the chairmanship of the Audit Committee. From 1999 to 2003,
Mr Ryöppönen was finance director of Industri Kapital Group, UK.
Mr Ryöppönen served as CFO of the IKEA Group, Denmark, from
1985 to 1998, including a position as deputy CEO in IKANO Asset
Management from 1998 to 1999. From 1977 to 1985,
Mr Ryöppönen held various management positions at Chemical
Bank in the US and the UK, as well as at Alfa Laval in the US and
Sweden. Mr Ryöppönen is chairman of the Board of Directors of
Tiimari Oyj, Vice Chairman of the Board of Directors of Rautaruukki
Oyj and a member of the Board of Directors of Neste Oil Oyj, and
Amer Sports Oyj, all in Finland, and a member of the Board of
Directors of Korsnäs AB, Sweden. Mr Ryöppönen is also chairman
of the Audit Committees of Amer Sports Oyj and Rautaruukki Oyj,
and a member of the Audit Committee of Neste Oil Oyj. Finally,
Mr Ryöppönen is chairman of the Board of Directors of the Altor
private equity funds, Altor 2003 GP Limited, Altor Fund II GP Limited
and Altor III GP Limited, Jersey, Channel Islands, and a member of
the Board of Directors of the private equity fund Value Creation
Investments Limited, Jersey, Channel Islands. Mr Ryöppönen has
a BA in Business Administration from Hanken School of Economics,
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Helsinki, Finland (1976). The special competences possessed by
Mr Ryöppönen that are important for the performance of his duties
are his international executive background and thorough under-
standing of managing finance operations in global organisations,
in particular in relation to accounting, financing and capital market
issues, but also his experience within private equity and mergers &
acquisitions (M&A). Mr Ryöppönen has been a member of the Audit
Committee at Novo Nordisk A/S since 2009 and is designated as
financial expert under both Danish and US law.4,5
Stig Strøbæk, picture 10
Stig Strøbæk joined Novo Nordisk in 1992 as an electrician and is
currently working as a full-time shop steward. Mr Strøbæk has been
an employee-elected member of the Board of Directors of the Novo
Nordisk Foundation since 1998. Mr Strøbæk has a diploma in
electrical engineering and a diploma in further training for board
members from the Danish Employees’ Capital Pension Fund.
Jørgen Wedel, picture 11
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. From 2004 to 2008, he was a
board member of ELOPAK AS, Norway. Mr Wedel has an MSc
in Commerce and Business Administration from the Copenhagen
Business School, Denmark (1972), majoring in accounting and
financing, and an MBA from the University of Wisconsin, US
(1974). The special competences possessed by Mr Wedel that are
important for the performance of his duties are his background
as a senior sales and marketing executive in a global consumer-
oriented company within the fast-moving consumer goods
industry, as well as particular insight into the US market. In
addition, he possesses competences in relation to auditing and
accounting. Mr Wedel has been a member of the Audit
Committee at Novo Nordisk A/S since 2005, and is designated
as financial expert under both Danish and US law.4,5
Organisational structure: Senior Management Board
Novo Nordisk
Lars Rebien Sørensen
Research & Development
Mads Krogsgaard Thomsen
3,776 employees
Diabetes Research Unit
Peter Kurtzhals
Biopharmaceuticals
Research Unit
Per Falk2
Device R&D
Jesper Kløve
CMC Supply
Jesper Bøving
Global Development
Peter Kristensen
Regulatory Affairs
Peter Bonne Eriksen
Operations
Kåre Schultz
21,643 employees
Product Supply
Per Valstorp
Finance, Legal and IT
Jesper Brandgaard
4,018 employees1
Legal Affairs
Ole F Ramsby
Biopharmaceuticals
Flemming Dahl
Corporate Finance
Lars Green
Diabetes API
Henrik Wulff
IT & Corporate
Development
Lars Fruergaard Jørgensen
Corporate Relations
Lise Kingo
1,044 employees1
Business Assurance
Kim Bundegaard
Global Quality
Lars Guldbæk Karlsen
Corporate People
& Organisation
Lars Christian Lassen
Diabetes Finished Products
Kim Tosti
Devices & Sourcing
Susanne Hundsbæk-
Pedersen
Global Marketing
Jakob Riis
Region China
Ronald Christie2
Europe
Martin Soeters
Japan & Korea
Claus Eilersen
International Operations
Jesper Høiland
North America
Jerzy Gruhn
1. Employee total includes those who work for NNE Pharmaplan A/S, NNIT A/S and Steno Diabetes Center A/S. Morten Nielsen (NNE Pharmaplan) and Per Kogut (NNIT) are also members of the Senior
Management Board.
2. From 1 January 2011.
52 Novo Nordisk Annual Report 2010
Executive Management
Lars Rebien Sørensen, picture A
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
a member of Corporate Management in May 1994, and in December
1994 he was given special responsibility within Corporate Manage-
ment for Health Care. He was appointed president and CEO in
Novem ber 2000. Mr Sørensen is a member of the boards of DONG
Energy A/S and Danmarks Nationalbank, both in Denmark, as well
as a member of the Bertelsmann AG Supervisory Board, Germany.
He has an MSc in Forestry from the Royal Veterinary and Agricultural
University (now the Life Sciences Faculty of the University of Copen-
hagen), Denmark (1981), and a BSc in International Economics from
the Copenhagen Business School, Denmark (1983). He received the
French award Chevalier de l’Ordre National de la Légion d’Honneur
in 2005. In October 2007, he became an adjunct professor of the Life
Sciences Faculty of the University of Copenhagen. Mr Sørensen is a
Danish national, born on 10 October 1954.
Jesper Brandgaard, picture B
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 SimCorp
A/S, NNE Pharmaplan A/S and NNIT A/S, all in Denmark.
Mr Brandgaard has an MSc in Economics and Auditing (1990) and an
MBA (1995), both from the Copenhagen Business School, Denmark.
Mr Brandgaard is a Danish national, born on 12 October 1963.
Lise Kingo, picture C
Lise Kingo joined Novo Nordisk in 1988 and has worked over the
years to build up the company’s Triple Bottom Line approach.
Ms Kingo was appointed senior vice president in 1999 and
executive vice president, Corporate Relations, in 2002. Ms Kingo
serves as chair of the board of the Steno Diabetes Center A/S,
Denmark. She is also associate professor of the Medical Faculty,
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 (1986), a BComm in Marketing Economics from
the Copenhagen Business School, Denmark (1991), and an MSc in
Responsibility and Business Practice from the University of Bath, UK
(2000). Ms Kingo is a Danish national, born on 3 August 1961.
Kåre Schultz, picture D
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 position of COO.
Mr Schultz is chairman of the Board of Royal Unibrew A/S and a
member of the board of LEGO A/S, both in Denmark. Mr Schultz has
an MSc in Economics from the University of Copenhagen, Denmark
(1987), and is a Danish national, born on 21 May 1961.
Mads Krogsgaard Thomsen, picture E
Mads Krogsgaard Thomsen joined Novo Nordisk in 1991. He was
appointed CSO in November 2000. He sits on the editorial boards
of international journals and is a member of the board of Cellartis
AB, Sweden. Dr Thomsen has a DVM from the Royal Veterinary and
Agricultural University (now the Life Sciences Faculty of the University
of Copenhagen), Denmark (1986), where he also obtained a PhD
(1989) and a DSc degree (1991), and became adjunct professor of
pharmacology (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.
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Novo Nordisk Annual Report 2010 53
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Shares
and capital
structure
We aim to communicate openly with stakeholders about the
company’s financial and business development as well as
strategies and targets. Through active dialogue, we seek to
obtain fair and efficient pricing of the Novo Nordisk share.
To keep investors updated on financial and operating performance
as well as the progress of clinical programmes, Novo Nordisk
hosts conference calls with Executive Management following
key events and the release of financial results, which are also
accessible by webcast. Executive Management and Investor
Relations also travel extensively to ensure that all investors with
a major holding of Novo Nordisk shares can meet with Novo
Nordisk on a regular basis and that a high number of smaller
investors or potential investors also have access to the company.
Roadshows are primarily held in major European and North
American financial centres.
A wide range of other investor activities are held during the
year. Investors and financial analysts are welcome to visit our
headquarters in Bagsværd, Denmark, as well as our regional
offices. In 2010, meetings with investor groups were held in
Princeton, US, Beijing, China, Zürich, Switzerland, and Tokyo,
Japan. Investors and analysts are also invited every year to
presentations of the most recent scientific results in connection
with the two major scientific diabetes conferences, the American
Diabetes Association and the European Association for the
Study of Diabetes. We expect to host similar investor events
in 2011.
Share price performance
Novo Nordisk’s share price increased by 89% from its 2009 close
of 332 Danish kroner to its 31 December 2010 close of 629 kroner.
This was more than the 2010 performance of the NASDAQ OMX
Copenhagen 20 Index, which increased by 36%. In 2009, Novo
Nordisk’s share price and the NASDAQ OMX Copenhagen 20
Index increased by 22.5% and 36%, respectively.
In 2010, Novo Nordisk’s share price increased more than the
MSCI Europe Health Care Index, which increase by 5% measured
in Danish kroner. Measured in US dollars, the price of the Novo
Nordisk B share increased by 76%, above the dollar gain of 1%
for the MSCI US Health Care Index. The positive development of
the company’s share price is most likely a reflection of a relatively
solid position in a growing market with strong operating perfor-
mance and ongoing progress in research and development.
In 2010, factors believed to have impacted the share price
positively include a solid operating performance bolstered by
steady sales growth, driven by modern insulins and Victoza®.
Continuous productivity increases also contributed to a solid
improvement in the gross margin of around 1.2 percentage
points in 2010.
54 Novo Nordisk Annual Report 2010
As the global launch of Victoza® progresses, with the product
now commercially available in 16 European countries, the US,
Canada, Japan and five countries in International Operations, the
encouraging launch performance and significant expansion of
the GLP-1 class in key markets such as the US, UK, Germany and
France by the end of 2010, are believed to have impacted the
share price positively.
Within research and development particular focus has been on
the development of Degludec and DegludecPlus, Novo Nordisk’s
two new-generation insulin projects, where the phase 3 clinical
programme has provided encouraging results, is also believed to
have had a positive impact on the share price.
Capital structure
The Board of Directors believes that the current capital and share
structure of Novo Nordisk serves the interests of the shareholders
and the company. Our guiding policy is that any excess capital,
after the funding of organic growth opportunities and potential
acquisitions, is returned to investors. We apply a pharmaceutical
industry payout ratio to dividend payments complemented by
long-term share repurchase programmes.
As decided at the 2010 Annual General Meeting, a reduction of
the company’s B share capital, corresponding to approximately
3.2% of the total share capital, was effected in June 2010 by
cancellation of treasury shares. This enables Novo Nordisk to
Price development
and monthly turn-
over of Novo
Nordisk’s B shares
on NASDAQ OMX
Copenhagen 2010
Novo Nordisk’s B share
closing prices in DKK (left)
■ Turnover of B shares
in DKK billion (right)
DKK
750
600
450
300
150
0
DKK billion
15
12
9
6
3
0
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Index: 2 January 2006 = 100
Price development
of Novo Nordisk’s
B shares relative to
the MSCI Europe
Health Care Index
measured in DKK
Novo Nordisk’s B
shares (prices in DKK)
MSCI Europe Health
Care Index
500
400
300
200
100
0
2006
2007
2008
2009
2010
Index: 2 January 2006 = 100
Price development
of Novo Nordisk’s
B shares relative
to the MSCI US
Health Care Index
measured in USD
Novo Nordisk’s B
shares (prices in USD)
MSCI US Health
Care Index
500
400
300
200
100
0
2006
2007
2008
2009
2010
Dividend payments
and payout ratio
■ Dividend for the year (left)
Payout ratio (right)
* 2007 and 2008 payout ratio adjusted
for the AERx® discontinuation cost
and the divestment of Dako’s business
activities.
** Pending approval at the 2011 Annual
General Meeting. 2010 payout ratio
adjusted for ZymoGenetics divestment.
DKK
10
8
6
4
2
0
%
50
45
40
35
30
2006
2007*
2008*
2009 2010E**
Breakdown of shareholders
% of capital
■ Novo A/S, Bagsværd,
Denmark 25.5% (72.8%)*
■ Novo Nordisk A/S 4.7% (0%)*
■ Other 69.8% (27.2%)*
* % of votes, excl treasury shares.
Geographical distribution
of share capital
% of capital
■ Denmark 44%
■ North America 26%
■ UK 23%
■ Other 7%
continue to buy back shares without exceeding the limit for a
total holding of treasury shares of 10% of the total share capital.
In 2010, Novo Nordisk repurchased shares worth 9.5 billion
Danish kroner, compared to 6.5 billion kroner in 2009. During
2010 the share repurchase programme was expanded twice,
each time by 1 billion kroner. The first expansion was announced
on 5 August at the half-year financial release due to improved
outlook for free cash flow generation in 2010. The second
expansion was announced on 27 October due to the divestment
of Novo Nordisk’s ownership in ZymoGenetics, Inc.
For 2011, Novo Nordisk has initiated a new share repurchase
programme with an expected total repurchase value of B shares
amounting to a cash value of 10 billion kroner. Since 2008, the
share repurchase programme has primarily been conducted in
accordance with the provisions of European Commission
Regulation no. 2273/2003 of 22 December 2003, also known as
the ‘Safe Harbour Regulation’. This programme gives the selected
financial institutions the mandate to purchase shares
independently of Novo Nordisk A/S.
At the 2011 Annual General Meeting, the Board of Directors will
propose a further reduction of the company’s B share capital,
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corresponding to approximately 3.3% of the total share capital,
by cancellation of 20 million treasury shares.
Share capital and ownership
Novo Nordisk’s total share capital of 600,000,000 Danish kroner
is divided into A share capital of nominally 107,487,200 kroner
and B share capital of nominally 492,512,800 kroner, of which
28,206,755 kroner is held as treasury shares (figures as of 31
December 2010). The company’s A shares (each 1 krone) are not
listed and are held by Novo A/S, a Danish public limited liability
company which is 100% owned by the Novo Nordisk Foundation.
More information on share capital is included in note 18 on p 76.
According to the Articles of Association of the Foundation, the
A shares cannot be divested by Novo A/S or the Foundation. As
of 31 December 2010, Novo A/S also held 45,512,800 kroner of
B share capital. Each holding of 1 krone of the A share capital
carries 1,000 votes. Each holding of 1 krone of the B share capital
carries 100 votes. With 25.5% of the total share capital, Novo A/S
controls 72.8% of the total number of votes, excluding treasury
shares. The total market value of Novo Nordisk’s B shares
excluding treasury shares was 292 billion kroner at the end of
2010.
Novo Nordisk’s B shares are quoted on the NASDAQ OMX
Copenhagen and on the New York Stock Exchange in the form
of ADRs. The B shares are traded in units of 1 krone and 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. In March, Novo Nordisk’s B shares were delisted from the
London Stock Exchange. Based on available sources of infor-
mation on the company’s shareholders as of 31 December 2010,
it is estimated that shares were distributed as shown in the charts
on this page. At the end of 2010, the free float was 69.8%.
Form 20-F
The Form 20-F Report for 2010 is expected to be filed with the
United States Securities and Exchange Commission in February
2011. The report 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 back cover). Novo Nordisk does not pay a
dividend on its holding of treasury shares. As illustrated in the
figure above, Novo Nordisk has consistently increased both the
payout rate and the paid dividend over the last five years. The
dividend for 2009 paid in March 2010 was 7.50 Danish kroner
per share of 1 krone.
Novo Nordisk Annual Report 2010 55
The proposed dividend payments for Novo Nordisk shares are
noted in the table below:
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s
l
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i
p
a
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d
n
a
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e
r
a
h
S
Proposed dividend payment for 2010
A shares of DKK 1
B shares of DKK 1
ADRs
DKK 10.00
DKK 10.00
DKK 10.00
Analyst coverage
Our company is currently covered by more than 35 analysts,
including the major global investment banks that regularly produce
research reports about Novo Nordisk. A list of analysts covering
Novo Nordisk can be found at novonordisk.com/investors.
Internet
Our homepage for investors is novonordisk.com/investors. It
includes historical and updated information about Novo Nordisk’s
activities: press releases from 1995 onwards, financial and
non-financial results, a calendar of investor-relevant events,
investor presentations, background information and recent
annual reports.
Financial calendar 2011
Annual general meeting 23 March 2011
Dividend
Ex-dividend
Record date
Payment
B shares
24 March 2011
28 March 2011
29 March 2011
ADRs
24 March 2011
28 March 2011
5 April 2011
Announcement of financial results
First three months
Half year
First nine months
Full year
28 April 2011
4 August 2011
27 October 2011
2 February 2012
56 Novo Nordisk Annual Report 2010
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C
Consolidated
financial and
non-financial
statements
2010
58 Income statement and Statement of comprehensive income
59 Balance sheet
60 Statement of cash fl ows
61 Statement of changes in equity
62 Notes to the Consolidated fi nancial statements
92 Financial defi nitions
93 Supplementary information
93 Consolidated non-fi nancial statement
94 Notes to the Consolidated non-fi nancial statement
100 Summary of fi nancial data 2006 –2010 in EUR
101 Quarterly fi nancial fi gures 2009 and 2010
102 Financial statements of the Parent company
109 Management’s statement
110 Auditor’s Reports
Novo Nordisk Annual Report 2010 57
Income statement and Statement of comprehensive income for the year ended 31 December
DKK million
Income statement
Sales
Cost of goods sold
Gross profi t
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income, net
Operating profi t
Share of profi t/(loss) of associated companies, net of tax
Financial income
Financial expenses
Profi t before income taxes
Income taxes
Net profi t for the year
Earnings per share:
Basic earnings per share (DKK)
Diluted earnings per share (DKK)
Note
2010
2009
2008
2, 3
2, 4, 6
60,776
11,680
51,078
10,438
45,553
10,109
49,096
40,640
35,444
2, 4, 6
2, 4, 6
2, 4, 5, 6
2, 4
18,195
9,602
3,065
657
15,420
7,864
2,764
341
12,866
7,856
2,635
286
18,891
14,933
12,373
13
7
8
1,070
382
2,057
(55)
375
1,265
(124)
1,127
681
18,286
13,988
12,695
9
3,883
3,220
14,403
10,768
3,050
9,645
10
10
24.81
24.60
17.97
17.82
15.66
15.54
Statement of comprehensive income
Net profi t for the year
14,403
10,768
9,645
Other comprehensive income
Deferred gains/(losses) on cash fl ow hedges arising during the period
Transfer of deferred gains/(losses) from previous year of cash fl ow hedges
recognised in the Income statement as part of fi nancial income/(expenses)
Exchange rate adjustment of investments in subsidiaries
Share of other comprehensive income of associated companies, net of tax
Gains/(losses) on available-for-sale fi nancial assets (equity investments)
Other
Tax on other comprehensive income, income/(expense)
Other comprehensive income for the year, net of tax
(643)
(422)
300
(9)
(14)
27
346
(415)
352
900
528
9
(1)
10
(25)
(940)
(615)
(473)
39
(9)
(45)
81
1,773
(1,962)
9
Total comprehensive income for the year
13,988
12,541
7,683
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I
58 Novo Nordisk Annual Report 2010
Balance sheet at 31 December
DKK million
Assets
Intangible assets
Property, plant and equipment
Investments in associated companies
Deferred income tax assets
Other non-current fi nancial assets
Total non-current assets
Inventories
Trade receivables
Tax receivables
Other current assets
Marketable securities and derivative fi nancial instruments
Cash at bank and in hand
Total current assets
Total assets
Equity and liabilities
Share capital
Treasury shares
Retained earnings
Other reserves
Total equity
Non-current debt
Deferred income tax liabilities
Retirement benefi t obligations
Provisions for other liabilities
Total non-current liabilities
Current debt and derivative fi nancial instruments
Trade payables
Tax payables
Other current liabilities
Provisions for other liabilities
Total current liabilities
Total liabilities
Total equity and liabilities
Note
2010
2009
11
12
13
20
14
15
14, 16
17
14
14
18
18
14, 19
20
21
22
23
14
24
22
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a
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fi
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a
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r
e
b
m
e
c
e
D
1
3
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a
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n
a
a
B
l
1,458
20,507
43
1,847
254
1,037
19,226
176
1,455
182
24,109
22,076
9,689
8,500
650
2,403
4,034
12,017
10,016
7,063
799
1,962
1,530
11,296
37,293
32,666
61,402
54,742
600
(28)
36,097
296
620
(32)
34,435
711
36,965
35,734
504
2,865
569
2,023
5,961
1,720
2,906
1,252
7,954
4,644
970
3,010
456
1,157
5,593
418
2,242
701
6,813
3,241
18,476
13,415
24,437
19,008
61,402
54,742
Novo Nordisk Annual Report 2010 59
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3
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o
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s
w
o
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a
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S
Statement of cash fl ows for the year ended 31 December
DKK million
Net profi t for the year
Adjustments for non-cash items:
Income taxes
Depreciation, amortisation and impairment losses
Net interest, (income)/expense
Other adjustments for non-cash items
Income taxes paid
Interest received
Interest paid
Note
2010
2009
2008
14,403
10,768
9,645
9
6
7, 8
25
3,883
2,467
265
1,834
(3,436)
218
(252)
3,220
2,551
71
859
(1,998)
284
(98)
3,050
2,442
(385)
614
(3,172)
656
(247)
Cash fl ow before change in working capital
19,382
15,657
12,603
(Increase)/decrease in trade receivables and other current assets
(Increase)/decrease in inventories
Increase/(decrease) in trade payables and other current liabilities
Currency translation
Cash fl ow from operating activities
Proceeds from the divestment of ZymoGenetics, Inc.
Purchase of intangible assets and non-current fi nancial assets
Proceeds from sale of property, plant and equipment
Purchase of property, plant and equipment
Net change in marketable securities
Dividend received
Cash fl ow from investing activities
Repayment of non-current debt
Purchase of treasury shares
Proceeds from sale of treasury shares
Dividends paid to the Parent company’s owners
Cash fl ow from fi nancing activities
Net cash fl ow
Unrealised gain/(loss) on exchange rates, included in cash and cash equivalents
Net change in cash and cash equivalents
(1,878)
327
1,805
43
(740)
(405)
921
(55)
(700)
(591)
1,228
323
19,679
15,378
12,863
1,155
(521)
68
(3,376)
(2,913)
8
–
(433)
1
(2,632)
–
18
–
(264)
18
(1,772)
466
170
(5,579)
(3,046)
(1,382)
–
(9,498)
678
(4,400)
–
(6,512)
117
(3,650)
(153)
(4,717)
295
(2,795)
(13,220)
(10,045)
(7,370)
11, 14
12
13
18
18
10
2,287
4,111
880
46
926
21
2,308
8,726
(2)
4,109
4,617
8,726
8,726
997
7,451
Cash and cash equivalents at the beginning of the year
26
11,034
Cash and cash equivalents at the end of the year
11,960
11,034
Additional information:
Cash and cash equivalents at the end of the year
Marketable securities at the end of the year
Undrawn committed credit facilities 1)
26
14
11,960
3,926
4,473
11,034
1,013
4,465
Financial resources at the end of the year
20,359
16,512
17,174
Cash fl ow from operating activities
Cash fl ow from investing activities
Net change in marketable securities
Free cash fl ow
19,679
(5,579)
2,913
15,378
(3,046)
–
12,863
(1,382)
(466)
17,013
12,332
11,015
1) At year-end, the Group had an undrawn committed credit facility amounting to DKK 4,473 million (DKK 4,465 million in 2009). The undrawn committed credit facility is a
EUR 600 million facility committed by a number of Danish and international banks. The facility matures in 2012.
60 Novo Nordisk Annual Report 2010
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i
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n
i
s
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g
n
a
h
c
f
o
t
n
e
m
e
t
a
t
S
350
350
(415)
(415)
(415)
13,988
(4,400)
463
(9,498)
678
0
Statement of changes in equity at 31 December
Share
capital
Treasury
shares
Retained
earnings
Other reserves
Total
Exchange
rate
adjust-
ments
Deferred
gain/(loss)
on cash
fl ow
hedges
Tax and
other
adjust-
ments
Total
other
reserves
DKK million
2010
Balance at the beginning of the year
620
(32)
34,435
271
393
47
711
35,734
Net profi t for the year
Other comprehensive income for the year,
net of tax
14,403
14,403
300
(1,065)
Total comprehensive income for the year
14,403
300
(1,065)
Transactions with owners, recognised
directly in equity:
Dividends (refer to note 10)
Share-based payments (refer to note 28)
Purchase of treasury shares (refer to note 18)
Sale of treasury shares (refer to note 18)
Reduction of the B share capital
(refer to note 18)
Balance at the end of the year
(20)
600
(4,400)
463
(9,478)
674
(20)
4
20
(28)
36,097
571
(672)
397
296
36,965
Share
capital
Treasury
shares
Retained
earnings
Other reserves
Total
Exchange
rate
adjust-
ments
Deferred
gain/(loss)
on cash
fl ow
hedges
Tax and
other
adjust-
ments
Total
other
reserves
DKK million
2009
Balance at the beginning of the year
634
(26)
33,433
(256)
(859)
53
(1,062)
32,979
Net profi t for the year
Other comprehensive income for the year,
net of tax
Total comprehensive income for the year
10,768
10,768
10,768
527
527
1,252
1,252
(6)
(6)
1,773
1,773
1,773
12,541
Transactions with owners, recognised
directly in equity:
Dividends (refer to note 10)
Share-based payments (refer to note 28)
Purchase of treasury shares (refer to note 18)
Sale of treasury shares (refer to note 18)
Reduction of the B share capital
(refer to note 18)
Balance at the end of the year
(14)
620
(3,650)
259
(6,490)
115
(22)
2
14
(3,650)
259
(6,512)
117
0
(32)
34,435
271
393
47
711
35,734
Novo Nordisk Annual Report 2010 61
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Notes to the Consolidated fi nancial statements
1 Basis of preparation of the consolidated
fi nancial statements
The Consolidated fi nancial statements have been prepared in accordance
with International Financial Reporting Standards (IFRS) as issued by the
International Accounting Standards Board (IASB), as well as in accordance
with International Financial Reporting Standards (IFRS) as endorsed by the
European Union.
Furthermore, the Annual Report has been prepared in accordance with
ad d itional Danish disclosure requirements for the annual reports of listed
companies.
The Consolidated fi nancial statements have been prepared on the historical
cost basis except for the revaluation of available-for-sale fi nancial assets
such as equity investments and marketable securities measured at fair value
through Other comprehensive income and derivative fi nancial instruments
measured at fair value through Income statement.
Key accounting estimates and assumptions
The use of reasonable estimates is an essential part of the preparation of
the Consolidated fi nancial statements in conformity with IFRS as issued by
the IASB and IFRS as endorsed by the European Union. Management is
required to make estimates and assumptions that affect the application of
accounting policies and reported amounts of assets, liabilities, sales, costs,
cash fl ow and related disclosures at the date(s) of the Consolidated fi nancial
statements.
Management bases its estimates on historical experience and various other
assumptions that are held to be reasonable under the circumstances. These
form the basis for making judgements about the reported fi nancial position
and result of operations and cash fl ow that are not readily apparent from
other sources. Actual results could differ from these estimates. The esti-
mates and underlying assumptions are reviewed on an ongoing basis and,
if necessary, changes are recognised in the period in which the estimate is
revised.
Management regards the following to be the key accounting estimates and
assumptions used in the preparation of the Consolidated fi nancial state-
ments.
Sales rebates and provisions
The Group has provisions and accruals for expected sales rebates, whole-
saler charge-backs and other rebates, including Medicaid in the United
States and similar rebates in other countries.
Such estimates are based on analyses of existing contractual or legal obliga-
tions, historical trends and the Group’s experience. They are calculated
on the basis of a percentage of sales for each product as defi ned by the
contracts with the various customer groups.
Sales discounts and sales rebates are predominantly issued in Region
North America. In that region, signifi cant sales rebates and discounts com-
prise rebates from sales covered by Medicare and Medicaid, the US state
and federal programmes for public healthcare insurance.
Provisions for Medicaid and Medicare rebates have been calculated using a
combination of historical experience, product and population growth, price
increases, the impact of contracting strategies and specifi c terms in the
individual agreements. For Medicaid, the calculation of rebates involves
in ter pretation of relevant regulations that are subject to challenge or
change in interpretative guidance by government authorities. Although
ac cruals are made for Medicaid and Medicare rebates at the time sales are
recorded, the actual rebates related to the specifi c sale will typically be
invoiced to Novo Nordisk up to six months later. Due to the time lag, the
rebate adjustments to sales in any particular period may incorporate
revisions of accruals for prior periods.
62 Novo Nordisk Annual Report 2010
Customer rebates are offered to a number of managed healthcare plans.
These rebate programmes imply that the customer receives a rebate after
attaining certain performance parameters relating to product purchases,
formulary status and pre-established market share milestones relative
to competitors. Since they are contractually agreed upon, rebates are
esti mated according to the specifi c terms in each agreement, historical
experience, anticipated channel mix, product growth rates and market
share information. Novo Nordisk considers the sales performance of pro-
ducts subject to managed healthcare rebates and other contract discounts,
and adjusts the provision periodically to refl ect actual experience.
Wholesaler charge-backs relate to contractual arrangements existing
between Novo Nordisk and indirect customers, mainly in the US, whereby
products are sold at prices lower than the list price charged to wholesalers.
A wholesaler charge-back represents the difference between the invoice
price to the wholesaler and the indirect customer’s contract price. Provisions
are calculated for estimated charge-backs using a combination of factors
such as historical experience, current wholesaler inventory levels, contract
terms and the value of claims received but not yet processed. Wholesaler
charge-backs are generally settled within one to three months of incurring
the liability.
The carrying amount of provisions for sales rebates is DKK 4,364 million as
at 31 December 2010. Please refer to note 22 for further information on
provisions for sales rebates. Furthermore, please refer to note 3 for a gross-
to-net sales reconciliation.
Novo Nordisk considers the provision, established for sales rebates to
be reasonable and appropriate based on currently available information.
However, the actual amount of rebates and discounts may differ from
the amounts estimated by Management as better information becomes
available.
Indirect production costs (IPCs)
Production costs for work in progress and fi nished goods include IPCs such
as employee costs, depreciation, maintenance etc.
IPCs are measured based on a standard cost method which is reviewed
regularly to ensure relevant measures of utilisation, production lead time
and other relevant factors. Changes in the parameters for calculation of
IPCs, including utilisation levels, production lead time etc could have an
im pact on the gross margin and the overall valuation of inventories.
The carrying amount of IPCs on inventory is DKK 5,090 million as at
31 December 2010. Please refer to note 15 for further information.
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 in anti-
cipation of estimated losses resulting from the subsequent inability of
customers to make required payments. If the fi nancial circumstances of the
customers were to deteriorate, resulting in an impairment of their ability
to make payments, additional allowances could be required in future
periods. Management analyses trade receivables and examines historical
bad debt, customer concentrations, customer creditworthiness, current
economic trends and changes in customer payment terms when evaluating
the adequacy of the allowance for doubtful trade receivables.
The carrying amount of allowances for doubtful trade receivables is DKK
627 million as at 31 December 2010. Please refer to note 16 for further
information.
Provisions and contingencies
Deferred income tax assets and liabilities
Novo Nordisk recognises deferred income tax assets if it is probable that
suffi cient 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 should be recognised.
The carrying amount of deferred income tax assets and deferred income
tax liabilities is DKK 1,847 million and DKK 2,865 million respectively as at
31 December 2010. Please refer to note 20 for further information.
Returned products
The Group has recorded provisions for expected product returns. The
provision is based on an analysis of the estimated rate of return, which is
determined based on historical experience of customer returns or
con sidering any other relevant factors.
The carrying amount of provision for product returns is DKK 534 million as
at 31 December 2010. Please refer to note 22 for further information.
Other provisions
Other provisions consist of various types of provisions, including provisions
for legal disputes. Management makes judgements about provisions and
contingencies, including the probability of pending and potential future
litigation outcomes that by their very nature are dependent on inherently
uncertain future events. When determining likely outcomes of litigations
etc, Management considers the evaluation of external counsel knowledge-
able about each case, as well as known outcomes in case law.
Provisions for pending litigations are recognised as part of other provisions.
The carrying amount of other provisions is DKK 1,769 million as at
31 December 2010. Please refer to note 22 for further information and
note 31 for a description of signifi cant litigations pending.
Although Management believes that the total provisions for legal pro-
ceedings are adequate based upon currently available information, there
can be no assurance that there will not be an increase in the scope of these
matters or that any future lawsuits, claims, proceedings or investigations
will not be material.
Accounting policies
The accounting policies set out below have been applied con sistently in
the preparation of the Consolidated fi nancial statements for all the years
presented.
Adoption of new and revised IFRSs
Novo Nordisk has adopted all new or amended and revised accounting
standards and interpretations (‘IFRSs’) issued by IASB and IFRSs endorsed
by the European Union effective for the accounting year 2010. Based on
an analysis made by Novo Nordisk, the application of the new IFRSs has not
had a material impact on the Consolidated fi nancial statements in 2010
and we do not anticipate any signifi cant impact on future periods from the
adoption of these new IFRSs.
New IFRSs that have been issued but not yet come into effect
In addition to the above, IASB has issued a number of new or amended
and revised accounting standards and interpretations (‘IFRSs’) which have
been endorsed by the European Union but not yet come into effect. Novo
Nordisk has thoroughly assessed the impact of these IFRSs that are not yet
effective and determined that we do not anticipate any signifi cant impact
on the Consolidated fi nancial statements from the adoption of these
standards.
Furthermore, IASB has issued IFRS 9 ‘Financial Instruments’ which is
required to be adopted by 1 January 2013. This is part of the IASB’s project
to replace IAS 39 and the new standard will substantially change the clas-
sifi cation and measurement of fi nancial instruments and hedging require-
ments. IFRS 9 has not been endorsed by the European Union, and a decision
to do so is currently postponed. Novo Nordisk has assessed the impact of
the standard and determined that it will not have signifi cant impact on the
Consolidated fi nancial statements.
Principles of consolidation
The Consolidated fi nancial statements incorporate the fi nancial statements
of Novo Nordisk A/S and entities controlled by Novo Nordisk A/S. The results
of subsidiaries acquired or disposed of during the year are included in the
consolidated income statement from the effective date of acquisition and
up to the effective date of disposal, as appropriate. Comparative fi gures are
not adjusted for disposed or acquired companies.
Where necessary, adjustments are made to the fi nancial statements of sub-
sidiaries to bring their accounting policies in line with the Group policies.
All intra-Group transactions, balances, income and expenses are eliminated
in full on consolidation.
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When the Group looses control of a subsidiary, the profi t or loss on disposal
is calculated as the difference between (i) the aggregate of the fair value of
the consideration received and the fair value of any retained interest and
(ii) the previous carrying amount of the assets (including goodwill) and
liabilities of the subsidiary. The fair value of any investment retained in the
former subsidiary at the date when control is lost is regarded as the fair
value on initial recognition for subsequent accounting as equity investment
or, when applicable, the cost on initial recognition of an investment in
associated companies.
Translation of foreign currencies
Functional and presentation currency
Items included in the fi nancial 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 fi nancial
statements are presented in Danish kroner, 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 prevaling at the dates of the transactions. Foreign
exchange gains and loses resulting from the settlement of such trans actions
and from the translation at year-end exchange rates of monetary assets and
liabilities denominated in foreign currencies are recognised in the Income
statement.
Translation differences on non-monetary items, such as fi nancial assets
classifi ed as available for sale, are included in the fair value reserve in Other
comprehensive income.
Translation of Group companies
Financial statements of foreign subsidiaries are translated into Danish
kroner at the exchange rates ruling at the end of the reporting period for
assets and liabilities, and at average exchange rates for Income statement
items.
All effects of currency translation are recognised in the Income statement
with the exception of exchange gains and losses arising from:
• the translation of foreign subsidiaries’ net assets at the beginning of the
year at the exchange rates at the end of the reporting period
• the translation of foreign subsidiaries’ income statements using average
exchange rates, whereas balance sheet items are translated using the
exchange rates prevailing at the end of the reporting period
• the translation of non-current intra-Group receivables that are con sidered
to be an addition to net investments in subsidiaries
• the translation of investments in associated companies
The above exchange gains and losses are recognised in Other comprehen-
sive income.
Sales and revenue recognition
Sales are measured at the fair value of the consideration received or receiv-
able. Sales are reduced for realised and estimated customer returns, rebates
and other similar allowances.
Revenue from the sale of goods is recognised when all the following condi-
tions are satisfi ed:
• the Group has transferred to the buyer the signifi cant risks and rewards
of ownership of the goods
• the Group retains neither continuing managerial involvement to the
degree usually associated with ownership nor effective control over the
goods sold
• the amount of revenue can be measured reliably
• it is probable that the economic benefi ts associated with the transaction
will fl ow to the entity and
• the costs incurred or to be incurred in respect of the transaction can be
measured reliably
Provisions for rebates and discounts granted to government agencies,
whole salers, retail pharmacies, managed care and other customers are
recorded as a reduction of revenue at the time the related revenues
are recorded or when the incentives are offered. They are calculated on
the basis of historical experience and the specifi c terms in the individual
agreements. The sales rebate accruals and provisions are included in Other
current liabilities and Provisions for other liabilities.
Novo Nordisk Annual Report 2010 63
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Where there is a historical experience or a reasonably accurate estimate of
expected future returns can otherwise be made, a provision for estimated
sales returns is recorded. Revenue recognition for new product launches
is based on specifi c facts and circumstances relating to those products,
including estimated demand and acceptance rates for well-established
products with similar market characteristics. Where shipments of new or
existing products are made on a sale or return basis, without suffi cient
historical experience for estimating sales returns, revenue is only recorded
when there is evidence of consumption or when the right of return has
expired.
Provisions for revenue deductions are adjusted to actual amounts as
rebates, discounts and returns are processed.
Research and development
All internal research costs are expensed in the Income statement as
incur red.
Due to the long duration and signifi cant uncertainties relating to the
development of new products, including risks associated with clinical trials
and regulatory approval, it is concluded that the Group’s internal develop-
ment costs in general do not meet the capitalisation criteria. This is because
the technical feasibility criteria are not considered to be fulfi lled until a
high probability of regulatory approval can be determined. Hence, internal
research and development costs are expensed in the Income statement as
incurred. The same principles are used for property, plant and equipment
with no alternative use developed as part of a research and development
project. However, property, plant and equipment with alternative use or
used for general research and development purposes are capitalised and
depreciated over their estimated useful lives.
For acquired in-process research and development projects, the effect
of probability is refl ected in the cost of the asset, and the probability
recogni tion criteria are therefore always considered satisfi ed. As the cost
of acquired in-process research and development projects can often be
measured reliably, these projects fulfi l the capitalisation criteria as intangible
assets upon acquisition. However, further internal development costs
subsequent to acquisition are treated in the same way as other internal
development costs.
Licence fees and other operating income
Licence fees and other operating income comprise licence fees and income
of a secondary nature in relation to the main activities of the Group. Non-
Group net profi t from the two wholly owned subsidiaries NNIT A/S and
NNE Pharmaplan A/S is recognised as other operating income. Licence fees
are recognised on an accrual basis in accordance with the terms and sub-
stance of the relevant agreement. Licence fees and other operating income
also include non-recurring income items in respect of sale of intellectual
property rights.
Intangible assets
Goodwill
Goodwill represents any cost in excess of identifi able net assets, measured
at fair value, in the acquired company. Goodwill recorded under Intangible
assets is related to subsidiaries.
Patents and licences
Patents and licences, including acquired patents and licences for in-process
research and development projects, are carried at historical cost less ac-
cumulated amortisation and any impairment loss. Amortisation is calculated
using the straight-line method to allocate the cost of patents and licences
over their estimated useful lives. Estimated useful life is the shorter of the
legal duration and the economic useful life. The estimated useful life of
intangible assets is regularly reviewed. The amortisation of patents and
licenses begins after regulatory approval has been obtained, which is the
point in time from which the intangible asset is available for use in the
production of the product.
Other intangible assets
Internal development of computer software and other development costs
related to major IT projects for internal use that are directly attributable
to the design and testing of identifi able and unique software products
controlled by the Group are recognised as intangible assets under Other
intangible assets if the recognition criteria are met. The computer software
has to be a signifi cant business system and the expenditure will lead to
the creation of a durable asset.
When assessing whether an internally generated intangible asset qualifi es
for recognition, it is required that the related internal development project is
at a suffi ciently advanced stage and that the project is economically viable.
Amortisation is calculated using the straight-line method over the estimated
useful life of 3 –10 years. The amortisation commences when the asset is
available for use, ie when it is in the location and condition necessary for it
to be capable of operating in the manner intended by Management.
Property, plant and equipment
Property, plant and equipment are measured at historical cost less accu-
mulated depreciation and any impairment loss. The cost of self-constructed
assets includes costs directly attributable to the construction of the assets.
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 benefi ts associated with the item will fl ow to the Group and
the cost of the item can be measured reliably. In general, constructions of
major investments are self-fi nanced and thus no material interest on loans
(borrowings) is capitalised as part of the cost.
Depreciation is provided under the straight-line method over the estimated
useful lives of the assets as follows:
• Buildings: 12 – 50 years
• Plant and machinery: 5 –16 years
• Other equipment: 3 –16 years
• Land: not depreciated
The assets’ residual values and useful lives are reviewed and adjusted,
if appropriate, at the end of each reporting period. 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.
Gains and losses on disposals are determined by comparing the proceeds
with the carrying amount and are recognised in the Income statement.
Leasing
Leases are classifi ed as fi nance leases whenever the terms of the lease
substantially transfer all the risks and rewards of ownership to the lessee.
All other leases are classifi ed as operating leases. The use of fi nance leases
in the Consolidated fi nancial statements is immaterial and they are part
of property, plant and equipment.
Operating lease payments are recognised in the Income statement as an
expense on a straight-line basis over the lease term, except where another
systematic basis is more representative of the time pattern in which eco-
nomic benefi ts from the leased asset are consumed. Contingent rentals
arising under operating leases are recognised as an expense in the period in
which they are incurred.
Impairment of assets
Intangible assets with an indefi nite useful life and intangible assets not yet
available for use are not subject to amortisation and are tested annually
for impairment irrespective of whether there is any indication that they may
be impaired.
Assets that are subject to amortisation, such as intangible assets in use
or with defi nite useful life and other non-current assets, are reviewed for
impairment whenever events or changes in circumstances indicate that the
carrying amount may not be recoverable. Factors considered material by
the Group that could trigger an impairment test include the following:
• Development of a competing drug
• Changes in the legal framework covering patents, rights or licences
• Advances in medicine and/or technology that affect the medical treat-
ments
• Lower-than-predicted sales
• Adverse impact on reputation and/or brand names
• Changes in the economic lives of similar assets
• Relationship with other intangible or tangible assets
• Changes or anticipated changes in participation rates or reimbursement
policies.
If the carrying amount of goodwill, intangible assets or other non-current
assets exceeds the recoverable amount based upon the existence of one or
more of the above indicators of impairment, any impairment is measured
based on discounted projected cash fl ows.
64 Novo Nordisk Annual Report 2010
Intangible assets and other non-fi nancial assets (other than goodwill) that
have suffered impairments are reviewed at each reporting date for possible
reversal of the impairment.
Investments in associated companies
Investments in associated companies are accounted for under the equity
method of accounting (ie at the respective share of the associated
com panies’ net asset value applying Group accounting policies). Goodwill
relating to associated companies is recorded as part of the investment
under Investments in associated companies.
Financial assets
The Group classifi es its investments in the following categories:
• Available-for-sale fi nancial assets
• Loans and receivables
• Financial assets at fair value (derivatives)
The classifi cation depends on the purpose for which the investments were
acquired. Management determines the classifi cation of its investments on
initial recognition and re-evaluates this at the end of every reporting period
to the extent that such a classifi cation is permitted and required.
Recognition and measurement
Purchases and sales of investments are recognised on the settlement date.
Investments are initially recognised at fair value.
Available-for-sale fi nancial assets and fi nancial assets at fair value
are subsequently carried at fair value. Loans and receivables are carried at
amortised cost using the effective interest method.
Fair value disclosures are made separately for each class of fi nancial instru-
ments at the end of the reporting period.
Derecognition
Investments are derecognised when the rights to receive cash fl ows from
the investments have expired or have been transferred, and the Group has
transferred substantially all risks and rewards of ownership.
Available-for-sale fi nancial assets
Available-for-sale fi nancial assets consist of equity investments and
market able securities and are included in Other non-current assets unless
Management intends to dispose of the investment within 12 months of the
end of the reporting period. If that would be the case, the current part is
included as Other current assets.
Unrealised gains and losses arising from changes in the fair value of fi nan-
cial assets classifi ed as available-for-sale are recognised in Other compre-
hensive income. When fi nancial assets classifi ed as available-for-sale are
sold or impaired, the accumulated fair value adjustments are included in the
Income statement.
The fair values of quoted investments (including bonds) are based on cur-
rent bid prices at the end of the reporting period. Financial assets for which
no active market exists are carried at cost if no reliable valuation model can
be applied (such as unlisted shares).
Loans and receivables
Loans and receivables are non-derivative fi nancial assets with fi xed or deter-
minable payments that are not quoted in an active market. If collection is
expected within one year (or in the normal operating cycle of the business
if longer), they are classifi ed as Current assets. If not, they are presented as
Non-current assets.
Trade receivables and Other current assets are recognised initially at fair
value and subsequently measured at amortised cost using the effective
interest method, less provision for allowances. Provision for allowances of
trade receivables is made when there is objective evidence that the Group
will not be able to collect all amounts due according to the original terms
of the receivables.
The provision for allowances is deducted from the carrying amount of
Trade receivables and the amount of the loss is recognised in the Income
statement under Sales and distribution costs. When a trade receivable
is uncollectible, it is written off against the allowance account for trade
receivables. Subsequent recoveries of amounts previously written off are
credited against Sales and distribution costs in the Income statement.
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Financial assets at fair value (derivatives)
The Group uses forward exchange contracts, currency options, interest rate
swaps and cross-currency swaps to hedge forecast transactions, assets and
liabilities, and net foreign currency investments in foreign subsidiaries in
accordance with the specifi c rules of IAS 39 ‘Financial Instruments: Recogni-
tion and Measurement’.
Upon initiation of the contract, the Group designates each derivative fi nan-
cial contract that qualifi es for hedge accounting as:
• Hedges of the fair value of a recognised asset or liability or a fi rm commit-
ment (fair value hedge), or
• Hedges of the fair value of a forecast fi nancial transaction (cash fl ow
hedge), or
• Hedges of a net investment in a foreign operation (net investment
hedge).
All contracts are initially recognised at fair value and subsequently re-
measured at their fair values based on current bid prices at the end of the
reporting period.
Forward exchange contracts and currency swap hedges recognised as
assets or liabilities in foreign currencies are measured at fair value at the end
of the reporting period. Value adjustments are recognised in the Income
statement along with any value adjustments of the hedged asset or liability
that is attributable to the hedged risk.
The value adjustments on forward exchange contracts and interest rate
swaps designated as hedges of forecast transactions are recognised directly
in Other comprehensive income, given hedge effectiveness. The cumulative
value adjustment of these contracts is transferred from Other compre-
hensive income to the Income statement as a reclassifi cation adjustment
under Financial income or Financial expenses when the hedged transaction
is recognised in the Income statement.
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 end of the reporting period. The value adjustment
is recognised in Other comprehensive income.
Furthermore, the Group uses currency option hedges of forecast trans-
actions. Currency options are initially recognised at cost, which equals fair
value of considerations paid, and subsequently re-measured at their fair
values at the end of the reporting period. The cumulative value adjustment
of the currency options for which hedge accounting is applied is transferred
from Other comprehensive income to the Income statement as a reclas-
sifi cation adjustment under Financial income or Financial expenses when
the hedged transaction is recognised in the Income statement. Gains and
losses on currency options that do not meet the detailed requirements for
allowing hedge accounting are recognised directly in the Income statement
under Financial income or Financial expenses.
The accumulated net fair value of derivatives is presented as Marketable
securities and fi nancial instruments if positive or Current debt and fi nancial
instruments if negative.
The fair value of fi nancial assets and liabilities is measured on the basis of
quoted market prices of fi nancial instruments traded in active markets.
If an active market exists, fair value is based on the most recently observed
market price at the end of the reporting period.
If a fi nancial instrument is quoted in a market that is not active, the Group
bases its valuation on the most recent transaction price. Adjustment is
made for subsequent changes in market conditions, for instance by includ-
ing transactions in similar fi nancial instruments that are assumed to be
motivated by normal business considerations.
If an active market does not exist, the fair value of standard and simple
fi nancial instruments, such as interest rate swaps, currency swaps and
un listed bonds, is measured according to generally accepted valuation
techniques. Market-based parameters are used to measure fair value.
When a hedging instrument expires or is sold, or when a hedge no longer
meets the criteria for hedge accounting, any cumulative gain or loss existing
in equity at that time remains in equity and is recognised when the forecast
transaction is ultimately recognised in the Income statement. When a
forecast transaction is no longer expected to occur, the cumulative gain or
loss that was reported in equity is immediately transferred to the Income
statement under Financial income or Financial expenses.
Novo Nordisk Annual Report 2010 65
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
impact of any non-market vesting conditions. The fair value is fi xed at grant
date. Non-market vesting conditions are included in assumptions about the
number of options or shares that are expected to vest. At the end of each
reporting period, the Group revises its estimates of the number of options
or shares that are expected to vest. Novo Nordisk recognises the impact
of the revision of the original estimates, if any, in the Income statement
and a corresponding adjustment to Equity (change in proceeds) over the
remaining vesting period. Adjustments relating to prior years are included
in the Income statement in the year of adjustment.
Liabilities
Generally, liabilities are stated at amortised cost unless specifi ed otherwise.
Borrowings are recognised initially at fair value, net of transaction costs
incurred. Borrowings are subsequently stated at amortised cost; any dif-
ference between the proceeds (net of transaction costs) and the redemp-
tion value is recognised in the Income statement over the period of the
bor rowings using the effective interest method. Borrowings are classifi ed as
Current debt unless the Group has an unconditional right to defer settle-
ment of the liability for at least 12 months after the end of the reporting
period.
Provisions
Provisions, including legal cases, are recognised where a legal or con-
structive obligation has incurred as a result of past events and it is probable
that there will be an outfl ow of resources that can be reliably estimated. In
this case, Novo Nordisk arrives at an estimate on the basis of an evaluation
of the most likely outcome. Cases for which no reliable estimate can be
made are disclosed as contingent liabilities.
Provisions are measured at the present value of the anticipated expenditure
for settlement of the legal or constructive obligation using a pre-tax rate
that refl ects current market assessments of the time value of money and
the risks specifi c to the obligation. The increase in the provision due to the
passage of time is recognised as interest expense.
Treasury shares
Treasury shares are deducted from the share capital at their nominal value
of DKK 1 per share. Differences between this amount and the amount paid
for acquiring, or received for disposing of, treasury shares are deducted
from retained earnings.
Statement of cash fl ows
The statement of cash fl ows and fi nancial resources is presented in accord-
ance with the indirect method commencing with net profi t for the year.
Cash and cash equivalents consist of cash and marketable securities, with
original maturity of less than three months offset by 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.
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Inventories
Inventories are stated at the lower of cost and net realisable value. Cost
is determined using the fi rst-in, fi rst-out method. Cost comprises direct
pro duction costs such as raw materials, consumables and labour as well as
production overheads such as employee wages, depreciation, maintenance
etc. The production overheads are measured based on a standard cost
method, which is reviewed regularly to ensure relevant measures of utilisa-
tion, 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
recognised for the amount by which the carrying amount exceeds its net
realisable value.
Inventory manufactured prior to regulatory approval is capitalised as an
asset but provided for until there is a high probability of regulatory approval
of the product. Before that point a provision is made against the carrying
value to its recoverable amount and recorded as research and development
costs. At the point when a high probability of regulatory approval is deter-
mined, the provision recorded is reversed, up to the original cost.
Tax
The tax expense for the period comprises current and deferred tax including
adjustments to previous years. Tax is recognised in the Income statement,
except to the extent that it relates to items recognised in Other compre-
hensive income.
Deferred income taxes arise from temporary differences between the ac-
counting and taxable values of the individual consolidated companies and
from realisable tax-loss carry-forwards using the liability method. The tax
value of tax-loss carry-forwards is included in deferred tax assets to the
extent that the tax losses and other tax assets are expected to be utilised
in 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.
Unremitted earnings are retained by subsidiaries for reinvestment. No
provision is made for income taxes that would be payable upon the distri-
bution of such earnings.
Employee benefi ts
Wages, salaries, social security contributions, annual leave and sick leave,
bonuses and non-monetary benefi ts are recognised in the year in which
the associated services are rendered by employees of the Group. Where
the Group provides long-term employee benefi ts, the costs are accrued to
match the rendering of the services by the employees concerned.
Pensions
The Group operates a number of defi ned contribution plans throughout
the world. In a few countries, the Group still operates defi ned benefi t plans.
The costs for the year for defi ned benefi t plans are determined using the
projected unit credit method. This refl ects 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 benefi ts,
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.
Actuarial gains and losses are recognised as income or expenses when the
net cumulative unrecognised actuarial gains and losses for each individual
plan at the end of the previous reporting period exceed 10% of the
higher of the defi ned benefi t obligation and the fair value of plan assets at
that date. These gains or losses are recognised over the expected average
remaining working lives of the employees participating in the plans.
Past service costs are allocated over the average period until the benefi ts
vest.
Pension assets are only recognised to the extent that the Group is able to
derive future economic benefi ts such as refunds from the plan or reductions
of future contributions.
The Group’s contributions to the defi ned contribution plans are charged to
the Income statement in the year to which they relate.
66 Novo Nordisk Annual Report 2010
2 Segment information
Operating segments are reported in a manner consistent with the internal
reporting provided to Executive Management and the Board of Directors.
Business segments
The Group operates in two business segments based on different therapies:
Diabetes care and Biopharmaceuticals.
The Diabetes care business segment includes research, development,
manufacturing and marketing of products within the areas of insulin, GLP-1
and related delivery systems, and oral antidiabetic products (OAD).
The Biopharmaceuticals business segment includes research, development,
manufacturing and marketing of products within the areas of haemophilia,
growth hormone therapy, hormone replacement therapy, infl ammation
therapy and other therapy areas.
No operating segments have been aggregated to form the above reportable
business segments.
Management monitors the operating results of its business segments
separately for the purpose of making decisions about resource allocation
and performance assessment. Segment performance is evaluated on the
basis of operating profi t consistent with the Consolidated fi nancial state-
ments. Group fi nancing (including fi nancial expenses and fi nancial income)
and income taxes are managed on a Group basis and are not allocated to
business segments.
There are no sales or other transactions between the business segments.
Costs have been split between business segments according to a specifi c
allocation with the addition of a minor number of corporate overheads
allocated systematically between the segments. Licence fees and other
operating income has been allocated to the two segments based on the
same principle. Segment assets comprise the assets that are applied directly
to the activities of the segment, including intangible assets, property, plant
and equipment, non-current fi nancial assets, inventories, trade receivables
and other receivables.
No single customer represents more than 10% of the total sales.
Business segments
DKK million
Segment sales
NovoRapid® / NovoLog®
NovoMix® / NovoLog®Mix
Levemir®
Total modern insulin
Human insulin
Victoza®
Protein-related products
Oral antidiabetic products (OAD)
2010
2009
2008
2010
2009
2008
2010
2009
2008
Diabetes care
Biopharmaceuticals
Total
11,900
7,821
6,880
26,601
11,827
2,317
2,214
2,751
9,749
6,499
5,223
21,471
11,315
87
1,977
2,652
7,830
5,637
3,850
17,317
11,804
–
1,844
2,391
Diabetes care total sales
45,710
37,502
33,356
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NovoSeven®
Norditropin®
Hormone replacement therapy
Other products
Biopharmaceuticals total sales
Total business segments –
other key fi gures
Total sales
Change in DKK (%)
Change in local currencies (%)
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating
income, net
Operating profi t
Depreciation, amortisation and
impairment losses included in the costs
Assets allocated to business segments
Assets not allocated to business
segments 1)
Total assets
8,030
4,803
1,892
341
7,072
4,401
1,744
359
6,396
3,865
1,612
324
15,066
13,576
12,197
45,710
21.9%
15.7%
10,131
14,815
6,744
2,260
342
12,102
1,887
34,947
37,502
12.4%
11.1%
9,001
12,877
5,257
2,044
187
8,510
33,356
9.4%
12.7%
8,705
10,497
4,791
1,936
142
7,569
1,973
29,703
1,899
30,468
15,066
11.0%
5.4%
1,549
3,380
2,858
805
315
6,789
580
7,906
13,576
11.3%
9.3%
1,437
2,543
2,607
720
154
6,423
578
8,984
12,197
7.4%
11.1%
1,404
2,369
3,065
699
144
4,804
543
6,640
60,776
19.0%
13.0%
11,680
18,195
9,602
3,065
657
18,891
2,467
42,853
18,549
61,402
51,078
12.1%
10.6%
10,438
15,420
7,864
2,764
341
14,933
2,551
38,687
16,055
54,742
45,553
8.9%
12.2%
10,109
12,866
7,856
2,635
286
12,373
2,442
37,108
13,495
50,603
1) The part of total assets that has not been allocated to either of the two business segments includes Cash at bank and in hand, Marketable securities, Derivative fi nancial instruments
and tax assets etc.
Novo Nordisk Annual Report 2010 67
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2 Segment information (continued)
Geographical segments
The Group operates in four geographical regions:
• North America: the US and Canada
• Europe: the EU, EFTA, Albania, Bosnia-Herzegovina, Croatia, Macedonia,
Serbia, Montenegro and Kosovo
• Japan & Korea: Japan and Korea
• International Operations: all other countries, currently including China.
Sales are attributed to geographical regions according to the location of
the customer. Allocation of property, plant and equipment and total assets
are based on the location of the assets.
The country of domicile is Denmark, which is part of Region Europe.
Denmark is immaterial in relation to the Group’s activities in terms of geo-
graphical size and the operational business segments. Less than 1% of the
total sales is realised in Denmark. Sales to external customers attributed
to the US are collectively the most material to the company. The US is the
only country where sales contribute more than 10% of our total sales.
However, sales to the US represent more than 90% of sales in region North
America.
Effective 1 January 2011, China will be reported as a separate geographical
region. Currently, China is reported as a part of International Operations.
The change does not impact the segment reporting in the Annual Report
2010.
Geographical segments
DKK million
2010
2009
2008
2010
2009
2008
North America
Sales
Change in DKK (%)
Change in local currencies (%)
Property, plant and equipment
Total assets
23,609
29.2%
22.4%
987
3,680
18,279
20.6%
15.2%
905
3,232
15,154
10.2%
17.7%
973
3,532
18,664
6.4%
4.6%
15,669
46,654
Europe
17,540
1.9%
5.2%
15,445
42,933
17,219
5.3%
6.7%
15,624
40,849
DKK million
2010
2009
2008
2010
2009
2008
International Operations 2)
Japan & Korea 2)
Sales
Change in DKK (%)
Change in local currencies (%)
Property, plant and equipment
Total assets
12,843
23.8%
15.1%
3,638
9,910
10,371
15.4%
17.3%
2,688
7,574
8,984
14.5%
18.9%
1,828
5,292
5,660
15.8%
3.3%
213
1,158
4,888
16.5%
1.8%
188
1,003
4,196
7.9%
1.8%
214
930
DKK million
Sales
Change in DKK (%)
Change in local currencies (%)
Property, plant and equipment
Total assets
2010
2009
2008
Total
51,078
12.1%
10.6%
19,226
54,742
60,776
19.0%
13.0%
20,507
61,402
45,553
8.9%
12.2%
18,639
50,603
2) As at 1 January 2010, Korea joined Japan to form Region Japan & Korea, while Australia and New Zealand became part of
Region International Operations. The historical fi gures for 2009 and 2008 have been restated and are comparable to the 2010 regional
set-up.
68 Novo Nordisk Annual Report 2010
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3 Gross-to-net sales reconciliation
5 Fee to statutory auditors
DKK million
Gross sales
US Medicaid and Medicare rebates
US managed healthcare rebates
US wholesaler charge-backs
Non-US healthcare plans and
programme rebates
Sales returns and discounts
2010
2009
2008
DKK million
2010
2009
2008
75,811
62,459
54,532
(4,124)
(2,494)
(4,994)
(2,447)
(2,121)
(3,720)
(1,672)
(1,543)
(2,949)
(543)
(2,880)
(431)
(2,662)
(350)
(2,465)
Statutory audit
Audit-related services
Tax advisory services
Other services
Total fee to statutory auditors
25
6
15
4
50
25
6
13
3
47
25
4
16
1
46
Total gross-to-net sales adjustments
(15,035)
(11,381)
(8,979)
6 Depreciation, amortisation and impairment losses
Total net sales
60,776
51,078
45,553
DKK million
2010
2009
2008
4 Employee costs
DKK million
2010
2009
2008
Included in the Income statement:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses
1,832
60
460
115
1,851
43
528
129
1,831
38
473
100
14,520
13,231
11,959
Total depreciation, amortisation and
impairment losses
2,467
2,551
2,442
Wages and salaries
Share-based payment costs
(refer to note 28)
Pensions – defi ned contribution plans
Pensions – retirement benefi t
obligations (refer to note 21)
Other contributions to social security
Other employee costs
463
1,052
210
1,067
1,510
259
958
152
898
1,332
331
871
128
756
1,240
Total employee costs for the year
18,822
16,830
15,285
Change in employee costs included
in assets under construction
Change in employee costs included
in inventories
Total employee costs expensed
in the Income statement
(559)
(485)
(449)
76
(21)
(146)
18,339
16,324
14,690
Included in the Income statement:
Cost of goods sold
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income
4,006
7,240
3,697
2,059
1,337
3,952
6,063
3,218
1,811
1,280
3,676
5,083
3,040
1,654
1,237
Total included in the Income statement
18,339
16,324
14,690
Employee costs related to NNE Pharmaplan and NNIT are included in the
schedule of total employee costs, whereas in previous years they were
stated outside the schedule. Comparatives for 2009 and 2008 have been
included in the schedule accordingly.
Average number of full-time equivalents
Year-end number of full-time equivalents
29,423
30,014
27,985
28,809
26,069
26,575
DKK million
2010
2009
2008
Remuneration to Executive
Management amounts to:
Salary
Pension
Other benefi ts
Total
32
8
1
41
30
8
1
39
31
7
2
40
Share-based payments are allocated in the joint pool with other members
of the Senior Management Board. Please refer to the ‘Remuneration report’
in the section Corporate governance, remuneration and leadership,
pp 46 – 49, for further information on remuneration to the Board of
Directors and Executive Management.
7 Financial income
DKK million
2010
2009
2008
Interest income
Foreign exchange gain (net)
Foreign exchange gain on
derivatives (net)
Gains on currency options (net)
Foreign exchange gain on
derivatives transferred from Other
comprehensive income (net)
235
86
61
–
–
313
62
–
–
–
631
–
105
34
357
Total fi nancial income
382
375
1,127
8 Financial expenses
DKK million
2010
2009
2008
Interest expenses 1)
Foreign exchange loss (net)
Foreign exchange loss on
derivatives (net)
Loss on currency options (net)
Capital loss on investments etc
Other fi nancial expenses
Foreign exchange loss on
derivatives transferred from Other
comprehensive income (net)
500
–
–
82
23
46
384
–
95
56
16
52
1,406
662
Total fi nancial expenses
2,057
1,265
246
355
–
–
28
52
–
681
1) Interest expenses include interest on tax cases ongoing or settled during the year.
Novo Nordisk Annual Report 2010 69
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9 Taxes
DKK million
Current tax on profi t for the year
Deferred tax on profi t for the year (refer to note 20)
Tax on profi t for the year
Adjustments related to previous years – current tax
Adjustments related to previous years – deferred tax
Income taxes in the Income statement
Computation of effective tax rate:
Statutory corporate income tax rate in Denmark
Deviation in foreign subsidiaries’ tax rates compared to the Danish tax rate (net)
Non-tax income less non-tax-deductible expenses (net)
Other
Effective tax rate
2010
2009
3,477
495
3,972
504
(593)
2,382
840
3,222
(54)
52
3,883
3,220
2008
2,233
851
3,084
(218)
184
3,050
25.0%
(2.5%)
(1.2%)
(0.1%)
25.0%
(2.2%)
0.2%
0.0%
25.0%
(0.3%)
(0.4%)
(0.3%)
21.2%
23.0%
24.0%
Tax on Other comprehensive income for the year, (income)/expense (refer to note 20)
(346)
25
(81)
Tax on Other comprehensive income for the year relates to tax on deferred (gains)/losses on cash fl ow hedges etc.
10 Earnings per share and dividend
DKK million
Net profi t for the year
2010
2009
2008
14,403
10,768
9,645
Average number of shares outstanding
Dilutive effect of outstanding share bonus pool and options ‘in the money’ 1)
in 1,000 shares
in 1,000 shares
580,438
5,039
599,197
5,126
615,780
4,947
Average number of shares outstanding including dilutive effect of options ‘in the money’
in 1,000 shares
585,477
604,323
620,727
Basic earnings per share 1)
Diluted earnings per share 1)
DKK
DKK
24.81
24.60
17.97
17.82
15.66
15.54
1) For further information on outstanding share bonus pool and options, refer to notes 28 and 29.
Dividend
At the end of 2010, proposed dividends (not yet declared) of DKK 5,700 million (DKK 10.00 per share) are included in Retained earnings.
The declared dividend included in Retained earnings was DKK 4,400 million (DKK 7.50 per share) and DKK 3,650 million (DKK 6.00 per share) in 2009 and
2008 respectively. No dividend is declared on treasury shares.
70 Novo Nordisk Annual Report 2010
11 Intangible assets
DKK million
2010
Cost at the beginning of the year
Additions during the year
Disposals during the year
Effect of currency translation
Cost at the end of the year
Amortisation and impairment losses at the beginning of the year
Amortisation for the year
Amortisation and impairment losses reversed on disposals during the year
Effect of currency translation
Amortisation and impairment losses at the end of the year
Carrying amount at the end of the year
2009
Cost at the beginning of the year
Additions during the year
Disposals during the year
Effect of currency translation
Cost at the end of the year
Amortisation and impairment losses at the beginning of the year
Amortisation for the year
Impairment losses for the year
Amortisation and impairment losses reversed on disposals during the year
Effect of currency translation
Amortisation and impairment losses at the end of the year
Carrying amount at the end of the year
1) Includes primarily internally developed software and costs related to major IT projects.
Goodwill
Patents and
licences etc
Other
intangible
assets 1)
928
148
(2)
16
727
339
(40)
26
1,090
1,052
139
–
(4)
–
135
65
–
–
–
65
70
136
3
–
–
139
65
–
–
–
–
65
74
283
31
(1)
7
320
770
700
277
(49)
–
928
219
21
92
(49)
–
283
645
Total
1,794
487
(46)
42
2,277
757
80
(41)
23
819
409
49
(40)
16
434
618
1,458
609
113
(6)
11
727
373
40
–
(6)
2
409
1,445
393
(55)
11
1,794
657
61
92
(55)
2
757
318
1,037
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Impairment tests in 2010 and 2009 were based upon Management’s projections and anticipated net present value of future cash fl ows from cash-
generating units. Management has used a discount rate (WACC) pre tax of 9% based on the risk inherent in the related activity’s current business model
and industry comparisons. Terminal values used are based on the expected life of products, forecast life cycle and forecast cash fl ow over that period
and the useful life of the underlying assets. No material impairment losses have been recognised during 2010 and 2009.
Novo Nordisk Annual Report 2010 71
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12 Property, plant and equipment
DKK million
2010
Cost at the beginning of the year
Additions during the year
Disposals during the year
Transfer from/(to) other items
Effect of currency translation
Cost at the end of the year
Land and
buildings
Plant and
machinery
Other
equipment
Total
Payments on
account and
assets in
course of
construction
12,855
142
(35)
372
264
16,709
394
(830)
727
243
2,740
146
(156)
76
55
2,907
2,694
–
(1,175)
90
35,211
3,376
(1,021)
–
652
13,598
17,243
2,861
4,516
38,218
Depreciation and impairment losses at the beginning of the year
Depreciation for the year
Impairment losses for the year
Depreciation and impairment losses reversed on disposals during the year
Effect of currency translation
4,387
581
37
(29)
72
9,913
1,453
30
(708)
118
1,685
285
1
(145)
31
Depreciation and impairment losses at the end of the year
5,048
10,806
1,857
–
–
–
–
–
–
15,985
2,319
68
(882)
221
17,711
Carrying amount at the end of the year
8,550
6,437
1,004
4,516
20,507
2009
Cost at the beginning of the year
Additions during the year
Disposals during the year
Transfer from/(to) other items
Effect of currency translation
Cost at the end of the year
12,280
232
(81)
190
234
15,699
259
(129)
615
265
2,620
179
(118)
54
5
1,789
1,962
–
(859)
15
32,388
2,632
(328)
–
519
12,855
16,709
2,740
2,907
35,211
Depreciation and impairment losses at the beginning of the year
Depreciation for the year
Impairment losses for the year
Depreciation and impairment losses reversed on disposals during the year
Effect of currency translation
3,792
528
100
(73)
40
8,471
1,418
52
(105)
77
1,486
297
3
(101)
–
Depreciation and impairment losses at the end of the year
4,387
9,913
1,685
–
–
–
–
–
–
13,749
2,243
155
(279)
117
15,985
Carrying amount at the end of the year
8,468
6,796
1,055
2,907
19,226
13 Investments in associated companies
DKK million
2010
2009
2008
Carrying amount at the beginning of the year
Investments during the year
Transfers to Other non-current fi nancial assets
Divestments during the year
Share of profi t/(loss) recognised in the Income statement
Impairments
Dividend received
Other equity movements
Carrying amount at the end of the year
Share of profi t/(loss)
Impairments
Gain from divestment of shares in ZymoGenetics, Inc.
Transfer of share of Other comprehensive income of ZymoGenetics, Inc.
Currency translation
Total share of profi t/(loss) of associated companies, net of tax
176
38
(68)
(70)
38
(63)
(8)
–
43
38
(63)
1,056
36
3
1,070
222
15
–
–
(55)
–
(18)
12
176
(55)
–
–
–
–
(55)
500
–
–
(18)
(124)
–
(170)
34
222
(124)
–
–
–
–
(124)
In 2010, Novo Nordisk sold its 22,143,320 shares in ZymoGenetics, Inc. at a price of USD 9.75 per share. The sale resulted in a non-recurring income of
DKK 1,092 million. The income from the transaction is exempt from tax charges under applicable Danish tax laws. Also during 2010, Novo Nordisk
transferred Innate Pharma SA to Other non-current fi nancial assets as Novo Nordisk no longer holds signifi cant infl uence. Carrying amount of investments
at the end of the year of DKK 43 million relates to Harno Invest A/S (formerly Dako A/S) only. Public accounting information for 2010 are not yet available.
In 2009, the associated companies realised DKK 170 million in sales and generated a net loss of DKK 598 million. At 31 December 2009, total assets
amounted to DKK 2,168 million, whereas total liabilities amounted to DKK 1,772 million.
72 Novo Nordisk Annual Report 2010
14 Financial assets and liabilities
DKK million
Assets at the end of the year
2010
Available-for-sale fi nancial assets
– Other non-current fi nancial assets (equity investments)
– Marketable securities (bonds) 1)
Financial assets measured at fair value through the Income statement
– Derivative fi nancial instruments (refer to note 30)
Loans and receivables
– Other non-current fi nancial assets
– Trade receivables (refer to note 16)
– Other current assets less prepayments (refer to note 17)
– Cash at bank and in hand
Equity
investments
Maturity
< 1 year
Maturity
> 1 year
< 5 years
Maturity
> 5 years
Total
216
3,174
108
8,500
1,786
12,017
752
38
216
3,926
108
38
8,500
1,786
12,017
Total
216
25,585
752
38
26,591
2009
Available-for-sale fi nancial assets
– Other non-current fi nancial assets (equity investments)
– Marketable securities (bonds) 1)
Financial assets measured at fair value through the Income statement
– Derivative fi nancial instruments (refer to note 30)
Financial assets measured at fair value through Other comprehensive income
– Derivative fi nancial instruments (refer to note 30)
Loans and receivables
– Other non-current fi nancial assets
– Trade receivables (refer to note 16)
– Other current assets less prepayments (refer to note 17)
– Cash at bank and in hand
145
500
44
506
7,063
1,271
11,296
513
55
(88)
37
145
1,013
99
418
37
7,063
1,271
11,296
Total
145
20,680
480
37
21,342
1) Danish AAA-rated mortgage bonds issued by Danish credit institutions governed by the Danish Financial Supervisory Authority. Redemption yield on the bond portfolio is 1.05%
(1.79% in 2009). Nominal EUR 9 million (DKK 69 million) of Greek zero-coupon state bonds related to the settlement in 2010 of overdue hospital accounts receivables is included.
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m
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a
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DKK million
Liabilities at the end of the year
2010
Financial liabilities measured at amortised cost
– Non-current debt (refer to note 19)
– Current debt (refer to note 23)
– Trade payables
– Other current liabilities less taxes and duties payable (refer to note 24)
Financial liabilities measured at fair value through the Income statement
– Derivative fi nancial instruments (refer to note 30)
Financial liabilities measured at fair value through Other comprehensive income
– Derivative fi nancial instruments (refer to note 30)
Total
2009
Financial liabilities measured at amortised cost
– Non-current debt (refer to note 19)
– Current debt (refer to note 23)
– Trade payables
– Other current liabilities less taxes and duties payable (refer to note 24)
Financial liabilities measured at fair value through the Income statement
– Derivative fi nancial instruments (refer to note 30)
Financial liabilities measured at fair value through Other comprehensive income
– Derivative fi nancial instruments (refer to note 30)
Total
Maturity
< 1 year
Maturity
> 1 year
< 5 years
Maturity
> 5 years
Total
145
359
359
12,766
563
407
504
562
2,906
7,636
446
712
970
263
2,242
6,551
122
33
562
2,906
7,636
438
582
12,124
263
2,242
6,551
56
15
9,127
8
130
283
66
18
647
407
10,181
For a description of the credit quality of fi nancial assets such as Trade receivables, Cash at bank and in hand and Current debt and Derivative fi nancial
instruments, refer to notes 27 and 30.
Novo Nordisk Annual Report 2010 73
14 Financial assets and liabilities (continued)
Financial assets and liabilities that are measured in the Balance sheet at fair value can be categorised by the following fair value measurement hierarchy:
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a
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a
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i
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–
s
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DKK million
2010
Available-for-sale fi nancial assets
Other non-current fi nancial assets (equity investments)
Marketable securities (bonds)
Financial assets at fair value through the Income statement
Derivative fi nancial instruments
Total assets
Financial liabilities at fair value through the Income statement
Derivative fi nancial instruments
Total liabilities
2009
Available-for-sale fi nancial assets
Other non-current fi nancial assets (equity investments)
Marketable securities (bonds)
Financial assets at fair value through the Income statement
Derivative fi nancial instruments
Total assets
Financial liabilities at fair value through the Income statement
Derivative fi nancial instruments
Total liabilities
Active
market
data 1)
Directly or
indirectly
observable
market
data 2)
Not based on
observable
market
data 3)
Total
216
3,926
108
159
159
4,250
–
137
1,158
1,158
145
1,013
517
137
1,675
155
155
–
57
3,926
3,983
–
8
1,013
1,021
–
108
108
1,158
1,158
517
517
155
155
1) The fair value of fi nancial instruments traded in active markets is based on quoted market prices at the balance sheet date. The quoted market price used for fi nancial assets
held by the Group is the current bid price.
2) The fair value of fi nancial instruments that are not traded in an active market (ie over-the-counter derivatives) is determined using valuation techniques.
3) If there are no observable market data available (ie unlisted equity investments), the instrument is included in the latter category.
The following table presents the changes in the category ‘Not based on observable market data’ for the year ended 31 December 4).
DKK million
Other non-current fi nancial assets (equity investments)
Balance at the beginning of the year
Total gains/(losses) recognised in the Income statement, fi nancial income/expenses
Purchases
Balance at the end of the year
2010
2009
137
(12)
34
159
153
(33)
17
137
4) There were no transfers between the categories ‘Active market data’ and ‘Directly or indirectly observable market data’ during 2010 or 2009.
74 Novo Nordisk Annual Report 2010
15 Inventories
DKK million
Raw materials
Work in progress
Finished goods
Total inventories (gross)
Inventory write-downs at year-end
Total inventories
1,378
6,344
3,268
1,290
7,254
2,196
10,990
10,740
1,301
724
9,689
10,016
Indirect production costs included in work
in progress and fi nished goods
5,090
5,046
The movements in the inventory write-downs
can be specifi ed as follows:
Inventory write-downs at the beginning of the year
Utilisation of inventory write-downs
Reversal of inventory write-downs
Inventory write-downs net for the year
724
(139)
(116)
832
1,038
(513)
(115)
314
Inventory write-downs at the end of the year
1,301
724
16 Trade receivables
DKK million
Trade receivables (gross)
Allowances at the end of the year
Trade receivables (net)
Trade receivables (net) are equal to an average
credit period of 51 days (50 days in 2009).
Trade receivables can be specifi ed as follows:
Non-impaired trade receivables
– Not yet due
– Overdue by between 1 and 179 days
– Overdue by between 180 and 359 days
– Overdue by more than 360 days
Total exposure to credit risk
Trade receivables allowances
Trade receivables (gross)
Allowances for doubtful receivables can be
specifi ed as follows:
Carrying amount at the beginning of the year
Confi rmed losses
Reversal of allowances for possible losses
Allowances for possible losses for the year
Effect of currency translation
Carrying amount at the end of the year
2010
2009
9,127
627
7,663
600
8,500
7,063
7,425
727
128
220
5,801
678
452
132
8,500
7,063
627
600
9,127
7,663
600
(14)
(141)
164
18
627
602
(20)
(32)
74
(24)
600
17 Other current assets
2010
2009
DKK million
2010
2009
Prepayments 1)
Interest receivable
Amounts owed by affi liated companies
Rent deposit
VAT receivable
Other receivables 2)
617
97
111
455
474
649
691
83
118
344
125
601
Total other current assets
2,403
1,962
1) Comprises prepayments to ongoing research and development activities and
payments made concerning subsequent fi nancial years etc.
2) Other receivables comprise miscellaneous duties and work in progress for third
parties etc.
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a
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N
Novo Nordisk Annual Report 2010 75
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18 Share capital
DKK million
Development in share capital:
2006 and before
2007
2008
2009
At the beginning of the year
2010
At the end of the year
A share
capital
B share
capital
Total share
capital
107
–
–
–
107
–
107
567
(27)
(13)
(14)
513
(20)
493
674
(27)
(13)
(14)
620
(20)
600
At the end of 2010, the share capital amounted to DKK 107,487,200 in A share capital (equal to 107,487,200 A shares of DKK 1) and DKK 492,512,800
in B share capital (equal to 492,512,800 B shares of DKK 1).
Treasury shares
Market value
DKK million
As % of share
capital before
cancellation
As % of share
capital after
cancellation
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
Holding at the end of the year
5.18%
(3.23%)
1.95%
10,670
(6,640)
4,030
9,498
(678)
4,892
17,742
2010
Number of
B Shares
of DKK 1
2009
Number of
B Shares
of DKK 1
32,137,945
(20,000,000)
25,721,095
(14,000,000)
2.02%
3.26%
(0.58%)
12,137,945
19,534,528
(3,465,718)
–
11,721,095
21,661,949
(1,245,099)
–
4.70%
28,206,755
32,137,945
Acquisition of treasury shares during the year relates to the DKK 9.5 billion share repurchase programmes for 2010 of Novo Nordisk B shares. The purpose of
the programme was a reduction of the company’s share capital. Sale of treasury shares relates to exercised share options, employee share savings programme
and employee shares.
At the end of the year, 6,255,365 shares of the treasury B shareholding are regarded as hedges for the share-based incentive schemes and restricted stock
awards to employees.
19 Non-current debt
DKK million
Mortgage debt and other secured loans 1)
Unsecured loans and other non-current loans
Total non-current debt
The debt is denominated in the following currencies:
DKK
EUR
USD
Total non-current debt
2010
2009
504
–
504
2
502
–
504
503
467
970
2
501
467
970
Adjustment of the above loans to market value at year-end 2010 would result in a loss of DKK 4 million (a loss of DKK 22 million at year-end 2009).
1) Terms to maturity between 2016 and 2022 and a weighted average interest rate of 1.34%.
76 Novo Nordisk Annual Report 2010
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20 Deferred income tax assets and liabilities
DKK million
At the beginning of the year
Deferred tax on profi t for the year (refer to note 9)
Adjustment relating to previous years
Deferred tax on items recognised in Other comprehensive income (refer to note 9)
Effect of currency translation
Total deferred tax assets/(liabilities), net
2010
2009
(1,555)
(495)
593
346
93
(708)
(840)
(52)
(14)
59
(1,018)
(1,555)
DKK million
Specifi cation
The deferred tax assets and liabilities are allocated
to the various items in the Balance sheet as follows:
Property, plant and equipment
Intangible assets
Indirect production costs
Unrealised profi t on intra-Group sales
Provisions for doubtful trade receivables
Tax-loss carry-forward
Other
Assets
Liabilities
2010
Total
Assets
Liabilities
189
549
–
2,703
49
113
478
4,081
(1,468)
(4)
(1,272)
–
–
–
(2,355)
(1,279)
545
(1,272)
2,703
49
113
(1,877)
(5,099)
(1,018)
165
475
–
2,106
101
44
288
3,179
(1,432)
(5)
(1,262)
–
–
–
(2,035)
(4,734)
(1,555)
2009
Total
(1,267)
470
(1,262)
2,106
101
44
(1,747)
Netting of deferred tax assets and deferred tax liabilities related to
income taxes for which there is a legally enforceable right to offset
(2,234)
2,234
0
(1,724)
1,724
0
Total deferred tax assets/(liabilities), net
1,847
(2,865)
(1,018)
1,455
(3,010)
(1,555)
Tax losses carried forward
Further to the above, the tax value of tax losses carried forward of DKK 176 million (DKK 285 million in 2009) has not been recognised in the Balance sheet
due to the likelihood that the tax losses will not be realised in the future.
21 Retirement benefi t obligations
Most employees in the Group are covered by post-employment retirement plans primarily in the form of defi ned contribution plans but in a few cases in the
form of defi ned benefi t 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, fi scal requirements and economic conditions of the countries in which the employees are employed, and
the benefi ts 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.
The Group’s defi ned benefi t plans are primarily located in Japan, Germany, the United States and Switzerland. Post-employment benefi t 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 Balance sheet. In accordance with the Accounting policies, the costs recognised for post-employment benefi ts are included
in Cost of goods sold, Sales and distribution costs, Research and development costs and Administrative expenses.
Other post-employment benefi ts consist mostly of post-retirement healthcare plans, principally in the United States. The following shows a fi ve-year summary
refl ecting the funding of retirement obligations and the impact of historical deviations between expected and actual return on plan assets and actuarial
adjustments on plan liabilities:
DKK million
Retirement benefi t obligations
Fair value of plan assets
(Over)/under funding
Unrecognised actuarial gains/(losses) 1)
Net retirement benefi t obligations recognised in the Balance sheet
2010
2009
2008
2007
2006
1,452
(766)
686
(117)
569
1,063
(620)
443
13
456
1,103
(649)
454
(35)
419
885
(566)
319
43
362
938
(495)
443
(113)
330
1) Actuarial (gains)/losses on plan assets and plan liabilities for the year are predominantly related to actuarial adjustments while experience adjustments are immaterial.
Novo Nordisk Annual Report 2010 77
21 Retirement benefi t obligations (continued)
DKK million
2010
2009
DKK million
2010
2009
Pension
plans
Medical
benefi ts
Total
Total
Changes in the retirement
benefi t obligations
At the beginning of the year
Current service costs
Interest cost
Actuarial (gains)/losses
Past service costs
Benefi ts paid
Curtailments
Settlements
Effect of currency translation
Other
832
99
35
92
(1)
(29)
96
14
231
38
15
15
(3)
19
(1)
1,063
137
50
107
(1)
(32)
–
–
115
13
1,103
118
45
(29)
(4)
(53)
(2)
(104)
(3)
(8)
At the end of the year
1,138
314
1,452
1,063
Costs recognised in the Income statement
for the year
Current service costs
Interest cost on pension obligation
Expected return on plan assets 1)
Actuarial (gains)/losses
Curtailment/settlement gains
Past service costs
Effect of currency translation
Other
Total charge to the Income statement
1) Actual return on plan assets was DKK 13 million in 2010
(a loss of DKK 6 million in 2009).
The costs are recognised in the Income statement
as employee costs by function and consist of:
Defi ned benefi t pension plans
Post-employment medical benefi ts
DKK million
2010
2009
Total charge to the Income statement
137
50
(26)
(11)
–
–
53
7
210
118
45
(20)
30
(20)
(1)
–
–
152
137
73
210
107
45
152
Changes in the fair value of plan assets
At the beginning of the year
Expected return on plan assets
Actuarial gains/(losses)
Employer contributions
Benefi ts paid to employees
Curtailments
Settlements
Effect of currency translation
Other
At the end of the year
620
26
(13)
84
(19)
–
–
62
6
766
649
20
(14)
68
(40)
3
(67)
1
–
620
DKK million
2010
2009
The Group expects to contribute DKK 73 million to its defi ned benefi t
plans in 2011 (actual DKK 84 million in 2010).
2010
DKK
million
%
DKK
million
522
83
88
63
10
68%
11%
12%
8%
1%
434
57
68
59
2
2009
%
70%
9%
11%
10%
0%
Weighted average asset
allocation of funded
retirement obligations
Coverage insurance 2)
Equities
Bonds
Cash at bank
Property
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Total
766
100%
620
100%
1,070
(766)
832
(620)
2) Novo Nordisk’s defi ned benefi t payments in Germany and Switzerland are re-
imbursed by Allianz regardless of the value of the plan assets. The only risk related
to the pension in these countries is therefore counterparty risk against Allianz.
Net retirement benefi t obligations
recognised in the Balance sheet
Present value of funded retirement
benefi t obligations
Fair value of plan assets
Net retirement benefi t obligations funded
Present value of unfunded retirement
benefi t obligations
(Over)/underfunding
Unrecognised actuarial gains/(losses)
on pension plans (net)
Unrecognised actuarial gains/(losses)
on post-employment medical benefi ts (net)
Unrecognised past service costs
Net retirement benefi t obligation
304
382
686
212
231
443
(144)
(26)
24
3
37
2
569
456
Amount recognised in the Balance sheet is reported as Non-current debt.
DKK million
2010
2009
Changes in net retirement benefi t obligations
At the beginning of the year
Recognised in the Income statement
Employer contributions
Benefi t paid to employees (net)
Settlements
Curtailments
Currency translation
At the end of the year
456
210
(84)
(13)
–
–
–
569
419
152
(68)
(13)
(37)
7
(4)
456
78 Novo Nordisk Annual Report 2010
DKK million
2010
2009
The assumptions used for valuation of
defi ned benefi t plans and post-employment
medical benefi ts are as follows
Discount rate
Projected return on plan assets
Projected future remuneration increases
Healthcare cost trend rate
Infl ation rate
4%
3%
2%
5%
2%
4%
3%
3%
6%
2%
Actuarial valuations are performed annually for all major defi ned benefi t
plans. The overall expected rate of return is determined based on low-risk
investments in bonds in the relevant currencies.
The effect of a 1 percentage point increase or decrease in the medical cost
trend rate is shown below. The Group’s major post-employment medical
plans are for US employees.
DKK million
2010
2009
Increase
Decrease
Increase
Decrease
Current service and
interest cost
Defi ned benefi t obligation
3
20
(4)
(22)
2
13
(3)
(14)
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a
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fi
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a
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s
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a
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a
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a
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22 Provisions for other liabilities
DKK million
At the beginning of the year
Additional provisions, including increases to existing provisions
Amount used during the year
Adjustments, including unused amounts reversed during the year
Effect of currency translation
At the end of the year
Specifi cation of other provisions:
Non-current
Current
Total provisions for other liabilities
2009
Total
3,786
5,501
(4,738)
(147)
(4)
Provisions
for product
returns 1)
Provisions
for sales
rebates
Other
provisions 2)
2010
Total
588
186
(241)
(32)
33
534
319
215
534
2,623
7,197
(5,491)
(179)
214
1,187
738
(182)
(10)
36
4,398
8,121
(5,914)
(221)
283
4,364
1,769
6,667
4,398
–
4,364
4,364
1,704
65
1,769
2,023
4,644
6,667
1,157
3,241
4,398
1) 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.
2) Other provisions consist of various types of provisions, including employee benefi ts like jubilee benefi ts and provisions for legal disputes, which represent Management’s best
estimate. Please refer to note 31 for further information on commitments and contingencies.
23 Current debt and derivative fi nancial instruments
26 Cash and cash equivalents
DKK million
2010
2009
DKK million
2010
2009
2008
Cash at bank and in hand
Bank overdrafts (refer to note 23)
12,017
(57)
11,296
(262)
8,781
(55)
Cash and cash equivalents
at the end of the year
11,960
11,034
8,726
Bank overdrafts
Loans
Derivative fi nancial instruments
Total current debt and derivative
fi nancial instruments
24 Other current liabilities
DKK million
Employee costs payable
Taxes and duties payable
Other payables 1)
Total other current liabilities
57
505
1,158
262
–
156
1,720
418
2010
2009
3,042
318
4,594
2,742
262
3,809
7,954
6,813
1) Other payables primarily consist of accruals related to ongoing research and develop-
ment clinical trials, royalty payments, deferred income and interest accruals etc.
25 Other adjustments for non-cash items
DKK million
2010
2009
2008
Share-based payment costs
(refer to note 28)
Increase/(decrease) in provisions
and benefi t obligations
(Gains)/losses from sale of property,
plant and equipment
Change in allowances for doubtful
trade receivables (refer to note 16)
Unrealised (gain)/loss on equity
investments and bonds etc
Unrealised foreign exchange (gain)/loss
Share of (profi t)/loss in associated
companies (refer to note 13)
Other, including difference between
average exchange rate and year-end
exchange rate
463
2,382
71
41
259
649
(3)
18
(43)
(467)
21
(253)
331
221
95
69
30
24
(1,070)
55
124
457
Other adjustments for non-cash items
1,834
113
859
(280)
614
Novo Nordisk Annual Report 2010 79
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27 Financial risk
Novo Nordisk has centralised the management of the Group’s fi nancial
risks. The overall objectives and policies for the company’s fi nancial risk
management are outlined in an internal 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 fi nancial instruments and risk limits.
DKK million
2010
Other comprehensive income
Income statement
Total
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 fi nancial positions. All positions are marked-to-market based on
real-time quotes and risk is assessed using generally accepted standards.
2009
Other comprehensive income
Income statement
Total
5% increase in all
currencies against
DKK and EUR
5% decrease in all
currencies against
DKK and EUR
(862)
93
(769)
(878)
(49)
(927)
893
(38)
855
879
98
977
Foreign exchange risk
Foreign exchange risk is the principal fi nancial risk for Novo Nordisk and
as such has a signifi cant impact on the Income statement and Other com-
prehensive income, the Balance sheet and the Statement of cash fl ows.
The bulk of Novo Nordisk’s sales are in EUR, USD, JPY, CNY and GBP, while
most production, research and development costs are carried in DKK. Con-
sequently, Novo Nordisk’s foreign exchange risk is most signifi cant in USD,
JPY, CNY and GBP, while the EUR exchange rate risk is regarded as low due
to the Danish fi xed-rate policy towards EUR.
The overall objective of foreign exchange risk management is to limit any
short-term negative impact on earnings and cash fl ow from exchange rate
fl uctuations, thereby increasing the predictability of the fi nancial results.
Novo Nordisk hedges existing assets and liabilities in major currencies as
well as future expected cash fl ows 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 fl ows
are continually assessed using historical infl ows, budgets and monthly
sales forecasts. Hedge effectiveness is assessed on a regular basis.
In 2010, the USD, the JPY, the CNY and the GBP appreciated by 8.1%,
22.6%, 11.8% and 5.3% versus the DKK respectively. In 2009, the USD,
the JPY and the CNY depreciated by 1.8%, 3.9% and 1.7% versus the DKK
respectively, whereas the GBP appreciated by 7.6% versus the DKK.
Key currencies:
Exchange rate
DKK per 100
2010
average
2009
2010
average end of year
2009
end of year
USD
JPY
CNY
GBP
562
6.42
83
869
536
5.73
78
836
561
6.89
85
867
519
5.62
76
823
At year-end 2010, Novo Nordisk covered the foreign exchange exposures
on the Balance sheet together with 15 months of expected future cash
fl ow in USD. For JPY, CNY and GBP, the equivalent cover was 14 months,
12 months and 10 months respectively. At the end of 2009, the USD and
CNY cover was 17 months, and for JPY and GBP the cover was 15 months
and 14 months respectively.
Foreign exchange sensitivity analysis
A 5% increase/decrease in the following currencies will impact Novo
Nordisk’s operating profi t as outlined in the table below:
DKK million
USD
JPY
CNY
GBP
Estimated for
2011
620
155
120
85
2010
580
150
100
80
The table below shows the effect on the fi nancial instruments if all other cur-
rencies increased by 5% and decreased by 5% respectively versus EUR and
DKK at the end of 2010 and at the end of 2009.
80 Novo Nordisk Annual Report 2010
The lower foreign exchange sensitivities in 2010, compared to 2009, are
primarily a result of lower hedging covers as described in the above.
The fi nancial instruments included in the foreign exchange sensitivity
analysis are the Group’s:
• Cash,
• Accounts receivable and Accounts payable,
• Current and non-current loans,
• Current and non-current fi nancial investments,
• Foreign exchange forwards and Foreign exchange options hedging
transaction exposure,
• Interest rate swaps and Cross-currency swaps
Not included are anticipated currency transactions, investments and fi xed
assets.
Novo Nordisk only hedges invested equity in major foreign affi liates to a
very limited extent. Equity hedging takes place using long-term cross-
currency swaps. At the end of 2010, hedged equity constituted 15% of
the Group’s JPY equity. At the end of 2009, 16% of the Group’s JPY equity
was hedged.
Interest rate risk
In general, DKK and EUR interest rates declined in 2010. The Danish two-
year interest rate was 1.8% at the end of 2010, down from 2.42% at the
end of 2009. The three-month Cibor interest rate was 1.21% at the end
of 2010, down from 1.55% in 2009.
Changes in interest rates affect Novo Nordisk’s fi nancial instruments. At
the end of 2010, an increase in the interest rate level of 1 percentage point
would, all else being equal, decrease the fair value of Novo Nordisk’s fi nan-
cial instruments by DKK 8 million (increase the fair value by DKK 19 million
in 2009).
The fi nancial instruments included in the sensitivity analysis consist of
Marketable securities, Deposits, Current and non-current loans, Interest rate
swaps and Cross-currency swaps. Not included are Foreign exchange for-
wards and Foreign exchange options due to the limited effect that a parallel
shift in interest rates in all currencies has on these instruments.
Liquidity risk
Novo Nordisk ensures availability of required liquidity through a com-
bination of cash management, highly liquid investment portfolios and
uncom mitted as well as committed facilities. Novo Nordisk uses cash pools
for optimisation and centralisation of cash management. For non-cash
pool affi liates, surplus cash above the balance required for working capital
manage ment is deposited with the Parent company, which invests surplus
cash in money market deposits and marketable securities.
Counterparty risk
The use of derivatives and money market deposits gives rise to counterparty
exposure. To manage counterparty credit risk, Novo Nordisk only enters
into derivative fi nancial contracts and money market deposits with fi nancial
counterparties possessing a satisfactory long-term credit rating from both
Standard and Poor’s and Moody’s. Currently, all of Novo Nordisk’s signifi -
cant fi nancial counterparties have a long-term credit rating in the AA or the
A category. Furthermore, maximum credit lines defi ned for each counter-
party limit the overall counterparty risk.
The credit risk on bonds is limited as investments are made in highly liquid
bonds with solid credit ratings.
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27 Financial risk (continued)
Credit risk on Trade receivables and Other current assets is limited as Novo
Nordisk has no signifi cant concentration of credit risk, with exposure being
spread over a large number of counterparties and customers.
Capital structure
Novo Nordisk’s capital structure is characterised by a substantial equity
ratio. This is in line with the general capital structure of the pharma ceutical
industry and refl ects the inherent long-term investment horizons in an
industry with typically more than 10 years’ development time for pharma-
ceutical products. Novo Nordisk’s equity ratio, calculated as equity to total
liabilities, was 60.2% at the end of the year (65.3% at the end of 2009).
For 2008, this group consisted of about 590 employees. The allocation to
the joint pool was DKK 181 million, corresponding to 570,390 shares. The
cost of this allocation will be amortised over the period 2008 –2011.
For 2009, this group consisted of about 675 employees. The allocation to
the joint pool was DKK 186 million, corresponding to 605,218 shares. The
cost of this allocation will be amortised over the period 2009 –2012.
For 2010, this group consisted of about 700 employees. The allocation to
the joint pool was DKK 208 million, corresponding to 548,936 shares. The
cost of this allocation will be amortised over the period 2010 –2013.
The total number of shares in the joint pools relating to the years 2008,
2009 and 2010 is as follows:
28 Share-based payment schemes
DKK million
2010
2009
2008
Employee shares
Long-term share-based incentive
programme (Senior Management Board)
Long-term share-based incentive
programme and share options
(management group below
Senior Management Board) 1)
241
64
49
54
171
55
158
156
105
Share-based payment expensed in the
Income statement
463
259
331
1) Includes long-term share-based incentive programme for 2007 to 2010 and share
option programme for 2005 and 2006.
Employee shares
In 2010, a general employee share programme was implemented in Den-
mark. Approximately 11,000 employees have purchased 567,000 shares at
a price of DKK 275 per share.
Outside Denmark the programme is structured as share options with the
same initial benefi t per employee as in Denmark. Approximately 15,000
employees have been granted share options and it is estimated that
approximately 273,000 share options will be exercised when the options
vest in three years.
Long-term share-based incentive programme
For a description of the programme, please refer to the Remuneration
report’ in the section Corporate governance, remuneration and leadership,
pp 46 – 49.
The Board of Directors on 1 February 2011 approved the establishment of a
joint pool, for members of the Senior Management Board, for the fi nancial
year 2010 by allocating a total of 169,025 Novo Nordisk B shares. This
allo cation amounts to eight months of fi xed base salary plus pension con-
tribution on average per participant, corresponding to a value at launch
of the programme of DKK 64 million. This amount was expensed in 2010.
The share price used for the conversion was the average share price
(DKK 379) for Novo Nordisk B shares on NASDAQ OMX Copenhagen from
2–16 February 2010. Based on the split of participants at the establish-
ment of the joint pool, approximately 30% of the pool will be allocated to
members of Executive Management and 70% to members of the Senior
Management Board.
The shares allocated to the joint pool for 2007 (166,292 shares),
corresponding to a value at launch of the programme of DKK 43 million
expensed in 2007, were released to the individual participants on 1 February
2011 following the approval of the Annual Report 2010 by the Board of
Directors.
For the management group below the Senior Management Board, a
share-based incentive programme with similar performance criteria was
introduced in 2007.
The shares allocated to the joint pool for 2007 (477,832 shares), cor-
responding to a value at launch of the programme of DKK 135 million
amortised over the period 2007–2010, were released to the individual
participants on 1 February 2011 following the approval of the Annual Report
2010 by the Board of Directors. The number of shares to be transferred
is lower than the original number of shares allocated to the share pool as
some participants have left the company before the release conditions of
the programme have been met.
Year allocated to pool
Senior Management Board
2008 1)
2009
2010
Management group below
Senior Management Board
2008
2009
2010
Cancelled
Total
Number
of shares
166,302
177,066
169,025
512,393
570,390
605,218
548,936
(62,590)
1,661,954
2,174,347
Vesting
2012
2013
2014
2012
2013
2014
1) The number of shares in the joint pool for 2008 has been reduced due to termina-
tion of an international member of the Senior Management Board.
For the service entities NNIT and NNE Pharmaplan, separate share-based
incentive programmes have been set up that are similar to the general Novo
Nordisk programme but operate with entity-specifi c targets.
Share options
Novo Nordisk established share option schemes in 1998 –2006 with the
purpose of motivating and retaining a qualifi ed management group and
to ensure common goals for Management and the owners. Each option
gives the right to purchase one Novo Nordisk B share. All share options are
hedged by treasury shares. No options have been granted since 2006 as the
long-term incentive programme from 2007 onwards has been share-based.
The options are exercisable three years after the issue date and will expire
after eight years. The exercise price for options granted based on per-
formance targets for the fi nancial 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.
The internal rules for trading in Novo Nordisk securities by board members,
executives and certain employees only permit trading in the 15-calendar-day
period following each quarterly announcement.
Assumptions
The fair value of the Novo Nordisk B share options has been calculated
using the Black-Scholes option pricing model.
The expected volatility is calculated as one-year historic volatility – average
of daily volatilities.
The assumptions used are shown in the table below:
Expected life of the option in years
(average)
Expected volatility
Expected dividend per share (in DKK)
Risk-free interest rate
(based on Danish government bonds)
Novo Nordisk B share price
at the end of the year
2010
2009
2008
4
21%
10.00
6
26%
7.50
6
29%
6.00
2.00%
2.00%
3.00%
629
332
271
Novo Nordisk Annual Report 2010 81
28 Share-based payment schemes (continued)
Outstanding share options in Novo Nordisk
Outstanding at the end of 2008
Exercised in 2009:
Of 2000 ordinary share option plan
Of 2001 ordinary share option plan
Of 2003 ordinary share option plan
Of 2004 ordinary share option plan
Of 2005 ordinary share option plan
Of 2008 employee share options 1)
Expired in 2009
Cancelled in 2009
Value adjustment 2)
Outstanding at the end of 2009
Employee share options granted in 2010 1)
Exercised in 2010:
Of 2001 ordinary share option plan
Of 2003 ordinary share option plan
Of 2004 ordinary share option plan
Of 2005 ordinary share option plan
Of 2006 ordinary share option plan
Of 2008 employee share options 1)
Expired in 2010
Cancelled in 2010
Value adjustment 2)
Outstanding at the end of 2010
Average
exercise price
per option
DKK
Share
options
Fair value
DKK million
Calculated
fair value
per option
DKK
6,918,332
133
948
(258,341)
(113,484)
(148,255)
(186,350)
(500,225)
(1,530)
(5,000)
(105,700)
99
166
97.5
133.5
153
0
99
133
(35)
(15)
(20)
(25)
(69)
0
(1)
(14)
287
5,599,447
135
1,056
273,000
(370,400)
(281,275)
(297,000)
(427,600)
(986,847)
(2,170)
(57,708)
(12,553)
166
97.5
133.5
153
175
0
166
135
163
(70)
(53)
(56)
(81)
(186)
0
(11)
(2)
950
3,436,894
110
1,710
137
137
137
137
137
137
137
137
137
189
597
189
189
189
189
189
189
189
189
498
1) Granted to all employees outside Denmark under the 2008 and 2010 employee share option programme, with a benefi t equal to the benefi t obtained by the Danish-based
employees under the employee share programme.
2) The fair value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year.
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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
At the
beginning
of the year
Exercised
during
the year
Additions
during
the year 3)
At the end
of the year
Fair value 4)
DKK million
68,000
33,000
19,000
–
33,000
29,000
14,500
19,000
14,500
153,000
77,000
39,000
18,500
–
–
18,500
76,000
125,350
201,350
–
50
50
20.4
9.7
–
–
9.7
39.8
59.6
99.4
Other members of the Senior Management Board in total
242,950
117,650
Total
395,950
194,650
3) Additions during the year cover the holdings of share options by the Senior Management Board members appointed in 2010.
4) The fair value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year.
The total number of options to acquire B shares held by Executive Management as of 1 February 2011 equals 76,000 and the specifi c conditions are from
the ordinary 2003 share option plan. The 76,000 options are held with an exercise price of DKK 97.5. The exercise period is from 6 February 2007 until
5 February 2012.
82 Novo Nordisk Annual Report 2010
28 Share-based payment schemes (continued)
Exercisable and outstanding
share options in Novo Nordisk
Issued
share
options
Exercised
share
options
2001 Ordinary share option plan
2003 Ordinary share option plan
2004 Ordinary share option plan
2005 Ordinary share option plan
2006 Ordinary share option plan
1,369,960
2,185,000
1,618,832
1,640,468
2,229,084
(1,216,464)
(1,633,765)
(1,049,866)
(927,825)
(986,847)
Expired
(57,708)
Outstanding/
exercisable
share options
Cancelled
Exercise
price
DKK
(95,788)
(82,666)
(118,000)
(152,818)
(179,053)
–
468,569
450,966
559,825
1,063,184
Exercisable at the end of 2010
9,043,344
(5,814,767)
(57,708)
(628,325)
2,542,544
2008 employee share options
2010 employee share options
694,500
273,000
(3,700)
(69,450)
621,350
273,000
Outstanding at the end of 2010 5) 10,010,844
(5,818,467)
(57,708)
(697,775)
3,436,894
5) All share options will vest if there is a change of control of Novo Nordisk A/S.
Average market price of Novo Nordisk B shares per trading period in 2010
2 February – 16 February
27 April – 11 May
5 August – 19 August
27 October – 10 November
Total exercised options
166
98
134
153
175
0
0
Exercise period
8/2/05 – 7/2/10
6/2/07 – 5/2/12
31/1/08 – 30/1/13
31/1/09 – 30/1/14
31/1/10 – 30/1/15
1/11/11
1/12/13
Average
market price
DKK
Exercised
share
options
379
463
502
556
1,596,147
391,000
153,995
224,150
2,365,292
29 Management’s holdings of Novo Nordisk shares
The internal rules for trading in Novo Nordisk securities by board members, executives and certain employees only permit trading in the 15-calendar-day period
following each quarterly announcement.
At the beginning
of the year
Addition
Sold/released
during the year during the year
At the end Market value 1)
DKK million
of the year
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Shares in Novo Nordisk
Board of Directors:
Sten Scheibye
Göran A Ando
Anne Marie Kverneland
Henrik Gürtler
Ulrik Hjulmand-Lassen
Jørgen Wedel
Kurt Anker Nielsen
Hannu Ryöppönen
Pamela J Kirby
Stig Strøbæk
Søren Thuesen Pedersen
Board of Directors in total
Executive Management:
Lars Rebien Sørensen
Jesper Brandgaard
Lise Kingo
Kåre Schultz
Mads Krogsgaard Thomsen
800
1,600
2,772
–
755
11,000
83,704
600
–
420
585
89
89
1,000
70
89
270
2,000
365
800
1,600
2,591
–
844
11,000
81,704
1,600
–
490
309
102,236
1,337
2,635
100,938
10,920
420
220
45,100
11,888
55,138
31,969
36,469
17,469
31,969
55,138
27,430
36,430
17,430
10,920
4,959
259
62,569
26,427
0.5
1.0
1.6
–
0.5
6.9
51.4
1.0
–
0.3
0.2
63.4
6.9
3.1
0.2
39.3
16.6
66.1
57.5
Executive Management in total
68,548
173,014
136,428
105,134
The Senior Management Board in total
58,324
249,370
216,339
91,355
Joint pool for Executive Management and
other members of the Senior Management Board 2)
726,640
169,025
258,210
637,455 3)
401.0
Total
955,748
592,746
613,612
934,882
588.0
1) Calculation of the market value is based on the quoted share price of DKK 629 at the end of the year.
2) The annual allocation to the joint 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 joint pool, 30% of the pool will be allocated to the members of Executive Management and 70% to other members of the
Senior Management Board. In the lock-up period, the joint pool may potentially be reduced in case of lower-than-planned value creation in subsequent years.
3) Excludes 41,230 shares currently assigned for fi ve retired Senior Management Board members.
Novo Nordisk Annual Report 2010 83
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30 Derivative fi nancial instruments
Novo Nordisk uses a number of derivatives to hedge currency exposure. Novo Nordisk’s currency hedging activities are categorised into hedging of forecast
transactions (cash fl ow hedges), hedging of assets and liabilities (fair value hedges) and hedging of net investments. None of the derivatives are held for
trading.
Total hedging activities
The table below summarises the fair values of all the hedging activities of Novo Nordisk.
DKK million
Currency-related instruments
Forward contracts, cash fl ow hedges
Forward contracts, fair value hedges
Currency options, cash fl ow hedges
Cross-currency swaps, cash fl ow hedges
Cross-currency swaps, net investment hedges
Total currency-related instruments
Interest-related instruments
Interest rate swaps, cash fl ow hedges
Total interest-related instruments
Total derivatives included in:
Marketable securities and fi nancial instruments
Current debt and fi nancial instruments
Contract
amount
at year-end
2010
Positive
fair value
at year-end
Negative
fair value
at year-end
Contract
amount
at year-end
2009
Positive
fair value
at year-end
Negative
fair value
at year-end
16,538
2,318
5,929
818
166
25,769
561
561
108
658
411
20
40
108
1,129
–
108
29
29
1,158
18,006
3,702
3,274
817
166
25,965
560
560
418
7
37
55
517
–
517
Total hedging activities
26,330
108
1,158
26,525
517
Presentation in the Income statement and Other comprehensive income
The fair value adjustments are recognised as follows:
Fair value through the Income statement
Cash fl ow hedges for which hedge accounting is not applied
Fair value hedges
Total fair value adjustments through the Income statement
Fair value through Other comprehensive income
Cash fl ow hedges for which hedge accounting is applied
Net investment hedges
(included in exchange rate adjustment)
Total fair value adjustments through
Other comprehensive income
108
108
–
35
411
446
672
40
712
Total fair value adjustments
108
1,158
92
7
99
418
418
517
84 Novo Nordisk Annual Report 2010
15
56
51
3
125
30
30
155
155
66
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122
30
3
33
155
30 Derivative fi nancial instruments (continued)
Hedging of forecast transactions (cash fl ow hedge)
The table below shows the fair value of cash fl ow hedging activities for 2010 and 2009 specifi ed by hedging instrument and the major currencies. The fair
value of the fi nancial instruments qualifying for hedge accounting is recognised directly under Other comprehensive income until the hedged items affect
the Income statement. At year-end, a loss of DKK 672 million is deferred via Other comprehensive income (a net gain of DKK 388 million in 2009). The fair
values of the fi nancial instruments not qualifying for hedge accounting are recognised directly in the Income statement.
Contract
amount
at year-end
2010
Positive
fair value
at year-end
Negative
fair value
at year-end
Contract
amount
at year-end
2009
Positive
fair value
at year-end
Negative
fair value
at year-end
DKK million
Hedging of forecast transactions qualifying
for hedge accounting
USD
JPY
GBP
Other
Total forward contracts
USD
Total currency options 1)
EUR / USD
Total cross-currency swaps
EUR / EUR
Total interest rate swaps
Total cash fl ow hedges for which hedge
accounting is applied
11,264
3,605
1,063
606
16,538
4,103
4,103
504
504
251
251
21,396
292
355
11
658
–
4
4
10
10
12,799
3,728
916
563
18,006
–
503
503
250
250
266
132
20
418
–
–
–
672
18,759
418
–
–
–
–
–
1) The positive fair value at year-end 2010 does not qualify for hedge accounting and is consequently disclosed in the table below.
Other forecast transaction hedges for which
hedge accounting is not applied
EUR / USD 2)
JPY/ DKK
Total cross-currency swaps
DKK / DKK
EUR / EUR 2)
Total interest rate swaps
USD
Total currency options
Total cash fl ow hedges for which hedge
accounting is not applied
Total contracts of forecast transactions
2) The contract value is disclosed only in the upper table.
314
314
310
310
1,826
1,826
2,450
23,846
–
–
108
108
108
108
3
13
16
11
8
19
–
35
314
314
310
310
3,274
3,274
3,898
55
55
–
37
37
92
707
22,657
510
The fi nancial contracts existing at the end of the year (cash fl ow hedges) cover the expected future cash fl ow for the following number of months:
USD
JPY
GBP
CNY 3)
2010
15 months
14 months
10 months
12 months
2009
17 months
15 months
14 months
17 months
3) USD used as proxy when hedging Novo Nordisk’s CNY currency exposure.
The maturity of the swaps existing at the end of 2010 is December 2011 and December 2012 (December 2011 and December 2012 at the end of 2009).
Novo Nordisk Annual Report 2010 85
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–
11
11
4
4
30
40
40
17
9
26
–
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30 Derivative fi nancial instruments (continued)
Hedging of assets and liabilities (fair value hedge)
The table below shows the fair value of fair value hedging activities for 2010 and 2009 specifi ed by hedging instrument and the major currencies.
All changes in fair values are recognised in the Income statement, amounting to a loss of DKK 411 million in 2010 (a net loss of DKK 49 million in 2009).
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
USD
JPY
GBP
Other
Total forward contracts
Total hedging of assets and liabilities
Contract
amount
at year-end
2010
Positive
fair value
at year-end
Negative
fair value
at year-end
Contract
amount
at year-end
2009
Positive
fair value
at year-end
Negative
fair value
at year-end
890
647
262
519
2,318
2,318
225
166
7
13
411
411
–
–
2,092
764
304
542
3,702
3,702
25
13
18
56
56
7
7
7
The fi nancial 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 primarily assets and liabilities in USD, JPY and GBP.
Hedging of net investments in foreign subsidiaries (net investment hedge)
The table below shows the fair value of hedging activities relating to net investments in foreign subsidiaries for 2010 and 2009 specifi ed by hedging
instrument and the major currencies. All changes in fair values relating to currency are recognised directly in Other comprehensive income, amounting
to a loss of DKK 40 million in 2010 (a loss of DKK 3 million in 2009). All changes relating to interest rates are recognised in the Income statement,
amounting to DKK 1 million in 2010 (DKK 1 million in 2009).
DKK million
Total cross-currency swap JPY/DKK
Total hedging of net investments in foreign subsidiaries
Contract
amount
at year-end
166
166
2010
Positive
fair value
at year-end
Negative
fair value
at year-end
Contract
amount
at year-end
40
40
–
166
166
2009
Positive
fair value
at year-end
–
Negative
fair value
at year-end
3
3
The maturity of the swap existing at the end of 2010 is November 2012.
The fi nancial contracts existing at the end of the year hedges 15% (16% in 2009) of the net investments in JPY. No other net investments have been hedged.
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86 Novo Nordisk Annual Report 2010
31 Commitments and contingencies
The latest interest rate fi xing has been used to compute the contractual
obligation for interest on variable-rate debt instruments.
Commitments
The total contractual obligations and recognised non-current debt as of
31 December 2010 can be specifi ed as follows:
Payments due by period
DKK million
Non-current debt
Retirement benefi t
obligations
Total non-current
liabilities recognised
in the Balance sheet
Interest payments related
to non-current debt
Operating leases 1)
Purchase obligations
Research and develop-
ment obligations
Total obligations
not recognised in the
Balance sheet
Total contractual
obligations
Less
than one
year
One
to three
years
Three
to fi ve
years
More
than fi ve
years
Total
–
17
48
33
97
31
359
488
504
569
17
81
128
847
1,073
8
785
1,386
16
1,147
1,327
13
682
1,361
22
813
189
59
3,427
4,263
1,078
876
475
81
2,510
3,257
3,366
2,531
1,105
10,259
3,274
3,447
2,659
1,952
11,332
As of 31 December 2009 the contractual obligations and recognised
non-current debt are specifi ed as follows:
Less
than one
year
One
to three
years
Three
to fi ve
years
More
than fi ve
years
–
467
14
26
96
25
407
391
Total
970
456
14
493
121
798
1,426
8
670
1,522
14
1,000
442
12
661
67
24
679
20
58
3,010
2,051
1,742
201
23
23
1,989
Payments due by period
DKK million
Non-current debt
Retirement benefi t
obligations
Total non-current
liabilities recognised
in the Balance sheet
Interest payments related
to non-current debt
Operating leases 1)
Purchase obligations
Research and develop-
ment obligations
Total obligations
not recognised in the
Balance sheet
Total contractual
obligations
3,942
1,657
763
746
7,108
Contingencies
3,956
2,150
884
1,544
8,534
1) No material fi nance lease obligations exist in 2010 and 2009.
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The operating lease commitments are related to non-cancellable operating
leases primarily related to premises, company cars and offi ce equipment.
Approximately 68% of the commitments are related to leases outside
Denmark. The lease costs for 2010 and 2009 were DKK 933 million and
DKK 615 million respectively.
The purchase obligations primarily relate to contractual obligations in
connection with investments in property, plant and equipment as well as
purchase agreements regarding medical equipment and consumer goods.
Novo Nordisk expects to fund these commitments with existing cash and
cash fl ows from operations.
Research and development obligations contain uncertainties in relation to
the period in which payments are due as a proportion of the obligations
are dependent on milestone achievements. The due periods disclosed
are based on Management’s best estimate. Novo Nordisk has engaged in
research and development projects with a number of external enterprises.
Most of these obligations comprise post-approval study on the LEADER ®
programme.
DKK million
Other guarantees
Other guarantees primarily relate to guarantees
issued by Novo Nordisk in relation to rented
property
Security for debt
Land, buildings and equipment etc at carrying
amount
2010
2009
555
443
1,366
1,459
World Diabetes Foundation
At the Annual General Meeting of Novo Nordisk A/S in 2002, the share -
holders agreed on a donation to the World Diabetes Foundation, obligat-
ing Novo Nordisk A/S for a period of 10 years from 2001 to make annual
donations to the Foundation of 0.25% of the net insulin sales of the Group
in the preceding fi nancial year.
At the Annual General Meeting in 2008, a new donation in supplement to
the existing obligation was agreed on by the shareholders. According to
this agreement, Novo Nordisk is obliged to make annual donations to the
Foundation of 0.01% in the period 2008 –2010 and 0.125% in the period
2011–2017 of the net insulin sales of the Group in the preceding fi nancial
year.
However, annual donations for 2010 shall not exceed the lower of
DKK 70 million or 15% of the taxable income of Novo Nordisk A/S, and for
the period 2011–2017 the lower of DKK 80 million or 15% of the taxable
income of Novo Nordisk A/S in the fi nancial year in question.
In 2010 the donation amounts to DKK 69 million (DKK 68 million in both
2009 and 2008), which is recognised in Administrative expenses in the
Income statement. In addition Novo Nordisk has committed to pay an
amount of DKK 25 million for the period covering 2011–2012 to support
predetermined WDF activities.
Novo Nordisk is currently involved in pending litigations, claims and
investigations arising out of the normal conduct of its business. Whilst
provisions have been made for probable losses that Management deems to
be reasonable or appropriate, there are uncertainties connected with these
estimates. The below description of legal matters also include some of the
provisions made.
See note 1 for the principles for making accounting estimates and judge-
ments about pending and potential future litigation outcomes.
Novo Nordisk Annual Report 2010 87
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31 Commitments and contingencies (continued)
Pending litigation against Novo Nordisk
Along with a majority of the hormone therapy product manufacturers in
the US, Novo Nordisk is a defendant in pro duct liability lawsuits related to
hormone therapy products. These lawsuits currently involve a total of
50 individuals (as compared to 52 individuals in February 2010) 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 Pfi zer Inc.). According to in-
formation received from Pfi zer, 72 individuals (as compared to 63 individuals
in February 2010) currently allege, in relation to similar lawsuits against
Pfi zer Inc., that they also have used a Novo Nordisk hormone therapy pro-
duct. Currently, Novo Nordisk does not have any trials scheduled in 2011.
Novo Nordisk does not expect the pending claims to have a material impact
on Novo Nordisk’s fi nancial position, operating profi t or cash fl ow.
In November 2006, Novo Nordisk A/S and the Italian affi liate Novo Nordisk
Farmaceutici S.P.A. were 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. A hearing on the
matter is scheduled to take place in May 2011. 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 fi nancial
position, operating profi t or cash fl ow.
Novo Nordisk Inc. is currently a defendant in two separate cases fi led in the
US alleging that Novo Nordisk and a number of other pharmaceutical com-
panies provided a false Average Wholesale Price for certain drugs covered
by Medicaid. These cases have been brought by the State of Alabama and
the State of Louisiana. Novo Nordisk was dismissed from a similar action
brought by the State of Mississippi. In 2010, Novo Nordisk settled similar
cases brought by three New York Counties. Novo Nordisk does not expect
the pending claims to have a material impact on Novo Nordisk’s fi nancial
position, operating profi t or cash fl ow.
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 is not expected to have a material
effect on Novo Nordisk’s fi nancial position, operating profi t or cash fl ow.
Pending claims against Novo Nordisk and investigations
involving Novo Nordisk
In December 2005, the offi ce of the US Attorney for the Eastern District
of New York issued a subpoena directed to Novo Nordisk calling for the
production of documents relating to Novo Nordisk’s US marketing and
promotional practices. Novo Nordisk assesses 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 benefi t 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 investigation. In addition, Novo
Nordisk cannot predict how long the investigation will take or when the
company will be able to provide additional information.
In May 2009 Novo Nordisk entered into a Deferred Prosecution Agreement
(DPA) for a three-year period with the US Department of Justice relating
to certain actions undertaken by Novo Nordisk under the Iraq Oil for Food
Programme. Novo Nordisk must comply with the DPA (including US regula-
tion related to the Foreign Corrupt Practices Act and Foreign Assets Control)
in order for the case to be dismissed. If Novo Nordisk breaches the DPA, the
prosecution may resume.
In light of the DPA, Novo Nordisk has identifi ed and self-reported certain
US Foreign Assets Control concerns to the US authorities. At this point in
time, Novo Nordisk cannot determine or predict the outcome or when the
next update related to this case will be available.
In January 2010, the Inspector General of the US Department of Defense
issued a subpoena directed to Novo Nordisk to provide documents relating
to NovoSeven®. Novo Nordisk is cooperating with the Offi ce of the
Inspector General and the US Attorney’s Offi ce for the District of Maryland
in responding to the subpoena, but cannot, at this point in time, deter-
mine or predict the outcome of the investigation or when the next update
related to this case will be available given the unpredictable nature of these
investigations.
In June 2005 Novo Nordisk fi led a patent infringement lawsuit against Caraco
Pharmaceutical Laboratories, Ltd. (‘Caraco’), a generic pharmaceutical com-
pany, and its Indian parent, Sun Pharmaceutical Industries, Ltd., in the US Dis-
trict Court for the Eastern District of Michigan regarding Caraco’s abbreviated
new drug application (‘ANDA’) for a generic version of Prandin® (repaglinide)
containing claims directed to the use of repaglinide in combination with
metformin. In January 2011, the District Court ruled that Novo Nordisk’s US
patent No. 6,677,358, which covers the combination use of repaglinide and
metformin for the treatment of type 2 diabetes, is invalid and unenforceable,
the latter due to inequitable conduct. Novo Nordisk has on 26 January 2011
fi led an appeal to the US Court of Appeals for the Federal Circuit.
Also pending before the District Court in Michigan and the US District Court
for the District of Minnesota are separate cases where a putative class of
direct purchasers of Prandin® and Paddock Laboratories, Inc., respectively as-
sert that Novo Nordisk has violated US antitrust laws in delaying the entry of
generic versions of Prandin®. Lastly, Novo Nordisk is involved in litigation with
Sandoz Inc. and Lupin Ltd. in the US District Court for the Southern District
of New York in which Novo Nordisk asserts that Sandoz & Lupin’s ANDAs to
produce a generic version of PrandiMet® (repaglinide/metformin HCl) infringe
Novo Nordisk’s patent.
At present, it is unclear whether or when a generic version of Prandin® or
PrandiMet® will be available in the US market.
In addition to the above, the Novo Nordisk Group is engaged in various
ongoing tax audits and investigations. In the opinion of Management,
these pending audits and investigations are not expected to have a material
effect on Novo Nordisk’s fi nancial position, operating profi t or cash fl ow.
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
liabilities for any obligation that 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 liabilities in Novozymes A/S amounted to DKK 557 million
(DKK 557 million in 2009).
Debts and obligations pertaining to the period before 1 January 2000,
which are recognised after 1 January 2000 and which cannot be clearly
attributed to either Novo Nordisk A/S or Novozymes A/S, will be distributed
proportionally between the two companies according to an agreement
established in connection with the demerger in November 2000.
Disclosure regarding Change of Control
The EU Takeover Bids Directive, as partially implemented by the Danish
Financial Statements Act, contains certain rules relating to listed companies
on disclosure of information that may be of interest to the market and
potential takeover bidders, in particular in relation to disclosure of change
of control provisions.
For information on the ownership structure of Novo Nordisk, please refer
to Shares and capital structure on pp 54 – 56. For information on change
of control clauses in share option programmes, please refer to note 28,
‘Share-based payment schemes’ on pp 81– 83 and in relation to employee
contracts of Executive Management of Novo Nordisk, please refer to the
‘Remuneration report’ in the section Corporate governance, remuneration
and leadership, pp 46 – 49.
In addition, Novo Nordisk discloses that the Group has signifi cant agree-
ments to which the Group is a party and which take effect, alter or
terminate upon a change of control of the Group following implementation
of a take-over bid. If effected, a takeover could – at the discretion of each
relevant counterparty – lead to the termination of one or more of such
agreements and a total loss of approximately 5% of Novo Nordisk’s sales,
corresponding to approximately 4% of Novo Nordisk‘s gross profi t.
88 Novo Nordisk Annual Report 2010
32 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 representing 72.8%
of the total number of votes, excluding treasury shares. The remaining
shares are widely held. The ultimate parent of the Group is the Novo
Nordisk Foundation (incorporated in Denmark). Both entities are considered
related parties.
Other related parties are considered to be the Novozymes Group due to
joint ownership, associated companies, the directors and offi cers of these
entities and Management of Novo Nordisk A/S. Following the demerger
of Novozymes in November 2000, Novo Nordisk A/S 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
the market price. Most of these agreements cover one year.
In 2010, Novo Nordisk A/S acquired 5,100,000 B shares, worth DKK 2.6
billion, from Novo A/S as part of the DKK 9.5 billion share repurchase pro-
gramme. The transaction price was DKK 503 per share and was calculated
as the average market price from 5 August to 19 August 2010 in the open
window following the announcement of the fi nancial results for the second
quarter of 2010.
In 2009, Novo Nordisk A/S acquired 3,570,000 B shares, worth DKK 1.1
billion, from Novo A/S as part of the DKK 19 billion share repurchase pro-
gramme. The transaction price was DKK 311 per share and was calculated
as the average market price from 6 August to 7 August 2009 in the open
window following the announcement of the fi nancial results for the second
quarter of 2009.
In 2008, Novo Nordisk A/S acquired 3,304,800 B shares, worth DKK 1.0
billion, from Novo A/S as part of the share repurchase programme. The
trans action price was DKK 307 per share and was calculated as the average
market price from 7 August to 13 August 2008 in the open window fol-
lowing the announcement of the fi nancial results for the second quarter of
2008.
The Group has had the following material transactions with related parties
(income)/expense:
DKK million
2010
2009
2008
Novo Nordisk Foundation
Donations to Novo Nordisk
Novo A/S
Services provided by Novo Nordisk
Purchase of Novo Nordisk B shares
Sale of treasury shares
(related to share options)
Novozymes
Services provided by Novo Nordisk
Services provided by Novozymes
Associated companies
Purchased intangible assets, fees
and royalties etc paid to associated
companies by Novo Nordisk
Received intangible assets, fees
and royalties etc from associated
companies to Novo Nordisk
(38)
(32)
(29)
(3)
2,567
(8)
1,111
(6)
1,016
(2)
(2)
(9)
(395)
83
(357)
118
(284)
147
16
184
40
(4)
–
(12)
Transactions with associated companies are included up until the date of
transfer or disposal.
There are no contingent liabilities towards associated companies.
There have not been any material transactions with any director or offi cer
of Novo Nordisk, Novozymes, Novo A/S, the Novo Nordisk Foundation or
associated companies. For information on remuneration to the Manage-
ment of Novo Nordisk, please refer to the ‘Remuneration report’ in the
section Corporate governance, remuneration and leadership, pp 46 – 49.
There have not been and are no loans to the Board of Directors or Executive
Management in 2010, 2009 and 2008.
There are no material unsettled transactions with related parties at the end
of the year.
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Novo Nordisk Annual Report 2010 89
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33 Companies in the Novo Nordisk Group
Country
Year of
incorporation/
acquisition
Currency
Issued
share capital/
paid-in capital
Percentage
of shares
owned
Activity
l
t
n
e
m
p
o
e
v
e
d
d
n
a
h
c
r
a
e
s
e
R
s
t
n
e
m
t
s
e
v
n
i
/
s
e
c
i
v
r
e
S
g
n
i
t
e
k
r
a
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d
n
a
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a
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u
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o
r
P
• • • •
Parent company
Novo Nordisk A/S
Subsidiaries by region
Denmark
1931
DKK
600,000,000
–
• • • •
1974
1974
2009
2005
2004
1997
2002
1972
2003
1959
1973
1979
1996
1978
1980
2005
2006
1983
1965
1996
1984
2005
2005
2007
2006
1978
1971
2003
2000
1968
1977
1978
1983
2003
2007
1991
1982
2002
1980
1994
EUR
EUR
BAM
BGN
HRK
CZK
DKK
EUR
EUR
EUR
EUR
EUR
HUF
EUR
EUR
LTL
MKD
EUR
NOK
PLN
EUR
RON
EUR
EUR
EUR
EUR
SEK
CHF
CHF
CHF
GBP
GBP
CAD
DKK
USD
USD
USD
36,336
69,000
97.792
5,880,000
5,000,000
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
14,068,285
61,155
250,000
29,021,000
250,000
2,795,000
640,000
265,552
2,679,286
1,502,500
100,000
1,100,000
159,325,000
50,000
2,802,130
2,350,000
200
500,000
50,000
55,000,000
283,837,600
15,500,000
DKK
JPY
2,104,000,000
KRW 6,108,400,000
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
100
100
100
100
Austria
Belgium
Bosnia-Herzegovina
Bulgaria
Croatia
Czech Republic
Denmark
Finland
France
France
Germany
Greece
Hungary
Ireland
Italy
Lithuania
Macedonia
Netherlands
Norway
Poland
Europe
Novo Nordisk Pharma GmbH
SA Novo Nordisk Pharma NV
Novo Nordisk Pharma d.o.o.
Novo Nordisk Pharma EAD
Novo Nordisk Hrvatska d.o.o.
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 Hungária Kft.
Novo Nordisk Limited
Novo Nordisk Farmaceutici S.P.A.
UAB Novo Nordisk Pharma
Novo Nordisk Farma dooel
Novo Nordisk B.V.
Novo Nordisk Scandinavia AS
Novo Nordisk Pharma Sp. z.o.o.
Novo Nordisk Comércio Produtos Farmace˜ uticos Lda. Portugal
Romania
Novo Nordisk Farma S.R.L.
Serbia
Novo Nordisk Pharma d.o.o. Belgrade (Serbia)
Novo Nordisk Slovakia s.r.o.
Slovakia
Novo Nordisk, trzˇenje farmacevtskih izdelkov d.o.o. Slovenia
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 Limited
Novo Nordisk Limited
Spain
Sweden
Switzerland
Switzerland
Switzerland
United Kingdom
United Kingdom
North America
Novo Nordisk Canada Inc.
Novo Nordisk Region North America A/S
Novo Nordisk US Holdings Inc.
Novo Nordisk Pharmaceutical Industries Inc.
Novo Nordisk Inc.
Japan & Korea
Novo Nordisk Region Japan & Oceania A/S
Novo Nordisk Pharma Ltd.
Novo Nordisk Pharma Korea Ltd.
Canada
Denmark
United States
United States
United States
Denmark
Japan
South Korea
90 Novo Nordisk Annual Report 2010
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• • •
• • •
•
•
•
•
•
•
•
•
• •
• • •
•
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33 Companies in the Novo Nordisk Group (continued)
Country
Year of
incorporation/
acquisition
Currency
Issued
share capital/
paid-in capital
Percentage
of shares
owned
Activity
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P
• • • •
1994
1997
1985
2007
2002
1990
2006
1994
Algeria
Argentina
Australia
Bangladesh
Brazil
Brazil
Chile
China
International Operations
Aldaph SpA
Novo Nordisk Pharma Argentina S.A.
Novo Nordisk Pharmaceuticals Pty. Ltd.
Novo Nordisk Pharma (Private) Limited
Novo Nordisk Produção Farmacêutica do Brasil Ltda.
Novo Nordisk Farmacêutica do Brasil Ltda.
Novo Nordisk Farmacêutica Limitada
Novo Nordisk (China) Pharmaceuticals Co., Ltd.
Beijing Novo Nordisk Pharmaceuticals Science &
Technology Co., Ltd.
Novo Nordisk Pharma Operations A/S
Novo Nordisk Region International Operations A/S
Novo Nordisk Egypt LLC
Novo Nordisk Hong Kong Limited
Novo Nordisk India Private Limited
PT. Novo Nordisk Indonesia
Novo Nordisk Pars
Novo Nordisk Ltd
Novo Nordisk Lebanon
Novo Nordisk Pharma (Malaysia) Sdn Bhd
Novo Nordisk Mexico S.A. de C.V.
Novo Nordisk Pharma SAS
Novo Nordisk Pharmaceuticals Ltd.
Novo Nordisk Nigeria Ltd.
Novo Nordisk Pharma (Private) Limited
Novo Nordisk Pharmaceuticals (Philippines) Inc.
Novo Nordisk Limited Liability Company
Novo Nordisk Production Support LLC
Novo Investment Pte Limited
Novo Nordisk Pharma (Singapore) Pte Ltd.
Novo Nordisk (Pty) Limited
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. Venezuela
2006
China
2009
Denmark
2002
Denmark
2004
Egypt
2001
Hong Kong
1994
India
2003
Indonesia
2005
Iran
1997
Israel
2007
Lebanon
1992
Malaysia
2004
Mexico
2006
Morocco
1990
New Zealand
2006
Nigeria
2005
Pakistan
1999
Philippines
2003
Russia
2010
Russia
1994
Singapore
1997
Singapore
1959
South Africa
1990
Taiwan
1983
Thailand
2004
Tunisia
1993
Turkey
United Arab Emirates 2005
2004
Other subsidiaries
FeF Chemicals A/S
NNIT A/S 1)
NNE Pharmaplan A/S 1)
Steno Diabetes Center A/S
Associated companies
Harno Invest A/S
Denmark
Denmark
Denmark
Denmark
1989
1998
1989
2008
DZD
ARS
AUD
BDT
BRL
BRL
CLP
USD
USD
DKK
DKK
EGP
HKD
INR
IDR
IRR
ILS
LBP
MYR
MXN
MAD
NZD
NGN
PKR
PHP
RUB
RUB
SGD
SGD
ZAR
TWD
THB
TND
TRY
AED
VEF
DKK
DKK
DKK
DKK
1,742,650,000
7,465,150
500,001
17,500,000
896,834,727
84,727,136
758,271,200
371,155,362
2,000,000
500,000
113,303,310
50,000
500,000
265,000,000
827,900,000
10,000,000
100
600,000,000
500,000
387,816,547
2,597,000
1,000,000
10,000,000
43,000,000
50,000,000
188,243,360
5,100,000
12,000,000
200,000
8,000
9,000,000
15,500,000
400,000
25,296,300
100,000
2,250,000
10,000,000
1,000,000
500,000
1,000,000
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
• •
•
•
•
•
•
•
• •
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
• •
•
•
• •
•
Denmark
1992
DKK
70,419,910
30
1) In addition to the listed companies, NNIT A/S and NNE Pharmaplan A/S have their own subsidiaries.
Novo Nordisk Annual Report 2010 91
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Financial defi nitions
ADRs
An American Depositary Receipt (or ADR) represents ownership in the
shares of a non-US company and trades in US fi nancial markets.
Basic earnings per share (EPS)
Net profi t divided by the average number of shares outstanding.
Gross margin
Gross profi t as a percentage of sales.
Net profi t margin
Net profi t as a percentage of sales.
Cash to earnings
Free cash fl ow as a percentage of net profi t.
Diluted earnings per share
Net profi t divided by the sum of average number of shares outstanding,
including the dilutive effect of share options ‘in the money’. The dilutive
effect of share options ‘in the money’ is calculated as the difference
between the following:
1) the number of shares that could have been acquired at fair value with
proceeds from the exercise of the share options, and
2) the number of shares that would have been issued assuming the exercise
of the share options.
The difference (the dilutive effect) is added to the denominator as an issue
of shares for no consideration.
Effective tax rate
Income taxes as a percentage of profi t before income taxes.
Equity ratio
Total equity at year-end as a percentage of total assets at year-end.
Free cash fl ow
The sum of cash fl ow from operating activities less cash fl ow from net
investment in intangible, tangible assets, associated companies and other
equity investments.
Number of shares outstanding
The total number of shares, excluding the holding of treasury shares.
Operating profi t margin
Operating profi t as a percentage of sales.
Other comprehensive income
Other comprehensive income comprises all non-owner changes, eg items
of income and expense (including reclassifi cation adjustments) that are not
recognised in the Income statement.
Payout ratio
Total dividends for the year as a percentage of net profi t.
Return on equity (ROE)
Net profi t for the year as a percentage of shareholders’ equity (average).
Return on invested capital (ROIC)
Operating profi t after tax (using the effective tax rate) as a percentage of
invested capital (average). Invested capital comprises 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).
92 Novo Nordisk Annual Report 2010
Non-fi nancial statement for the year ended 31 December
Note
2010
2009
2008
Social performance
Patients
2
Donations to the World Diabetes Foundation (DKK million)
2
Donations to the Novo Nordisk Haemophilia Foundation (DKK million)
3
Healthcare professionals trained or educated in diabetes (1,000) (accumulated)
3
People with diabetes trained (1,000)
LDCs where Novo Nordisk sells insulin according to the differential pricing policy (%) 3
Active patent families
New patent families (fi rst fi lings)
Animals purchased
People participating in clinical trials
Employees
Employees (total)
Employee turnover (%)
Absence (%)
Frequency of occupational injuries (number/million working hours)
Annual training costs per employee (DKK)
Engaging culture (employee engagement) on a scale of 1– 5
Diverse senior management teams (%)
Employment impact worldwide (direct and indirect jobs)
Assurance
Company reputation with external key stakeholders on a scale of 0 –100
Employees trained in business ethics (%)
Warning letters and re-inspections
Fulfi lment of action points from facilitations of the
Novo Nordisk Way (%) of Management
Supplier audits
Environmental performance
Inputs
Energy consumption (1,000 GJ)
Water consumption (1,000 m3)
Raw materials and packaging materials (1,000 tons)
Outputs
CO2 emissions from energy consumption (1,000 tons)
CO2 emissions from refrigerants (1,000 tons)
CO2 emissions from transport (1,000 tons)
Wastewater (1,000 m3)
Chemical oxygen demand (COD) in wastewater (tons)
Total waste (tons)
Non-hazardous waste (% of total waste)
Breaches of regulatory limit values
1) N/A denotes values that were not recorded in the respective period.
4
4
5
6
7
7
8
8
7
7
7
9
10
11
12
13
14
15
16
17
18
18
18
19
19
20
20
21
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15
1,178
494
67
817
62
62,927
19,361
30,483
9.1
2.4
4.9
14,207
4.3
54
68
15
805
416
73
905
55
57,315
11,130
29,329
8.3
2.6
4.3
13,283
4.3
50
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380
N/A 1)
64
890
71
57,253
13,822
27,068
12.1
2.2
5.4
13,192
4.2
43
108,248
96,468
88,521
76.1
98
0
93
192
2,234
2,047
65
95
6
57
1,935
555
20,565
68
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76.3
N/A 1)
0
93
196
72.4
N/A 1)
0
92
161
2,246
2,149
79
2,533
2,684
132
146
6
N/A 1)
2,062
617
21,019
64
10
215
N/A 1)
N/A 1)
2,542
891
20,346
70
28
Novo Nordisk Annual Report 2010 93
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Notes to the Consolidated non-fi nancial statements
1 Accounting policies for non-fi nancial data
The accounting policies applied to the preparation of the consolidated non-
fi nancial reporting have been consistently applied to the years presented,
except as described below in ‘Changes in non-fi nancial accounting policies’.
Standards for non-fi nancial reporting
The consolidated non-fi nancial statement is prepared in accordance with
the Danish Financial Statements Act (FSA), section 99a. Section 99a requires
Novo Nordisk to account for the company’s activities on social respons ibility,
reporting on business strategies and activities on human rights, labour
standards, environment and anti-corruption. Companies that subscribe
to the UN Global Compact and annually submit their Communication on
Progress will be in compliance with the FSA, provided that the annual report
includes a reference to where the information has been made publicly
avail able. Novo Nordisk’s Communication on Progress 2010 can be found at
annualreport2010.novonordisk.com and on UN Global Compact’s website
at unglobalcompact.org/COP.
Novo Nordisk has set an ambition that non-fi nancial information be subject
to the same types of internal control procedures required of fi nancial data.
Novo Nordisk has been working towards this objective since 2008.
Novo Nordisk adheres to the following internationally acknowledged
voluntary standards and principles:
• AA1000 framework for accountability. The framework states that report-
ing must provide a complete, accurate, relevant and balanced picture
of the organisation’s approach to and impact on society. Novo Nordisk’s
assurance process is designed according to AA1000AS(2008).
• Global Compact. As a signatory to the UN Global Compact, a strategic
policy initiative for businesses that are committed to aligning their
operations and strategies with ten universally accepted principles in the
areas of human rights, labour, environment and anti-corruption, Novo
Nordisk reports on actions during 2010 to implement the 10 principles in
the Com munication on Progress, which can be found at
annualreport2010.novonordisk.com.
• Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines.
The guidelines (G3) include the only internationally recognised set of
indicators for economic, environmental and social aspects of business
performance that enables stakeholders to compare companies’ perform-
ance. Novo Nordisk’s reporting according to the reporting principles
and guidance, including required disclosures, can be found at
annualreport2010.novonordisk.com.
Defi ning materiality
It is Novo Nordisk’s responsibility to ensure that those areas are addressed
in which the company has signifi cant impact. Novo Nordisk has sought
inspiration in AccountAbility’s materiality test to defi ne what is material
to Novo Nordisk’s business and what should be included in the annual
reporting. Non-fi nancial issues are prioritised to be reported either in the
printed annual report (most material; business critical), online (material,
often catering to specifi c stakeholder interests), or not reported (not
material). The same process applies for the assurance provider’s recom-
mendations.
The outcomes of formal reviews, research, stakeholder engagement and
internal materiality discussions are presented as a proposal for annual
reporting to Executive Management and the Board of Directors. In addition,
Novo Nordisk’s external assurance provider is requested to review whether
the non-fi nancial performance included in the annual report covers the
material aspects. The conclusion is available in the Independent assurance
report on non-fi nancial reporting 2010 on p 111.
As a pharmaceutical company, Novo Nordisk’s most material social impact
is the company’s contribution to improving care for people with diabetes
and other conditions for which Novo Nordisk provides treatments. In as-
sessing benefi ts for patients, the scope of clinical development programmes
and the efforts to expand access are measured. Ensuring that an engaging,
safe workplace that supports innovation is created is another important
dimension of Novo Nordisk’s social performance. Because it is important
to retain society’s trust, the degree to which Novo Nordisk refl ects its own
values and high ethical standards is also measured and managed. The most
material dimension of the environ mental impact is the energy and water
used for production and the CO2 emissions from energy consumption. As
94 Novo Nordisk Annual Report 2010
the business has grown, with sales and pro duction increasing sub stantially,
the focus is on improving ressource effi ciency and on using alternative
energy to reduce the environmental impact.
For more information on Novo Nordisk’s voluntary reporting, visit
annualreport2010.novonordisk.com.
Changes in non-fi nancial accounting policies
In 2010, there were no material changes to the accounting policies for
non-fi nancial data.
The following accounting policies were adjusted in 2010:
• The accounting policy for ‘LDCs where Novo Nordisk sells insulin
accord ing to the differential pricing policy’ was previously reported as the
number of countries. Reporting in terms of a percentage aligns with the
company target, which is defi ned as a percentage.
• The accounting policy for ‘Diverse senior management teams’ was
previously reported in terms of the number of diverse management
teams. Reporting in terms of a percentage aligns with the company
target, which is defi ned as a percentage.
Please refer to the specifi c accounting policies for further information.
The non-fi nancial statement has been reviewed and new disclosures have
been added to refl ect current priorities and enhance transparency:
• Donations to the World Diabetes Foundation (DKK million)
• Donations to the Novo Nordisk Haemophilia Foundation (DKK million)
• Employees trained in business ethics (%)
• Supplier audits
• CO2 emissions from transport (1,000 tons)
The review process also resulted in a decision to discontinue reporting on
the following in the consolidated non-fi nancial statement:
• Managers trained in business ethics (%)
• First-line sales managers trained in business ethics (%)
• Research and development as share of sales
• CO2 emissions from energy consumption as share of sales
The two indicators related to business ethics have been replaced by the
indicator on employees trained in business ethics. The replacement is due to
a management decision to make business ethics training mandatory for all
employees – not just managers. Research and development as share of sales
and CO2 emissions from energy consumption as share of sales have been
taken out, as they are not used to improve performance.
Principles of non-fi nancial disclosures
The consolidated non-fi nancial statement and disclosures cover 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 infl uence (subsidiaries). Novo
Nordisk A/S and these companies are referred to as the Group.
The environmental disclosures cover the impact from the production of
Novo Nordisk’s approved products. See accounting policies for details.
Accounting policies
To Novo Nordisk, AA1000APS(2008) is a component in creating a generally
applicable approach to assessing and strengthening the credibility of the
company’s public reporting of non-fi nancial data. Novo Nordisk’s assurance
process has been designed to ensure that the qualitative and quantitative
information that documents non-fi nancial dimensions of performance as
well as the systems that underpin the data and performance are assured.
The principles outlined by AA1000APS(2008) have been applied as
described below.
1. Inclusivity
As a pharmaceutical company with global reach, Novo Nordisk is commit-
ted to being accountable to those on whom the organisation has an impact
and those who have an impact on Novo Nordisk. Novo Nordisk con tinuously
maps its stakeholders and has processes in place to ensure inclusion of
stakeholder concerns and expectations. Stakeholder engagement results
in stakeholders being involved in developing and accounting for strategic
responses to sustainability challenges.
2. Materiality
Key issues are identifi ed through ongoing stakeholder engagement and
trendspotting and are addressed by programmes or action plans with clear
and measurable targets. Long-term targets are set to guide long-term
performance in strategic areas. The issues presented in the annual report
are deemed to have a signifi cant 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
specifi c needs and interests. To most stakeholders, however, the annual
report is just one element of the interaction and communication with the
company. The annual report refl ects how the company is managing its
business in ways that respond to and consider stakeholder concerns and
interests.
Social performance
Donations to the World Diabetes Foundation
The amount includes donations in DKK paid out by Novo Nordisk to the
World Diabetes Foundation during the fi scal year.
Donations to the Novo Nordisk Haemophilia Foundation
The amount includes donations allocated by Novo Nordisk to the Novo
Nordisk Haemophilia Foundation during the fi scal year.
Healthcare professionals trained or educated in diabetes
Healthcare professionals trained or educated in diabetes is an estimated
accumulated number based on registrations by affi liates and corporate
functions in Novo Nordisk. The number refl ects the total number of
healthcare providers participating in Novo Nordisk-sponsored training and
education activities since the National Changing Diabetes® programmes
were initiated in 2002.
People with diabetes trained
People with diabetes trained is an estimated number based on registrations
by affi liates and corporate functions in Novo Nordisk. The number refl ects
the total number of people with diabetes with whom Novo Nordisk has
engaged during the year for educational purposes. Training includes
activities conducted, organised or funded by Novo Nordisk. These efforts
support improvements in self-care and chronic disease management.
Least developed countries where Novo Nordisk sells insulin
according to the differential pricing policy
Novo Nordisk’s differential pricing policy offers LDCs to buy insulin at or
below 20% of the average prices for insulin in the western world. The
western world is defi ned as Europe (EU, Switzerland and Norway), the US,
Canada and Japan. The number of LDCs where Novo Nordisk sells insulin
according to the differential pricing policy is measured by direct or indirect
sales by Novo Nordisk via government tender or private market sales to
wholesalers, distributors or non-governmental organisations. For 2009 and
2010, the UN list included 49 countries. For 2006 to 2008, the list included
50 countries.
Active patent families
Active patent families is the total number of single inventions covered by at
least one pending or issued patent in one or more countries.
New patent families (fi rst fi lings)
New patent families (fi rst fi lings) is the number of new patent applications
that were fi led during the year.
Animals purchased
Animals purchased for studies is the number of animals purchased for all
testing undertaken for Novo Nordisk either in-house or at external con-
tractors. The number of animals purchased is based on internal registration
of purchased animals and yearly reports from external contractors.
People participating in clinical trials
The number of people participating in clinical research (phase 1– 4,
excluding observational studies) is measured based on active participants in
clinical research during the year.
Employees
The number of employees at year-end includes all employees except
externals, employees on unpaid leave, interns, bachelor and master thesis
employees and substitutes.
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Employee turnover
The rate of turnover is calculated as the number of employees, excluding
temporary employees, who left the Group during the fi nancial year
compared to the average number of employees, excluding temporary
employees.
Absence
Absence is calculated as absence due to the employee’s own illness,
pregnancy-related sick leave and occupational injuries and illnesses per
working hours in the year, adjusted for holidays.
Frequency of occupational injuries
The frequency of occupational injuries is calculated based on the number
of injuries reported for all employees per million working hours, excluding
externals, employees on unpaid leave, interns, bachelor and master thesis
employees and substitutes. An occupational injury is any work-related injury
causing at least one day of absence in addition to the day of the injury.
Annual training costs per employee
Training costs are all costs expensed in a specifi c account in the fi nancial
accounts. The amount covers internal and external training posted in the
fi nancial accounts.
Engaging culture (employee engagement)
Employee engagement is measured on a scale of 1– 5, with 5 being the best
score, and is an average of respondents’ answers to 10 selected questions
related to employees’ engagement in the annual employee survey, eVoice.
Employee engagement is a simple average of answers given by employees.
The 10 questions are the same as in the previous years.
Diverse senior management teams
Diversity in senior management teams is measured as the percentage of
teams that are diverse in terms of both gender and nationality. A senior
management team includes all managers and executive assistants referring
directly to an executive vice president/senior vice president.
Employment impact worldwide (direct and indirect jobs)
Employment impact worldwide is an estimate of the direct and indirect
jobs created by the Group. Calculated using fi nancial records and general
statistics from public sources such as Statistics Denmark, Updated Economic
Multipliers for the US Economy (the Economic Policy Institute) and the
China Statistical Yearbook, it refl ects part of the company’s socio-economic
impact.
Company reputation
Company reputation is measured as a mean corporate brand score in four
key markets (China, Germany, the UK and the US) based on feedback from
primary care physicians and secondary care physicians. The survey is per-
formed by an independent external consultancy fi rm. The mean corporate
brand score is based on company ratings (scale 0 –100) collected through
individual online interviews with primary and secondary care professionals
(target groups). In China the survey is conducted via face-to-face interviews.
Employees trained in business ethics
The percentage of employees trained in business ethics covers all employees
in Novo Nordisk except employees on leave and is based on regi strations in
training databases and local archives of employees completing the annual
business ethics training.
Warning letters and re-inspections
Warning letters and re-inspections is measured as the number of warning
letters issued by the US Food and Drug Adminstration (FDA) in connection
with GxP-regulated and ISO9000-certifi ed areas and the number of
re-inspections issued to Novo Nordisk by any health authority globally.
Warning letters issued by the FDA regarding promotional materials are
also included.
Fulfi lment of action points from facilitations of the Novo Nordisk Way of
Management
The percentage of fulfi lment of action points arising from facilitations
with respect to the Novo Nordisk Way is measured as an average of timely
closure of action points issued in the current year and the two previous
years. Timely closure of action points relates to the company’s adherence
to the Novo Nordisk Way. The reason for using a three-year average as
the basis for the calculation is that action lead time typically varies from a
couple of months to more than a year.
Novo Nordisk Annual Report 2010 95
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Supplier audits
The number of supplier audits performed includes responsible sourcing
audits and quality audits conducted in the areas of direct spend materials,
indirect spend materials and suppliers to the research and development
organisation. Contract and licence manu facturers are not included.
2 Donations to the World Diabetes Foundation and
the Novo Nordisk Haemophilia Foundation
The World Diabetes Foundation and the Novo Nordisk Haemophilia Founda-
tion are non-profi t organisations receiving donations from Novo Nordisk.
Environmental performance
Energy consumption
Energy consumption (direct and indirect supply) includes both direct supply
of energy (internally produced energy), ie energy Novo Nordisk produces
from natural gas, fuel oil and other types, and indirect supply of external
energy (externally produced energy), eg electricity, steam and district heat.
The consumption of fuel and externally produced energy is based on meter
readings and invoices.
Water consumption
Water consumption is based on meter readings and invoices and includes
drinking water, industrial water and steam.
Raw materials and packaging materials
The consumption of raw and packaging materials used for production,
related processes and packaging is converted to tons.
CO2 emissions from energy consumption
The amount of CO2 emissions from energy consumption covers consump-
tion related to production. The CO2 emissions from energy consumption are
calculated according to the GHG protocol. Emissions of CO2 from energy
consumption 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 2010 are the three-year average of
2007 to 2009.
CO2 emissions from refrigerants
CO2 emissions from refrigerants are calculated based on standard factors.
CO2 emissions from transport
CO2 emissions from transport include emissions from worldwide distribu-
tion of semi-fi nished, fi nished products, raw materials and components by
air, sea and road between production sites and from production sites to
affi liates, direct customers and importing distributors. CO2 emissions from
product distribution from affi liates to pharmacies, hospitals and wholesalers
are not included.
Wastewater
The volume of wastewater includes process wastewater, sanitary waste-
water and drainage water from fortifi ed areas. The total volume of waste-
water is calculated based on input from the production sites either as a
direct measure of the total sum discharged to public sewer systems or as
the total consumption of the site minus registered evaporation from cooling
systems (including cooling towers and other plants from which evapora-
tion occurs) and any large amount of wastewater collected and treated as
waste.
Chemical oxygen demand (COD) in wastewater
COD is a measure of the amount of pollutants in the water and is calculated
based on in-house test results or standard factors.
Total waste
Total waste is measured as the sum of non-hazardous and hazardous waste.
The amount of waste disposed of is registered based on weight receipts.
Non-hazardous waste
The percentage of non-hazardous waste is calculated as the waste disposed
of as non-hazardous of the total amount of waste disposed.
Breaches of regulatory limit values
Breaches of regulatory limit values are measured as all breaches reported to
the authorities.
In 2010 Novo Nordisk donated DKK 69 million to the World Diabetes
Foundation, supporting more than 200 projects covering 96 countries in the
developing world to expand access to diabetes treatment and care.
The Novo Nordisk Haemophilia Foundation’s objective is to increase treat-
ment and care in developing countries. In 2010, Novo Nordisk donated
DKK 15 million to the Novo Nordisk Haemophilia Foundation supporting
more than 30 projects covering 25 countries.
DKK million
2010
2009
2008
World Diabetes Foundation
Novo Nordisk Haemophilia Foundation
Total
69
15
84
68
15
83
68
10
78
3 Impact on health
A measure of the company’s contribution to global health is the number
of healthcare professionals trained, educated, interacted with or reached
through awareness campaigns, and the number of people with diabetes
reached through training or awareness programmes. The aim is to continue
activities to educate healthcare professionals to improve diagnosis and
treatment and to train people with diabetes to improve self-care.
Since 2002, 1,178,000 healthcare professionals have been trained, educat-
ed, interacted with or reached through awareness campaigns. The number
of people with diabetes trained was 494,000 in 2010 compared to 416,000
in 2009, which is an increase of 19% due to more activities.
Through the company’s differential pricing policy, the world’s 49 least
developed countries (LDCs) are offered insulin at or below a price of 20%
of the average prices for insulin in the western world. The western world
is defi ned as Europe (EU, Switzerland and Norway), the US, Canada and
Japan.
The differential pricing policy is part of the global initiatives to promote
access to health to all LDCs as defi ned by the UN. In 2010 Novo Nordisk
offered the differential price to all of the 49 LDCs, of which Novo Nordisk
operates in 34 countries and sold insulin to either governments or the
private market in 67% (33 countries) of the countries according to the
differential pricing policy compared to 73% (36 countries) of the countries
in 2009. In 2010, Novo Nordisk operated in the Lao People’s Democratic
Republic but did not sell insulin at the dif ferential policy price. The govern-
ment in Lao was offered to buy insulin at the differential price. The insulin
sold in 2010 in Lao was to the private market.
In a total of 15 LDCs Novo Nordisk had no sales in 2010 for various reasons.
In several cases, either the government has not responded to the offer,
there are no private wholesalers or other partners to work with, or wars or
political unrest make it impossible to do business. While Novo Nordisk pre-
fers to sell insulin at the differential price through government tenders, the
company is willing to sell to private distributors and agents. Novo Nordisk
is unable to guarantee that the price at which the company sells the insulin
will be refl ected in the fi nal price to the consumer.
96 Novo Nordisk Annual Report 2010
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4 Patent families
The number of Novo Nordisk patent families decreased by 10% from 905 in 2009 to 817 in 2010. The decrease is a result of a focused patent policy according
to which only patents of signifi cant business interest are continued. The number of new patent families established in 2010 was 62, which is an increase of
13% compared to the fi ling activity of 2009, when 55 new patent families were established. The increased fi ling activity is attributed to the continued increase
in research and development spend.
The patent expiry dates for the product portfolio are shown in the table below. The dates provided are for expiry of patents in the US, Japan, China and major
European markets 1) on the active ingredient, unless otherwise indicated, and include extensions of patent term (including for paediatric extension where
applicable). In many cases Novo Nordisk has exclusivity beyond the expiry of the active ingredient patent through later-expiring patents. For several products,
in addition to the compound patent, Novo Nordisk holds other patents on manufacturing processes, formulations or uses that may extend exclusivity
beyond the expiration of the active ingredient patent. Furthermore, data-based exclusivity may be available under pharmaceutical regulatory laws.
Marketed products in key markets (active ingredients)
Product
Levemir ®
NovoRapid ® (NovoLog ®)
NovoMix ® 30 (NovoLog ® Mix 70/30)
NovoNorm® (Prandin®)
PrandiMet ®
Norditropin® (Norditropin® SimpleXx ®)
NovoSeven®
Victoza®
Europe
US
Japan
China
2018
2011 2)
2014 –15 3)
Expired 6)
Pending
2017 4)
2010 –11 3)
2022
2019
2014 2)
2014
Expired
2018 5)
2015 4)
Expired
2022
2019
Expired 2)
2014
2011 7)
Pending
2017 4)
Expired
2022
2014
Expired 2)
Expired
Expired
N/A
2017 4)
Expired
2017
1) Major European markets are defi ned as Germany, France and the UK.
2) Formulation patent expires in 2017.
3) Exact date varies from country to country.
4) Formulation patent.
5) Combination patent.
6) Enantiomer use patent expires in 2011, extended to 2013 in certain countries.
7) Possibly extendable by fi ve years.
5 Animals purchased
Novo Nordisk continuously works towards reducing, refi ning and replac-
ing experiments on animals and to improve animal welfare. The number of
animals purchased in 2010 increased by 10% compared to 2009 and 96%
of animals purchased in 2010 were rodents. The increase in rodents is due
to increases in the number of biopharmaceutical studies, where rodents
are most suitable. The increase in purchased dogs is due to an increased
number of diabetes studies in this species.
Number
Mice and rats
Guinea pigs
Hamsters
Rabbits
Pigs
Dogs
Goats
Non-human primates
Other vertebrates 1)
2010
2009
2008
60,441
74
12
543
1,196
328
1
330
2
54,714
84
6
559
1,170
240
2
540
0
54,484
150
16
770
808
276
6
593
150
Total
62,927
57,315
57,253
1) Other vertebrates are lamas, fi sh, chickens and frogs.
6 People participating in clinical trials
The number of people participating in clinical interventional trials increased
by 74% from 11,130 in 2009 to 19,361 in 2010. The substantial increase
was due to the initiation of the phase 3a programme on Degludec 1) (insulin
degludec) and DegludecPlus 2) (insulin degludec/insulin aspart).
1) Internal designation for insulin degludec
2) Internal designation for insulin degludec/insulin aspart
7 Employees
Number
Employees by gender
– Female
– Male
2010
2009
2008
15,100
15,383
14,514
14,815
13,432
13,636
Total number of employees
30,483
29,329
27,068
Year-end number of full-time
equivalents (FTEs)
30,014
28,809
26,575
In 2010 the number of employees increased by 1,154 (4%) compared to
an increase of 2,261 (8%) in 2009. The increase refl ects increased activities
in most business areas, particularly Operations and Research and Develop-
ment. Regionally, the largest increase in employees was in North America
and International Operations.
The rate of employee turnover increased from 8.3 in 2009 to 9.1 in 2010.
The increase was primarily in International Operations and is deemed
acceptable. Overall the increase can be attributed to the gradual recovery
of the global economy.
The annual training costs per employee increased by 7%, with a spend of
DKK 14,207 in 2010 compared to DKK 13,283 in 2009, refl ecting the
company’s strategic prioritisation of talent and leadership development, and
of lifelong learning offered to all employees.
Diversity in the company’s senior management teams increased from 50%
(14 teams) of the 28 teams in 2009 to 54% (15 teams) in 2010.
In the annual eVoice survey measuring employee engagement, the response
rate was 92%. The engagement rate remained high at 4.3 in 2010 as in
2009. Below are additional key questions and scores from the eVoice survey
that reconfi rm the strong adherence to the company’s values and priorities.
Living our values
Scale 1– 5
2010
2009
2008
Importance of social and environmental
issues for the future of the company
Manager’s behaviour consistent with
Novo Nordisk’s values
4.5
4.4
4.5
4.4
4.5
4.3
Novo Nordisk Annual Report 2010 97
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8 Health and safety
In 2010, there were no fatal occupational injuries and Novo Nordisk has not had any fatal occupational injuries since 2004.
The rate of absence decreased in 2010 to 2.4% from 2.6% in 2009. The decrease is explained by fewer days of absence due to illness compared to 2009.
The frequency of occupational injuries increased from 4.3 in 2009 to 4.9 in 2010. The increase is due to more occupational injuries with absence both at
production sites and in affi liates.
By the end of 2010, the Novo Nordisk Occupational Health & Safety (OH&S) Management System globally covered research and development, production
facilities and headquarters.
9 Socio-economics
In 2010, Novo Nordisk created 1,154 new positions globally and had 30,014 full-time positions, measured as full-time equivalents (FTEs). This compares to
2,261 new positions created in 2009 with 28,809 FTEs. The number of jobs in 2010 translates into 108,248 direct and indirect jobs. Of these, 78,218 indirect
global jobs are created in the supply chain from production needs and employees’ private consumption. The majority of indirect jobs created are due to
production (54,648), but the effect of private consumption by Novo Nordisk employees is also signifi cant (23,570). In 2009, the total number of direct and
indirect jobs created was 96,468.
Cash value distribution
DKK million
Cash
received
Cash
added value
2010
Customers
Suppliers
Company cash
Employees
Investors/funders
Public sector
Management
2009
Customers
Suppliers
Company cash
Employees
Investors/funders
Public sector
Management
2008
Customers
Suppliers
Company cash
Employees
Investors/funders
Public sector
Management
Cash received from products and services (from sales)
Cash payments for materials, facilities and services 1)
Cash added value (cash received minus cash payments)
Remuneration
Dividend, share repurchase and interest payments
Taxes
Future growth
Cash received from products and services (from sales)
Cash payments for materials, facilities and services 1)
Cash added value (cash received minus cash payments)
Remuneration
Dividend, share repurchase and interest payments
Taxes
Future growth
Cash received from products and services (from sales)
Cash payments for materials, facilities and services 1)
Cash added value (cash received minus cash payments)
Remuneration
Dividend, share repurchase and interest payments
Taxes
Future growth
59,339
22,781
36,558
18,522
13,720
3,436
880
50,596
20,386
30,210
15,496
10,429
1,998
2,287
45,064
16,151
28,913
14,141
7,617
3,172
3,983
100%
38%
31%
23%
6%
2%
100%
40%
31%
21%
4%
4%
100%
36%
31%
17%
7%
9%
100%
51%
38%
9%
2%
100%
51%
34%
7%
8%
100%
49%
26%
11%
14%
1) Fixed assets and cash payments outside Novo Nordisk. The fi gure includes cash received from licence fees, realised exchange rate gains and interest income.
10 Company reputation
12 Quality
Company reputation, measured as the mean brand score, remained stable
with a small decrease of 0.2 points from 76.3 in 2009 to 76.1 (on a scale of
0 –100) in 2010.
11 Business ethics training
In 2010, 98% of all employees were trained in business ethics upon the
release of the updated Standard Operating Procedures. The scope of the
business ethics training includes all employees present in Novo Nordisk
by the time of the new releases. The training is conducted annually. This
disclosure is reported for the fi rst time this year, hence no historical data
exists.
In 2010, as in 2009, no warning letters were issued to Novo Nordisk by the
FDA in connection with GMP (Good Manufacturing Practice), GCP (Good
Clinical Practice) or GLP (Good Laboratory Practice) inspections. Nor were
any re-inspections issued to Novo Nordisk. In total, 105 inspections were
concluded in 2010, which is an increase of 36% compared to 2009, when
77 inspections were concluded. The increase is attributed to an increased
number of GMP and GCP inspections. More GMP inspections were con-
ducted, partly due to increased activities by the Danish Medicines Agency
to overcome a backlog situation and partly due to a more diverse supply
strategy. GCP inspections increased due to changes in reporting.
98 Novo Nordisk Annual Report 2010
13 Fulfi lment of action points from facilitations
of the Novo Nordisk Way of Management
In 2010, 93% of all action points, based on a three-year average, were
closed in a timely manner, which is consistent with 2009.
19 Wastewater
The total volume of wastewater decreased by 6% from 2,062,000 m 3
in 2009 to 1,935,000 m 3 in 2010, primarily due to changes in the diabetes
care production. In the same period, the discharged quantity of COD de-
creased by 10% from 617 tons in 2009 to 555 tons in 2010.
14 Supplier audits
20 Waste
In 2010, the total amount of waste decreased by 2% from 21,019 tons
in 2009 to 20,565 tons in 2010. This was due to a 12% decrease in the
quantity of hazardous waste. The volume of non-hazardous waste was
68% of total waste, representing an increase of 4%, whereas the recycling
percentage of total waste remained stable compared to 2009.
Tons
Non-hazardous waste
– Recycled (%)
– Incinerated (%) 1)
– Landfi ll (%)
– Special treatment (%)
Hazardous waste
– Recycled ethanol (%) 2)
– Incinerated ethanol (%) 3)
– Other (%)
2010
2009
2008
13,911
53
20
7
20
6,654
44
15
41
13,432
57
21
5
17
7,587
40
21
39
14,240
57
20
6
17
6,106
38
19
43
Total waste
20,565
21,019
20,346
Recycling percentage of total waste
50
51
51
1) 99% with energy recovery.
2) Ethanol recycled in eg biogas or wastewater treatment plants.
3) Incinerated at combined heat and power plants or at plants for special treatment of
hazardous waste with energy recovery.
21 Breaches of regulatory limit values
Ensuring compliance with legal environmental requirements is a high
priority for Novo Nordisk. The number of breaches of regulatory limit values
increased from 10 in 2009 to 18 in 2010, an increase of 80% due to
different types of breaches eg noise, smell and wastewater components.
In 2010, a total of 192 audits were conducted among suppliers, compared
to 196 in 2009. Audits are categorised as either ‘Responsible sourcing
audits’ or ‘Quality sourcing audits’.
Number
2010
2009
2008
Responsible sourcing audits
Quality sourcing audits
Total number of audits
26
166
192
20
176
196
31
130
161
The supplier audits in 2010 resulted in 539 non-conformities and follow-up
actions were performed according to procedures.
15 Energy
In 2010, the consumption of energy was 2,234,000 GJ, which is a small
decrease (0.5%) compared to 2,246,000 GJ in 2009. Reductions at the
production sites outweigh increases in other areas, such as the research and
development site in Denmark.
16 Water
The consumption of water decreased by 5% from 2,149,000 m 3 in 2009 to
2,047,000 m 3 in 2010. The decrease was mainly due to water saving efforts
in diabetes care production.
17 Raw materials and packaging materials
The consumption of raw materials decreased by 18% from 79,000 tons in
2009 to 65,000 tons in 2010. The decrease was mainly due to optimisations
in insulin bulk production in Kalundborg.
18 CO2 emissions
In 1,000 tons
2010
2009
2008
CO2 emissions from energy consumption
CO2 emissions from refrigerants
CO2 emissions from transport
Total CO2 emissions
95
6
57
158
146
6
N/A
215
N/A
N/A
The CO2 emissions from energy consumption related to production de-
creased by 35% from 146,000 tons in 2009 to 95,000 tons in 2010, mainly
due to the agreement with DONG Energy on receiving certifi cates from
the offshore wind turbine park Horns Rev 2 in Denmark, which started
operating in 2009. In 2010, the wind turbines were in production the whole
year.
The CO2 emissions from refrigerants remained stable at 6,000 tons in 2010
as in 2009. Novo Nordisk continues focusing on eliminating refrigerants
with a high CO2 potential and continuing to improve good operations and
maintenance practice for the cooling systems.
The CO2 emissions from transport in relation to distribution of products are
reported for the fi rst time this year, hence no historical data exists.
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Novo Nordisk Annual Report 2010 99
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Summary of fi nancial data 2006 –2010 in EUR
EUR million
Sales
Sales by business segment:
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)
Diabetes care total
NovoSeven®
Norditropin®
Hormone replacement therapy
Other products
Biopharmaceuticals total
Sales by geographical segment:
North America
Europe
International Operations 1)
– of which Region China
Japan & Korea 1)
Depreciation, amortisation and impairment losses
Operating profi t
Net fi nancials
Profi t before income taxes
Income taxes
Net profi t
Total assets
Total current liabilities
Total non-current liabilities
Equity
Capital expenditure
Free cash fl ow 2)
Net cash fl ow
2006
2007
2008
2009
2010
5,194
5,614
6,109
6,860
8,161
1,451
1,804
–
215
266
3,736
755
444
215
44
1,880
1,687
–
235
288
4,090
788
471
224
41
2,323
1,583
–
247
321
4,474
858
518
216
43
2,883
1,520
12
265
356
5,036
950
591
234
49
1,458
1,524
1,635
1,824
1,646
2,051
871
208
626
287
1,223
6
1,229
364
865
5,994
1,362
592
4,040
374
631
62
1,845
2,194
979
271
596
404
1,200
272
1,472
328
1,144
6,401
1,427
658
4,316
304
1,210
220
2,032
2,309
1,130
353
638
328
1,660
43
1,703
409
1,294
6,792
1,739
627
4,426
235
1,478
552
2,454
2,356
1,393
476
657
343
2,005
(126)
1,879
433
1,446
7,356
1,802
752
4,802
353
1,656
307
3,572
1,588
311
297
369
6,137
1,078
645
254
47
2,024
3,170
2,506
1,725
606
760
331
2,537
(82)
2,455
521
1,934
8,237
2,521
757
4,959
444
2,284
118
1) As of 1 January 2010 Korea joined Japan to form Region Japan & Korea while Australia and New Zealand became part of Region International Operations.
Comparatives for 2006 –2009 have been restated and are comparable to the 2010 regional set-up.
2) For defi nitions, please refer to p 92.
Key fi gures are translated into EUR as supplementary information – the translation of Income statement items is based on the average exchange rate in 2010 (EUR 1 = DKK 7.4472)
and the translation of Balance sheet items is based on the exchange rate at the end of 2010 (EUR 1 = DKK 7.4544). The fi gures in DKK refl ect the economic substance of the
underlying events and circumstances of the Group.
100 Novo Nordisk Annual Report 2010
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Quarterly fi nancial fi gures 2009 and 2010
DKK million
Sales
Sales by business segment:
Modern insulins (insulin analogues)
Human insulins
Victoza®
Protein-related products
Oral antidiabetic products (OAD)
Diabetes care total
NovoSeven®
Norditropin®
Hormone replacement therapy
Other products
Biopharmaceuticals total
Sales by geographical segment:
North America
Europe
International Operations 1)
– of which Region China
Japan & Korea 1)
Gross profi t
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income (net)
Operating profi t
Net fi nancials
Profi t before income taxes
Income taxes
2009
2010
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
12,498
13,001
12,517
13,062
13,674
15,394
15,584
16,124
4,990
3,004
–
484
691
5,414
2,879
–
492
675
5,353
2,747
28
491
650
5,714
2,685
59
510
636
5,862
2,773
370
503
645
6,792
3,099
296
583
704
6,820
2,963
700
567
736
7,127
2,992
951
561
666
9,169
9,460
9,269
9,604
10,153
11,474
11,786
12,297
1,805
1,034
409
81
1,874
1,122
435
110
1,651
1,074
440
83
1,742
1,171
460
85
1,914
1,083
443
81
2,155
1,245
450
70
1,965
1,233
517
83
1,996
1,242
482
107
3,329
3,541
3,248
3,458
3,521
3,920
3,798
3,827
4,532
4,195
2,607
923
1,164
9,990
3,844
1,744
679
87
3,810
(305)
3,505
806
4,710
4,375
2,661
854
1,255
10,391
3,837
1,849
693
78
4,090
(206)
3,884
893
4,527
4,376
2,447
876
1,167
9,832
3,502
1,884
666
34
3,814
(207)
3,607
852
4,510
4,594
2,656
883
1,302
10,427
4,237
2,387
726
142
3,219
(227)
2,992
669
5,221
4,432
2,865
1,030
1,156
10,984
3,984
2,131
711
224
4,382
(65)
4,317
993
5,988
4,671
3,296
1,083
1,439
12,425
4,364
2,434
745
159
5,041
(433)
4,608
1,060
6,114
4,675
3,341
1,214
1,454
12,648
4,573
2,302
759
110
5,124
(468)
4,656
1,071
6,286
4,886
3,341
1,181
1,611
13,039
5,274
2,735
850
164
4,344
361
4,705
759
Net profi t
2,699
2,991
2,755
2,323
3,324
3,548
3,585
3,946
Depreciation, amortisation and impairment losses
607
533
657
754
581
595
607
684
Total assets
Total equity
Financial ratios
In percentage of sales
Sales and distribution costs
Research and development costs
Administrative expenses
Gross margin 2)
Operating profi t margin 2)
Equity ratio 2)
Share ratios
50,205
31,345
51,246
34,086
52,589
34,874
54,742
35,734
54,155
32,916
57,048
33,635
57,162
34,264
61,402
36,965
30.8%
14.0%
5.4%
79.9%
30.5%
62.4%
29.5%
14.2%
5.3%
79.9%
31.5%
66.5%
28.0%
15.1%
5.3%
78.5%
30.5%
66.3%
32.4%
18.3%
5.6%
79.8%
24.6%
65.3%
29.1%
15.6%
5.2%
80.3%
32.0%
60.8%
28.3%
15.8%
4.8%
80.7%
32.7%
59.0%
29.3%
14.8%
4.9%
81.2%
32.9%
59.9%
32.7%
17.0%
5.3%
80.9%
26.9%
60.2%
Basic earnings per share/ADR (in DKK)
Diluted earnings per share/ADR (in DKK)
4.44
4.41
4.96
4.91
4.62
4.58
3.95
3.92
5.66
5.61
6.07
6.02
6.21
6.15
6.87
6.82
Average number of shares outstanding (million) – basic
Average number of shares outstanding (million) – diluted
607.4
612.7
603.1
607.9
596.4
601.4
589.9
595.2
587.6
593.0
584.0
588.9
577.6
582.3
572.7
577.5
Employees
Number of full-time employees at the end of the period
27,429
27,998
28,497
28,809
29,154
29,364
29,515
30,014
1) As of 1 January 2010 Korea joined Japan to form Region Japan & Korea while Australia and New Zealand became part of Region International Operations.
Comparatives for Q1– Q4 2009 have been restated and are comparable to the 2010 regional set-up.
2) For defi nitions, please refer to p 92.
Novo Nordisk Annual Report 2010 101
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Financial
statements
of the Parent
company
for 2010
103 Income statement
104 Balance sheet
105 Notes to the fi nancial statements
102 Novo Nordisk Annual Report 2010
Income statement for the year ended 31 December
DKK million
Sales
Cost of goods sold
Gross profi t
Sales and distribution costs
Research and development costs
Administrative expenses
Licence fees and other operating income (net)
Operating profi t
Profi t in subsidiaries, net of tax
Share of profi t in associated companies, net of tax
Financial income
Financial expenses
Profi t before income taxes
Income taxes
Net profi t for the year
Proposed appropriation of net profi t:
Dividends
Net revaluation reserve according to the equity method
Retained earnings
Note
2
3
3
3
3, 4
10
10
5
5
6
9, 10
2010
2009
37,261
11,609
27,834
9,155
25,652
18,679
10,196
7,998
1,385
691
6,764
9,475
1,089
437
1,884
6,932
6,739
1,229
433
4,212
8,170
(55)
381
1,087
15,881
11,621
1,466
857
14,415
10,764
5,700
1,573
7,142
4,400
5,751
613
14,415
10,764
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Novo Nordisk Annual Report 2010 103
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Balance sheet at 31 December
DKK million
Assets
Intangible assets
Property, plant and equipment
Financial assets
Total non-current assets
Raw materials and consumables
Work in progress
Finished goods
Inventories
Trade receivables
Amounts owed by affi liates
Tax receivables
Other receivables
Receivables
Marketable securities and fi nancial instruments
Cash at bank and in hand
Total current assets
Total assets
Equity and liabilities
Share capital
Net revaluation reserve according to the equity method
Retained earnings
Total equity
Deferred income tax liabilities
Other provisions
Total provisions
Mortgage debt
Other non-current debt
Non-current liabilities
Current debt and fi nancial instruments
Trade payables
Amounts owed to affi liates
Tax payables
Other current liabilities
Current liabilities
Total liabilities
Total equity and liabilities
104 Novo Nordisk Annual Report 2010
Note
2010
2009
7
8
10
9
12
13
11
1,083
14,418
19,314
781
14,381
17,400
34,815
32,562
1,231
4,896
1,551
7,678
1,388
6,748
518
879
9,533
1,100
6,509
1,492
9,101
1,081
3,889
464
623
6,057
3,980
1,528
11,418
10,625
32,609
27,311
67,424
59,873
600
9,791
26,565
620
22,415
12,670
36,956
35,705
204
561
765
504
–
504
1,669
1,479
23,186
–
2,865
880
566
1,446
503
467
970
306
1,188
17,454
1
2,803
29,199
21,752
29,703
22,722
67,424
59,873
Notes to the fi nancial statements
1 Accounting policies
The Financial statements of the Parent company have been prepared in
accordance with the Danish Financial Statements Act (Class D) and other
accounting regulations for companies listed on NASDAQ OMX Copen-
hagen.
The accounting policies for the Financial statements of the Parent company
are unchanged compared to last fi nancial year and are the same as for
the Consolidated fi nancial statements with the following additions. For a
description of the accounting policies of the Group, please refer to note 1
Basis of preparation of the consolidated fi nancial statements, pp 62– 66.
Supplementary accounting policies for the Parent company
Financial assets
In the fi nancial statements of the Parent company, Investments in sub-
sidiaries and associated companies are recorded under the equity method,
which is at the respective share of the net asset values in subsidiaries and
associated companies. Any cost in excess of net assets in the acquired
company is capitalised in the Parent company under Financial assets as
part of investments in subsidiaries (‘Goodwill’). Amortisation of goodwill is
provided under the straight-line method over a period not exceeding
20 years based on estimated useful life.
Net profi t of subsidiaries less unrealised intra-Group profi ts is recorded in
the Income statement of the Parent company.
To the extent it exceeds declared dividends from such companies, net
revaluation of investments in subsidiaries and associated companies is trans-
ferred to net revaluation reserve according to the equity method under
equity.
Fair value adjustments of fi nancial assets categorised as ‘Available for sale’
are recognised in the Parent company in the Income statement.
The profi ts in subsidiaries and associated companies are disclosed as profi t
after tax.
Tax
For Danish tax purposes, the Parent company is assessed jointly with its
Danish subsidiaries. The Danish jointly-taxed companies are included in a
Danish on-account tax payment scheme for Danish corporate income tax.
All current taxes under the scheme are recorded in the individual com-
panies.
Cash fl ow statement
No separate cash fl ow statement has been prepared for the Parent company
– please refer to the Consolidated statement of cash fl ow on p 60.
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3 Employee costs
DKK million
Wages and salaries
Share-based payment costs
Pensions
Other contributions to social security
Other employee costs
Total employee costs
2010
2009
5,730
637
576
155
250
6,106
121
541
144
275
7,348
7,187
Included in the Balance sheet as change
in employee costs included in inventories
(276)
90
For information regarding remuneration to the Board of Directors and
Executive Management, please refer to the ‘Remuneration report’ in section
Corporate governance, remuneration and leadership, pp 46 – 49 and the
Consolidated fi nancial statements note 4, p 69.
Average number of full-time
employees in Novo Nordisk A/S
4 Fee to statutory auditors
DKK million
Statutory audit
Audit-related services
Tax advisory services
Other services
2010
2009
11,052
10,910
2010
2009
8
4
7
–
8
1
6
2
Total fee to statutory auditors
19
17
5 Financial income and fi nancial expenses
DKK million
2010
2009
Interest income relating to subsidiaries
Foreign exchange gain (net)
Other fi nancial income
Total fi nancial income
Interest expenses relating to subsidiaries
Foreign exchange loss (net)
Other fi nancial expenses
14
206
217
437
122
–
1,762
24
–
357
381
157
57
873
Total fi nancial expenses
1,884
1,087
2 Sales
DKK million
Sales by business segment 1)
Diabetes care total
Biopharmaceuticals total
Total sales
Sales by geographical segment 1)
Europe
North America
International Operations
– of which Region China
Japan & Korea
Total sales
2010
2009
36,943
318
27,513
321
37,261
27,834
6 Income taxes
The Parent company paid income taxes of DKK 1,838 million related to the
current year (DKK 1,370 million in 2009).
12,134
13,373
8,892
3,191
2,862
10,603
7,013
6,917
2,590
3,301
37,261
27,834
Sales are attributed to geographical segment based on location of the
customer.
1) For defi nitions of the segments, please refer to the Consolidated fi nancial state-
ments, note 2, pp 67– 68.
Novo Nordisk Annual Report 2010 105
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7 Intangible assets
DKK million
Cost at the beginning of the year
Additions during the year
Disposals during the year
Cost at the end of the year
Amortisation at the beginning of the year
Amortisation during the year
Impairment losses for the year
Amortisation reversed on disposals during the year
Amortisation at the end of the year
Carrying amount at the end of the year
8 Property, plant and equipment
DKK million
Cost at the beginning of the year
Additions during the year
Disposals during the year
Transfer from/(to) other items
Goodwill
Patents and
licences
Other
intangible
assets
51
51
51
51
–
819
148
(42)
925
232
29
261
664
461
257
718
267
32
299
419
2010
Total
1,331
405
(42)
1,694
550
61
–
–
611
1,083
2009
Total
1,033
346
(48)
1,331
490
49
59
(48)
550
781
Land and
buildings
Plant and
machinery
Other
equipment
Payments
on account
and assets
in course of
construction
2010
Total
2009
Total
9,689
112
(13)
351
13,811
317
(783)
705
1,770
64
(47)
46
2,036
1,405
(1,102)
27,306
1,898
(843)
0
25,761
1,722
(177)
0
Cost at the end of the year
10,139
14,050
1,833
2,339
28,361
27,306
Depreciation and impairment losses at the beginning of the year
Depreciation for the year
Impairment losses for the year
Depreciation reversed on disposals during the year
3,424
412
37
(10)
8,407
1,112
30
(675)
1,094
155
1
(44)
–
12,925
1,679
68
(729)
11,249
1,648
168
(140)
Depreciation and impairment losses at the end of the year
3,863
8,874
1,206
–
13,943
12,925
Carrying amount at the end of the year
6,276
5,176
627
2,339
14,418
14,381
106 Novo Nordisk Annual Report 2010
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9 Statement of changes in equity
DKK million
Balance at the beginning of the year
Adjustment to beginning balance 1)
Appropriated from net profi t for the year
Proposed dividends
Appropriated from net profi t for the year to net revaluation reserve
Effect of hedged forecast transactions transferred to the Income statement
Fair value adjustments for the year on cash fl ow hedges
Dividends paid
Share-based payments
Purchase of treasury shares
Sale of treasury shares
Reduction of the B share capital
Exchange rate adjustment of investments in subsidiaries
Other adjustments
Share
capital
620
Net
revaluation
reserve
22,415
(14,139)
1,573
(20)
300
Retained
earnings
2010
Total
2009
Total
12,670
14,139
7,142
5,700
–
(422)
(635)
(4,400)
463
(9,498)
678
20
350
35,705
0
7,142
5,700
1,573
(422)
(635)
(4,400)
463
(9,498)
678
0
300
350
32,954
0
613
4,400
5,751
900
352
(3,650)
259
(6,512)
117
0
523
(2)
Balance at the end of the year
600
10,149
26,207
36,956
35,705
1) Transfer of unrealised internal profi t from previous years from net revaluation reserve to retained earnings.
Regarding average number of shares, please refer to the Consolidated fi nancial statements, note 10, p 70.
Regarding total number of A and B shares in Novo Nordisk A/S and treasury shares, please refer to the Consolidated fi nancial statements, note 18, p 76.
10 Financial assets
DKK million
Cost at the beginning of the year
Investments during the year
Divestments during the year
Transferred from associated companies to Other securities
Cost at the end of the year
Value adjustments at the beginning of the year
Profi t/(loss) before tax
Income taxes on profi t for the year
Amortisation and impairment of goodwill
Dividends received
Transferred from associated companies to Other securities
Divestments during the year
Effect of currency translation
Other adjustments
Value adjustments at the end of the year
Offset against amounts owed by subsidiaries
at the beginning of the year
Additions during the year
At the end of the year
Unrealised internal profi t at the beginning of the year
Change for the year – charged to Income statement
Change for the year – charged to Other comprehensive income
Effect of currency translation
At the end of the year
Carrying amount at the end of the year
Investments
in subsidiaries
Amounts
owed by
affi liates
Investments
in associated
companies
Other
securities
and
investments
2010
Total
2009
Total
8,201
540
8,741
22,199
11,974
(2,417)
(7,895)
1,030
(70)
24,821
102
(102)
0
(13,459)
(82)
(348)
(688)
(14,577)
18,985
73
26
(11)
88
–
–
–
–
88
616
38
(356)
(164)
134
(464)
1,132
–
(58)
(8)
96
(808)
15
(95)
488
73
(165)
164
560
(356)
(96)
94
9,378
677
(532)
0
9,523
21,379
13,106
(2,417)
(58)
(7,903)
0
(808)
1,030
39
9,340
53
(15)
–
9,378
15,186
10,708
(2,363)
(3)
(2,668)
–
–
478
41
(358)
24,368
21,379
–
–
102
(102)
0
61
41
102
(13,459)
(82)
(348)
(688)
(13,274)
(230)
–
45
–
39
–
(14,577)
(13,459)
202
19,314
17,400
Carrying amount of investments in subsidiaries and associated companies does not include capitalised goodwill at the end of the year (DKK 58 million
included in associated companies in 2009).
A list of companies in the Novo Nordisk Group is included in the Consolidated fi nancial statements, note 33, pp 90 – 91.
Novo Nordisk Annual Report 2010 107
11 Non-current liabilities
14 Commitments and contingencies
Non-current liabilities due after more than fi ve years from the balance sheet
date amounts to DKK 359 million (DKK 407 million in 2009).
DKK million
Commitments
Lease commitments
Contractual obligations relating to
investments in property, plant and equipment
Guarantees given for subsidiaries
Obligations related to research and
development projects
Other guarantees and commitments
Lease commitments expiring
within the following periods
as from the balance sheet date
Within one year
Between one and fi ve years
After fi ve years
Total lease commitments
The lease costs for 2010 and 2009 were
DKK 279 million and DKK 250 million, respectively.
Security for debt
Land, buildings and equipment etc.
at carrying amount
2010
2009
865
809
88
1,601
2,510
3,518
260
1,346
1,989
1,373
157
402
306
865
144
387
278
809
1,277
1,196
For information on pending litigation and other contingencies, please refer
to the Consolidated fi nancial statements, note 31, pp 87– 88.
15 Related party transactions
For information on transactions with related parties, please refer to the
Consolidated fi nancial statements, note 32, p 89.
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12 Deferred income tax liabilities
DKK million
2010
2009
The deferred tax assets/liabilities are
allocated to the various balance sheet
items as follows:
Property, plant and equipment
Indirect production costs
Unrealised profi t on intra-Group sales
Other
Total income tax liabilities
1,233
956
(1,780)
(205)
1,217
1,171
(1,587)
79
204
880
The deferred income tax has been calculated using a tax rate of 25%.
For a specifi cation of deferred income tax posted directly in Other com-
prehensive income, please refer to the Consolidated fi nancial statements,
note 9, p 70.
13 Other provisions
DKK million
Non-current
Current
Total other provisions
2010
2009
401
160
561
149
417
566
Provisions for pending litigations are recognised as other provisions.
Furthermore, as part of normal business Novo Nordisk issues credit notes
for expired goods. Consequently, a provision for future returns is made,
based on historical statistical product returns.
108 Novo Nordisk Annual Report 2010
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 2010.
The Consolidated fi nancial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting
Standards Board (IASB), and with the International Financial Reporting Standards as endorsed by the EU. The Financial statements of the Parent company,
Novo Nordisk A/S, are prepared in accordance with the Danish Financial Statements Act.
Further, the Consolidated fi nancial statements, the Financial statements of the Parent company and Management’s Review are prepared in accordance with
additional Danish disclosure requirements for listed companies.
In our opinion, the Consolidated fi nancial statements and the Financial statements of the Parent company give a true and fair view of the fi nancial position
at 31 December 2010, the results of the Group and Parent company operations and consolidated cash fl ows for the fi nancial year 2010. Furthermore, in our
opinion, Management’s Review includes a true and fair account of the development in the operations and fi nancial circumstances, of the results for the year
and of the fi nancial position of the Group and the Parent company as well as a description of the most signifi cant risks and elements of uncertainty facing
the Group and the Parent company.
Novo Nordisk’s consolidated non-fi nancial statement have been prepared in accordance with the non-fi nancial reporting principles of materiality, inclusivity
and responsiveness of AA1000APS(2008). They give a balanced and reasonable presentation of the organisation’s economic, environmental and social
performance.
We recommend that the Annual Report be adopted at the Annual General Meeting.
Bagsværd, 1 February 2011
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
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Henrik Gürtler
Ulrik Hjulmand-Lassen
Pamela J Kirby
Anne Marie Kverneland
Kurt Anker Nielsen
Chairman of
the Audit Committee
Søren Thuesen Pedersen
Hannu Ryöppönen
Audit Committee member
Stig Strøbæk
Jørgen Wedel
Audit Committee member
Novo Nordisk Annual Report 2010 109
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Independent Auditor’s Report on the Annual Report
for 2010
To the Shareholders of Novo Nordisk A/S
We have audited the Annual Report of Novo Nordisk A/S for the fi nancial
year 2010, pp 2– 92 and pp 102–109, which comprises Management
Statement, Management’s review, Income Statement, Statement of Com-
prehensive Income, Balance Sheet, Statement of Changes in Equity and
Notes including accounting policies for the Group as well as for the Parent
Company and Consolidated Cash Flow Statement.
The Consolidated Financial Statements are prepared in accordance with
International Financial Reporting Standards as issued by the International
Accounting Standards Board, and International Financial Reporting
Standards as endorsed by the EU. The Financial Statements of the Parent
Company are prepared in accordance with the Danish Financial Statements
Act. Moreover, the Annual Report is prepared in accordance with additional
Danish disclosure requirements for listed companies.
Management’s Responsibility
Management is responsible for the preparation and fair presentation of
the Consolidated Financial Statements and the Financial Statements of the
Parent Company in accordance with the above legislation and accounting
standards. This responsibility includes: designing, implementing and main-
taining internal control relevant to the preparation and fair presentation of
Consolidated Financial Statements and Financial Statements of the Parent
Company that are free from material misstatement, whether due to fraud
or error.
The responsibility also includes selecting and applying appropriate
accounting policies; and making accounting estimates that are reasonable
in the circumstances. Furthermore, Management is responsible for the
preparation of a Management’s review that gives a true and fair account in
accordance with Danish disclosure requirements for listed companies.
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 that the Annual Report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the 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 Entity’s preparation and fair presentation of Consolidated
Financial Statements and Financial Statements of the Parent Company and
to the preparation of a Management’s review that gives a true and fair
account in order to design audit procedures that are appropriate in the
circumstances.
An audit also includes evaluating the appropriateness of accounting policies
used and the reasonableness of accounting estimates made by Manage-
ment, as well as evaluating the overall presentation of the Annual Report.
We believe that the audit evidence we have obtained is suffi cient and
appropriate to provide a basis for our audit opinion.
Our audit has not resulted in any qualifi cation.
Opinion
In our opinion, the Annual Report gives a true and fair view of the fi nancial
position at 31 December 2010 of the Group and of the results of the
Group’s operations and consolidated cash fl ows for the fi nancial year 2010
in accordance with International Financial Reporting Standards as issued by
the International Accounting Statements Board, and International Financial
Reporting Standards as endorsed by the EU and additional Danish disclosure
requirements for listed companies. Moreover, in our opinion the Annual
Report gives a true and fair view of the fi nancial position at 31 December
2010 of the Parent Company and of the results of the Parent Company’s
operations for the fi nancial year 2010 in accordance with the Danish
Financial Statements Act and additional Danish disclosure requirements for
listed companies. Furthermore, in our opinion the Management’s review
gives a true and fair account in accordance with Danish disclosure require-
ments for listed companies.
Bagsværd, 1 February 2011
PricewaterhouseCoopers
Statsautoriseret Revisionsaktieselskab
Mogens Nørgaard Mogensen
Danish State Authorised
Public Accountant
Lars Baungaard
Danish State Authorised
Public Accountant
110 Novo Nordisk Annual Report 2010
Independent Assurance Report on the non-fi nancial
reporting for 2010
To the Stakeholders of Novo Nordisk A/S
We have reviewed the non-fi nancial information in the Annual Report
of Novo Nordisk A/S for the fi nancial year 2010, which comprises Manage-
ment’s Statement, Management’s Review, the non-fi nancial accounting
policies and the consolidated non-fi nancial statement on pp 2– 56, 93 – 99
and 109.
The assurance engagement has furthermore covered the nature and
extent of Novo Nordisk A/S incorporation of the AA1000 AccountAbility
Principles Standard (AA1000APS(2008)) principles (inclusivity, materiality
and responsiveness) with respect to stakeholder dialogue.
Criteria for the preparation of reporting on data
The non-fi nancial information is prepared in accordance with the
accounting policies described on pp 94 – 96.
Management’s responsibility
Novo Nordisk A/S’ Management is responsible for preparing the non-
fi nancial information, including for establishing data collection and registra-
tion, internal control systems with a view to ensuring reliable reporting,
specifying acceptable reporting criteria and choosing data to be collected
for intended users of the report. Also, adherence to AA1000APS(2008)
and the three principles of inclusivity, materiality and responsiveness is the
responsibility of Novo Nordisk A/S’ Management.
Assurance provider’s responsibility
Our responsibility is, on the basis of our work, to express a conclusion
on the reliability of the non-fi nancial information in the report. Further-
more, our responsibility is, by applying the AA1000 Assurance Standard
(AA1000AS(2008)), to express a conclusion on as well as to make recom-
mendations for the nature and extent of Novo Nordisk A/S’ adherence to
the AA1000APS(2008) principles.
Our team of experts have competences in respect of assurance engage-
ments related to non-fi nancial information. In addition, our team have
competences in assessing non-fi nancial information and sustainability
management, and thus qualify to conduct this independent assurance
engagement. During 2010 we have not performed any tasks or services
to Novo Nordisk A/S or other clients that would confl ict with our inde-
pendence, nor have we been responsible for the preparation of any
part of the report; and therefore qualify as independent as defi ned by in
AA1000AS(2008).
Scope, standards and criteria used
We have planned and performed our work in accordance with the Inter-
national Standard on Assurance Engagements (ISAE) 3000, ‘Assurance
Engagements other than Audits or Reviews of Historical Financial Informa-
tion’, to obtain limited assurance that the non-fi nancial information in
the Annual Report is free of material misstatements and that the informa-
tion has been presented in accordance with the non-fi nancial accounting
policies. The assurance obtained is limited, as our work compared to that of
an engagement with reasonable assurance has been limited to, principally,
inquiries, interviews and analytical procedures related to registration and
communication systems, data and underlying documentation.
Moreover, we have planned and performed our work based on the
AA1000AS(2008), using the criteria in the AA1000APS(2008), to perform a
Type 2 engagement and to obtain a moderate level of assurance regarding
the nature and extent of Novo Nordisk A/S’ adherence to the principles of
inclusivity, materiality and responsiveness.
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Methodology, approach, limitation and scope of work
Based on an assessment of materiality and risk, our work included:
(i) Inquiries regarding procedures and methods to ensure that non-fi nancial
reporting include data from the Group’s Business Unit operations, and
that these data have been incorporated in compliance with the accounting
policies. Through site visits to Bagsværd, Gentofte, Kalundborg and Montes
Claros and based on requests and selected documentation, we have
furthermore assessed the existing systems for data collection and registra-
tion, and procedures to ensure reliable reporting;
(ii) Inquiries and interviews with members of Executive Management, staff
from the sustainability development department, as well as Management
representing different functions in the Group, regarding Novo Nordisk A/S’
adherence to the principles of inclusivity, materiality and responsiveness,
including Management’s commitment to the principles, the existence
of systems and procedures to support adherence to the principles and the
embedding of the principles at corporate level.
Conclusion
Based on our review, nothing has come to our attention which causes
us not to believe that the non-fi nancial performance information presented
in the Annual Report 2010 (on pp 2– 56, 93 – 99 and 109) is free of
material misstatements and has been stated in accordance with the criteria
mentioned.
Furthermore, nothing has come to our attention causing us to believe that
Novo Nordisk A/S does not adhere to the AA1000APS(2008) principles.
Observations and recommendations
According to AA1000AS(2008), we are required to include observations
and recommendations for improvements in relation to adherence to the
AA1000APS(2008) principles:
Regarding inclusivity
Novo Nordisk A/S’ Management has a strong commitment to inclusivity
and stakeholder engagement. Also, the Company has in place systems and
processes to ensure a continuous mapping of relevant stakeholders, as
well as a structured and systematic approach to ensuring the inclusion of
stakeholder concerns, demands and expectations at a corporate level.
We recommend that Novo Nordisk A/S continue to work on ensuring a
systematic and structured approach to the AA1000APS(2008) principles at
a local level.
Regarding materiality
Novo Nordisk A/S’ Management systematically takes the principle of mate-
riality into consideration when making decisions regarding sustainability
at management level. Also, the Company has in place a number of relevant
senior management level governance bodies to discuss, evaluate and
determine the materiality of sustainability issues on ongoing basis.
We recommend that the process and criteria applied to assess materiality
of non-fi nancial issues is formalised and documented to ensure a consistent
process.
Regarding responsiveness
Novo Nordisk A/S is committed to being responsive to stakeholders as is
evident from the wide range of media, forums and communication chan-
nels used by Novo Nordisk A/S to communicate on sustainability issues.
With respect to responsiveness we have no comments.
Bagsværd, 1 February, 2011
PricewaterhouseCoopers
Statsautoriseret Revisionsaktieselskab
Mogens Nørgaard Mogensen
State Authorised Public
Accountant
Lars Baungaard
State Authorised Public
Accountant
Novo Nordisk Annual Report 2010 111
Index
In addition to the information reported in this integrated annual report, we report information for specific stakeholder groups
at annualreport2010.novonordisk.com. To help you find information, this index is arranged with the categories used online. An
explanation of where you can find information reported in accordance with voluntary reporting standards is also included below.
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Topic
Page(s) in this report
5, 9, 31–32, 38, 96
98
31–34, 37
97
97
19–20, 97
9-10, 15, 21, 93
6–9, 14, 58–61, 100–101
9–10, 15, 93, 97–99
4, 9–10, 15, 93, 99
12–15
Performance
Triple Bottom Line Performance
Financial performance
Social performance
Environmental performance
Long-term targets
Social
Access to health
Safety and quality
Support and advocacy
Clinical research
People
Diversity
Talent and leadership development 19
34
NovoHealth
46–49, 69
Wages and benefi ts
97
Workplace statistics
10, 93, 98
Health and safety
10, 19, 98
Business ethics
98
Socioeconomics
39
Ethics in research
97
Animal welfare
–
Gene technology
18
Stem cell research
31
Human rights
10, 44, 93, 99
Supply chain
8, 14, 45, 58–61, 70, 77
Tax contribution
9, 32, 35, 38, 87, 89, 93, 96
Donations
–
Employee volunteering
Environmental
Environmental strategy
Limiting our footprint
Climate action
Product stewardship
Governance
Novo Nordisk Way
Corporate governance
Risk management
Stakeholders & reporting
Stakeholder engagement
Public affairs
Partnerships
Memberships
Awards and recognition
About our reporting
Integrated reporting
Audit and assurance
Online report archive
21, 31–35, 37–38
32–35, 37–38
21, 32, 34
–
–
62–66, 94–96
1, 94
42, 110–111
–
10
10, 99
10, 99
–
23
40–42
43–45
112 Novo Nordisk Annual Report 2010
Global Reporting
Initiative Indicator
SO7
EN1, EN3, EN4, EN8, EN16, EN20–23
EC8
PR1–4
PR3
EC7, LA11–12
LA13
LA12
LA8
EC5, LA3–4, LA12
LA7
SO2–3, PR6–7
EC1, EC9
UN Global Compact
Principle (P) and
Advanced Criteria (C)
C1
C7
C1, C7, C9–12
P8, C7, C9–12
C7
C3, C5, C6, C9–12
C5, C9–12
P10
P6
P6
P6
P3, P6
P6
P10, C13–16
HR1–9, SO5
EC6, HR1–2
P1–6, P10, C3, C9–12
P1–6, C4, C9–12, C13–16
EN13, EN30
EN5, EN7, EN18
EN26
C3
P8
P8, P9
P7–9
C5, C13–16
C2, C6
C1, C4, C7
SO5–6
P10, C3
C8
Our products
This report makes reference to European product trade names. The list below provides an overview of European trade names with
accompanying generic names. Trade and generic names may differ in other markets.
Therapeutic area
Diabetes care
Modern insulins
Glucagon-Like Peptide-1
Human insulins
Diabetes devices
Oral antidiabetic agents
Biopharmaceuticals
Haemostasis
Human growth hormone
Hormone replacement therapy
.
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Trade name
Generic name
Levemir®
Insulin detemir
NovoRapid®
Insulin aspart
NovoMix® 30
Biphasic insulin aspart
NovoMix® 50
Biphasic insulin aspart
NovoMix® 70
Biphasic insulin aspart
Victoza®
Insulatard®
Actrapid®
Mixtard® 30
FlexPen®
Liraglutide
Insulin human
Insulin human
Insulin human
Prefilled insulin delivery system
NovoPen® 4
Durable insulin delivery system
NovoPen Echo®
Durable insulin delivery system
InnoLet®
NovoFine®
NovoTwist®
GlucaGen®
NovoNorm®
PrandiMet®
Prefilled insulin delivery system
Needle
Needle
Glucagon
Repaglinide
Repaglinide/metformin
NovoSeven®
Norditropin®
Recombinant factor VIIa
Somatropin (rDNA origin)
Norditropin® FlexPro®
Prefilled multidose delivery system
NordiFlex™
Prefilled multidose delivery system
NordiFlex PenMate®
Automatic needle insertion accessory
NordiPen®
Prefilled multidose delivery system
NordiPenMate®
Prefilled multidose delivery system
NordiLet®
Activelle®
Estrofem®
Novofem®
Vagifem®
Prefilled multidose delivery system
Estradiol/norethisterone acetate
Estradiol
Estradiol/norethisterone acetate
Estradiol hemihydrate
Market share data on pp 7 and 26–27 is from IMS Health, IMS MIDAS Customized Insights (November 2010). Market defi nition for retail: Argentina, Australia, Austria, Belgium, Brazil, Bulgaria,
Canada, Czech, Denmark, Egypt, Estonia, France, Finland, Germany, Greece, Hungary, India, Ireland, Italy, Japan, Korea, Latvia, Lithuania, Luxembourg, Mexico, Netherlands, New Zealand, Norway,
Poland, Portugal, Romania, Saudi Arabia, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, UK and US. Market defi nition for hospitals: Australia, Bulgaria, Canada, China, Czech,
Denmark, Germany, Hungary, Italy, Japan, Latvia, Lithuania, New Zealand, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, UK and US.
Novo Nordisk Annual Report 2010 113
“ I want to look
back on my life
and see that
I worked to
help people.”
Liu Hong-yu
Headquarters
Novo Nordisk A/S
Novo Allé
2880 Bagsværd
Denmark
Tel +45 4444 8888
webmaster@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 & Co
PO Box 64504
St Paul, MN 55164-0504
USA
Tel +1 800 990 1135
Tel +1 651 453 2128
CVR number 24 25 67 90
novonordisk.com
Reaching for the stars
Liu Hong-yu, a Novo Nordisk scientist with diabetes, has always aimed high.
As a child, he dreamed of being an astronaut and flying the 41.5 trillion
kilometres to Alpha Centauri, the closest star to our solar system. Now, his
aim is to cure chronic conditions.
As director of a newly established pilot project, Hong-yu, together with eight
colleagues, is responsible for the process optimisation, scale up and production
of proteins for preclinical testing. Departments within the research and
development centre rely on his team’s work to test hypotheses, validate
concepts and discover new targets. Though the search can be frustrating, with
nearly nine out of 10 searches ending in failure, Hong-yu remains enthusiastic
about finding new options to improve treatment.
An annual check-up in 2000 revealed Hong-yu had diabetes, which doctors
initially believed was type 2. When oral medications proved ineffective, more
blood work was done. The results showed that he had latent autoimmune
diabetes in adults, a rare form of diabetes called type 1.5.
Hong-yu manages his diabetes with a combination of exercise, diet and insulin.
The most difficult change has been reducing his time on the basketball court,
a precaution to avoid overexertion, which can impact blood glucose levels.
On the cover, Hong-yu is pictured with his son Centauri, named after the star
Hong-yu dreamed of reaching as a child.