Novo Resources
Annual Report 2011

Plain-text annual report

Financial, social and environmental performance Key figures 2011 Financial performance Sales total Diabetes care – of which modern insulins – of which Victoza® Biopharmaceuticals Gross profit Gross margin Sales and distribution costs Research and development costs Administrative expenses Operating profit Net profit Effective tax rate Capital expenditure, net Free cash flow Long-term financial targets Operating profit margin Growth in operating profit Operating profit after tax to net operating assets1 Cash to earnings (three-year average) Social performance Healthcare professionals trained or educated in diabetes Donations Employees (total) Average of full-time employees Employee turnover Relevant employees trained in business ethics Long-term social targets Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy Engaging culture Diverse senior management teams Environmental performance Energy consumption Water consumption CO2 emissions from energy consumption DKK million 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 % % % % 1,000 DKK million Number Number % % % Scale 1– 5 % 1,000 GJ 1,000 m3 1,000 tons Long-term environmental targets Energy consumption (change compared with 2007) Water consumption (change compared with 2007) CO2 emissions from energy consumption (change compared with 2004) % % % Share performance Diluted earnings per share/ADR Dividend per share (proposed) Closing share price (B shares) Market capitalisation (B shares)2 DKK DKK DKK DKK billion 1. The long-term financial targets were updated in February 2012. Please refer to p 6. 2. Novo Nordisk B shares (excluding treasury shares). See more performance highlights on pp 14 –15. 2011 2010 Change 66,346 50,425 28,765 5,991 15,921 53,757 81.0 28.6 14.5 4.9 22,374 17,097 22.0 3,003 18,112 33.7 18.4 77.9 112.8 835 81 32,632 31,499 9.8 99 75 4.3 62 2,187 2,136 93 (21) (34) (56) 29.99 14.00 660 296 60,776 45,710 26,601 2,317 15,066 49,096 80.8 29.9 15.8 5.0 18,891 14,403 21.2 3,308 17,013 31.1 26.5 63.6 115.6 373 84 30,483 29,423 9.1 98 67 4.3 54 2,234 2,047 95 (20) (37) (55) 24.60 10.00 629 292 9.2% 10.3% 8.1% 158.6% 5.7% 9.5% 18.4% 18.7% (9.2%) 6.5% Long-term financial targets1 35% 15% 90% 90% 123.9% (3.6%) 7.0% 7.1% Long-term social targets 100% 4.0 100% by 2014 (2.1%) 4.3% (2.1%) Long-term environmental targets 11% reduction by 2011 11% reduction by 2011 10% reduction by 2014 21.9% 40.0% 4.9% 1.4% 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 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 32,000 employees in 75 countries and markets products in more than 190 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. We leverage our expertise to make a difference in quality of care. We report on our financial, social and environmental performance in one integrated report and we report additional information online. This public filing contains references and links to information posted on the company’s website; such information is not incor - porated by reference into the public filing. The management review, as defined by the Danish Financial Statements Act, is com prised of pp 2–54 and 100–101. Material and business-critical information is reported in the annual report. Information for specific stakeholder groups is reported at annualreport2011.novonordisk.com. We value feedback and welcome questions or comments about this report or our perfor- mance at annualreport@novonordisk.com. 2 Our 2011 accomplishments and results 2 Letter from the Chairman 3 Letter from the CEO 5 Performance in 2011 13 Outlook 2012 14 Performance highlights 16 Our business 17 The Novo Nordisk Way 18 Our business 18 Our corporate strategy 20 Triple Bottom Line management 22 Risk management 26 Pipeline overview 28 Novo Nordisk at a glance 30 Diabetes care 31 The diabetes pandemic 33 Different pathways to diabetes control 34 Changing Diabetes® 36 Biopharmaceuticals 37 Commitment to haemophilia 38 Changing Possibilities in Haemophilia® 39 Other therapy areas 40 Governance, remuneration and leadership 41 Corporate governance 44 Remuneration report 48 Board of Directors 51 Executive Management 52 Shares and capital structure 55 Financial, social and environmental statements 56 Consolidated financial, social and environmental statements 100 Summary of financial data 2007–2011 in EUR 101 Quarterly financial figures 2010 and 2011 102 Financial statements of the Parent company 109 Management’s statement and Auditor’s reports 112 Additional information 112 Index 113 Our products Novo Nordisk Annual Report 2011 1 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Letter from the Chairman Sten Scheibye Chairman of the Board of Directors Novo Nordisk has been a focused pharmaceutical company specialising in therapeutic proteins, primarily for diabetes care, for nearly 90 years. Our company is characterised by a deep disease knowledge within diabetes, a long-term focus and a commitment to making innovative treatments broadly available – also in areas outside diabetes. According to new data announced in 2011, diabetes affects around 366 million people globally and is responsible for the deaths of nearly 4.6 million adults each year. In comparison, 1.8 million people died from HIV/AIDS in 2009. Diabetes and other chronic diseases are becoming more prevalent all over the world as urbanisation increases and more people live longer. There has never been more need for a company like Novo Nordisk. While the short-term outlook for the global economy and for many parts of the healthcare industry is uncertain, the Board of Directors is of the firm belief that Novo Nordisk must continue to invest in innovations in treatment and in expanding its business footprint in all corners of the world. As the company expands globally, we only do business the ‘Novo Nordisk Way’. This means we operate in ways that balance financial, social and environmental responsibility for the benefit of patients, employees, healthcare professionals, share holders and society at large. The results achieved in 2011 in terms of both sales and new product development are remarkably strong in light of the difficult eco no mic and regulatory climate. Novo Nordisk’s balance sheet and cash flow remain strong, and the Board has confidence in the strategic direction and growth prospects for the company. We have 2 Novo Nordisk Annual Report 2011 therefore consistently increased the dividend in recent years, raising dividends by 33% to 10.00 Danish kroner per share for 2010. The proposed dividend for 2011 is 14.00 kroner per share, a 40% increase. We have also continued our share repurchase programme, repur chasing shares worth 12 billion kroner in the 12-month period ending January 2012. The coming years will be extraordinarily important for Novo Nordisk’s long-term development. On one hand the company has never had a more promising pipeline of new products than it has today. Extremely important launches are on the horizon. On the other hand, the pharmaceutical industry is under immense pressure globally from measures to reform healthcare and reduce spending on pharmaceuticals, particularly for new and innovative products. In light of this, the Board has concluded that Lars Rebien Sørensen, Novo Nordisk’s president and chief executive officer, is the right person to steer the company through this exciting – and chal - lenging – period. I am therefore pleased that Lars has accepted the Board’s proposal to extend his contract by three years, so that it now expires in 2019. Novo Nordisk has in 2011 continued to increase sales and expand its business at a remarkable pace, and the Board would like to express its appreciation for the leadership shown by Lars Rebien Sørensen and his Executive Management team and the hard work and dedication of the entire Novo Nordisk organisation. Sten Scheibye Chairman of the Board of Directors s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Letter from the CEO Lars Rebien Sørensen President and chief executive officer Just as we thought the global economy was recovering from the financial crisis in 2008, we were reminded midway through 2011 that there is still a long way to go. We saw slow or no economic growth and growing public debts in European countries and the US, with the focus swinging between the instability in the euro zone and the political stalemate in the US Congress preventing adoption of long-term financial measures to deal with soaring public debt. Innovation is the only sustainable engine for growth. The situation has been likened to the Great Depression in the 1930s, with hardship felt today by millions of people who have lost their jobs or their savings, but the situation today is different nevertheless. It seems more like a crisis of confidence – confidence in our financial systems, in our democracies’ ability to agree on long-term solutions, and in ourselves and each other. What we are witnessing is a giant transfer of wealth and jobs from economies in the West to emerging economies in Asia, the Middle East, Latin America and, to some extent, Africa. This is painful for those affected negatively, but we must not forget that more jobs are being created than lost and that the livelihood of hundreds of millions of people is improving, creating the foundation for more equal growth in the future. I am confident that many companies will emerge from the crisis as more innovative, having realised that innovation is the only sustainable engine for growth. This means finding better ways of providing goods and services and solving unmet needs in a financially, socially and environmentally respon - sible way. With public spending under pressure, provision of healthcare has again been in focus and, consequently, the pharmaceutical industry has had to make significant adjustments. No market we serve has been untouched by this trend. In 2011, Novo Nordisk faced the consequences of healthcare reforms in many markets – with our business in the US and Europe particularly affected. Review of 2011 Given the current climate, it is rewarding that Novo Nordisk was able to grow sales by 11% in local currencies in 2011. This growth was driven by our full portfolio of modern insulins, NovoRapid®, Levemir® and NovoMix®, but most significantly by the increasing demand for Victoza®, our treatment for type 2 diabetes, which became the leader in the GLP-1 category of diabetes treatments. This sales growth, combined with continued focus on efficiency of our operations, resulted in operating profit growth of 18% reported and 22% in local currencies. This is significantly above results for the general pharmaceutical industry. Equally significant were the finalisation of the clinical activities and filing for regulatory approval in Europe, Japan and the US of a new generation of insulin products. These are based on the ultra-long principle of Degludec, allowing for a half-life twice as long as the basal insulins most commonly used today. With these products it is our hope that we can offer both the world’s longest-acting basal insulin, Degludec, and a combination of this basal insulin with the world’s leading short-acting insulin, NovoRapid® (NovoLog®), DegludecPlus, which will offer people with diabetes superior Novo Nordisk Annual Report 2011 3 Looking ahead We have significant confidence in our people, our pipeline and our products. Unlike most of the pharmaceutical industry, Novo Nordisk will undertake a year of major investments in 2012. This includes investment in further market expansion of our current portfolio, in preparing for the launch of our new-generation insulins and in research and development activities for the medium to long term. Our focus in 2012 will be on: (cid:282) The regulatory process for approval of Degludec and DegludecPlus in our main markets and preparations for the launch of these new-generation insulins. (cid:282) Execution and monitoring of the phase 3 clinical programme for liraglutide in obesity. (cid:282) Clinical development of fixed combinations of Degludec and Victoza®, which may offer a new option for intensification of the treatment of type 2 diabetes. (cid:282) Clinical development of vatreptacog alfa, for improved treatment of haemophilia with inhibitors. (cid:282) Expansion of our international organisation, particularly in fast- growing regions in the areas of sales and marketing, production and research and development. (cid:282) Co-organising the European Diabetes Leadership Forum under the auspices of the Danish EU presidency to reach consensus about what it will take to address the current challenges and change diabetes. With significant investment and continued focus on development, we expect continued growth for Novo Nordisk in 2012 and beyond. I would like to thank the entire Novo Nordisk organisation for their contributions to our success this year, our stakeholders and partners for their collaboration, and our shareholders for their confidence and continued support. Lars Rebien Sørensen President and chief executive officer s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O glucose control, reducing the risk of hypoglycaemia (too low blood sugar) and providing greater dosing flexibility. Degludec is also designed to provide people with diabetes the flexibility to administer their insulin at any time of day, at different times from day to day. We also saw innovation across a broad range of our therapeutic areas, with progress in the development of a new clotting factor, vatreptacog alfa, intended to improve treatment for haemophilia patients with inhibitors. We also made progress in the development of molecules to support the expansion of our presence into haemophilia A and B, as well as in a strong portfolio of inflammation development projects. In 2011, all UN member states pledged to develop diabetes strategies and set targets for improvement. The year was also a success for the millions of people with diabetes and other chronic conditions. I was encouraged by the outcome of the United Nations High-Level Meeting on non-communicable diseases in New York in September. Novo Nordisk played a part in the adoption of a UN declaration on diabetes in 2006, and last year we again played a role as all UN member states pledged to develop diabetes strategies and set targets for improvement in screening, treatment and outcomes. This was a moment for celebration for people with diabetes throughout the world. We believe the pledge by UN member states can be translated into concrete action to increase awareness of the threat diabetes poses. Our new vision statement and updated guiding principles and values, The Novo Nordisk Way, clearly states that “we never compromise on quality and business ethics”. With this we want to send a clear signal, internally as well as externally, regarding what our stakeholders can expect from each of us at Novo Nordisk. To support this commitment to integrity and high standards, in 2011 we further strengthened our efforts to ensure adherence to our global policies and procedures. Not all went according to plan, however, in 2011. Healthcare reforms in Europe, combined with the anaemic expec tations of the future pharmaceutical market, forced us to re-allocate resources from our European organisation to fast-growing markets in the US and Asia. This led to the unfortunate redundancy of approximately 300 positions. We value our people and we did not take this decision lightly. Securing cost-efficiency, however, is the only guarantee for the long-term success of our company. In Asia, a major earthquake off the coast of Japan caused a giant tsunami which killed thousands and caused severe property damage as well as contributing to a nuclear meltdown close to our factory in Koriyama. We were proud to see our Japanese colleagues standing firm while confronted with great personal hardship, ensuring our ability to deliver life-saving medicines to the people of Japan while protec ting the assets of our company. 4 Novo Nordisk Annual Report 2011 Performance in 2011 Despite continued global economic turmoil, 2011 was a positive year for Novo Nordisk with strong sales growth, good performance against long-term financial, social and environmental targets and very significant progress in the clinical development pipeline. Sales increased by 9% in Danish kroner and by 11% measured in local currencies during 2011 compared to 2010. Sales growth was realised in both diabetes care and biopharmaceuticals. Victoza® and modern insulins were the main contributors to growth, with Victoza® sales increasing by 159% (166% in local currencies) and sales of modern insulins increasing 8% (11% in local currencies). Sales growth was realised in all regions. Sales in North America increased by 13% and in International Operations by 12%, both in Danish kroner, and by 18% and 17% respectively in local currencies. Sales growth in 2011 was reduced by approximately 2 percentage points due to healthcare reforms in the US, several European markets, Turkey and China. 2011 was a positive year for Novo Nordisk with strong sales growth. Novo Nordisk achieved a significant milestone in 2011, as applications for marketing authorisation of two new-generation insulins, Degludec1 and DegludecPlus2, were filed in major markets. We made significant progress in the development of solutions for the range of haemophilia and other rare bleeding disorders, including initiation of a phase 3 trial programme for a fast-acting treatment of haemophilia with inhibitors. A phase 1 trial was also initiated for a long-acting growth hormone formulation. In addition, we exceeded long-term targets for resource optima- tisation, both in terms of reduced energy and water consumption for production and CO2 emissions from energy consumption for production. We also continued to exceed our long-term target for employee engagement. Notable progress was made in reaching targets for insulin sales in least developed countries and increasing diversity in our senior management teams. Financial performance 2011 performance against long-term financial targets By focusing on growth, profitability, operating assets and generation of cash, our four long-term financial targets guide Novo Nordisk’s financial development. Our historic long-term financial targets are operating profit growth, operating margin, operating profit after tax to net operating assets and cash conversion. The realised per for- mance for three of the four ratios exceeded the target level while the operating margin performance was progressing towards the target. See p 6 for an update on the long-term financial targets. Diabetes care sales development Sales of diabetes care products increased by 13% measured in local currencies and by 10% in Danish kroner to DKK 50,425 million in 2011 compared to 2010. Novo Nordisk is the world leader in diabetes care and now holds a global value market share of 24% compared to 23% at the same point in time last year. Modern insulins, human insulins and protein-related products In 2011, sales of modern insulins, human insulins and protein- related products increased by 5% measured in local currencies and by 3% in Danish kroner to DKK 41,859 million compared to 2010, driven by North America, International Operations and Region China. Global insulin sales growth was negatively impacted by healthcare reforms in the US, Europe, Turkey and China as well as by a decline in human insulin sales in Europe, the US and Japan. s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Growth in operating profit Target Realised Realised excl pulmonary diabetes projects Operating margin Target Realised Realised excl pulmonary diabetes projects Operating profit after tax to net operating assets (Previously: Return on invested capital) Target Realised Cash to earnings Three-year average Target Realised % 50 40 30 20 10 0 % 40 35 30 25 20 % 100 80 60 40 20 0 % 150 120 90 60 30 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 1. Internal designation for insulin degludec. 2. Internal designation for insulin degludec/insulin aspart. Novo Nordisk Annual Report 2011 5 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Sales of modern insulins increased by 11% in local currencies and by 8% in Danish kroner to DKK 28,765 million compared to 2010, reflecting steady sales growth. North America, International Operations and Europe were the main contributors to the growth. Sales of modern insulins constitute more than 72% of Novo Nordisk’s sales of insulin. North America Sales of modern insulins, human insulins and protein-related products in North America increased by 9% in local currencies and by 4% measured in Danish kroner in 2011. This reflects continued solid sales performance especially of NovoRapid® and Levemir® offset by a decline in human insulin sales and a negative impact of approximately 5 percentage points from the US health- care reform enacted in March 2010. Currently, around 46% of Novo Nordisk’s modern insulin volume in the US is being sold in the prefilled device FlexPen® compared to around 43% in the same period last year. Europe Sales in Europe decreased by 1% in local currencies and by 1% measured in Danish kroner in 2011. This reflects continued sales growth for modern insulins offset by a decline in human insulin sales. The growth of the insulin volume in Europe is currently low, below 3%, and Novo Nordisk’s full year insulin sales are negatively impacted by market share losses, especially in the UK, and by healthcare reforms implemented during 2010 and 2011 in a number of European markets. Currently, around 96% of Novo Nordisk’s insulin volume in Europe is being sold for use in devices. International Operations Sales in International Operations increased by 10% in local currencies and by 6% in Danish kroner in 2011. The growth is primarily driven by modern insulins with all three insulin analogues growing solidly, complemented by modest sales growth of human insulin. Currently, around 58% of Novo Nordisk’s insulin volume in International Operations’ non-tender markets is being sold for use in devices. Region China Sales in Region China increased by 10% in local currencies and by 10% in Danish kroner in 2011. The main contributor to growth was sales of modern insulin with the entire portfolio growing strongly, while sales of human insulin in 2011 were at the same level as sales in 2010, primarily as a result of implementation of a healthcare reform in China during 2011. Currently, around 96% of Novo Nordisk’s insulin volume in China is being sold for use in devices. Japan & Korea Sales in Japan & Korea decreased by 4% in local currencies and in creased by 1% in Danish kroner in 2011. The sales development reflects sales growth for modern insulins being offset by a decline in human insulin sales. Furthermore, continuous low market growth, below 3%, is impacting overall growth. The device penetration in Japan remains high with approximately 98% of Novo Nordisk’s insulin volume being used in devices, primarily FlexPen®. Victoza® (GLP-1 therapy for type 2 diabetes) Victoza® sales reached DKK 5,991 million during 2011, reflecting solid sales performance in all regions. The global roll-out is continuing with nearly 50 countries having launched. Victoza® achieved global market share leadership with 58% value market share in the GLP-1 segment in November 2011 compared to 30% in November 2010. Furthermore, the GLP-1 class’s value share of the total diabetes care market increased to 4.5% in November 2011 compared to 3.2% in November 2010. Long-term financial target update Novo Nordisk operates with four long-term financial targets to balance short- and long-term considerations, thereby ensuring a focus on shareholder value creation. The target ‘Return on Invested Capital’ (ROIC) has been changed to ‘Operating profit after tax to net operating assets’ to more accurately describe the financial elements included in the ratio. Further, the target level has been increased to 90% from 70%. The previous target level assumed that proposed accounting rules regarding treatment of operating leases, the draft International Financial Reporting Standard ‘Leases’ (ED/2010/09), would be implemented in the near future. However, the implementation has now been postponed and the actual content is currently unclear and as such, this assumption no longer applies. The target levels are based on the assumption of a continuation of the current business environment and the current scope of business activities and have been prepared assuming that currency exchange rates remain at the levels outlined in Outlook 2012 on p 13. Should any of these assumptions change, the time horizon for achieving the long-term targets may be extended or it may be necessary to revise the targets. Performance against long-term financial targets Result 2011 Previous targets Updated targets Operating profit growth Operating margin Operating profit after tax to net operating assets (previously ROIC) Cash to earnings Cash to earnings (three-years average) 18% 34% 78% 106% 113% 15% 35% 70% 90% 15% 35% 90% 90% 6 Novo Nordisk Annual Report 2011 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O North America Sales of Victoza® in North America increased by 167% in local currencies and by 155% measured in Danish kroner in 2011 compared to 2010. This reflects continuous GLP-1 market expansion driven by Victoza®, and the value market leadership position Victoza® achieved during 2011. Japan & Korea Sales in Japan & Korea increased, from a relatively low base in 2010, by 348% in local currencies and by 370% measured in Danish kroner in 2011. The sales performance in 2011 is encouraging and reflects the expiry of the 14 days prescription limitation mid-2011 and a significant commercial focus on Victoza® throughout the year. Victoza® reached global market share leadership in the GLP-1 segment in 2011. NovoNorm®/Prandin®/PrandiMet® (oral antidiabetic products) In 2011, sales of oral antidiabetic products declined by 3% measured in local currencies and by 6% in Danish kroner to DKK 2,575 million compared to 2010. The sales development primarily reflects lower sales in Europe due to generic competition in several European markets. Europe Sales in Europe increased by 114% in local currencies and by 115% measured in Danish kroner in 2011. This reflects continued roll-out across Europe and in particular solid sales growth in France, the UK and Italy. International Operations Sales in International Operations increased by 781% in local currencies and by 776% measured in Danish kroner in 2011. This reflects a low comparison base from 2010 but also very solid sales performance especially in Brazil and the countries of the Middle East. Region China Victoza® was launched in China during the fourth quarter of 2011 and although initial market feedback is positive, actual sales are limited. Biopharmaceuticals sales development In 2011, sales of biopharmaceutical products increased by 8% measured in local currencies and by 6% measured in Danish kroner to DKK 15,921 million compared to 2010 primarily driven by North America and International Operations. NovoSeven® (bleeding disorders therapy) Sales of NovoSeven® increased by 7% in local currencies and by 4% in Danish kroner to DKK 8,347 million compared to 2010. All regions contributed to the sales growth of NovoSeven®; International Operations was the primary contributor to growth followed by Europe and North America. DKK billion Sales by geographic region ■ North America ■ Europe ■ International Operations ■ Japan & Korea ■ Region China 2011 2010 2009 2008 2007 66.3 60.8 51.1 45.6 41.8 0 10 20 30 40 50 60 70 DKK billion Insulin volume market share Geographic region North America Europe International Operations Japan & Korea Region China 66.3 60.8 Modern insulins Global value market share of modern insulin segment 51.1 45.6 41.8 NovoRapid® NovoMix® Levemir® 0 10 20 30 40 50 60 70 % 100 80 60 40 20 0 % 100 80 60 40 20 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 0 2 4 6 Research and development costs ■ Diabetes care (excl pulmonary diabetes projects) ■ Biopharmaceuticals DKK billion 2011 2010 2009 2008 2007 9.6 9.6 10 7.9 7.5 7.2 8 Novo Nordisk Annual Report 2011 7 Sales by therapy area ■ Diabetes care ■ Haemostasis management (NovoSeven®) ■ Growth hormone therapy ■ Hormone replacement therapy ■ Other products 2011 2010 2009 2008 2007 Sales growth Local and reported rates In DKK as reported In local currencies % 25 20 15 10 5 0 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Norditropin® (growth hormone therapy) Sales of Norditropin® increased by 5% measured in local currencies and by 5% measured in Danish kroner to DKK 5,047 million compared to 2010. The sales growth was driven by International Operations, North America and Japan & Korea, partly offset by a decline in Europe. Novo Nordisk is the second-largest company in the global growth hormone market with a 24% share measured in volume. Other products Sales of other products within biopharmaceuticals, which primarily consist of hormone replacement therapy (HRT)-related products, increased by 15% measured in local currencies and by 13% in Danish kroner to DKK 2,527 million compared to 2010. This development primarily reflects continued sales progress for the low dose Vagifem® that was launched in North America and Europe in 2010. Sales growth was furthermore supported by GlucaGen® sales in the US and Japan, and partly off-set by a decline in Activelle® sales following patent expiry in Europe. Development in costs and operating profit The cost of goods sold grew by 8% to DKK 12,589 million in 2011. Reported gross margin increased by 0.2 percentage point to 81.0% compared to 80.8% in 2010. Measured in local currencies the gross margin increased by 0.4 percentage point in 2011 reflecting a positive product mix impact due to the upgrade from human insulins to modern insulins. In 2011, total non-production-related costs increased by 5% in local currencies and by 3% in Danish kroner to DKK 31,877 million compared to 2010. Research and development costs of DKK 9,628 million remained at an absolute level similar to 2010. Whereas the cost level in 2010 reflects execution of the phase 3a programmes for both Degludec and DegludecPlus, the cost level in 2011 reflects the initiation of pivotal trial activities within diabetes care, obesity and haemophilia. Operating profit in 2011 increased by 18% to DKK 22,374 million. Licence fees and other operating income constituted DKK 494 million in 2011 compared to DKK 657 million in 2010. This decline is primarily due to a non-recurring income from a patent settlement during the first quarter of 2010. Operating profit in 2011 increased by 18% to DKK 22,374 million compared to 2010. In local currencies the growth was 22%. Net financials and tax Net financials showed a net expense of DKK 449 million in 2011 compared to a net expense of DKK 605 million in 2010. As of 31 December 2011, foreign exchange hedging losses of around DKK 1,200 million have been deferred for recognition in the income statement in 2012. For 2011, the foreign exchange result was an expense of DKK 322 million compared to an expense of DKK 1,341 million in 2010. The foreign exchange loss in 2011 reflects losses on foreign exchange hedging contracts primarily related to the Japanese yen due to the appreciation versus the Danish krone in 2011 compared to the exchange rate level prevailing in 2010 and in the last quarter of 2009. Sales and distribution costs increased by 4% to DKK 19,004 million primarily as a result of increased sales promotion in the US and China, sales force expansion in the US in the fourth quarter of 2010 and costs related to the ‘Manufacturer’s fee’ part of US health- care reform. Also included in net financials is the result from associated companies with an expense of DKK 4 million. In 2010, the result from associated companies was an income of DKK 1,070 million as Novo Nordisk recorded a non-recurring income of approximately DKK 1.1 billion from the sale of shares in ZymoGenetics, Inc. Gross margin Development in gross margin % 85 80 75 70 65 US dollar and Japanese yen Cover and exchange rate at year-end ■ Cover USD (left) ■ Cover JPY (left) Rate USD (right) Rate DKK per 100 JPY (right) The effective tax rate for 2011 was 22%. Capital expenditure and free cash flow Net capital expenditure for property, plant and equipment for 2011 was DKK 3.0 billion compared to DKK 3.3 billion in 2010. The main investment projects in 2011 were the insulin filling plant in Tianjin, China, filling capacity for biopharmaceuticals and new device manu- facturing capacity in Denmark and the US. 2007 2008 2009 2010 2011 Month 20 16 12 8 4 0 Rate Free cash flow for 2011 was DKK 18.1 billion compared to DKK 17.0 billion in 2010. 8 7 6 5 4 Equity Total equity was DKK 37,448 million at the end of 2011, equivalent to 57.9% of total assets, compared to 60.2% at the end of 2010. Please refer to p 59 for further elaboration of changes in equity during 2011. 2007 2008 2009 2010 2011 8 Novo Nordisk Annual Report 2011 Treasury shares and 2011 share repurchase programme During 2011, Novo Nordisk repurchased 18,261,205 shares at an average price of DKK 598.92 per share, equivalent to a cash value of DKK 10.9 billion. During January 2012 Novo Nordisk repurchased 1,567,117 shares at an average price per share of DKK 678.25, equivalent to a cash value of DKK 1.1 billion. Novo Nordisk thereby concluded the 12-month share repurchase programme initiated on 2 February 2011. Employee share programmes in 2011 Under a share savings programme, approximately 8,000 employees in Denmark have purchased a total of 250,000 shares. The shares were purchased at a price of DKK 638.21 – the market price on 7 December 2011. The company does not incur any costs related to this programme. Holding of treasury shares and reduction of share capital As of 1 February 2012, Novo Nordisk A/S and its wholly-owned affiliates owned 26,007,303 of its own B shares, corresponding to 4.5% of the total share capital. In order to maintain capital structure flexibility, the Board of Directors will, at the Annual General Meeting in 2012, propose a reduction in the B share capital from DKK 472,512,800 to DKK 452,512,800 by cancelling 20,000,000 B shares of DKK 1 from the company’s own holdings of B shares at a nominal value of DKK 20,000,000, equivalent to 3.4% of the total share capital. After implemen- tation of the share capital reduction, the company’s share capital will amount to DKK 560,000,000 divided into an A share capital of DKK 107,487,200 and a B share capital of DKK 452,512,800. Proposed dividend and 2012 share repurchase programme At the Annual General Meeting on 21 March 2012, the Board of Directors will propose a 40% increase in dividend to DKK 14.00 per share of DKK 1, corresponding to a payout ratio of 45.3%. For 2010, the payout ratio was 39.6%. No dividend will be paid on the company’s holding of treasury shares. The Board of Directors has approved a new DKK 12 billion share repurchase programme to be executed during the coming 12 months. 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 2.5 billion during the trading period starting 2 February 2012 and ending on 25 April 2012. A maximum of 128,433 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 2012, and a maximum of 7,320,681 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. s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Social performance 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. 2011 performance against long-term social targets Adoption of our long-established differential pricing policy, a measure of our progress to expand access to diabetes care, continued during 2011. During the year, we met targets related to employee engagement and made progress towards the target of diversity in all senior management teams. Patients Access to care As the leader in diabetes care, our global reach allows us to help more people with diabetes. We estimate that 24 million people were treated with Novo Nordisk’s injectable diabetes care products during 2011. More than 40% of people treated are in countries served through Novo Nordisk’s International Operations region. See map on pp 28–29. Novo Nordisk’s long-term efforts to expand access to care and treatment include the establishment of the World Diabetes Foundation (WDF) in 2002. In 2011, the company donated DKK 65 million to the foundation, which supports sustainable initiatives to Insulin sales in least developed countries % of countries reached through differential pricing policy Target Realised Engaging culture Employee engagement (scale1–5) Target Realised Diverse senior management teams* Target Realised * Target established in 2008. % 100 75 50 25 0 5 4 3 2 1 % 100 75 50 25 0 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 2007 2008 2009 2010 2011 Novo Nordisk Annual Report 2011 9 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O build healthcare capacity to prevent and treat diabetes in developing countries. The company’s regular contribution was DKK 51 million, equivalent to 0.125% of net insulin sales for the year, in accordance with obligations previously agreed to by the company’s share- holders. During 2011, the company made a special contribution of DKK 14 million to WDF for activities relating to the UN High-Level Meeting on non-communicable diseases, including diabetes. Novo Nordisk also supports the Novo Nordisk Haemophilia Foundation (NNHF), established in 2005. In 2011, we donated DKK 16 million to NNHF. For more information on the foundations, see pp 34 and 39. Clinical trials The number of people participating in Novo Nordisk’s clinical trials increased by 16% in 2011 compared with 2010. A total of 22,445 people participated in Novo Nordisk’s clinical trials in 2011, compared with 19,361 in 2010. Pricing 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 75%, or 36 of 48, of the least developed countries during 2011. Capacity building To achieve sustainable improvements in access to care and personal health, we seek to improve the ability to diagnose and treat diabetes. Over the years, our investments in training and education of healthcare professionals have been significantly scaled up. During 2011, approximately 835,000 healthcare professionals worldwide attended training programmes conducted or sponsored by Novo Nordisk. We also reached approximately 626,000 people with diabetes, providing training on how to manage their condition. In addition to enrolling about 3,400 children with type 1 diabetes in our Changing Diabetes® in Children programme during 2011, taking the total to nearly 5,000, we trained about 1,000 healthcare providers and established more than 40 clinics. The programme supports diagnosis and treatment of diabetes in children in developing countries. Employees Our global growth continued as projected, with new employees primarily added in International Operations, North America and Region China. At the end of 2011, the total number of full-time employees was 31,499, an increase of 7% compared to 2010. At the end of 2011, Novo Nordisk employed 32,632 people. In the same period, employee turnover increased to 9.8% from 9.1%. 1,000 full-time positions 31.5 29.4 28.0 26.1 24.3 0 5 10 15 20 25 30 35 Full-time employees (average) by geographic region ■ North America ■ Europe ■ International Operations ■ Japan & Korea ■ Region China 2011 2010 2009 2008 2007 10 Novo Nordisk Annual Report 2011 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 2011, the consolidated engagement score (on a scale of 1 to 5, with 5 being the best score) was 4.3, which was consistent with 2010. Annual scores have met our target of 4.0 or above consistently since 2006. Diversity, a prerequisite for global growth, increased in senior management teams in 2011. Diversity We believe that fostering workplace diversity is a prerequisite for achieving global growth. Our ambition is that by 2014 all senior management teams will include employees of both genders and different nationalities. While pursuing this objective we insist that all positions are filled by the best candidate. Though we have chosen two dimensions of diversity to track at the senior level, our focus is broader, ensuring equal opportunities, non-discrimination and an inclusive working culture. At the end of 2011, diversity in terms of gender and nationality was reflected in 62% of the 29 senior management teams, compared with 54% of 28 at the end of 2010. Health and safety The frequency of occupational injuries decreased to 3.4 per million working hours in 2011, compared with 4.9 per million working hours in the previous year. Regrettably, a Novo Nordisk sales representative in Bangladesh died in a car accident while on Novo Nordisk business in 2011. With thousands of employees on the roads around the world, we introduced a new global company car guideline in 2011 that includes the stipulation that company cars must have above- average safety ratings using regional benchmarks. Assurance Quality As sales and production output have increased, quality levels, measured in terms of inspection findings, have been maintained. In 2011, 76 inspections of Novo Nordisk’s production facilities were concluded with no significant re-inspections or warning letters. In 2011, Novo Nordisk had five instances of products recalled from the market, in line with 2010. Three recalls were implemented in single countries due to product storage issues in the distribution chain. Two recalls, involving several countries, were the result of product defects relating to production. None of the products recalled caused any harm to patients. In all cases, we cooperated with local health authorities to ensure appropriate information was provided to pharmacies, medical practitioners and patients. Values In 2011, we rolled out an updated version of our values-based management system, the Novo Nordisk Way, with significant focus on ensuring that the values are actively lived across the organisation. s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O The Novo Nordisk Way 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 2010 to 30 September 2011, 59 facilitations were conducted at unit level, covering more than 13,000 employees. Nearly 2,000 employees were interviewed to determine how corporate values are being complied with throughout the orga ni- sation. The primary finding during the facilitation year was that the rollout and training related to the new, updated Novo Nordisk Way was effectively implemented. Business ethics As we grow, onboarding more than 5,000 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 relevant employees. In total, 99% completed the required training in 2011 compared with 98% 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 2011, 43 business ethics audits were conducted, an increase from 35 in 2010. 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 anonymously through a compliance hotline monitored by the Audit Committee. During 2011, 66 cases were reported through the compliance hotline, compared with 53 in 2010. Cases reported concerned potential instances of business ethics issues, fraud, violations of the Novo Nordisk Way, quality concerns and other issues. With the introduction of the new Novo Nordisk Way, the most significant area of increase was in failures to comply with the company values. Disciplinary actions were taken in all substantiated cases. None of these cases had any 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 2011, a total of 177 audits were conducted, compared with 192 in 2010. These audits found no significant critical non-conformities. Environmental performance 2011 performance against long-term environmental targets 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 2011 by 34% and 21% respectively compared with the 2007 baseline, exceeding the long-term targets of 11% reductions in both areas by 2011 compared with 2007. Consumption decreases were mainly due to optimisations in insulin bulk production of diabetes care products. With CO2 emissions from energy consumption in 2011 down 56% compared with the 2004 baseline, the company remains on track to achieve its long-term target of an absolute reduction by 2014. Inputs Energy consumed for production decreased in 2011 by 2.1%, to 2.2 million GJ. Water consumption, however, increased from 2.0 million cubic metres in 2010 to 2.1 million cubic metres in 2011, an increase of 4.3%. Energy consumption Target Realised Water consumption Target Realised 1,000 GJ 4,000 3,500 3,000 2,500 2,000 2007 2008 2009 2010 2011 1,000 m3 4,000 3,500 3,000 2,500 2,000 2007 2008 2009 2010 2011 CO2 emissions from energy consumption Target Realised 1,000 tons 300 240 180 120 60 0 2007 2008 2009 2010 2011 Novo Nordisk Annual Report 2011 11 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Outputs The total volume of waste increased 62% to 41,376 tons in 2011 from 25,627 tons in 2010. The increase was primarily due to the fact that yeast slurry, previously reused as pig feed, is now disposed of at biogas plants and therefore treated as recycled waste. For this reason, 70% of waste was recycled in 2011 compared with 51% in 2010. Energy consumption and CO2 emissions decreased in 2011. While sales and production increased in 2011, CO2 emissions related to production fell by 2% compared with 2010 levels. This was due to increased energy efficiency in all production facilities globally. Environmental target update With the achievement in 2011 of the company’s long- term targets for energy and water consumption, we have framed a new environmental strategy towards 2020 and set interim targets for 2014. Focusing on resource pro - ductivity, the new target levels are to keep the annual rate of increase below the projected rate of growth in production. We believe that the new targets for 2012–2014 are ambitious. We have achieved a 34% reduction in water consumption for production since 2007. Because a substantial portion of the water used by Novo Nordisk is for fermentation and purification of insulin, finding opportunities to further reduce water consumption is challenging. While we have reduced energy consumption for production by 21% since 2007, we have more options regarding energy usage. The target for constraining growth in energy consumption is therefore lower than the target for constraining growth in water consumption. Performance against environmental targets Result 2011 Annual targets 2012–2014 Energy consumption (change compared to prior year) Water consumption (change compared to prior year) (2.1)% < 3.3% 4.3% < 5.4% The target levels are based on the assumption of a continuation of the current business environment and given the current scope of business activities. 12 Novo Nordisk Annual Report 2011 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Outlook 2012 The current expectations for 2012 are summarised in the table below: 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: Expectations are as reported, if not otherwise stated Current expectations 2 February 2012 Sales growth (cid:282) in local currencies (cid:282) as reported Operating profit growth (cid:282) in local currencies (cid:282) as reported Net financials Effective tax rate Capital expenditure 7–11% Around 4 percentage points higher Around 10% Around 7 percentage points higher Expense of around DKK 1,000 million Key invoicing currency Annual impact on Novo Nordisk’s operating profit of a 5% movement in currency Hedging period (months) USD JPY CNY GBP 1. USD used as proxy when hedging Novo Nordisk’s CNY currency exposure. DKK 775 million DKK 170 million DKK 100 million DKK 75 million 11 12 121 11 22–23% Around DKK 3.5 billion The financial impact from foreign exchange hedging is included in note 28 pp 80–82. Depreciation, amortisation and impairment losses Around DKK 2.9 billion Free cash flow Around DKK 18 billion Novo Nordisk expects sales growth in 2012 of 7–11% 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 a continued impact from the implemen- tation 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 4 percentage points higher than growth measured in local currencies. For 2012, growth in operating profit is expected to be around 10% measured in local currencies. The outlook for growth in operating profit reflects significant expenditure related to the expected launch of the ultra-long-acting insulin Degludec. Given the current level of exchange rates versus Danish kroner, the reported operating profit growth is expected to be 7 percentage points higher than growth measured in local currencies. For 2012, Novo Nordisk expects a net financial expense of around DKK 1,000 million. The current expectation primarily reflects a net loss on the foreign exchange contracts hedging Novo Nordisk’s exposure in US dollar, Japanese yen and Chinese yuan. The accounting effect of foreign exchange hedging contracts has, in line with Novo Nordisk’s accounting policies, been deferred for loss recognition in 2012 when the hedged operating cash flows will be realised. The effective tax rate for 2012 is expected to be 22–23%. Capital expenditure is expected to be around DKK 3.5 billion in 2012, primarily related to investments in filling capacity for bio- pharma ceuticals in Denmark, filling capacity for insulin in Russia, and new prefilled device production capacity in Denmark and the US. Expec tations for depreciation, amortisation and impairment losses are around DKK 2.9 billion and free cash flow is expected to be around DKK 18 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 in 2012 and that currency exchange rates, especially the US dollar, will remain at the current level versus the Danish krone during the remaining part of 2012. 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 2012, 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: (cid:282) statements of targets, 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 cooperation in relation thereto (cid:282) statements containing projections of or targets for revenues, costs, income (or loss), earnings per share, capital expenditures, dividends, capital structure, net financials and other financial measures (cid:282) statements regarding future economic performance, future actions and outcome of contingencies such as legal proceedings, and (cid:282) 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 2011, ‘Outlook 2012’ 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, inter ruptions 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 related 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 in ‘Risk Management’ on pp 22–24. 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 2011 13 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O Performance highlights DKK million 2007 2008 2009 2010 2011 2010 –2011 Financial performance Sales Modern insulins (insulin analogues) Human insulins Victoza® Protein-related products Oral antidiabetic products (OAD) 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 28,765 10,785 5,991 2,309 2,575 Diabetes care total 30,478 33,356 37,502 45,710 50,425 NovoSeven® Norditropin® Hormone replacement therapy Other products 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 8,347 5,047 2,054 473 Biopharmaceuticals total 11,353 12,197 13,576 15,066 15,921 Total sales by business segment 41,831 45,553 51,078 60,776 66,346 North America Europe International Operations1 Japan & Korea Region China1 13,746 16,350 5,870 3,843 2,022 15,154 17,219 6,353 4,196 2,631 18,279 17,540 6,835 4,888 3,536 23,609 18,664 8,335 5,660 4,508 26,586 19,168 9,367 6,223 5,002 Total sales by geographical segment 41,831 45,553 51,078 60,776 66,346 Underlying sales growth in local currencies Currency effect (local currency impact) Total sales growth as reported 13% (5%) 8% 12% (3%) 9% Other financial performance Depreciation, amortisation and impairment losses Operating profit Net financials Profit before income taxes Net profit for the year Total assets Equity Capital expenditure, net Free cash flow2 Financial ratios Percentage of sales Sales outside Denmark Sales and distribution costs Research and development costs Administrative expenses Gross margin2 Net profit margin2 Effective tax rate2 Equity ratio2 Return on equity (ROE)2 Cash to earnings2 Payout ratio2 Payout ratio excl non-recurring events3 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% 105.7% 32.8% 34.9% 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% 114.2% 37.8% 36.6% 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% 114.5% 40.9% 40.9% 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% 118.1% 39.6% 42.8% 11% (2%) 9% 2,737 22,374 (449) 21,925 17,097 64,698 37,448 3,003 18,112 99.3% 28.6% 14.5% 4.9% 81.0% 25.8% 22.0% 57.9% 46.0% 105.9% 45.3% 45.3% Change 8.1% (8.8%) 158.6% 4.3% (6.4%) 10.3% 3.9% 5.1% 8.6% 38.7% 5.7% 9.2% 12.6% 2.7% 12.4% 9.9% 11.0% 9.2% 10.9% 18.4% (25.8%) 19.9% 18.7% 5.4% 1.3% (9.2%) 6.5% Ratios for long-term financial targets Operating profit margin2 Operating profit growth Operating profit after tax to net operating assets Cash to earnings, (three-year average) 21.4% (1.9%) 27.2% 87.0% 27.2% 38.4% 37.4% 97.6% 29.2% 20.7% 47.3% 111.5% 31.1% 26.5% 63.6% 115.6% 33.7% 18.4% 77.9% 112.8% Long-term financial targets4 35% 15% 90% 90% 14 Novo Nordisk Annual Report 2011 s t l u s e r d n a s t n e m h s i l p m o c c a 1 1 0 2 r u O 2007 2008 2009 2010 2011 2010 –2011 Social performance Patients: People with diabetes using Novo Nordisk injectable products (million) (estimate) Healthcare professionals trained or educated in diabetes (1,000) People with diabetes trained (1,000) Donations (DKK million) New patent families (first filings) Employees: Employees (total) Average of full-time employees Employee turnover Assurance: Relevant employees trained in business ethics Fulfilment of action points from facilitations of the Novo Nordisk Way Product recalls Warning Letters and re-inspections Company reputation with external key stakeholders (scale 1–7) Long-term social targets Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy Engaging culture (employee engagement) (scale 1– 5) Diverse senior management teams Environmental performance Inputs: Energy consumption (1,000 GJ) Water consumption (1,000 m3) N/A N/A N/A 76 116 N/A N/A N/A 78 71 N/A 425 416 83 55 N/A 373 494 84 62 24 835 626 81 80 26,008 24,344 11.6% 27,068 26,069 12.1% 29,329 27,985 8.3% 30,483 29,423 9.1% 32,632 31,499 9.8% N/A 91% 3 0 N/A 72% 4.1 N/A N/A 92% 2 0 N/A 64% 4.2 43% N/A 93% 2 0 N/A 73% 4.3 50% 98% 93% 5 0 N/A 67% 4.3 54% 99% 93% 5 0 5.6 75% 4.3 62% 2,784 3,231 2,533 2,684 2,246 2,149 2,234 2,047 2,187 2,136 Outputs: CO2 emissions from energy consumption (1,000 tons) Wastewater (1,000 m3) Total waste (tons) 236 2,764 23,345 215 2,542 24,314 146 2,062 26,362 95 1,935 25,627 93 2,036 41,376 Long-term environmental targets Energy consumption (change compared with 2007) Water consumption (change compared with 2007) CO2 emissions from energy consumption (change compared with 2004) Share performance Basic earnings per share/ADR in DKK2 Diluted earnings per share/ADR in DKK2 Dividend per share in DKK Total dividend N/A N/A (9%) (19%) (20%) (21%) (17%) (34%) (37%) (34%) 12% 2% (31%) (55%) (56%) 13.49 13.39 4.50 2,795 15.66 15.54 6.00 3,650 17.97 17.82 7.50 4,400 24.81 24.60 10.00 5,700 30.24 29.99 14.00 7,742 1. As of 1 January 2011, Region China is reported as a separate geographical region. Before 2011, Region China was part of International Operations. The historical figures for 2007–2010 have been restated and are comparable with the 2011 regional set-up. 2. For definitions, please refer to p 65. 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 financial targets were updated in February 2012. Please refer to p 6. Change 123.9% 26.7% (3.6%) 29.0% 7.0% 7.1% – – Long-term social targets 100% 4.0 100% by 2014 Change (2.1%) 4.3% (2.1%) 5.2% 61.5% Long-term environmental targets 11% reduction by 2011 11% reduction by 2011 10% reduction by 2014 Novo Nordisk Annual Report 2011 15 s s s s e e n n i i s s u u b b r r u u O O JENNY PETTERSSON The Young Leaders in Diabetes programme involves young people like Jenny from Stockholm, Sweden, working with and for young people with diabetes to improve awareness and address the particular challenges involved in being young with diabetes. Representing her country’s diabetes association, Jenny took part in the Young Leaders in Diabetes Programme in Dubai during the World Diabetes Congress held by the International Diabetes Federation in December 2011. Novo Nordisk is proud to be among the founding partners of this programme. 16 Novo Nordisk Annual Report 2011 The Novo Nordisk Way Novo Nordisk is its people. As the company grows and globalises, it is important that we continue to build on a strong foundation of shared values. The Novo Nordisk Way, our values-based manage- ment system, was updated in 2011. In a concise and compelling form it makes clear to employees what the company’s ambitions are, how we will achieve them, and what we value as an organisation. To support it, we have framed 10 essentials that describe how our values are put into action in the way we work and collaborate and the way we interact with other people. During 2011, employees around the world explored the essence of the Novo Nordisk Way and what it means to them. Nearly every one, 97% of employees, participated in training activities. The updated and simplified format has been welcomed, in particular the emphasis on patients at the front and centre of everything we do and the clear language on respect for everyone. The values are also consistent with the universal principles for responsible business conduct expressed by the UN Global Compact, to which Novo Nordisk has been a signatory since 2002. The Novo Nordisk Way expresses our deeply rooted values. A follow-up methodology involving values audits, or facilitations, helps us assess and manage the degree to which the Novo Nordisk Way is actively put into practice throughout our company. To support this process, we have a global facilitator team of senior people with deep understanding of our business and business environment. The head of the team has a formal reporting line to the chairman of the Board. For some units, these audits take place annually; for others, the process takes place once every three to five years. Observations from this process are reported to the Board of Directors each year. See more about facilitations on pp 11 and 43. s s s s e e n n i i s s u u b b r r u u O O 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. (cid:282)(cid:3)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:68)(cid:80)(cid:69)(cid:76)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:86)(cid:87)(cid:85)(cid:72)(cid:81)(cid:74)(cid:87)(cid:75)(cid:72)(cid:81)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:79)(cid:72)(cid:68)(cid:71)(cid:72)(cid:85)(cid:86)(cid:75)(cid:76)(cid:83)(cid:3)(cid:76)(cid:81)(cid:3)(cid:71)(cid:76)(cid:68)(cid:69)(cid:72)(cid:87)(cid:72)(cid:86)(cid:17) (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:86)(cid:83)(cid:76)(cid:85)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:70)(cid:75)(cid:68)(cid:81)(cid:74)(cid:72)(cid:3)(cid:83)(cid:82)(cid:86)(cid:86)(cid:76)(cid:69)(cid:76)(cid:79)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:76)(cid:81)(cid:3)(cid:75)(cid:68)(cid:72)(cid:80)(cid:82)(cid:83)(cid:75)(cid:76)(cid:79)(cid:76)(cid:68)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:82)(cid:87)(cid:75)(cid:72)(cid:85)(cid:3) serious chronic conditions where we can make a difference. (cid:282)(cid:3)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:78)(cid:72)(cid:92)(cid:3)(cid:70)(cid:82)(cid:81)(cid:87)(cid:85)(cid:76)(cid:69)(cid:88)(cid:87)(cid:76)(cid:82)(cid:81)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:71)(cid:76)(cid:86)(cid:70)(cid:82)(cid:89)(cid:72)(cid:85)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) biological medicines and make them accessible to patients throughout the world. (cid:282)(cid:3)(cid:3)(cid:42)(cid:85)(cid:82)(cid:90)(cid:76)(cid:81)(cid:74)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:71)(cid:72)(cid:79)(cid:76)(cid:89)(cid:72)(cid:85)(cid:76)(cid:81)(cid:74)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:72)(cid:87)(cid:76)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) results is what allows us to help patients live better lives, offer an attractive return to our shareholders and contribute to our communities. 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. 1. We create value by having a patient-centred business approach. 2. We set ambitious goals and strive for excellence. 3. We are accountable for our financial, environmental and social performance. (cid:282)(cid:3)(cid:3)(cid:50)(cid:88)(cid:85)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:83)(cid:75)(cid:76)(cid:79)(cid:82)(cid:86)(cid:82)(cid:83)(cid:75)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3)(cid:82)(cid:81)(cid:72)(cid:3)(cid:82)(cid:73)(cid:3)(cid:69)(cid:68)(cid:79)(cid:68)(cid:81)(cid:70)(cid:76)(cid:81)(cid:74)(cid:3)(cid:73)(cid:76)(cid:81)(cid:68)(cid:81)(cid:70)(cid:76)(cid:68)(cid:79)(cid:15)(cid:3)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:79)(cid:3) 4. We provide innovation to the benefit of our stakeholders. and environmental considerations – we call it the Triple Bottom Line. 5. We build and maintain good relations with our key stakeholders. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:68)(cid:85)(cid:72)(cid:3)(cid:82)(cid:83)(cid:72)(cid:81)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:75)(cid:82)(cid:81)(cid:72)(cid:86)(cid:87)(cid:15)(cid:3)(cid:68)(cid:80)(cid:69)(cid:76)(cid:87)(cid:76)(cid:82)(cid:88)(cid:86)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:70)(cid:70)(cid:82)(cid:88)(cid:81)(cid:87)(cid:68)(cid:69)(cid:79)(cid:72)(cid:15)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3) treat everyone with respect. 6. We treat everyone with respect. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:82)(cid:73)(cid:73)(cid:72)(cid:85)(cid:3)(cid:82)(cid:83)(cid:83)(cid:82)(cid:85)(cid:87)(cid:88)(cid:81)(cid:76)(cid:87)(cid:76)(cid:72)(cid:86)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3)(cid:83)(cid:72)(cid:82)(cid:83)(cid:79)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:68)(cid:79)(cid:76)(cid:86)(cid:72)(cid:3)(cid:87)(cid:75)(cid:72)(cid:76)(cid:85)(cid:3) potential. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:81)(cid:72)(cid:89)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:82)(cid:80)(cid:76)(cid:86)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:72)(cid:87)(cid:75)(cid:76)(cid:70)(cid:86)(cid:17) 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. 7. We focus on personal performance and development. 8. We have a healthy and engaging working environment. 9. We optimise the way we work and strive for simplicity. 10. We never compromise on quality and business ethics. Novo Nordisk Annual Report 2011 17 s s s s e e n n i i s s u u b b r r u u O O Our business Novo Nordisk is a focused healthcare company specialising in thera peutic 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 replace ment therapy products. Finally, we carry out research and development projects targeting treatment of obesity and inflam- mation. 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. Our corporate strategy Novo Nordisk’s business is focused on those therapy areas that leverage our distinct capabilities and strengths: developing and delivering superior protein analogues and the large-scale manu- facturing and global commercial infrastructure necessary to make these analogues widely available. Our protein analogues are supported by innovative devices that make treatment more convenient, which is linked to improved rates of treatment compliance and health outcomes. Striving to continuously improve chronic disease therapy, we have designed these devices to improve dose accuracy, convenience and general user-friendliness. The same technologies are used across our entire product line. Our high-quality, cost-effective global manufacturing infrastructure helps Novo Nordisk make innovative treatments accessible to people around the world. Our manufacturing infrastructure is supported by a lean, flexible supply chain. Although Novo Nordisk focuses on relatively few therapy areas, we sell our products in more than 190 countries with market leadership in both developed and emerging markets. Our launches of Victoza® in multiple markets demonstrated our global reach. This ability is due to our competence in and collaboration between our regulatory affairs and sales and marketing organisations, as well as our relation- ships globally with healthcare specialists. Expand leadership in diabetes care For those millions of people who live with diabetes, our goal is to offer treatment options that are safe and convenient so that they can live their lives to the fullest. Novo Nordisk is uniquely positioned to address the issues at the core of the diabetes pandemic. We are the only company with a full portfolio of human and modern insulins on the market, and our new-generation insulins, Degludec and DegludecPlus, were submitted for regulatory approval in 2011. See p 33. We are also developing even faster-acting bolus insulin to be taken at mealtimes, which is currently in phase 1 clinical trials. The primary intention of our research efforts in diabetes is to address the unmet medical need to safely and effectively lower blood glucose while reducing the risk of hypoglycaemia. As well as developing new-generation insulins, longer term we hope to radically change insulin delivery by offering tablets in addition to injectable treatments. The development of oral formulations for both insulin and Glucagon-Like Peptide-1 (GLP-1) analogues is still at an early stage and many technological challenges remain. Our current work involves searching for the most suitable compounds Novo Nordisk’s corporate strategy Therapy area Compounds and capabilities Strategic focus Diabetes Insulin and GLP-1 Expand leadership Obesity GLP-1 Haemophilia Coagulation factors Growth disorders Human growth hormone l n o i t a u m r o f d n a g n i r e e n g n e n e t o r P i i y r e v i l e d g u r d n e t o r P i g n i r u t c a f u n a m i i l s c g o o b e a c s - e g r a L l e r u t c u r t s a r f n i l i a c r e m m o c l a b o G l Establish presence Achieve leadership Achieve leadership Inflammation Monoclonal antibodies Establish presence The Novo Nordisk Way 18 Novo Nordisk Annual Report 2011 and the best method of oral delivery, one that will ensure that the active ingredients are not destroyed or degraded in the gastro- intestinal tract before being absorbed. We also seek to expand our leadership within GLP-1 treatment. With the successful launch of Victoza® (liraglutide), our once-daily GLP-1 analogue, we have the leading GLP-1 treatment for the early stages of type 2 diabetes in adults. We introduced NovoSeven® for the treatment of haemophilia patients with inhibitors 15 years ago and it remains the leading recombinant bypassing agent available for the 3,500 people with haemophilia who have developed inhibitors to conventional treat ments. To further improve treatment of bleeding episodes for people with inhibitors, we have a fast-acting recombinant factor VIIa analogue, vatreptacog alfa, with improved efficacy in phase 3 clinical development. Our goal is to offer treatments that are as safe and convenient as possible. We are now building a GLP-1 portfolio with the intention to provide an even broader range of treatment options, including longer-acting versions to improve convenience. Our late-stage GLP-1 pipeline includes two new treatments, a fixed combination of Victoza® with Degludec, which may offer the benefits of both compounds in a convenient solution, and a novel once-weekly GLP-1 analogue, semaglutide. While there is not yet a cure for type 1 diabetes, we are conducting research in cooperation with leading academic centres to tackle the roots of the condition. At our Hagedorn Research Institute, we are making progress towards preventing and ultimately curing diabetes through projects involving stem cell biology and beta cell regeneration. For information on our efforts to find a cure, see annualreport2011.novonordisk.com. Establish presence in obesity treatment Obesity is known to be a major risk factor in developing type 2 diabetes, cardiovascular disease and a range of other life-threatening diseases. Despite the growing prevalence of severe and morbid obesity globally, there are currently only a few treatment options. In studies of people with diabetes and people with obesity who do not have diabetes, liraglutide has shown the potential to reduce food intake with the result of controlling weight. We are therefore exploring the option of using liraglutide as a new way of treating high-risk patients, those with obesity-related medical conditions such as high blood pressure and high cholesterol levels. Gaining regulatory approval for antiobesity medications remains a major challenge. Compounds developed by other pharmaceutical companies to target obesity have experienced significant challenges in obtaining regulatory approval due to concerns about side effects outweighing potential benefits. However, given the results seen so far in randomised controlled trials, we believe liraglutide can offer benefits for people with severe obesity and co-morbidities. Achieve leadership in haemophilia Our ambition is to achieve leadership in haemophilia by improving the efficacy of prevention and treatment of bleeding episodes with improved treatment options for all patients. With a significant number of compounds in clinical development, we are set to build a strong portfolio of recombinant products, covering all the main segments of the haemophilia market. s s s s e e n n i i s s u u b b r r u u O O We are leveraging our core protein capabilities and our under- standing of haemophilia to develop factor VIII and factor IX com pounds for the treatment of haemophilia A and B respectively. The primary focus of these development projects is to treat and prevent bleeding episodes and consequently reduce damage to joints. In 2011, these projects were either recruiting patients in phase 3 trials or approved to initiate phase 3 trials. Novo Nordisk filed for regulatory approval of a recombinant factor XIII treatment in the US and Europe during 2011. This treatment, if approved, will be the only recombinant treatment option for the 600 people worldwide diagnosed with congenital factor XIII deficiency. Achieve leadership in growth disorders Novo Nordisk’s strategy in growth hormone therapy is to achieve leadership by providing innovative and convenient products and devices as well as a full range of service offerings for physicians and patients in markets where services can be delivered. Norditropin® is the only liquid, room temperature-stable growth hormone product available in a prefilled pen device, the ergonomic Norditropin® FlexPro® with an easy-touch dosing mechanism. We are also developing a long-acting growth hormone formulation, currently in phase 1 trials. Establish presence in inflammation Our expertise in design of therapeutic proteins and chronic disease care can be leveraged to address the significant unmet medical needs in diseases caused by chronic autoimmune inflammation. Initial clinical tests of first-in-class, protein-based therapuetic agents that reduce the overactive immune response indicate the potential to offer significant benefit to patients, but these projects are still at an early stage of clinical development. There are a significant number of people with autoimmune inflam- matory diseases who do not adequately respond to current treatments. In order to successfully build a presence in treatment of inflammation, we are investing in early-stage research with the hope of finding the underlying mediators of inflammatory conditions and developing new treatments, particularly for patients who are unresponsive to current treatments. Novo Nordisk Annual Report 2011 19 Triple Bottom Line management we aspire. The targets also help management establish a balance between growing our business profitably in the near term and ensuring the company is able to make investments in longer-term growth, including investments in clinical development of improved therapies. We aim to grow our business in ways that are both profitable and responsible. Recognising that long-term business success relies on a healthy economy, environment and society, we manage our business in a way that addresses multiple dimensions of perfor- mance: financial, social and environmental. We apply the Triple Bottom Line principle as a lens for decision making. This approach supports long-term success by creating shared value for society and our investors. s s s s e e n n i i s s u u b b r r u u O O Our Triple Bottom Line business principle is anchored in our company bylaws, the Articles of Association, and the Novo Nordisk Way. We drive our social and environmental performance with the same diligence and focus as our financial performance. All business units are responsible for monitoring and reporting on their perfor- mance in all three dimensions, based on long-term goals and targets cascaded through the balanced scorecard process. Managers and employees are also encouraged to take initiatives that extend beyond compliance measures. Helping people live better lives is at the core of our business. Our corporate priorities reflect initiatives in support of business objectives as well as broader sustainability goals. Our main con- tributions include expanding access to healthcare and promotion of healthy lifestyles, offering an inclusive, healthy and engaging working environment, driving carbon reduction and climate advocacy, pursuing resource efficiency, combating corruption and ensuring consistent responsible business practices and good governance. In 2011, we strengthened internal governance and oversight of our corporate sustainability efforts and made progress in embedding the Triple Bottom Line more firmly across the organisation. The Sustainability Committee, with representation from all parts of the business, has overall responsibility for setting direction for strategic and proactive management of the sus- tainability agenda. This includes implementation of initiatives in support of the company’s long-term sustainable growth and in accordance with the UN Global Compact and other voluntary commitments. For more about the internal Novo Nordisk boards and committee structure for managing multiple dimensions of performance, see annualreport2011.novonordisk.com. The financial, social and environmental priorities that determine the indicators we use to manage performance are listed on pp 14–15. Deliver competitive financial results 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 targets for operating profit margin, operating profit growth and the ratio of operating profit after tax to net operating assets provide a guide to the level of growth and profitability to which 20 Novo Nordisk Annual Report 2011 The growth target for operating profit has been viewed as the cornerstone financial target since we began using financial targets in 1996. It allows for deviations in individual years if necessitated by business opportunities, market conditions or exchange rate movements. The continued improvement in efficiencies at our manufacturing facilities around the world and, longer term, in the productivity of our global sales force supports improvements in our operating margin, as does improvement in the ratio of administrative costs to sales. Our cash to earnings helps ensure that we are able to pay an attractive dividend. Offer a healthy and engaging working environment We believe that having a healthy and engaging working environment helps attract, motivate and retain employees and that this is critical to sustaining our company’s growth and positive contributions to society. Employees around the world advocate healthy lifestyles, improved prevention, detection and treatment of diabetes, and patient support activities through their work as well as through voluntary initiatives. On World Diabetes Day in November 2011, for instance, more than 7,500 employees in more than 50 countries engaged over 1 million people in activities to raise awareness about the diabetes pandemic. We have a long-term target to maintain a high level of employee engagement, which is assessed through the annual company- wide survey, eVoice. Survey questions also assess adherence to company values, employees’ perceptions of the quality of manage- ment, their working environment and well-being. This information is used by local and corporate management to address any issues discovered through employees’ feedback. As our business becomes increasingly global, it becomes even more important to embrace diversity and embody a global mindset. We believe that diverse management teams are best suited to drive performance, foster innovative thinking and nurture collaboration between people with different perspec- tives. We aim to increase diversity because we believe doing so offers a competitive advantage. Our leadership development programmes emphasise personal leadership and respect for the integrity of each individual. Training for managers includes decision-making that balances short- and long-term considerations and considers multiple dimensions of performance. Helping people live better lives Helping people live better lives is at the core of our business. We act on the premise that everyone has a right to health. Access to care is not only an issue in developing countries. As we seek to reach out to more people, we have now begun to report estimates of the number of people treated using Novo Nordisk diabetes care products. A decade ago we began addressing the issues of inadequate access to health, introducing a preferential pricing policy in all of the least developed countries, launching dedicated programmes for underprivileged populations, including women and children, and advocating the need for Changing Diabetes® and Changing Possibilities in Haemophilia®. While we have made progress, we also realise that a different approach is needed to increase the scale of our impact, particularly as global health becomes a higher priority on the political agenda. In 2011, we announced a new approach to access to health, informed by candid stakeholder dialogues and high-level engagements with policymakers. See novonordisk.com/sustainability. We have also reaffirmed that low-priced insulin will remain in the company’s portfolio in low-income countries. Much more can be done, yet success hinges on the ability of governments, industry and civil society acting together to deliver sustainable, effective responses. In 2011, Novo Nordisk worked on several fronts to forge partnerships that have the potential to be transformational over time. Promoting responsible business practices We never compromise on quality and business ethics. In a business environment in which compliance requirements constantly increase, Novo Nordisk has further geared up to manage developments. This is the result of significant efforts invested in expanding the business ethics compliance programme with global policies and procedures, governance structure, training, audits and investigations. All relevant Novo Nordisk employees are required to be trained annually in business ethics guidelines and we train third parties who act on our behalf to align understanding of compliance requirements and Novo Nordisk’s ethical standards. We have also now improved tracking and disclosure of financial interactions with healthcare providers. We drive progress through systematic management and oversight. While seeking to exploit opportunities to act in ways that are both responsible and profitable, we also vigilantly manage risks to our business by monitoring trends and continuously adapting our business practices. Our enterprise risk management system considers both financial and non-financial risks, along with plans or processes to manage these risks. From this platform, focused on mitigating risks, we are reinforcing a strong ethical mindset in every aspect of the way we do business. Expectations for working with integrity are embedded in job descriptions, management systems and internal audit processes. Adherence to voluntary guidelines and participation in stakeholder dialogues helps us anticipate and prepare for new requirements. Prior to the adoption of the United Nations Guiding Principles on Business and Human Rights, Novo Nordisk has been actively engaged in shaping the agenda for businesses’ responsibility to respect human rights, and in 2011 we commis- sioned an analysis to assess which additional steps will be necessary to take in order to live up to the guidelines. s s s s e e n n i i s s u u b b r r u u O O Decoupling environmental impacts from business growth While growing our business and increasing sales, we seek to reduce the consumption of natural resources and manufactured inputs, such as packaging, generated by our business activities and supply chain. In addition to reducing negative impacts, our approach focuses on contributing to solving global challenges such as climate change. Over the past decade, we have demonstrated the ability to decouple resource consumption and emissions from sales growth. In 2011, we expanded our environmental management from a focus on resource productivity optimisation related to production to include sustainability aspirations across the entire value chain for our customer footprint and our contribution to communities. Contributing to sustainable growth Case studies of our business approach in different markets quantify benefits to patients, cost savings in healthcare systems and productivity gains resulting in sustainable societal value. Through our Blueprint for Change programme we document shared value creation and assess the potential for enhanced value. Our most recent study is from the US and shows how concerted efforts to improve prevention and early detection of type 2 diabetes can improve quality of life and reduce healthcare costs. Doing so has given us a competitive edge in terms of strong relations with stakeholders, a highly engaged workforce in the US and recognition as a great place to work. See novonordisk.com/ sustainability. Our Triple Bottom Line approach Financially and economically responsible Patients Socially responsible Environmentally responsible Novo Nordisk Annual Report 2011 21 Risk management s s s s e e n n i i s s u u b b r r u u O O We believe that our dynamic approach to risk management ensures that key risks are proactively identified, assessed and managed. For shorter-term risks, we have an ongoing assessment process that takes into account the likelihood of an event, its potential impact on the business and the need for mitigating action. Maintaining and monitoring a systematic, integrated process to continually assess business risks is the responsibility of Executive Management. The Risk Management Board, which has repre- sentatives of senior management from all parts of the business and is chaired by the chief financial officer, sets the strategic direction for the risk management process and challenges the overall risk profile for Novo Nordisk. Novo Nordisk’s risk policy 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 will: (cid:282)(cid:3)(cid:3)(cid:88)(cid:87)(cid:76)(cid:79)(cid:76)(cid:86)(cid:72)(cid:3)(cid:68)(cid:81)(cid:3)(cid:72)(cid:73)(cid:73)(cid:72)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:76)(cid:81)(cid:87)(cid:72)(cid:74)(cid:85)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) system while maintaining business flexibility (cid:282)(cid:3)(cid:3)(cid:76)(cid:71)(cid:72)(cid:81)(cid:87)(cid:76)(cid:73)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:68)(cid:86)(cid:86)(cid:72)(cid:86)(cid:86)(cid:3)(cid:80)(cid:68)(cid:87)(cid:72)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:68)(cid:86)(cid:86)(cid:82)(cid:70)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:90)(cid:76)(cid:87)(cid:75)(cid:3)(cid:82)(cid:88)(cid:85)(cid:3) business (cid:282)(cid:3)(cid:3)(cid:80)(cid:82)(cid:81)(cid:76)(cid:87)(cid:82)(cid:85)(cid:15)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:80)(cid:76)(cid:87)(cid:76)(cid:74)(cid:68)(cid:87)(cid:72)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:17) Our risk willingness Our risk willingness is characterised by the following: (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:71)(cid:72)(cid:89)(cid:72)(cid:79)(cid:82)(cid:83)(cid:3)(cid:81)(cid:72)(cid:90)(cid:3)(cid:76)(cid:81)(cid:81)(cid:82)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:83)(cid:85)(cid:82)(cid:71)(cid:88)(cid:70)(cid:87)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:76)(cid:80)(cid:83)(cid:85)(cid:82)(cid:89)(cid:72)(cid:3) treatment of serious diseases such as diabetes and haemophilia. We accept the high level of risk involved in bringing such products to market to meet the needs of patients in terms of both safety and efficacy. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:80)(cid:68)(cid:78)(cid:72)(cid:3)(cid:72)(cid:89)(cid:72)(cid:85)(cid:92)(cid:3)(cid:72)(cid:73)(cid:73)(cid:82)(cid:85)(cid:87)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:72)(cid:3)(cid:86)(cid:68)(cid:73)(cid:72)(cid:87)(cid:92)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3) lowest level possible in both clinical trials and already marketed products. The well-being of patients is paramount. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:87)(cid:68)(cid:78)(cid:72)(cid:3)(cid:68)(cid:3)(cid:70)(cid:82)(cid:81)(cid:86)(cid:72)(cid:85)(cid:89)(cid:68)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:68)(cid:70)(cid:75)(cid:3)(cid:87)(cid:82)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:80)(cid:68)(cid:81)(cid:68)(cid:74)(cid:72)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3) of financial risks. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:86)(cid:87)(cid:85)(cid:76)(cid:89)(cid:72)(cid:3)(cid:87)(cid:82)(cid:3)(cid:85)(cid:72)(cid:71)(cid:88)(cid:70)(cid:72)(cid:3)(cid:86)(cid:88)(cid:83)(cid:83)(cid:79)(cid:92)(cid:3)(cid:70)(cid:75)(cid:68)(cid:76)(cid:81)(cid:3)(cid:85)(cid:76)(cid:86)(cid:78)(cid:86)(cid:3)(cid:87)(cid:75)(cid:85)(cid:82)(cid:88)(cid:74)(cid:75)(cid:3)(cid:83)(cid:85)(cid:82)(cid:68)(cid:70)(cid:87)(cid:76)(cid:89)(cid:72)(cid:3) business continuity planning, regular inspections and back-up facilities. (cid:282)(cid:3)(cid:3)(cid:58)(cid:72)(cid:3)(cid:81)(cid:72)(cid:89)(cid:72)(cid:85)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:85)(cid:82)(cid:80)(cid:76)(cid:86)(cid:72)(cid:3)(cid:82)(cid:81)(cid:3)(cid:84)(cid:88)(cid:68)(cid:79)(cid:76)(cid:87)(cid:92)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:69)(cid:88)(cid:86)(cid:76)(cid:81)(cid:72)(cid:86)(cid:86)(cid:3)(cid:72)(cid:87)(cid:75)(cid:76)(cid:70)(cid:86)(cid:17) For more about our risk management process, see annualreport2011.novonordisk.com. 22 Novo Nordisk Annual Report 2011 Most important risks Below are the risks we assess as having the greatest potential impact on our business. The risks are not ranked, but are categorised and described, including 2011 developments in each risk area. In the process of setting our strategy, we also identify risks that are potential barriers to the achievement of our long-term ambitions. For these risks, see pp 18–21. Market risks Price pressures Healthcare costs are rising and, in many countries, are outstripping the pace of economic growth. There is increasing economic, political and regulatory pressure to contain these costs, including spending on pharmaceutical products. The continued global economic crisis has further exacerbated this trend. Examples of how Novo Nordisk’s key markets are affected include: (cid:282) US: Healthcare reform legislation was enacted in 2010. Continued federal budget issues could lead to further pricing reforms for products purchased through the Medicare and Medicaid programmes. (cid:282) Europe: As the region’s debt crisis builds, a number of European governments have announced or implemented several rounds of healthcare reforms, intensifying an already challenging operating environment with significant pricing pressures. (cid:282) China: Price reductions for pharmaceutical products were introduced in September 2011 as part of healthcare reforms. Provincial-level tenders have been introduced in some parts of the country. Documenting treatment benefits is one way to ensure that innovation is properly valued. Novo Nordisk conducts a considerable number of clinical and health-economic studies to substantiate the benefits of our products for patients and society, particularly for improved diabetes treatment. Biosimilar competition The market for therapeutic proteins is becoming more accessible to biosimilar producers. Regulatory processes in Europe and the US may change to facilitate potential approval of biosimilar products without full clinical development once patents expire. Increasing pressure on governments to contain healthcare costs makes this scenario more likely. To address this risk, Novo Nordisk is continuously developing in- novative medicines to address unmet medical needs. One example is our new generation of insulins, Degludec and DegludecPlus. In 2011, more than half of Novo Nordisk’s diabetes care sales were for modern insulins under patent protection. Novo Nordisk anti- cipates that the expiration of certain patents could impact sales within the next five years, but the potential launch of new products should offset the impact of currently protected products going off patent. 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 human insulin 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 Novo Nordisk has long had biosimilar competition, Novo Nordisk has maintained an insulin volume market share of more than 60%. Research and development risks Bringing new products to market Continued growth in our business depends on Novo Nordisk’s ability to develop and offer better treatments to patients. At 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 project altogether. Significant 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 a less than 35% chance of a diabetes 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, although there remains significant uncertainty regarding the timing and success of the regulatory approval process. As the Novo Nordisk pipeline becomes more diversified, these figures are likely to decline towards industry standards over a longer period. The reasons for delays or failure include, for instance, failure of the product candidate in non-clinical studies because of 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 of 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. As a result of 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 and could potentially cause 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 established production capacity on five continents. See the map of our production facilities on pp 28–29. Significant decisions were made in 2011 with regard to the geographical spread of our facilities. The Board of Directors approved investment plans for implementation of new filling and packaging facilities for biopharmaceutical products, ensuring back-up production capacity for all filled biopharmaceutical products. After the earthquake, tsunami and nuclear power plant failure in Japan in March, our packaging plant in Koriyama, 60 kilometres from the affected nuclear power plant, had to close for two weeks. An additional warehouse has been established 450 kilometres from the affected area and a number of measures are in place or are being considered to ensure supply to the Japanese market in the event of a future emergency. Risk of product recalls Product safety is directly linked to patient well-being, so product safety and quality are paramount concerns from both financial and reputational perspectives. While the gross risk is high, with product safety issues having the potential to adversely affect operations, we believe that our vigorous efforts to proactively manage and mitigate this risk effectively reduce the company’s net risk profile. s s s s e e n n i i s s u u b b r r u u O O Product safety and quality are paramount concerns, so we vigorously manage quality risks. We have a global quality system in place, which ensures effective mitigation of risks to patient safety and product quality by struc- tured and controlled design, development and production risk reductions. The risk reduction activities span the entire life cycle of any of our products and are ensured by the completeness and full compliance of our quality management system with all regulatory requirements including standard operating proce- dures, quality audits, quality improvement plans and systematic senior management reviews. For information on Novo Nordisk’s product recalls from 2007 to 2011, see pp 10 and 96. Financial risks Exchange rates 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 of ±2.25. The majority of our sales, however, are in US dollars, European euros, Chinese yuan, Japanese yen and British pounds. Exchange rate risk is therefore the company’s biggest financial risk and the risk has grown in importance as the size of international markets and the share of sales in different currencies have increased. To manage this risk, the company hedges expected future cash flows for selected key currencies. For more information on how the company manages this risk, see note 27 to the Consolidated financial statements on pp 79–80. Tax cases In the course of conducting a global business, transfer pricing disputes may occur. Our policy is to pursue a competitive tax level, meaning at or below the average for the company’s peer group, in a responsible way. This means paying relevant tax in jurisdictions where business activity generates profits. Generally, Novo Nordisk affiliates pay tax in the countries in which they operate. We also seek to keep tax levels stable and predictable. To manage uncertainties regarding tax, we have negotiated multi-year agreements in key jurisdictions. For details on taxes paid by the company in 2011, see note 9 on p 69. Novo Nordisk Annual Report 2011 23 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. For more information on significant legal issues, see note 31 on pp 86–87. s s s s e e n n i i s s u u b b r r u u O O Ethical risks Marketing practices In a competitive environment with increasing regulation, mar- keting 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, reporting requirements and audits and reviews, all aim to mitigate these risks. Significant resources are also dedicated to training sales and marketing people around the world. 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 en- sure compliance with the DPA, including a reinforced governance structure, enhanced third-party due diligence systems and periodic testing of systems, policies and procedures. In February 2011, the office of the US Attorney for the District of Massachusetts served Novo Nordisk with a subpoena calling for the production of documents regarding potential criminal offences relating to the company’s marketing and promotion practices for the products NovoLog®, Levemir® and Victoza®. Novo Nordisk is cooperating with the US Attorney in this investigation. In June 2011, Novo Nordisk settled a civil case with the US Department of Justice and two individuals regarding alleged improper marketing of NovoSeven®. As part of the settlement, Novo Nordisk paid 25 million US dollars in total, but denied any wrongdoing. In addition to the financial settlement related to marketing practices in the United States regarding NovoSeven®, as part of the agreement with the US Department of Justice, our US affiliate entered into a five-year Corporate Integrity Agree- ment with the Office of the Inspector General of the US Depart- ment of Health and Human Services. Under that agreement, our US affiliate will add additional reporting and other procedures to its already robust compliance programme. Corporate Integrity Agreements are customary in this type of settlement and most of the major pharmaceutical companies operating in the US are party to similar types of agreement. Significant legal issues relating to marketing practices are included in note 31 on pp 86–87. 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 patient, social, 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 86–87. 24 Novo Nordisk Annual Report 2011 s s s s e e n n i i s s u u b b r r u u O O WINNIE MARGIT HANSEN Winnie works as a process operator at our production site in Hjørring, Denmark, where she is responsible for quality control of NovoTwist® needles. By aligning processes, Winnie and her colleagues are now able to produce more needles with shorter lead times, without compromising high quality standards. Winnie sees her role as delivering the highest-quality products to people with diabetes exactly when they need them. Novo Nordisk Annual Report 2011 25 Pipeline overview In 2011, 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 and clinicaltrials.gov. s s s s e e n n i i s s u u b b r r u u O O Therapy area Indication Compound Description Diabetes care Phase 1 Studies in a small group (usually 10 to 100) of healthy volunteers, and sometimes patients, to investigate how the body handles new medication and establish maximum tolerated dose. Type 1 and 2 diabetes Type 1 and 2 diabetes Insulin degludec Ultra-long-acting basal insulin. Submitted for marketing authorisation in five markets in 2011. Insulin degludec/ insulin aspart Ultra-long-acting basal insulin in combination with a boost of bolus insulin aspart. Submitted for marketing authorisation in four markets in 2011. Type 2 diabetes Insulin degludec/ liraglutide Liraglutide and insulin degludec in a combination. Phase 3 trials ongoing. Type 2 diabetes Semaglutide Once-weekly GLP-1 analogue. Phase 2 completed. Diabetes Type 1 and 2 diabetes Type 1 and 2 diabetes NN1218 Ultra-fast-acting insulin. Phase 1 trials ongoing. NN1953 Long-acting oral insulin analogue. Phase 1 trial ongoing. Type 2 diabetes Liraglutide depot Once-weekly liraglutide formulation. Phase 1 trial initiated during 2011. Type 2 diabetes NN9924 Long-acting, oral GLP-1 analogue formulation. Phase 1 trial ongoing. Type 2 diabetes NN9926 Long-acting, oral GLP-1 analogue formulation. Phase 1 trials ongoing. Obesity Obesity Liraglutide Once-daily GLP-1 analogue. Phase 3a programme ongoing. Biopharmaceuticals Congenital FXIII deficiency Catridecacog Recombinant coagulation factor XIII. Submitted for regulatory approval in the US in the first quarter and in the EU in the second quarter of 2011. Haemophilia A Turoctocog alfa Recombinant coagulation factor VIII. Phase 3 completed in 2011. Haemophilia Haemophilia with inhibitors Vatreptacog alfa Fast-acting recombinant coagulation factor VIIa analogue. Phase 3 trial initiated during the second quarter of 2011. Haemophilia B N9-GP Haemophilia A N8-GP Haemophilia NN7415 Long-acting recombinant coagulation factor IX derivative. Phase 3 trial initiated during the second quarter of 2011. Long-acting recombinant coagulation factor VIII derivative. Phase 3 start planned for 2012. Novel haemophilia treatment in the form of a monoclonal antibody against a tissue factor pathway inhibitor. Growth hormorne Growth hormone deficiency Rheumatoid arthritis NN8640 Long-acting growth hormone formulation. Phase 1 trial initiated January 2012. Anti-IL-20 Humanised recombinant monoclonal antibody. Phase 2a trial completed. Crohn’s disease Anti-NKG2d Humanised recombinant monoclonal antibody. Phase 2a trial ongoing. Inflammation Rheumatoid arthritis Rheumatoid arthritis Rheumatoid arthritis Rheumatoid arthritis 26 Novo Nordisk Annual Report 2011 Anti-NKG2d Humanised recombinant monoclonal antibody. Phase 2a trial ongoing. Anti-C5aR Humanised recombinant monoclonal antibody. Phase 1 trial ongoing. Anti-IL-21 Humanised recombinant monoclonal antibody. Phase 1 trial ongoing. Anti-NKG2a Humanised recombinant monoclonal antibody. Phase 1 trial ongoing. 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. In phase 2, clinical trials are carried out to evaluate efficacy (and safety) in specified populations of patients. The outcome of phase 2 trials is clinical proof of concept and the selection of dose for evaluation in phase 3 trials. 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 firmly establish its benefit–risk relationship. Phase 3a covers trials conducted after efficacy of the medicine is demonstrated but prior to regulatory submission, whereas phase 3b covers clinical trials completed after regulatory submission. Intended clinical benefit Phase 1 Phase 2 Phase 3 Filed/regulatory approval s s s s e e n n i i s s u u b b r r u u O O Long-acting basal insulin with duration of action of more than 24 hours for flexible once-daily treatment and an improved safety profile. A soluble fixed combination of long-acting insulin combining basal insulin coverage with a distinct meal peak of insulin. Combination of basal insulin degludec and the GLP-1 analogue liraglutide providing the benefits of the two components in a single preparation. Provides the clinical benefits of a GLP-1 analogue with less frequent injections. Ultra-fast-acting insulin for further improvement of glycaemic control in relation to a meal. Basal insulin delivered as a tablet. Provides the clinical benefits of a GLP-1 analogue with less frequent injections. A long-acting GLP-1 analogue delivered as a tablet. A long-acting GLP-1 analogue delivered as a tablet. Sustainable weight loss for people with severe obesity, including those at particular risk of developing diabetes. Prophylactic treatment of people with FXIII congenital deficiency. 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 re-treatment and the time to pain relief. Prophylaxis and treatment of bleeds in people with haemophilia B. Prophylaxis and treatment of bleeds in people with haemophilia A. Potential prophylactic treatment of haemophilia with subcutaneous administration. Provides the clinical benefits of growth hormone with less frequent injections. 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. Novel mechanism of action intended to improve treatment outcomes in patients who do not respond adequately to existing treatments. Novo Nordisk Annual Report 2011 27 s s s s e e n n i i s s u u b b r r u u O O 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. We have more than 32,000 employees working in 75 countries. See pp 89–90 for a list of our subsidiaries. North America Europe International Operations Japan & Korea Region China (cid:282) Headquarters and corporate hubs (cid:282) Research and development centres (cid:282) Production facilities (cid:282) Affiliates (cid:282) Representative offices Sales by geographic region ■ North America 40.1% ■ Europe 28.9% ■ International Operations 14.1% ■ Japan & Korea 9.4% ■ Region China 7.5% 28 Novo Nordisk Annual Report 2011 People treated with injectable Novo Nordisk diabetes care products by geographic region (estimate) ■ North America 14% ■ Europe 23% ■ International Operations 42% ■ Japan & Korea 5% ■ Region China 16% s s s s e e n n i i s s u u b b r r u u O O Full-time employees (average) by geographic region ■ North America 15.2% ■ Europe 56.2% ■ International Operations 13.1% ■ Japan & Korea 3.2% ■ Region China 12.3% People in clinical trials by geographic region ■ North America 34.5% ■ Europe 34.2% ■ International Operations 24.1% ■ Japan & Korea 3.3% ■ Region China 3.9% Novo Nordisk Annual Report 2011 29 e r a c s e t e b a D i TRACEY SAVERINO Tracey, from Bronxville, New York, was diagnosed with gestational diabetes while expecting her baby. Tracey was able to manage the condition by focusing on portion control, healthier eating and getting more exercise. Gestational diabetes affects 3–15% of all pregnancies. Managing the condition is important to avoid complications for both the mother and infant. 30 Novo Nordisk Annual Report 2011 e r a c s e t e b a D i Diabetes care Novo Nordisk has pioneered many therapeutic breakthroughs in diabetes care and today diabetes remains our primary focus. We are the market leader in diabetes care, with about 50% of the total insulin market, 43% of the modern insulin (insulin analogue) market and 58% of the Glucagon-Like Peptide (GLP-1) analogue market based on volume at year-end. While diabetes care has improved greatly in recent decades, there are still millions of people dying, losing their eyesight or requiring amputations because of poorly controlled diabetes.  We know that people with diabetes often suffer complications because of poor blood glucose control.1 This is a result of a number of factors, including undertreatment because of fear of hypoglycaemia or weight gain, a common side effect of insulin treatment. People with diabetes also struggle to follow complex treatment regimens exactly, and insulin doses are sometimes missed. Lack of access to diabetes medicine and care is still a barrier to treatment for millions. In our efforts to defeat diabetes, we have focused our research and development activities on addressing the unmet medical need to reduce blood glucose without the side effect of low blood glucose episodes, called hypoglycaemia. Findings from a landmark study in the UK showed that reducing blood glucose levels by close to 1% would reduce diabetes-related deaths by more than 20% and reduce microvascular complications by nearly 40%.2 Microvascular complications include diabetic retinopathy, which causes 10,000 cases of blindness annually in the US alone.3 We are dedicated to Changing Diabetes® and improving the health of people with diabetes. We do this by developing innovative treatments intended to serve individual needs and different stages of diabetes. In addition, we work with govern- ments, healthcare providers, patient organisations and people with diabetes to improve standards of care throughout the world. The diabetes pandemic Diabetes is a chronic disease currently estimated to affect more than 366 million people. If current trends persist, the International Diabetes Federation predicts that the number of people affected by diabetes will rise to more than 550 million by 2030. Globally, diabetes accounted for 11% of total spending on healthcare in 2011.4 For diabetes, the rule of halves tells the story of missed oppor- tunities along the care pathway, which includes prevention, diagnosis, access to care, achieving treatment targets and achieving desired outcomes. Of the estimated 366 million people with diabetes, only about half have been diagnosed. The millions of people whose diabetes is undiagnosed and therefore untreated are at risk of developing complications that will significantly impair their quality of life and increase healthcare costs. The cost of treatment is usually a small fraction of overall spending on diabetes care, with most spending allocated for serious complications related to inadequate medical care. In the US and Europe, for instance, insulin accounts for 3% of the total cost associated with treating diabetes. Key events in diabetes (cid:282)(cid:3)(cid:3)(cid:39)(cid:72)(cid:74)(cid:79)(cid:88)(cid:71)(cid:72)(cid:70)(cid:3)(cid:73)(cid:76)(cid:79)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:3)(cid:73)(cid:76)(cid:89)(cid:72)(cid:3)(cid:80)(cid:68)(cid:85)(cid:78)(cid:72)(cid:87)(cid:86)(cid:3) and DegludecPlus filed in four markets. (cid:282)(cid:3)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:80)(cid:76)(cid:85)® approved for paediatric use in the EU. (cid:282)(cid:3)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:80)(cid:76)(cid:85)® approved for treatment of gestational diabetes in the EU. (cid:282)(cid:3)(cid:3)(cid:47)(cid:72)(cid:89)(cid:72)(cid:80)(cid:76)(cid:85)® approved for add-on therapy to Victoza® for type 2 patients in the EU. (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:22)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:76)(cid:81)(cid:86)(cid:88)(cid:79)(cid:76)(cid:81)(cid:3)(cid:71)(cid:72)(cid:74)(cid:79)(cid:88)(cid:71)(cid:72)(cid:70)(cid:18)(cid:79)(cid:76)(cid:85)(cid:68)(cid:74)(cid:79)(cid:88)(cid:87)(cid:76)(cid:71)(cid:72)(cid:3) fixed-dose combination. (cid:282)(cid:3)(cid:3)(cid:41)(cid:79)(cid:72)(cid:91)(cid:55)(cid:82)(cid:88)(cid:70)(cid:75)®, our newest innovation in prefilled devices, approved in the EU and introduced in the UK. DKK billion Diabetes care Sales development ■ Modern insulins ■ Human insulins ■ Protein-related products ■ Oral antidiabetic products (OAD) ■ Victoza® 2011 2010 2009 2008 2007 50.4 45.7 37.5 33.4 30.5 0 10 20 30 40 50 60 Modern insulins Sales development ■ NovoRapid® ■ NovoMix® ■ Levemir® DKK billion 2011 2010 2009 2008 2007 28.8 26.6 21.5 17.3 14.0 0 6 12 18 24 30 Diabetes rule of halves Of the estimated 366 million people with diabetes … about 50% are diagnosed … Only around 6% are estimated to have well-managed diabetes and desired health outcomes of which about 50% receive care … of which about 50% achieve treatment targets … of which about 50% achieve desired outcomes. Evidence from medical literature suggests that approximately half of most common chronic disorders are undetected: the ‘rule of halves’. Actual rates of diagnosis and treatment vary in different countries.5,6 Novo Nordisk Annual Report 2011 31   e r a c s e t e b a D i Unfortunately, it is not only those with undiagnosed diabetes who go untreated. Only half of people diagnosed have access to treatment. Ensuring access to care can prevent complications and support human, social and economic development by reducing the burden untreated diabetes places both on healthcare systems and families. Of those people whose diabetes has been diagnosed and who are receiving treatment, it is estimated that only half achieve treatment targets and only half of those are achieving desired outcomes. Unfortunately, only by achieving treatment targets can the risk of developing severe complications be substantially reduced. What is diabetes? Diabetes is a metabolic disorder affecting the way our bodies use digested food for growth and energy. Over 4 million people die of complications caused by diabetes every year and millions more suffer disabling, costly and life-threatening complications such as heart attack, stroke, kidney failure, blindness and amputation. Diabetes has two main forms: type 1 and type 2 diabetes. Type 1 diabetes is a lifelong autoimmune disease that develops when the body creates an immune reation against its own cells, destroying beta cells in the pancreas. As a result, the pancreas stops producing insulin, typically at a young age. At least 90% of people with diabetes have type 2, which is caused by a combination of lifestyle and genetic factors. People with type 2 diabetes may still make their own insulin in the pancreas, but the insulin produced is insufficient and is not used as effectively by the body. Most of the long-term health complications associated with diabetes are due to persistent high blood glucose levels, which can cause kidney damage, neurological damage, cardiovascular damage, damage to the retina or damage to the feet and legs. Diabetes-related deaths could be reduced by 20% if average blood glucose levels (HbA1c) were reduced by 1%.2 Potential complications of uncontrolled diabetes Stroke Risk: Up to four times as likely. Effective treatment: Reduces stroke. Heart attack Risk: Three times as likely, and heart disease is up to four times as likely. Effective treatment: Reduces the risk of heart failure. Amputation Risk: A leading cause of non-traumatic lower limb amputations. Effective treatment: Reduces the number of amputations. Blindness Risk: Diabetes is a leading cause of blindness. Effective treatment: Reduces deterioration in eyesight. Total kidney failure Risk: Three times as likely. Effective treatment: Reduces the causes of kidney failure. 32 Novo Nordisk Annual Report 2011 Diabetes treatment For type 1 diabetes, insulin is introduced at diagnosis and is required for the rest of the person’s life. Treatment guidelines for type 2 diabetes call for different approaches at different stages. For type 2 diabetes, the first step is lifestyle changes – diet and exercise – and initiation of tablet therapy (metformin). If treat- ment targets are not met, GLP-1 therapy, such as Victoza®, or basal insulin, such as long-acting Levemir®, may be added. As a third step, treatment guidelines call for a transition to intensive insulin treatment to maintain good glycaemic control. This may include adding a rapid-acting modern insulin at mealtimes, such as NovoRapid®, in addition to a basal insulin. For insulin initiation, a modern premix insulin such as NovoMix® with dual release to cover both mealtime and basal requirements may also be used. One challenge in managing diabetes is to maintain appropriate blood glucose levels, adjusting insulin dosing as necessary to balance the impact of food and exercise. Low blood glucose levels cause hypoglycaemia, which, if untreated, can lead to seizures or unconsciousness. In rare cases, hypoglycaemia can lead to permanent brain damage or death. Progression of type 2 diabetes and treatment intensification Diet and exercise n o i t c n u f l l e c a t e B Tablets NovoNorm® PrandiMet® GLP-1 Victoza® Time Insulin Levemir® NovoRapid® NovoMix® e r a c s e t e b a D i Different pathways to diabetes control Modern insulin portfolio Using protein engineering, we have created a portfolio of insulins that offers options for individual treatment needs, accommodating different treatment norms and capabilities worldwide. Modern insulins are designed to mimic the body’s own physiological insulin regulation of blood glucose levels more closely than injected human insulin, resulting in better glucose control, lower levels of hypoglycaemia and increased convenience for people with diabetes. We seek to help people control their diabetes to live longer, more productive lives. Novo Nordisk’s modern insulin portfolio includes: (cid:282) Levemir®, a soluble, long-acting modern insulin for once-daily use for type 1 and 2 diabetes. When it is time to begin insulin, Levemir® provides glucose control with a favourable 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. Levemir® is also the first and only basal insulin analogue approved for two- to five-year-olds with diabetes. (cid:282) 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® helps attain and maintain treatment goals. NovoRapid® is used by people with both type 1 and type 2 diabetes. It is also approved in some markets for women who are pregnant or breastfeeding. (cid:282) NovoMix® 70/50/30 (NovoLog® Mix 70/30 in the US) is a dual-release modern insulin that covers both mealtime and basal requirements. It can be used either to initiate or intensify insulin therapy. avoid incidences of hypoglycaemia, allowing higher levels of blood glucose with the potential for health complications. Degludec is designed to provide greater dosing flexibility, with more than 40 hours' glucose control. This flexibility can give people with diabetes the flexibility to administer once-daily treatment at a different time from day to day. DegludecPlus combines ultra-long-acting insulin degludec and the most pre- scribed rapid-acting insulin, NovoRapid®, providing both basal and mealtime glucose control. The regulatory filings for Degludec and DegludecPlus were largely based on results from the BEGIN™ and BOOST™ clinical trial programmes. Data from the 17 trials have shown Degludec to effectively lower blood glucose levels, while demonstrating a lower rate of hypoglycaemia, particularly at night, relative to insulin glargine. In addition, Degludec will offer greater flexibility as to time of administration and, when used with FlexTouch®, can allow larger single doses than other insulin devices on the market. At present, many people need to take two injections to get their total insulin dose. BEGIN™ and BOOST™ were the largest clinical trial programmes in the history of insulin therapy, involving nearly 10,000 people with type 1 and type 2 diabetes. The programmes were designed after consulting with regulatory agencies in the EU, Japan and the US. 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 stimulating 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 physicians and people with diabetes. While effec- tive at lowering blood glucose, they carried a high risk of inducing low blood sugar episodes (hypoglycaemia) and weight gain. GLP-1 therapies are a major innovation in the treatment of type 2 diabetes because they lower glucose while having a very low risk of triggering hypoglycaemia, and, for 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 acting directly on beta cells in the pancreas so that more insulin is released when blood glucose is high. We are committed to producing safe treatments. All of our modern insulins have been investigated in many randomised, controlled trials and in observational studies in real-life use. New-generation insulins Our focus on improving the lives of people with diabetes led us to develop two new-generation insulins, Degludec and DegludecPlus, which were filed for regulatory approval in key markets in 2011. These new-generation insulins are designed to have an ultra-long action for the treatment of type 1 and type 2 diabetes, providing stable and consistent blood glucose control while reducing the rate of hypoglycaemia, particularly at night when hypoglycaemic events are difficult to manage. It is known that many healthcare providers and people with diabetes intentionally undertreat to Victoza®, the only once-daily GLP-1 analogue, can be used by adults with type 2 diabetes who are unable to achieve blood glucose goals with lifestyle changes and metformin. For most people with type 2 diabetes, Victoza® offers significant blood glucose reduction with the benefit of some weight loss in a flexible dose that can be taken once daily. Treatment guidelines now call for the use of GLP-1 as an option for early treatment of type 2 diabetes. Victoza® is the leading GLP-1 treatment globally and has steadily expanded the market for GLP-1 treatment. Now available in nearly 50 markets, Victoza® was also approved for use in China during 2011. Victoza® achieved blockbuster status in 2011 with sales of more than 1 billion US dollars globally. It has been used to treat approximately 600,000 people worldwide. Novo Nordisk Annual Report 2011 33 We are exploring longer-acting formulations for GLP-1 treatment. Liraglutide depot, a slow-release formulation, is being tested for once-weekly use in phase 1 clinical trials. We are also exploring the GLP-1 analogue semaglutide for once-weekly use. For more information, see pp 26–27. e r a c s e t e b a D i Device technology supports innovative treatments We continue to focus on making the most preferred treatment devices even better. FlexTouch®, our latest innovation in prefilled devices, which has been designed to improve the experience of performing daily injections, was launched in Europe in 2011. We intend to make Degludec and DegludecPlus available in FlexTouch®, the first insulin pen that will have the potential to deliver up to 160 insulin units in a single injection. Usability studies have shown that FlexTouch® features are valued by patients and healthcare providers. FlexTouch® has a conical shape, which is more ergonomic and may help to improve stability when injecting. Patients especially appreciate that FlexTouch® is the first insulin pen with no push-button extension. FlexTouch® also has an easy-touch button, a large, easy-to-read scale, accurate and consistent dosing, and an audible click that provides a signal when dialling doses up or down or when the full dose has been administered.7,8,9 FlexPen®, the world’s most widely used prefilled insulin pen, is available for all Novo Nordisk modern insulins and Victoza®. It eliminates the need to manually load treatment into a delivery device or use a separate vial and syringe. Changing Diabetes® A global commitment to people with diabetes Changing Diabetes® is Novo Nordisk’s global commitment to im- prove conditions for the millions of people who live with diabetes around the world today, and those who are at risk of developing diabetes tomorrow. It is a global advocacy and partner platform from which we advocate the prevention and earlier detection of diabetes, as well as improved treatment, care and health outcomes. It is also the framework for a series of partnership programmes for interventions and outreach activities, many of which address the specific needs of vulnerable groups such as those with low incomes, women and children. 2011 marked a turning point in our fight against diabetes when the United Nations convened a special General Assembly to address the global challenge of non-communicable diseases, including diabetes. Novo Nordisk, represented by President and CEO Lars Rebien Sørensen, participated in this historic event, which highlighted the serious threat non-communicable diseases present to global social and economic development, and the need for concerted action. We welcome and support the call to action resulting from the meeting and have reaffirmed our commitment to continue our long-term efforts to change diabetes through partnerships. 34 Novo Nordisk Annual Report 2011 Concerted action to improve access to diabetes care Ahead of the UN High-Level Meeting, we revisited our access to health strategy in consultation with key stakeholders, notably the World Health Organization, representing different viewpoints, insights and regional perspectives. Ten years ago, Novo Nordisk launched its first Access to Health strategy, which resulted in the establishment of the independent World Diabetes Foundation, our differential pricing policy in least developed countries, initiatives to improve healthcare capacity and efforts aimed at vulnerable population groups, such as the Changing Diabetes® in Children programme and the Changing Diabetes® in Pregnancy programme. Our insights from the past 10 years were captured in a report released in 2011, Access to Diabetes Care – Our Approach. While our stakeholders recognise that Novo Nordisk has done much to improve access to diabetes care in the least developed countries of the world, the lack of access to insulin remains a significant concern. Dialogues with stakeholders have helped inform our priorities going forward with a better understanding of where to strengthen our efforts. See novonordisk.com/sustainability. Our commitment to discover and develop innovative biological medicines and make them accessible to patients throughout the world is part of the Novo Nordisk Way. Because healthcare systems are at different stages of development, different solutions are needed in different countries. Novo Nordisk has the unique advantage of the broadest portfolio of diabetes treatments. We have also committed to keeping low-priced insulin as a key building block of our portfolio and making it available in low- and middle- income countries. Access to diabetes care is a global concern and this will be the premise for our access to diabetes care strategy. Many barriers to insulin access are linked to distribution systems, tendering and government policies. As part of our efforts to find an innovative, integrated approach to diagnosis, treatment and diabetes control for those at the base of the economic pyramid, we launched a pilot project in Kenya in December 2011. A public– private partnership involving the Kenyan government and other stakeholders, the project seeks to reduce direct and indirect costs of treatment by limiting price mark-ups in the supply chain and reducing travel costs and lost work days by printing prices on insulin packaging and distributing insulin at more locations. In our search for a sustainable business model for the base of the pyramid, additional projects will be launched in 2012 in rural India and Nigeria. To improve access to affordable insulin, Novo Nordisk has conducted pilot projects in eight least developed countries and recruited staff to address barriers in supply chains. Another priority is to strengthen the capacity of healthcare systems by training healthcare providers to diagnose and treat diabetes and its complications. In 2011, Novo Nordisk either trained or sponsored training for about 835,000 healthcare providers. To empower people with diabetes to better care for themselves, in 2011 we also trained or funded training for about 626,000 people. In our efforts to strengthen healthcare system capacity, Novo Nordisk established the World Diabetes Foundation in 2002. This independent and non-profit foundation supports the prevention and treatment of diabetes where it is needed most, providing funding for local initiatives that improve healthcare system World Diabetes Foundation’s impact 2002–2011 (cid:282) More than 5.6 million people have been screened for diabetes (cid:282) More than 5,000 clinics and micro clinics have been created or strengthened by WDF (cid:282) 1.4 million people with diabetes have been registered and treated through diabetes clinics For more information on the WDF visit worlddiabetesfoundation.org. capacity. To date it has supported 278 projects in 100 countries. We contribute a portion of our insulin sales to the Foundation each year, in line with an agreement with our shareholders. These contributions totalled 606 million Danish kroner during the period from 2002 to 2011. In financial terms, this is our biggest single commitment to the improvement of diabetes care in low- and middle-income countries. Novo Nordisk also has two seats on the Foundation’s board. See pp 9 and 86 for more information. Better treatment and care for all The 2011 UN High-Level Meeting concluded in a UN Declaration that calls attention to the threat diabetes and other chronic con- ditions pose, and stresses the need for prevention, early detection and early intervention. This focus is in line with our long-term efforts to increase awareness of diabetes among policymakers. We are committed to engaging with stakeholders to explore how the UN Declaration can be translated into concrete action to achieve this objective. Through 87 Diabetes Leadership Forums and regional or national roundtables in 78 countries since 2005, we have engaged more than 10,000 key stakeholders to date, helping to reach consensus about what it will take to address the current challenges and change diabetes. During 2012, the European Diabetes Leadership Forum will be held in Copenhagen under the auspices of the Danish EU Presidency. The event will be hosted by the Danish Diabetes Association and the OECD, and Novo Nordisk will co-organise the Forum. We will also continue our efforts to follow up on previous leadership forums in Russia, China, sub-Saharan Africa, the Middle East and North Africa, all of which involve commitments to action that will benefit people with diabetes. 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 long-term economic costs. One example is our Ask.Screen.Know initiative in the US, which supports diabetes screening for people in the US’s Medicare programme who are at risk of diabetes. It is estimated that only 10% of people with risk factors have been screened since Medicare began offering screenings in 2005. We encourage physicians to have at-risk patients screened and to talk with their patients about blood sugar numbers and healthy life- style changes. See AskScreenKnow.com and the Ask.Screen. Know page on Facebook. e r a c s e t e b a D i Understanding the needs of people with diabetes is a cornerstone of our advocacy work. 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 and those who care for them. It is a follow-up to our landmark study in 2001 to assess the needs of people with diabetes globally, with the aim of improving patient involvement, self- management and psychosocial support. The largest study of its kind, the new DAWN™ study will involve more than 16,000 people worldwide to establish a new understanding and awareness of the needs of people with diabetes and those who care for them. Working in partnership across healthcare systems Most developing countries have no 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 pro- gramme provides the necessary medical and laboratory equipment, organises training of healthcare professionals, puts in place patient education and creates systems for adequate monitoring and follow-up. In addition, insulin and diabetes supplies are provided free of charge for the duration of the programme. With the ambition of reaching 10,000 children with diabetes within five years, we made a 25 million US dollar commitment in 2008. In 2011, we expanded the programme to India and Ethiopia, enrolled about 3,400 children and established more than 40 new clinics under the Changing Diabetes® in Children programme, which now provides treatment for about 5,000 children. As part of our contribution to the UN Secretary General’s Every Woman Every Child programme, Novo Nordisk has launched its Early Origins of Health initiative with the aim of preventing future cases of diabetes through screening and treatment of gestational diabetes. The initiative is based on partnerships with industry peers, the World Diabetes Foundation and the United Nations Foundation where each will contribute their expertise in the field of health literacy, nutrition, research, access to health, and connecting people, ideas and resources. Our ongoing Changing Diabetes® in Pregnancy programme ties to the Early Origins of Health initiative. We have set up local public–private partnerships in India, Colombia and Nicaragua with an ambition to reach 60,000 pregnant women. We work with local health authorities and other partners to train health- care professionals, build capacity in the health system for gestational diabetes screening and management, and test innovative ways to effect lifestyle change. The hope is to identify cost-effective ways of reducing the burden of diabetes. 1. Global Attitudes of Patients and Physicians in Insulin Therapy (GAPP™) survey, Novo Nordisk, 2010. 2. UKPDS, Stratten et al. BMJ 2000; vol 321:405–412. 3. Fong DS, Aiello LP, Ferris FL 3rd, Klein R: Diabetic retinopathy. Diabetes Care 2001; 27:2540–2553. 4. International Diabetes Foundation. IDF Diabetes Atlas, fifth edition, 2011. 5. Hart JT. Rule of halves: implications of increasing diagnosis and reducing dropout for future workload and prescribing costs in primary care. Br J Gen Pract 1992, March; 42(356):116–119. 6. Wilkerson HL, Krall LP. Diabetes in a New England town. JAMA 1947;135:209-246. 7. Wielandt JO, Niemeyer M, Hansen MR, Bucher D, Thomsen NB. FlexTouch®: A Prefilled Insulin Pen with a Novel Injection Mechanism with Consistent High Accuracy at Low- (1 U), Medium- (40 U), and High- (80 U) Dose Settings. J Diabetes Sci Technol 2011; 5(5):1195–1199. 8. Dyer D, Narendran P, Qvist M, Niemeyer M, Nadeau DA. Ease of use and preference assessment of a new prefilled insulin pen versus a widely available prefilled insulin pen in people with diabetes, physicians and nurses. Expert Opin Drug Deliv 2011; doi:10.1517/17425 247.2011.615830. 9. Bailey T, Thurman J, Niemeyer M, Schmeisl G. Usability and preference evaluation of a prefilled insulin pen with a novel injection mechanism. Curr Med Res Opin 2011; 27:2043–52. Novo Nordisk Annual Report 2011 35 s l a c i t u e c a m r a h p o B i ALFRED MONAMETSI Alfred, from Johannesburg, South Africa, was diagnosed with haemophilia at birth and has been more mobile since beginning to use NovoSeven®. As a pastor and certified coach, being able to get out into the community is an important part of doing what Alfred loves: helping people. He hopes that future improvements in treatment will make it even easier for people with haemophilia to lead normal lives. 36 Novo Nordisk Annual Report 2011 Biopharma- ceuticals We use our understanding of chronic conditions to make a difference for people with haemophilia and other rare bleeding disorders, growth hormone disorders, symptoms of menopause and inflammatory diseases. Our specialised expertise in proteins gives us an advantage in developing innovative treatments in these therapy areas. Commitment to haemophilia We see a future where all people with haemophilia have the opportunity to live the life they desire. Our commitment to haemophilia builds on our 20 years of research into bleeding disorders and our promise to work with and listen to patients to improve treatment. For details of our strategy to achieve our haemophilia ambition, see p 19. We developed our recombinant, activated factor VII product, NovoSeven®, for the 3,500 people with haemophilia who have developed inhibitors, or neutralising antibodies, to their normal treatment. NovoSeven® provides effective treatment for bleeding episodes. It was a significant innovation when launched in 1996 and remains the only room temperature-stable recombinant bypassing agent available for people who have haemophilia with inhibitors. NovoSeven® is also the only recombinant medication approved for the treatment of bleeding episodes in acquired haemophilia, factor VII deficiency and, in Europe, Glanzmann’s thrombasthenia. Thanks to its therapeutic properties, 15 years after launch NovoSeven® achieved sales growth of 4% in Danish kroner. We are continuing to look for ways to make treatment for people with haemophilia with inhibitors even more effective. To support our ambition and also help people with general haemophilia, we have developed the broadest pipeline of haemophilia research and development projects in the pharma- ceutical industry, including treatments for haemophilia A and B. See p 38. As we seek to expand our portfolio and achieve leadership in the treatment of haemophilia, we are developing compounds targeting faster, more efficient long-acting and even sub- cutaneous (as opposed to intravenous) prevention and treatment of bleeding. During 2011, we made significant progress in the development of solutions for the range of haemophilia and other rare bleeding disorders. See pp 19 and 26–27. s l a c i t u e c a m r a h p o B i Key events in biopharmaceuticals (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:22)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:80)(cid:72)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3) factor VIII treatment for haemophilia A. (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:22)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:16)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) recombinant treatment for people with haemophilia B. (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:22)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:83)(cid:85)(cid:82)(cid:74)(cid:85)(cid:68)(cid:80)(cid:80)(cid:72)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:68)(cid:3)(cid:73)(cid:68)(cid:86)(cid:87)(cid:16)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3) recombinant treatment for haemophilia with inhibitors. (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:20)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:70)(cid:82)(cid:80)(cid:83)(cid:79)(cid:72)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:16)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:85)(cid:72)(cid:70)(cid:82)(cid:80)(cid:69)(cid:76)(cid:81)(cid:68)(cid:81)(cid:87)(cid:3) treatment for people with haemophilia A. Decision made to initiate a phase 3 trial in 2012. (cid:282)(cid:3)(cid:3)(cid:53)(cid:72)(cid:74)(cid:88)(cid:79)(cid:68)(cid:87)(cid:82)(cid:85)(cid:92)(cid:3)(cid:68)(cid:83)(cid:83)(cid:85)(cid:82)(cid:89)(cid:68)(cid:79)(cid:3)(cid:86)(cid:82)(cid:88)(cid:74)(cid:75)(cid:87)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:56)(cid:54)(cid:3)(cid:68)(cid:81)(cid:71)(cid:3)(cid:40)(cid:88)(cid:85)(cid:82)(cid:83)(cid:72)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3) the only recombinant treatment for ultra-rare congenital factor XIII deficiency. (cid:282)(cid:3)(cid:3)(cid:51)(cid:75)(cid:68)(cid:86)(cid:72)(cid:3)(cid:20)(cid:3)(cid:87)(cid:85)(cid:76)(cid:68)(cid:79)(cid:3)(cid:76)(cid:81)(cid:76)(cid:87)(cid:76)(cid:68)(cid:87)(cid:72)(cid:71)(cid:3)(cid:73)(cid:82)(cid:85)(cid:3)(cid:79)(cid:82)(cid:81)(cid:74)(cid:16)(cid:68)(cid:70)(cid:87)(cid:76)(cid:81)(cid:74)(cid:3)(cid:74)(cid:85)(cid:82)(cid:90)(cid:87)(cid:75)(cid:3)(cid:75)(cid:82)(cid:85)(cid:80)(cid:82)(cid:81)(cid:72)(cid:3) formulation. DKK billion Biopharmaceuticals Sales development ■ Haemostasis management (NovoSeven®) ■ Growth hormone therapy ■ Hormone replacement therapy ■ Other products 2011 2010 2009 2008 2007 15.9 15.1 13.6 12.2 11.4 0 5 10 15 20 Novo Nordisk aspires to offer treatment for all people with haemophilia Haemophilia A Approx 250,000 patients Haemophilia B Approx 50,000 patients Inhibitor segment Approx 3,500 patients Source: Stonebraker JS et al. Haemophilia 2010; 16:20–32. Haemophilia A and B patients represent those characterised as severe. Novo Nordisk Annual Report 2011 37 s l a c i t u e c a m r a h p o B i What is haemophilia? Haemophilia is an inherited or acquired bleeding disorder that prevents blood from clotting. More than 300,000 people worldwide are living with severe haemophilia. They lack, either partially or completely, an essential clotting factor needed to form stable blood clots. The treatment for haemophilia involves intravenous administration of replacement clotting factors. Treatment may be administered only when bleeding occurs or, increasingly, on a preventive basis, which is called prophylactic treatment. People with haemophilia A may have either no or decreased ability to produce clotting factor VIII. Those with haemophilia B have deficiencies in producing clotting factor IX. Some people with haemophilia develop inhibitors, or resistance (due to antibody formation), to their normal replacement treatment. For these 3,500 people, factor VIIa provides clotting action to treat bleeds. For people with haemophilia, bleeds often occur in the joints, particularly the knees and ankles. Bleeds can also occur in the muscles, soft tissues, gastrointestinal tract, and even in the brain. Surgery, and even tooth extractions, require careful medical intervention to control bleeding. Without treatment, uncontrolled bleeding can cause stiffness, pain and severe joint damage leading to impaired mobility. An intracerebral haemorrhage will often be fatal. While, thankfully, haemophilia is not becoming more common, more people in the world are now having the condition properly diagnosed and treated. Also, as treatment improves, those with this lifelong condition are living longer lives. Location of bleeds and their consequences Brain Nose and gums Head and neck Gut Kidneys Muscles Joints Impact on joints: (cid:282)(cid:3)(cid:3)(cid:37)(cid:79)(cid:72)(cid:72)(cid:71)(cid:76)(cid:81)(cid:74)(cid:3)(cid:76)(cid:81)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:86)(cid:83)(cid:68)(cid:70)(cid:72)(cid:3) causes a strong inflammatory reaction that predisposes to further bleeding. (cid:282)(cid:3)(cid:3)(cid:44)(cid:81)(cid:68)(cid:71)(cid:72)(cid:84)(cid:88)(cid:68)(cid:87)(cid:72)(cid:3)(cid:82)(cid:85)(cid:3)(cid:71)(cid:72)(cid:79)(cid:68)(cid:92)(cid:72)(cid:71)(cid:3) treatment of repeated joint bleeds results in a ‘target joint’. (cid:282)(cid:3)(cid:3)(cid:55)(cid:75)(cid:72)(cid:3)(cid:77)(cid:82)(cid:76)(cid:81)(cid:87)(cid:3)(cid:76)(cid:86)(cid:3)(cid:87)(cid:72)(cid:81)(cid:86)(cid:72)(cid:15)(cid:3)(cid:86)(cid:90)(cid:82)(cid:79)(cid:79)(cid:72)(cid:81)(cid:3) and extremely painful, and mobility is restricted. (cid:282)(cid:3)(cid:3)(cid:40)(cid:89)(cid:72)(cid:81)(cid:87)(cid:88)(cid:68)(cid:79)(cid:79)(cid:92)(cid:15)(cid:3)(cid:87)(cid:75)(cid:72)(cid:3)(cid:70)(cid:68)(cid:85)(cid:87)(cid:76)(cid:79)(cid:68)(cid:74)(cid:72)(cid:3) erodes completely and permanent joint damage (arthropathy) occurs. (cid:282)(cid:3)(cid:3)(cid:55)(cid:85)(cid:72)(cid:68)(cid:87)(cid:80)(cid:72)(cid:81)(cid:87)(cid:3)(cid:82)(cid:73)(cid:3)(cid:68)(cid:85)(cid:87)(cid:75)(cid:85)(cid:82)(cid:83)(cid:68)(cid:87)(cid:75)(cid:92)(cid:3)(cid:76)(cid:86)(cid:3) orthopaedic reconstructive surgery. 38 Novo Nordisk Annual Report 2011 Changing Possibilities in Haemophilia® To help build a better tomorrow for people with haemophilia, we partner with the haemophilia community to deliver innovative treatments, access to care, education and community support to empower patients. We recognise that medical products do not address all aspects of haemophilia. To strengthen understanding of life with haemophilia, we initiated a psychosocial study to determine how to best support the needs of people with haemophilia. Interviews have been conducted with 900 people to date, including those with haemophilia, caregivers and healthcare professionals, in 12 countries. This study, called HERO for Haemophilia Experiences, Results and Opportunities, is inspired by our decade of experience with psychosocial studies in diabetes. The initial findings, reported at the meeting of the International Society of Thrombosis and Haemostasis in Kyoto, Japan, in July 2011, underline the importance of psychosocial issues in haemophilia, which include family tensions, problems of inte- gration at school, fear of stigmatisation, and concerns about integration at work, forming relationships and starting a family. When the study is finalised in 2012, it 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. We collaborate with patient and medical organisations around the world to drive knowledge about haemophilia and offer training to the medical community to improve access to diagnosis and care for people with haemophilia globally. 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. Because haemophilia and other bleeding disorders are relatively rare, support for people with bleeding disorders and the com- munities that support them is critical. To help people with inhibitors meet others like them to share information, Novo Nordisk has set up a Facebook page for the approximately 800 people with inhibitors in the US. Through the changingpossibilities-US.com website, we also help caregivers and teenagers connect with others like themselves to share experiences. This year, we launched the Best Buddy award programme in the UK at an event at the Houses of Parliament in collaboration with the UK Haemophilia Society. The programme raises awareness of haemophilia and rare bleeding disorders and recognises the vital support provided by the families, carers, friends and teachers of children with these conditions. Novo Nordisk was an official sponsor of World Haemophilia Day, 17 April, in 2011. The designated day promoted awareness and understanding of haemophilia. Novo Nordisk sponsored activities in more than 20 countries, reaching thousands of people. Novo Nordisk is also a sponsor of the World Federation of Hemophilia’s 50th birthday celebrations, which begin in 2012. s l a c i t u e c a m r a h p o B i Novo Nordisk Haemophilia Foundation’s impact 2005–2011 People reached through educational activities More than 13,000 People with haemophilia retested or diagnosed More than 12,600 Healthcare providers trained in haemophilia care More than 7,700 53 Projects initiated with local partners 17 Fellowships awarded to healthcare professionals Expanding access to care We partner with physicians, policymakers and the wider haemophilia community to secure optimal care for people affected by haemophilia globally. To give surgical teams an understanding of options for managing necessary surgical procedures 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 training programmes are being held at haemophilia centres worldwide, with each session accommodating up to four surgical teams. We partner with the haemophilia community to deliver access to care and empower patients. Our commitment to the global haemophilia community includes efforts to close the gap in care between developed and developing countries. We established the non-profit Novo Nordisk Haemophilia Foundation (NNHF) in 2005 to address the significant need to improve access to care and treatment in developing countries. An estimated 75% of the global population of people with haemophilia and other rare bleeding disorders live in the developing world, and many go undiagnosed or receive inadequate care and treatment. Without adequate care, quality of life and life expectancy are often significantly reduced. Our donations to the NNHF, totalling 90 million Danish kroner from 2005 to 2011, support projects and fellowships in 33 developing and emerging countries. NNHF programmes improve access to care by focusing on capacity building, awareness creation and diagnosis and registries. By working with partners across all areas of the haemophilia and allied bleeding disorder community with local ownership of projects, the NNHF aims to ensure the sustainability of development programmes. See nnhf.org for more information. determining which therapy areas to enter. We also assess the potential for global market leadership. Growth hormone therapy Through our 40-year commitment to growth hormone therapy and our expertise in protein molecules, we have become one of the world’s leading producers of human growth hormone. Growth hormone deficiency is due to a defect in the pituitary gland at the base of the brain. 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 the proper amounts of body fat, muscle and bone to reduce metabolic complications and maintain a good quality of life. 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 Although Norditropin® is a man-made form of growth hormone, it is identical to growth hormone produced by the body. Norditropin® is approved for the treatment of certain growth hormone deficiencies in children and adults. In some markets, it is approved to help children of short stature as a result of Noonan syndrome or Turner syndrome grow taller. Research shows that children of short stature may be more likely to experience difficulty at school, while adults with growth hormone deficiency may have below-average health-related quality of life. Our commitment to growth hormone therapy includes development of a long-acting formulation, which is currently in phase 1 clinical trials. One example of our ongoing efforts to build upon scientific research to improve patient care is the NordiNet® International Outcome Study, an electronic patient data registry intended for endocrinologists. We also engage in activities to raise awareness of the need for diagnosis and treatment of growth hormone disorders among general health practitioners. We have drawn on our technological expertise in injection devices to improve growth hormone delivery systems and products. In 2011, we launched a new prefilled device, Norditropin® FlexPro®, in Australia. Norditropin® FlexPro® was first launched in 2010 in Europe, Japan and the US. Its features include an easy-touch dose button and an audible click, which lets the user know when the full dose has been delivered. The pen is also shorter, with the intention to make it easier to hold and handle for both children and adults. Hormone replacement therapy Our market-leading hormone therapy products Vagifem® and Activelle® (Activella® in the US) build on our 35 years of experience with hormone treatment for menopausal symptoms. Vagifem® 10 μg, the lowest effective dose available for the local treatment of vaginal atrophy, was launched in Spain, Finland and Norway during 2011. 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 assessed risks. Other therapy areas As a focused healthcare company, we consider our core strengths in protein engineering and chronic disease treatment when 1. Only the 5 μg and 10 μg sizes are room temperature-stable. All Norditropin® products must be refrigerated prior to first use. Do not freeze. After initial use, FlexPro® 5 mg/1.5 ml and 10 mg/1.5 ml delivery pens can either be stored outside the refrigerator (at up to 25°C or 77°F) for use within three weeks, or in the refrigerator (between 36°F and 46°F) for use within four weeks. The FlexPro® 15 mg/1.5 ml and NordiFlex® 30 mg/3 ml delivery pens must always be refrigerated (between 36°F and 46°F) – both prior to and after the initial injection – for use within four weeks. Novo Nordisk Annual Report 2011 39 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G NANCY SHAMMOUT For Nancy, a diabetes product specialist in Amman, Jordan, working for Novo Nordisk means being a part of improving life for people with diabetes. She works with healthcare providers and patients in Jordan to improve awareness of modern insulins and how they can improve glucose control. 40 Novo Nordisk Annual Report 2011 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Corporate governance Novo Nordisk seeks to create sustainable value and our corporate governance framework is designed to support this. While our corporate governance framework complies with applicable laws and requirements, it is designed specifically for Novo Nordisk. Framework The Novo Nordisk Way forms the foundation of our internal values-based framework, with values that are consistent with the principles of good governance. Our corporate governance frame- work aligns with internal principles as well as external regulations and codes. This includes compliance with applicable securities laws and corporate governance standards in Denmark and the US, including the Danish Corporate Governance Recommendations. The values of the Novo Nordisk Way reflect the shared values of the Novo Group, of which Novo Nordisk is a member. 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 foundation. See novonordiskfonden.dk. Our corporate governance framework supports sustainable value creation. Novo Nordisk adheres to the Charter for Companies in the Novo Group, which is available online at novo.dk. However, all strategic and operational matters are solely decided by the Board and Management of Novo Nordisk. Governance structure Our company holds itself accountable to shareholders for its performance. We seek to enhance the accuracy, completeness and reliability of the information provided in annual reporting through internal controls, assurance and independent audits. Reporting helps shareholders assess the actions of the Board and Management. Shareholders 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 53. The B shares are traded on 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 for winding-up proceedings. Shareholders have ultimate authority over the company and exercise their right to make decisions at general meetings in person, by proxy or by correspondence. Resolutions can generally be passed by a simple majority. However, resolutions to amend the Articles of Association require two-thirds of votes cast and capital represented, unless other adoption requirements 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. The Board has decided that general meetings should be conducted by physical attendance. Shareholders may, however, vote by proxy or correspondence, either electronically or by mail. The meeting is webcast and can be viewed online at novonordisk.com. 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 as of the record date, which is one week prior to the general meeting. All share- holders 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 event. 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 one serves as a member of both. On behalf of 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. It may also issue new shares or buy back shares in accordance with authorisations granted by the general meeting and recorded in the meeting minutes. For minutes from the general meeting, see novonordisk.com/about_us. The Board has 12 members, eight of whom are elected by share- holders at general meetings and four by employees in Denmark. Shareholder-elected board members serve a one-year term and may be re-elected. Members must retire at the first general meeting after reaching the age of 70. The majority of the shareholder-elected board members, five out of eight, are independent as defined by the Danish Corporate Governance Recommendations. See p 50. A proposal for nomination of board members is presented by the Chairmanship to the Board, taking into account required competences as defined by the Board’s competence profile, and reflecting the result of a self-assessment process facilitated in some years by external consultants. The assessment process is based on written questionnaires and evaluates the Board’s composition and the skills of its members, including whether each board member and executive participates actively in board discussions and contributes with independent judgement. Novo Nordisk Annual Report 2011 41 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G The self-assessment and the Board’s competence profile are used in the nomination process. The competence profile was significantly revised in 2011 to include special competences relating to the chairmanship, aspirations regarding Board diversity and a 12-year guiding principle on Board tenure. To ensure that discussions include multiple perspectives representing the complex, global pharmaceutical environment, the Board aspires to be diverse in gender and nationality. Currently, about 40% of the Board is either female or a citizen of a country other than Novo Nordisk’s home market. Half of the shareholder-elected board members are non-Danes. While the Board is 8% female, no shareholder-elected board members are female. The self-assessment conducted in 2011 resulted in enhancements in the succession process and preparedness as well as improve- ments to nomination criteria for new board members. In order to support continued fulfilment of the Novo Nordisk Way, criteria for board members include integrity, accountability, financial literacy and desire for innovation. Members are also expected to have experience managing major companies that develop, manufacture and market products and services globally. The competence profile, which includes nomination criteria, is available online at novonordisk.com/about_us. Under Danish law, Novo Nordisk’s 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 four board members from among themselves. 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 2011. Four meetings were attended by all board members; three of the members were 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. Chairmanship The annual general meeting directly elects the chairman and the vice chairman. In 2011, the Chairmanship held seven meetings and both members attended all meetings. 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 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. 42 Novo Nordisk Annual Report 2011 In March 2011, the annual general meeting 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. Ad hoc nomination team To enhance focus on the succession preparedness of the Board and of Executive Management, an ad hoc nomination team, consisting of the Chairmanship plus Jørgen Wedel and Henrik Gürtler, was established to prepare the Board's discussions regarding nomination of board members and succession in Executive Management. This team served throughout 2011 but is not intended to be a permanent committee of the Board. 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 2011, the Audit Committee held four meetings, attended by all members. The Audit Committee assists the Board of Directors with oversight of the external auditors, the internal audit function, complaints regarding fraud or violations of ethics, values or quality controls, the financial and non-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 2011, 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. Possible business ethics misconduct may be raised through the global compliance hotline. Concerns regarding possible breaches of business ethics or financial fraud, violations of the Novo Nordisk Way or quality lapses may be raised anonymously by employees and other stakeholders through the global compliance hotline. Complaints made through the compliance hotline are received by the Audit Committee Secretariat. Complaint handling is monitored by the Chairmanship or the Audit Committee, depending on the nature of the complaint. As such the hotline works independently of Executive Management. The compliance hotline is accessible by telephone and online in nine languages. Novo Nordisk’s risk management and internal controls in relation to financial processes are designed to effectively control the risk of material misstatements. A detailed description of the internal controls and risk management system implemented in relation to financial reporting processes is available at novonordisk.com/ about_us. Novo Nordisk is in compliance with US Sarbanes–Oxley Act section 404, which requires Novo Nordisk to design and implement an adequate system of internal controls over financial reporting processes to ensure that there are no material mis- statements in the financial reporting. The company’s conclusion and the auditor’s evaluation of the internal controls over financial 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 of financial processes and business ethics. To ensure that the internal financial audit 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. Three other types of internal audit – quality audits, organisational audits and values audits, called facilitations – help ensure that the organisation adheres to high quality standards and operates in accordance with the Novo Nordisk Way. For information on facilitations see pp 10 and 17. i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G reporting are included in its Form 20-F filing to the US Securities and Exchange Commission. Executive Management The Board has delegated responsibility for day-to-day manage- ment to Executive Management. Executive Management consists of the president and chief executive officer plus four other executives. They are responsible for organisation of the company as well as allocation of resources, determination and implemen- tation 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. Assurance External audit The company’s financial reporting and the internal controls over financial reporting processes are audited by an external auditor elected at the annual general meeting. The auditor acts in the interest of shareholders and reports any significant findings regarding accounting matters and any significant internal control deficiencies to the Audit Committee and to the Board. As part of the company’s commitment to financial, social and environmental 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 covers aspects deemed to be material and verifies the internal control processes of the information reported. Corporate governance codes and practices Framework Governance structure Assurance Shareholders Board of Directors Audit Committee Chairman- ship Executive Management External codes and regulations (external) Novo Nordisk Way (internal) Audit of financial data and review of social and environmental data (external and internal) Facilitation and organisational audit (internal) The applicable corporate governance codes for each stock exchange and a 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. Novo Nordisk follows the majority of the Danish Corporate Governance Recommendations, but does not conform in the following ways: (cid:282) The Board does not have a remuneration committee. (cid:282) The Board does not have a nomination committee (as defined by the Danish Corporate Governance Recommendations). (cid:282) Existing executive employment contracts allow for severance payments of more than 24 months’ fixed base salary plus pension contribution. Explanations of deviations from these recommendations are given on pp 42 and 47. Organisation Quality audit (internal) 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. Novo Nordisk Annual Report 2011 43 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Remuneration report In keeping with our aim to attract, retain and motivate talented individuals, remuneration at Novo Nordisk is designed to be competitive. For executives and employees, remuneration rewards short- and long-term performance and is aligned with the interest of the shareholders. Novo Nordisk’s remuneration principles provide guidance for remuneration of the Board and Executive Management. The principles are online at novonordisk.com/about_us. Remuneration is assessed on an annual basis against a bench- mark of Scandinavian companies and European pharmaceutical companies that are similar to Novo Nordisk in size and complexity in accordance with the remuneration principles for the Board of Directors and Executive Management. The results of the annual remuneration bench marking for board members are presented to the Board by the chairman at its October meeting. At the 2012 annual general meeting a proposal will be made to align the remuneration benchmarks for the Board and Executive Management. Board of Directors’ remuneration The remuneration of the Board of Directors is comprised of 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. 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 endorses the actual remuneration for the past financial year and the recommendation on remuneration levels for the current financial year. This is then presented to the annual general meeting for approval. Based on the benchmark assessment in October 2010, the Board determined that, in order to continue to attract and retain talented board members, it would be appropriate to make an adjustment to the annual fixed base fee paid to each board member. As a consequence, the Board proposed to the 2011 annual general meeting an adjustment of the fixed base fee to 500,000 Danish kroner, and this was approved. The benchmark assessment also led the Board to propose to the annual general meeting that the chairman receive 3.0 times the base fee and the vice chairman and the audit committee chairman receive 2.0 times the base fee. The proposal for other members of the audit committee was 1.5 times the base fee. These proposals were approved by the 2011 annual general meeting. 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 3,000 euros for Europe-based board members and 6,000 euros for US- and Asia-based board members. Expenses such as travel and accom- modation in relation to board meetings as well as relevant continuing education are reimbursed. Novo Nordisk also pays social security taxes imposed by foreign authorities and bank transfer fees. Variable remuneration Board members are not offered stock options, warrants, restricted stock or participation in other incentive schemes. Board of Directors In 2011, the base fee for members of the Board of Directors was DKK 500,000 (DKK 400,000 in 2010). DKK million Sten Scheibye (chairman of the Board) Göran A Ando (vice chairman of the Board) Kurt Anker Nielsen (chairman of the Audit Committee) Hannu Ryöppönen (Audit Committee member) Jørgen Wedel (Audit Committee member) Bruno Angelici3 Henrik Gürtler Johnny Henriksen4 Ulrik Hjulmand-Lassen Pamela J Kirby4 Thomas Paul Koestler3 Anne Marie Kverneland Søren Thuesen Pedersen Stig Strøbæk Total 20111 2010 Fixed base fee Fee for ad hoc tasks and Fixed committee work2 allowance Total base fee Travel Fee for ad hoc tasks and committee work2 allowance Total Travel 1.5 1.0 0.5 0.5 0.5 0.4 0.5 – 0.5 0.1 0.4 0.5 0.5 0.5 7.4 – 0.1 0.5 0.3 0.3 – – – – – – – – – 1.2 – 0.1 – 0.1 0.3 0.1 – – – – 0.2 – – – 1.5 1.2 1.0 0.9 1.1 0.5 0.5 – 0.5 0.1 0.6 0.5 0.5 0.5 0.8 9.4 1.0 0.6 0.4 0.4 0.4 – 0.4 0.1 0.3 0.4 – 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 0.1 0.3 0.5 – 0.4 0.4 0.4 0.4 6.8 1. 2011 amounts reflect changes in base payment, multiples and travel allowance approved at the 2011 general meeting. These changes were proposed based on benchmark assessments and the need to continue to attract and retain talented board members. 2. Ad hoc fees are for the research and development facilitator, a position that was abolished for 2011. Göran A Ando received 0.3 million Danish kroner in 2010. 3. First elected at the annual general meeting in March 2011. 4. Johnny Henriksen resigned as of March 2010. Pamela J Kirby resigned as of March 2011. 44 Novo Nordisk Annual Report 2011 Executive remuneration Executive remuneration is proposed by the Chairmanship and subsequently approved by the Board. Remuneration packages for executives comprise a fixed base salary, a cash-based incentive, a 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 an incentive for a given year is currently equal to 14 months’ fixed base salary plus pension contribution. All incentives are subject to claw-back if it is subsequently determined that payment was based on information that was manifestly misstated. Fixed base salary The fixed base salary accounts for 35–55% 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. Remuneration package components Board of Directors Executive Management Fixed base salary Yes Cash-based incentive Share-based incentive Pension Other benefits Severance payment No No No Yes No Yes Yes Yes Yes Yes Yes Executive remuneration At on-target performance: fixed versus variable pay ■ Fixed base salary 52% ■ Cash-based incentive 9% ■ Share-based incentive 22% ■ Pension 15% ■ Other benefits 2% i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Cash-based incentive The cash-based incentive is designed to incentivise individual performance and short-term achievements in line with company targets, and may result in an annual payout of up to four months’ fixed base salary plus pension contribution for reaching individ- ualised targets. In cases of extraordinary individual performance, the maximum annual payout may be up to six months’ fixed base salary plus pension contribution. For 2011, this maximum has been capped at five months’ fixed base salary plus pension contribution. The individualised performance targets are linked to 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 the other members of Executive Management are fixed by the chief executive officer. The Chairmanship of the Board evaluates the degree of achieve- ment for each member of Executive Management based on input from the chief executive officer. 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. Share-based incentives are linked to both financial and non-financial targets. The programme is based on a calculation of shareholder value creation compared with planned performance and may, subject to the Board’s assess- ment, be reduced to reflect underperformance in meeting significant research and development or sustainability targets. 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 requirement on average net operating assets. A proportion of the calculated shareholder value creation is allocated to a joint pool for the participants, who include Executive Management and senior vice presidents. The allocation to the joint pool can also be adjusted by the Board to reflect achievement of development milestones in the research and development pipeline and sustainability targets, which include long-term environmental targets, employee training objectives and company reputation objectives. Once the joint pool has been approved by the Board, the total cash amount is converted into Novo Nordisk B shares at market At maximum performance: fixed versus variable pay ■ Fixed base salary 39% ■ Cash-based incentive 13% ■ Share-based incentive 33% ■ Pension 13% ■ Other benefits 2% Novo Nordisk Annual Report 2011 45 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Executive Management and other members of the Senior Management Board DKK million 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 total1 Joint pool2 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 Fixed base salary Cash-based incentive Pension Other benefits Share-based incentive Total remuneration 7.3 4.5 4.1 4.9 4.5 25.3 70.8 6.6 4.3 3.9 4.7 4.3 23.8 62.5 3.1 1.5 1.4 1.7 1.9 9.6 2.7 1.5 1.3 1.7 1.5 8.7 0.3 0.3 0.3 0.3 0.3 1.5 26.3 22.4 10.8 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 – – – – – – – 56.9 – – – – – – – 64.3 13.4 7.8 7.1 8.6 8.2 45.1 130.3 56.9 11.3 7.4 6.8 8.3 7.4 41.2 117.5 64.3 1. The total remuneration for 2011 includes remuneration to 26 (24 in 2010) senior vice presidents, one (three in 2010) of whom retired or left the company. The 2011 remuneration for one retiring, senior vice president (three in 2010) is included in the table above, whereas a settlement of 5 million Danish kroner (25 million Danish kroner in 2010) is not included. 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 time of 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 (2010: 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 2008 (166,302 shares) were released to the individual participants subsequent to the approval of the Annual Report 2011 by the Board of Directors and the announcement on 2 February 2012 of 2011 full year financial results. Based on the share price at the end of 2011, the value of the released shares is as follows: Value as at 31 December 2011 of shares released 2 February 2012 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 Number Market value1 (DKK million) of shares 15,578 10,381 10,381 10,381 10,381 57,102 98,820 10.2 6.9 6.9 6.9 6.9 37.8 65.2 1. The market value of the shares released in 2011 is based on the Novo Nordisk B share price of 660 Danish kroner at the end of 2011. 2. In addition, 10,380 shares (market value: 6.9 million Danish kroner) were released to retired members of Management. Lars Rebien Sørensen serves as a member of the Board of Directors of Danmarks Nationalbank, from which he received remuneration of 21,841 Danish kroner in 2011 (compared with 20,000 kroner in 2010), as a member of the Board of Directors of DONG Energy A/S, from which he received remuneration of 175,000 kroner in 2011 (compared with 175,000 kroner in 2010) and as a member of the Supervisory Board of Bertelsmann AG, from which he received remuneration of 85,000 euros in 2011 (compared with 50,000 euros in 2010). As of 12 July 2011, Mr Sørensen has also served as a member of the Board of Directors of Thermo Fisher Scientific Inc, but has not received any remuneration. Jesper Brandgaard serves as chairman of the Board of Directors of SimCorp A/S, from which he received remuneration of 753,455 kroner in 2011 (compared with 794,425 kroner in 2010). Kåre Schultz serves as a member of the Board of Directors of LEGO A/S, from which he received remuneration of 300,000 kroner in 2011 (compared with 300,000 kroner in 2010). Kåre Schultz also serves as chairman of the Board of Directors of Royal Unibrew A/S, from which he received remuneration of 625,000 kroner in 2011 (compared with 156,250 kroner in 2010). Mads Krogsgaard Thomsen serves as a member of the Board of Directors of Cellartis AB, from which he received remuneration of 50,000 Swedish kroner in 2011 (50,000 kroner in 2010). 46 Novo Nordisk Annual Report 2011 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 senior vice presidents have one unit each. The shares in a joint pool in any 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. The value of the joint pool will change during the lock-up period depending on the development in the share price, aligning the interests of participants 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. Remuneration rewards short- and long-term performance. Other benefits Other benefits are added to ensure that overall remuneration is competitive and aligned with 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. If an executive is terminated by Novo Nordisk for other reasons, the severance payment is three months’ fixed base salary plus pension contribution per year of employment as an executive, taking into account previous employment history. In no event will the severance payment be less than 12 months’ or more than 36 months’ fixed base salary plus pension contribution. For new employment contracts, the severance payment 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. Organisation On a global basis, compensation packages for employees are guided by five broad principles: (cid:282) 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. (cid:282) 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. (cid:282) 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. (cid:282) Transparency Clear communication of remuneration programmes is a priority, and all costs associated with compensation practices are known and publicly disclosed. (cid:282) 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. i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Novo Nordisk Annual Report 2011 47 p Board of Directors i h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Sten Scheibye Formerly President and CEO of Coloplast A/S, Denmark (retired). Member of the Board of Novo Nordisk A/S in 2003, vice chairman in 2004 and chairman since 2006. Management duties: Trade Council of Denmark (chair), the Danish Industry Foundation (chair), the Denmark-America Foundation (chair), the Board of Governors of the Technical University of Denmark (chair), the Danish Fulbright Commission (vice chair), member of the board of Gambro AB, Sweden, Rambøll Gruppen A/S, Dades A/S, RM Rich. Müller A/S, the Rich. Müller Foundation, the Aase and Ejnar Danielsen Foundation and the Knud Højgaards Foundation. Special competences: Knowledge of the healthcare industry, particularly in relation to patients requiring chronic care, and managerial skills relating to international organisations. and in-depth knowledge of strategy, sales, marketing and governance of major companies. Education: AMP (1993) from Harvard Business School and MBA (1978) from Kellogg School of Management at Northwestern University, both in the US. Law degree (1973) from Reims University and BA in Business Administration (1971) from École Supérieure de Commerce de Reims, both in France. Henrik Gürtler President and CEO of Novo A/S, Denmark, since 2000. Formerly member of Corporate Management of Novo Nordisk A/S with special responsibility for Corporate Staffs. Member of the Board of Novo Nordisk A/S since 2005. Management duties: Novozymes A/S (chair), Copenhagen Airports A/S (chair) and COWI Holding A/S (chair), all in Denmark. Special competences: Knowledge of the Novo Group’s business and its policies, and knowledge of the international biotech industry. Education: BComm (1983) from Copenhagen Business School, Denmark, PhD in Organic Chemistry (1981) and MSc in Chemistry and Physics (1978), both from the University of Aarhus, Denmark. Education: MSc in Chemical Engineering (1976) from the Technical University of Denmark. Göran A Ando Formerly CEO of Celltech Group plc, UK (retired). Member of the Board of Novo Nordisk A/S in 2005 and vice chairman since 2006. Management duties: Symphogen A/S, Denmark (chair), S*Bio Pte Ltd, Singapore (vice chair), member of the board of Novo A/S, Denmark, EDBI Pte Ltd, Singapore, EUSA Pharma, UK, Chroma Therapeutics, UK, and Molecular Partners AG, Switzerland. Scientific Advisory Board, Southwest Michigan First, US (chair), Scientific Advisory Board of Bausch & Lomb, US, and senior adviser to Essex Woodlands Health Ventures Ltd., UK. Special competences: Medical qualifications and extensive executive background within the international pharmaceutical industry. Education: Specialism in general medicine (1978) and degree in medicine (1973), both from Linköping Medical University, Sweden. Ulrik Hjulmand-Lassen Senior IT Quality Advisor in IT Governance. Member of the Board of Novo Nordisk A/S since 2010. Education: CISM (2011). Trained as an MCSA/IT Security (2009) and as an ISO 9001 lead auditor (2006). BSc (1985) from the Technical University of Denmark/DIA-E. Thomas Paul Koestler Executive with Vatera Holdings LLC, US. Member of the Board of Novo Nordisk A/S since 2011. Management duties: Member of the board of Momenta Pharmaceuticals Inc., US. Special competences: Extensive Bruno Angelici Formerly executive vice president of AstraZeneca (retired). Member of the Board of Novo Nordisk A/S since 2011. Management duties: Member of the board of Smiths Group plc, UK, and Wolters Kluwer, NL, member of the Global Advisory R&D knowledge, both generally and within the field of regulatory affairs. Significant know-how about the pharmaceutical industry in general and how large international corporations operate. Additional knowledge of the US market. Education: PhD in Medicine & Pathology (1982) from the Roswell Park Memorial Institute and BSc in Biology (1975) from Daemen College, both in the US. Board at Takeda Pharmaceutical Company Limited, Japan. Special competences: Extensive global experience with two companies in the fields of pharmaceuticals and medical devices 48 Novo Nordisk Annual Report 2011 Anne Marie Kverneland Laboratory technician, currently working as a full-time shop steward. Member of the Board of Novo Nordisk A/S since 2000. Education: Degree in medical laboratory technology (1980) from the Copenhagen University Hospital, Denmark. Kurt Anker Nielsen Formerly CFO and deputy CEO of Novo Nordisk A/S. CEO of Novo A/S, Denmark, from 2000 to 2003 (retired). Member of the Board of Novo Nordisk A/S since 2000. Chairman of the Audit Committee of Novo Nordisk A/S since 2004. Management duties: Dalhoff Larsen & Horneman A/S (chair), Reliance A/S (chair), Collstrup’s Mindelegat (chair), Novozymes A/S (vice chair), and member of the board of the Novo Nordisk Foundation, Veloxis Pharmaceuticals A/S and Vestas Wind Systems A/S, all in Denmark. Chairman of the audit committees of Novozymes A/S, Veloxis Pharmaceuticals A/S and Vestas Wind Systems A/S, all in Denmark. Special competences: In-depth knowledge of Novo Nordisk A/S and its businesses, working knowledge of the global pharmaceutical industry and experience in working with accounting, financial and capital market issues. Education: MSc in Commerce and Business Administration (1972) from Copenhagen Business School, Denmark. i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Value Creation Investments Limited, Jersey. Chairman of the audit committees of Amer Sports Oyj and Rautaruukki Oyj and member of the audit committee of Neste Oil Oyj, all in Finland. Special competences: International executive background and thorough understanding of managing finance operations in global organisations, in particular in relation to accounting, financial and capital markets issues, but also experience in private equity and Mergers & Acquisitions (M&A). Education: BA in Business Administration (1976) from Hanken School of Economics, Helsinki, Finland. Stig Strøbæk Electrician, currently working as a full-time shop steward. Member of the Board of Novo Nordisk A/S since 1998. Management duties: Member of the board of the Novo Nordisk Foundation since 1998. Education: Diploma as an electrician. Diploma in further training for board members (2003) from the Danish Employees’ Capital Pension Fund (LD). Jørgen Wedel Formerly executive vice president of the Gillette Company, US (retired). Member of the Board of Novo Nordisk A/S since 2000. Member of the Audit Committee of Novo Nordisk A/S since 2005. Special competences: Background as a senior sales and Søren Thuesen Pedersen Currently working as an external affairs director in Quality Intelligence. Member of the Board of Novo Nordisk A/S since 2006. Management duties: Member of the board of the Novo Nordisk Foundation since 2002. marketing executive in a globally operating consumer-oriented company within the fast-moving consumer goods industry, as well as particular insight into the US market. In addition, competences in relation to auditing and accounting. Education: MBA (1974) from the University of Wisconsin in the US and MSc in Commerce and Business Administration (1972) from Copenhagen Business School, Denmark, majoring in accounting and financing. Education: BSc in Chemical Engineering (1988) from the Engineering Academy of Denmark. Hannu Ryöppönen Formerly CFO and deputy CEO of Stora Enso Oyj, Finland (retired). Member of the Board of Novo Nordisk A/S since 2009. Member of the Audit Committee of Novo Nordisk A/S since 2009. Management duties: Private equity funds Altor 2003 GP Limited (chair), Altor Fund II GP Limited (chair) and Altor III GP Limited (chair), all in Jersey, Rautaruukki Oyj (vice chair), member of the board of Tiimari Oyj, Neste Oil Oyj and Amer Sports Oyj, all in Finland, Korsnäs AB, Sweden, and the private equity fund Novo Nordisk Annual Report 2011 49 i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Name (male/female) Sten Scheibye (m) Göran A Ando (m) Bruno Angelici (m) Henrik Gürtler (m) Ulrik Hjulmand-Lassen3 (m) Thomas Paul Koestler (m) Anne Marie Kverneland3 (f) Kurt Anker Nielsen (m) Søren Thuesen Pedersen3 (m) Hannu Ryöppönen (m) Stig Strøbæk3 (m) Jørgen Wedel (m) First elected 2003 2005 2011 2005 2010 2011 2000 2000 2006 2009 1998 2000 Term 2012 2012 2012 2012 2014 2012 2014 2012 2014 2012 2014 2012 Nationality Danish Swedish French Danish Danish American Danish Danish Danish Finnish Danish Danish Date of birth 3 Oct 1951 6 Mar 1949 20 Apr 1947 11 Aug 1953 28 Apr 1962 11 Jun 1951 24 Jul 1956 8 Aug 1945 18 Dec 1964 25 Mar 1952 24 Jan 1964 10 Aug 1948 Independence1 Independent Not independent2 Independent Not independent2 Not independent Independent Not independent Not independent2,4 Not independent Independent4,5 Not independent Independent4,5 1. As designated by NASDAQ OMX Copenhagen in accordance with section 5.4.1 of Recommendations on Corporate Governance. 2. Member of Management or the Board of Novo A/S or the Novo Nordisk Foundation. 3. Elected by employees of Novo Nordisk. 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. Organisational structure: Senior Management Board Novo Nordisk Lars Rebien Sørensen Research & Development Mads Krogsgaard Thomsen 4,079 employees Operations Kåre Schultz 23,150 employees Finance, Legal and IT Jesper Brandgaard 4,294 employees1 Corporate Relations Lise Kingo 1,107 employees1 Diabetes Research Unit Peter Kurtzhals Global Marketing Jakob Riis Corporate Finance Lars Green Business Assurance Kim Bundegaard Legal Affairs Ole F Ramsby IT & Corporate Development Lars Fruergaard Jørgensen Global Quality Lars Guldbæk Karlsen Corporate People & Organisation Lars Christian Lassen Biopharmaceuticals Research Unit Per Falk Haemophilia R&D Portfolio Anne Prener Device R&D Jesper Kløve CMC Supply Jesper Bøving Global Development Peter Kristensen Regulatory Affairs Peter Bonne Eriksen North America Jerzy Gruhn Europe Martin Soeters International Operations Jesper Høiland Japan & Korea Claus Eilersen Region China Global Marketing Ronald Christie Jakob Riis Product Supply Per Valstorp Biopharmaceuticals Flemming Dahl Diabetes API Jan Hoff2 Diabetes Finished Products Henrik Wulff Devices & Supply Chain Management Susanne Hundsbæk-Pedersen 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 2012. 50 Novo Nordisk Annual Report 2011 Executive Management Lars Rebien Sørensen Lars Rebien Sørensen joined Novo Nordisk’s Enzymes Marketing in 1982. Over the years, he has completed several overseas postings, including in 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 Management for Health Care. He was appointed president and chief executive officer in November 2000. Board positions: DONG Energy A/S and Danmarks Nationalbank, both in Denmark, Thermo Fisher Scientific Inc., US, and member of the Bertelsmann AG Supervisory Board, Germany. Education: BSc in International Economics (1983) from Copenhagen Business School, Denmark, and MSc in Forestry (1981) from the Royal Veterinary and Agricultural University (now the Faculty of Science of the University of Copenhagen), Denmark. Jesper Brandgaard Jesper Brandgaard joined Novo Nordisk in 1999 as senior vice president of Corporate Finance. He was appointed executive vice president and chief financial officer in November 2000. Board positions: SimCorp A/S (chair), NNE Pharmaplan A/S (chair) and NNIT A/S (chair), all in Denmark. Education: MBA (1995) and MSc in Economics and Auditing (1990) from Copenhagen Business School, Denmark. Lise Kingo Lise Kingo joined Novo Industry A/S in 1988 and worked over the years to build up the company’s Triple Bottom Line approach. In 1999, Ms Kingo was appointed senior vice president, Stakeholder Relations. In 2002, she was appointed executive vice president and chief of staffs in Novo Nordisk, assuming global responsibility for Quality, Human Resources, Business Assurance, Corporate Communications, Corporate Branding, Public Affairs and Corporate Sustainability. She is adjunct professor at the Medical Faculty, Vrije Universiteit, Amsterdam, the Netherlands. Board position: Steno Diabetes Center A/S (chair). Education: MSc (Hons) in Responsibility and Business Practice (2000) from the University of Bath, UK, BCom in Marketing Economics (1991) from Copenhagen Business School, Denmark, and BA in Religions and Ancient Greek Art (1986) from the University of Aarhus, Denmark. i p h s r e d a e l d n a n o i t a r e n u m e r , e c n a n r e v o G Kåre Schultz 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 executive vice president and chief operating officer. Board positions: Royal Unibrew A/S (chair) and LEGO A/S, both in Denmark. Education: MSc in Economics (1987) from the University of Copenhagen, Denmark. Mads Krogsgaard Thomsen Mads Krogsgaard Thomsen joined Novo Nordisk in 1991. He was appointed executive vice president and chief science officer in November 2000. He sits on the editorial boards of international journals. He is a former president of the National Academy of Technical Sciences (ATV), Denmark. Since 2000 he has served as adjunct professor of pharmacology at the Royal Veterinary and Agricultural University (now the Faculty of Science of the University of Copenhagen), Denmark. Board position: Cellartis AB, Sweden, and the University of Copenhagen, Denmark.1 Education: DSc (1991), PhD (1989) and DVM (1986) from the Royal Veterinary and Agricultural University (now the Faculty of Science of the University of Copenhagen), Denmark. 1. From 1 January 2012. Novo Nordisk Annual Report 2011 51 e r u t c u r t s l a t i p a c d n a s e r a h S Shares and capital structure We aim to communicate openly with shareholders about the company’s financial and operational development as well as strategies and targets. Through active dialogue, we seek to obtain fair and efficient pricing of Novo Nordisk shares. To keep investors updated on financial and operating performance as well as the progress of clinical development 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 number of smaller investors and potential investors also have access to the company’s management. Roadshows are primarily held in major European and North American financial centres. In addition, a wide range of other investor activities are held during the year. In 2011, meetings with investor groups were held in Brazil, China, Denmark, India, Switzerland and the US. Investors and analysts are also invited to join 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 aim to communicate openly with shareholders about the company’s financial development. Share price performance Novo Nordisk’s share price increased by 4.9% from its 2010 close of 629 Danish kroner to its 31 December 2011 close of 660 kroner. This was more than the 2011 performance of the NASDAQ OMX Copenhagen 20 Index, which decreased by 14.8% in 2011. In 2010, Novo Nordisk’s share price and the NASDAQ OMX Copenhagen 20 Index increased by 89.5% and 35.6%, respectively. In 2011, Novo Nordisk’s share price increased slightly less than the MSCI Europe Health Care Index, which increased by 10.0% measured in Danish kroner. Measured in US dollars, the price of Novo Nordisk B shares increased by 2.5%, which is below the dollar gain of 10% for the MSCI US Health Care Index. We believe the development of the company’s share price is a reflection of our leading position in the growing diabetes care market, coupled with a continued improvement in operating performance and encouraging progress in research and development. Factors believed to have positively contributed to share price 52 Novo Nordisk Annual Report 2011 performance in 2011 include solid operating performance driven by strong sales growth and continuous productivity increases, which led to an improvement in the operating margin of 2.6% in 2011 up from 31.1% in 2010. Significant progress in the clinical develop- ment pipeline has also been positive for Novo Nordisk. Sales growth was driven by the successful global rollout of Victoza® and continued penetration of our modern insulins. The regulatory submission of the two new-generation insulins, Degludec and DegludecPlus, represented a historic milestone for Novo Nordisk, and is believed to have had a positive impact on the share price. Other notable examples of progress in the clinical development pipeline included initiation of phase 3 trials for a fixed combination of insulin degludec and liraglutide, a fast-acting treatment for haemophilia patients with inhibitors, a long-acting factor IX compound for the treatment of haemophilia B, and the use of liraglutide for obesity. On the negative side Novo Nordisk experienced increased competitive pressure, especially in the US market, in the first half of 2011. 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 principle 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 share repurchase programmes. As decided at the 2011 Annual Price development and monthly turn- over of Novo Nordisk’s B shares on NASDAQ OMX Copenhagen 2011 Novo Nordisk’s B share closing prices in DKK (left) ■ Turnover of B shares in DKK billion (right) DKK 1,000 DKK billion 800 600 400 200 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 35 28 21 14 7 0 Index: 1 January 2007 = 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 2007 2008 2009 2010 2011 Index: 1 January 2007 = 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 2007 2008 2009 2010 2011 Dividend payments and payout ratio ■ Dividend for the year (left) Payout ratio (right) 1. 2007 and 2008 payout ratio adjusted for the AERx® discontinuation cost and the divestment of Dako’s business activities. 2. 2010 payout ratio adjusted for ZymoGenetics divestment. 3. Pending approval at the 2012 Annual General Meeting. DKK 15 12 9 6 3 0 % 55 50 45 40 35 20071 20081 2009 20102 2011E3 Breakdown of shareholders % of capital (% of votes) ■ Novo A/S, Bagsværd, Denmark 25.5% (73.2%) ■ Novo Nordisk A/S 4.3% (0.0%) ■ Other 70.2% (26.8%) Geographic distribution of share capital* % of capital ■ Denmark 43% ■ North America 32% ■ UK 13% ■ Other 12% * Calculated using shareholders’ registered home country not, as in 2010, based on the location of the bank holding shares in custody. General Meeting, a reduction of the company’s B share capital, corresponding to approximately 3.3% of the total share capital, was implemented in May 2011 by cancellation of treasury shares. This enables Novo Nordisk to continue to buy back shares without exceeding the limit for a holding of treasury shares of 10% of the totalt share capital. During 2011 and January 2012, Novo Nordisk repurchased shares worth 12 billion Danish kroner, compared to 9.5 billion kroner in 2010. For the coming 12 months, Novo Nordisk has initiated a new share repurchase programme with an expected total repurchase value of B shares amounting to a cash value of 12 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. At the 2012 annual general meeting, the Board of Directors will propose a further reduction of the company’s B share capital, corresponding to approximately 3.4% of the total share capital, by cancellation of 20 million treasury shares. After implementation of the share capital reduction, the company’s share capital will amount to DKK 560,000,000 divided into an A share capital of DKK 107,487,200 and a B share capital of DKK 452,512,800. Share capital and ownership Novo Nordisk’s total share capital of 580,000,000 Danish kroner is divided into A share capital of nominally 107,487,200 kroner and B share capital of nominally 472,512,800 kroner, of which 24,440,186 kroner is held as treasury shares (figures as of 31 December 2011). The company’s A shares (nominal value 1 krone) are not listed and are held by Novo A/S, a Danish public limited liability company that is 100% owned by the Novo Nordisk Foundation. More information on share capital is included in note 18 on p 75. According to the Articles of Association of the Foundation, the A shares cannot be divested by Novo A/S or the Foundation. Novo A/S also held 40,412,800 kroner of B share capital (figures as of 31 December 2011). 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 73.2% of the total number of votes, excluding treasury shares. e r u t c u r t s l a t i p a c d n a s e r a h S Our guiding principle is that excess capital, after the funding of organic growth opportunities, is returned to investors. The total market value of Novo Nordisk’s B shares excluding treasury shares was 296 billion kroner at the end of 2011. Novo Nordisk’s B shares are quoted on 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. Based on available sources of information about the company’s share- holders as of 31 December 2011, it is estimated that shares were distributed as shown in the charts on this page. At the end of 2011, the free float of listed B shares was 70.3%. Form 20-F We expect to file our Form 20-F Report for 2011 with the United States Securities and Exchange Commission in February 2012. 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 ratio and the dividend paid over the last five years. The dividend for 2010 paid in March 2011 was 10.00 Danish kroner per share of 1 krone. At the 2012 annual general meeting, the Board of Directors will propose a 40% increase in the dividend for 2011 to 14.00 Danish kroner per share of 1 krone. Novo Nordisk Annual Report 2011 53 e r u t c u r t s l a t i p a c d n a s e r a h S The proposed dividend payments for Novo Nordisk shares are shown in the table below: Proposed dividend payment for 2011 A shares of DKK 1 B shares of DKK 1 ADRs DKK 14.00 DKK 14.00 DKK 14.00 Analyst coverage Our company is currently covered by 40 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 2012 Annual general meeting 21 March 2012 Dividend Ex-dividend Record date Payment B shares 22 March 2012 26 March 2012 27 March 2012 ADRs 22 March 2012 26 March 2012 3 April 2012 Announcement of financial results First three months Half year First nine months Full year 27 April 2012 9 August 2012 31 October 2012 31 January 2013 54 Novo Nordisk Annual Report 2011 1 1 0 2 s t n e m e t a t s l a t n e m n o r i v n e d n a l a i c o s , l a i c n a n fi d e t a d i l o s n o C Consolidated financial, social and environmental statements 2011 Consolidated financial statements 56 Income statement and Statement of comprehensive income 57 Balance sheet 58 Statement of cash flows 59 Statement of changes in equity 60 Notes to the Consolidated financial statements Consolidated social statement (supplementary information) 91 Statement of social performance 92 Notes to the Consolidated social statement Consolidated environmental statement (supplementary information) 97 Statement of environmental performance 98 Notes to the Consolidated environmental statement Novo Nordisk Annual Report 2011 55 Income statement and Statement of comprehensive income for the year ended 31 December DKK million Income statement Sales Cost of goods sold Gross profit Sales and distribution costs Research and development costs Administrative expenses Licence fees and other operating income, net Operating profit Share of profit/(loss) of associated companies, net of tax Financial income Financial expenses Profit before income taxes Income taxes Net profit for the year Earnings per share: Basic earnings per share (DKK) Diluted earnings per share (DKK) Note 2011 2010 2009 2, 3 2, 4, 6 66,346 12,589 60,776 11,680 51,078 10,438 53,757 49,096 40,640 2, 4, 6 2, 4, 6 2, 4, 5, 6 2, 4, 6 19,004 9,628 3,245 494 18,195 9,602 3,065 657 15,420 7,864 2,764 341 22,374 18,891 14,933 13 7 8 (4) 514 959 1,070 382 2,057 (55) 375 1,265 21,925 18,286 13,988 9 4,828 3,883 3,220 17,097 14,403 10,768 10 10 30.24 29.99 24.81 24.60 17.97 17.82 Statement of comprehensive income Net profit for the year 17,097 14,403 10,768 Other comprehensive income: Realisation of previously deferred (gains)/losses on cash flow hedges to Income statement Deferred gains/(losses) on cash flow hedges arising during the period Exchange rate adjustments of investments in subsidiaries Deferred gains/(losses) on equity investments Share of other comprehensive income of associated companies, net of tax Other Tax on other comprehensive income, income/(expense) Other comprehensive income for the year, net of tax 658 (1,170) (173) 8 – (28) 190 (515) (422) (643) 300 (14) (9) 27 346 (415) 900 352 528 (1) 9 10 (25) 1,773 9 Total comprehensive income for the year 16,582 13,988 12,541 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C r e b m e c e D 1 3 d e d n e r a e y e h t r o f e m o c n i e v i s n e h e r p m o c f o t n e m e t a t S d n a t n e m e t a t s e m o c n I 56 Novo Nordisk Annual Report 2011 Balance sheet at 31 December DKK million Assets Intangible assets Property, plant and equipment Investments in associated companies Deferred income tax assets Other financial assets Total non-current assets Inventories Trade receivables Tax receivables Other receivables and prepayments Marketable securities Derivative financial 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 Loans Deferred income tax liabilities Retirement benefit obligations Provisions Total non-current liabilities Current debt Trade payables Tax payables Other liabilities Derivative financial instruments Provisions Total current liabilities Total liabilities Total equity and liabilities Note 2011 2010 11 12 13 20 14 15 14, 16 14, 17 14 14, 28 14 18 18 14, 19 20 21 22 14, 19 14 14, 23 14, 19, 28 22 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C r e b m e c e D 1 3 t a t e e h s e c n a a B l 1,489 20,931 39 2,414 234 1,458 20,507 43 1,847 254 25,107 24,109 9,433 9,349 883 2,376 4,094 48 13,408 9,689 8,500 650 2,403 3,926 108 12,017 39,591 37,293 64,698 61,402 580 (24) 37,111 (219) 600 (28) 36,097 296 37,448 36,965 502 3,206 439 2,324 6,471 351 3,291 1,171 8,534 1,492 5,940 504 2,865 569 2,023 5,961 562 2,906 1,252 7,954 1,158 4,644 20,779 18,476 27,250 24,437 64,698 61,402 Novo Nordisk Annual Report 2011 57 Statement of cash flows for the year ended 31 December s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C r e b m e c e D 1 3 d e d n e r a e y e h t r o f s w o fl h s a c f o t n e m e t a t S DKK million Net profit for the year Adjustment for non-cash items Change in working capital Interest received Interest paid Income taxes paid Net cash generated from operating activities Proceeds from the divestment of ZymoGenetics, Inc. Purchase of intangible assets and other financial assets Proceeds from sale of property, plant and equipment Purchase of property, plant and equipment Net change in marketable securities Net cash used in investing activities Repayment of loans Purchase of treasury shares, net Dividends paid Net cash used in financing activities Net cash generated from activities Cash and cash equivalents at the beginning of the year Exchange gains/(losses) on cash and cash equivalents Cash and cash equivalents at the end of the year Additional information:1 Cash and cash equivalents at the end of the year Marketable securities at the end of the year Undrawn committed credit facilities2 Financial resources at the end of the year Net cash generated from operating activities Net cash used in investing activities Net change in marketable securities Free cash flow Note 2011 2010 2009 24 25 9 11, 14 12 18 10 26 26 14 17,097 14,403 10,768 9,117 434 332 (215) (5,391) 8,449 297 218 (252) (3,436) 6,701 (279) 284 (98) (1,998) 21,374 19,679 15,378 – (259) 70 (3,073) (197) 1,155 (513) 68 (3,376) (2,913) – (415) 1 (2,632) – (3,459) (5,579) (3,046) (507) (10,595) (5,700) – (8,820) (4,400) – (6,395) (3,650) (16,802) (13,220) (10,045) 1,113 880 11,960 (16) 11,034 46 2,287 8,726 21 13,057 11,960 11,034 13,057 4,094 4,832 11,960 3,926 4,473 11,034 1,013 4,465 21,983 20,359 16,512 21,374 (3,459) 197 19,679 (5,579) 2,913 15,378 (3,046) – 18,112 17,013 12,332 1. Additional non-IFRS measures. Please refer to p 65 for definition. 2. At year-end, the Group had an undrawn committed credit facility amounting to DKK 4,832 million (DKK 4,473 million in 2010). The undrawn committed credit facility is a EUR 650 million (EUR 600 million in 2010 and 2009) facility committed by a portfolio of international banks. The facility matures in 2016. 58 Novo Nordisk Annual Report 2011 Statement of changes in equity at 31 December Share capital Treasury shares Retained earnings Other reserves Exchange rate adjust- ment Cash flow hedges Tax and other adjust- ments Total Total other reserves DKK million 2011 Balance at the beginning of the year 600 (28) 36,097 571 (672) 397 296 36,965 Net profit for the year Other comprehensive income for the year 17,097 (173) (512) Total comprehensive income for the year 17,097 (173) (512) 170 170 (515) 17,097 (515) (515) 16,582 Transactions with owners: Dividends (note 10) Share-based payments (note 29) Purchase of treasury shares (note 18) Sale of treasury shares (note 18) Tax on sale of treasury shares Reduction of the B share capital (note 18) Balance at the end of the year (20) 580 (5,700) 319 (10,821) 242 (123) (18) 2 20 (5,700) 319 (10,839) 244 (123) – (24) 37,111 398 (1,184) 567 (219) 37,448 Share capital Treasury shares Retained earnings Other reserves Exchange rate adjust- ment Cash flow hedges Tax and other adjust- ments Total Total other reserves DKK million 2010 Balance at the beginning of the year 620 (32) 34,435 271 393 47 711 35,734 Net profit for the year Other comprehensive income for the year 14,403 300 (1,065) Total comprehensive income for the year 14,403 300 (1,065) 350 350 (415) 14,403 (415) (415) 13,988 Transactions with owners: Dividends (note 10) Share-based payments (note 29) Purchase of treasury shares (note 18) Sale of treasury shares (note 18) Reduction of the B share capital (note 18) Balance at the end of the year (20) 600 (4,400) 463 (9,478) 674 (20) 4 20 (4,400) 463 (9,498) 678 – (28) 36,097 571 (672) 397 296 36,965 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C r e b m e c e D 1 3 t a y t i u q e n i s e g n a h c f o t n e m e t a t S Novo Nordisk Annual Report 2011 59 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Notes to the Consolidated financial statements 1 Basis of preparation of the Consolidated financial statements The Consolidated financial 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 additional Danish disclosure requirements for the annual reports of listed companies. The Consolidated financial statements have been prepared on the historical cost basis except for the revaluation of available-for-sale financial assets such as equity investments and marketable securities measured at fair value through Other comprehensive income and derivative financial instruments measured at fair value through the Income statement. Key accounting estimates and assumptions The use of reasonable estimates is an essential part of the preparation of the Consolidated financial 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 flow and related disclosures at the date(s) of the Consolidated financial 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 financial position and result of operations and cash flow 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 financial state- ments. Sales rebates and provisions Novo Nordisk 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 defined by the contracts with the various customer groups. Sales discounts and sales rebates are predominantly issued in Region North America. In that region, significant 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 specific terms in the individual agreements. For Medicaid, the calculation of rebates involves interpretation of relevant regulations that are subject to challenge or change in interpretative guidance by government authorities. Although accruals are made for Medicaid and Medicare rebates at the time sales are recorded, the actual rebates related to the specific 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. 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 60 Novo Nordisk Annual Report 2011 estimated according to the specific 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 reflect 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 5,666 million as at 31 December 2011. 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 more detailed information becomes available. Indirect production costs (IPCs) Production costs for work in progress and finished 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 could have an impact on the gross margin and the overall valuation of inventories. The carrying amount of IPCs on inventory is DKK 5,125 million as at 31 December 2011. Please refer to note 15 for further information. Novo Nordisk considers the carrying amount of IPCs on inventory to be reasonable and appropriate based on currently available information. How- ever, the actual amount of IPCs may differ from the amounts estimated by Management as more detailed information becomes available. 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 financial 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. As a result of the generally troubled economic climate in Europe and thereby also the Eurozone countries, Novo Nordisk has increased its focus on the development in the outstanding trade receivables from this region. Payment history as well as current economic conditions and indicators are taken into account in the valuation of trade receivables. Please refer to note 2 for a geographical split of trade receivables and the allowance for trade receivables. The carrying amount of trade receivables is DKK 9,349 million and allow- ances for doubtful trade receivables is DKK 892 million as at 31 December 2011. Please refer to note 16 for further information. Provisions and contingencies Deferred income tax assets and liabilities Novo Nordisk is subject to income taxes around the world. Significant judgement is required in determining the worldwide accrual for income taxes, deferred income tax assets and liabilities, and provision for uncertain tax positions. Novo Nordisk recognises deferred income tax assets if it is probable that sufficient taxable income will be available in the future against which the temporary differences and unused tax losses can be utilised. Management has considered future taxable income in assessing whether deferred income tax assets should be recognised. The carrying amount of deferred income tax assets and deferred income tax liabilities is DKK 2,414 million and DKK 3,206 million respectively as at 31 December 2011. Please refer to note 20 for further information. Legal disputes Provisions for legal disputes consist of various types of provisions linked to ongoing legal disputes. Management makes judgements about provisions and contingencies, including the probability of pending and potential future litigation outcomes which by their very nature are dependent on inherently uncertain future events. When determining likely outcomes of litigations etc, Management considers the evaluation of external counsels input about each case, as well as known outcomes in case law. The carrying amount of provisions for legal disputes is DKK 1,554 million as at 31 December 2011. Please refer to note 22 for further information and note 31 for a description of significant pending litigations. 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 any changes in facts or matters or that any future lawsuits, claims, proceedings or investigations will not be material. Financial accounting policies The principal accounting policies set out below have been applied con- sistently in the preparation of the Consolidated financial 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 2011. Based on an analysis by Novo Nordisk, the application of the new IFRSs has not had a material impact on the Consolidated financial statements in 2011 and we do not anticipate any significant 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) that have been endorsed by the European Union but not yet come into effect. Novo Nordisk has thoroughly assessed the impact of these IFRSs which are not yet effective and determined that we do not anticipate any significant impact on the Consolidated financial statements from the adoption of these standards. IASB has issued IFRS 9 ‘Financial Instruments’ which is required to be adopted by 1 January 2015. This is part of the IASB’s project to replace IAS 39 and the new standard will substantially change the classification and measurement of financial instruments and hedging requirements. Further- more, IASB has issued an amendment to IAS 19 ‘Employee Benefits’ that makes changes to the recognition and measurement of defined benefit pension expenses and termination benefits, and to the disclosure of all employee benefits. The amendment is required to be adopted by 1 January 2013. Novo Nordisk has assessed the impact of the standard and the amendment and determined that they will not have any significant impact on the Consolidated financial statements. The new standards and the amendment have not yet been endorsed by the European Union. Defining materiality Novo Nordisk’s Consolidated financial statements are a result of processing large numbers of transactions and aggregating those transactions into classes according to their nature or function. When aggregated, the trans - actions are presented separately in classes of similar items in the con- solidated financial statements. If a line item is not individually material, it is aggregated with other items of a similar nature in the statements or in the notes. Throughout IFRS there are substantial disclosure requirements. Novo Nordisk provides specific disclosures required by an IFRS unless the informa- tion is immaterial or not applicable. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Principles of consolidation The Consolidated financial statements incorporate the financial 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 figures are not restated for disposed or acquired companies. Where necessary, adjustments are made to the financial statements of sub- sidiaries to bring their accounting policies in line with Novo Nordisk policies. All intra-Group transactions, balances, income and expenses are eliminated in full when consolidated. When Novo Nordisk loses control of a subsidiary, the profit 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 good- will) and liabilities of the subsidiary. Translation of foreign currencies Functional and presentation currency Items included in the financial statements of each of Novo Nordisk’s entities are measured using the currency of the primary economic environment in which the entity operates (functional currency). The Consolidated financial statements are presented in Danish kroner (DKK), which is the functional and presentation currency of the Parent company. Translation of transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such trans- actions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Income statement. Translation differences on non-monetary items, such as financial assets classified 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 prevailing at the end of the reporting period for assets and liabilities, and at average exchange rates for income state- ment items. All effects of exchange rate adjustment are recognised in the Income state- ment, 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 considered to be an addition to net investments in subsidiaries • the translation of investments in associated companies. The above exchange rate gains and losses are recognised in Other com- prehensive 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 satisfied: • Novo Nordisk has transferred to the buyer the significant risks and rewards of ownership of the goods. • Novo Nordisk 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 benefits associated with the transaction will flow to the entity. • The costs incurred or to be incurred in respect of the transaction can be measured reliably. Novo Nordisk Annual Report 2011 61 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Provisions for rebates and discounts granted to government agencies, wholesalers, 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 specific terms in the individual agreements. The sales rebate accruals and provisions are included in Other current liabilities and Provisions for other liabilities. Where there is 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 specific 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 sufficient 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 incurred. Due to the long duration and significant uncertainties relating to the development of new products, including risks associated with clinical trials and regulatory approval, it is concluded that Novo Nordisk’s internal development costs in general do not meet the capitalisation criteria. This is because the technical feasibility criteria are not considered to be fulfilled 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 applied to 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 is capitalised and depreciated over its estimated useful life. For acquired in-process research and development projects, the effect of probability is reflected in the cost of the asset, and the probability recognition criteria are therefore always considered satisfied. As the cost of acquired in-process research and development projects can often be measured reliably, these projects fulfil the 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 Novo Nordisk. Non-Novo Nordisk-related net profit from the two wholly owned sub- sidiaries 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 substance of the relevant agreement. Licence fees and other operating income also include income from sale of intellectual property rights. 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 identifiable and unique software products controlled by Novo Nordisk are recognised as intangible assets under Other intangible assets if the recognition criteria are met. The computer software has to be a significant business system and the expenditure must lead to the creation of a durable asset. In order for an internally generated intangible asset to qualify for recognition, it is required that the related internal development project is at a sufficiently 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 is 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 benefits associated with the item will flow to Novo Nordisk and the cost of the item can be measured reliably. In general, constructions of major investments are self-financed 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 classified as finance leases whenever the terms of the lease substantially transfer all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. The use of finance leases in the Consolidated financial 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 benefits 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. Intangible assets Goodwill Goodwill represents any cost in excess of identifiable net assets, measured at fair value, in the acquired company. Goodwill recorded under Intangible assets is related to subsidiaries. Impairment of assets Intangible assets with an indefinite 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. 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 licences 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. Assets that are subject to amortisation, such as intangible assets in use or with definite 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 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. 62 Novo Nordisk Annual Report 2011 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 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 flows. Intangible assets and other non-financial 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 Novo Nordisk’s accounting policies). Good- will relating to associated companies is recorded as part of the investment under Investments in associated companies. Financial assets Novo Nordisk classifies its investments in the following categories: • Available-for-sale financial assets • Loans and receivables • Financial assets at fair value through the Income statement (derivatives). The classification depends on the purpose for which the investments were made. Management determines the classification of its investments on initial recognition and re-evaluates this at the end of every reporting period to the extent that such a classification 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 financial assets and financial 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 financial instru- ments at the end of the reporting period. Derecognition Investments are derecognised when the rights to receive cash flows from the investments have expired or have been transferred, and Novo Nordisk has transferred substantially all risks and rewards of ownership. Available-for-sale financial assets Available-for-sale financial assets consist of equity investments and market- able securities and are included in Other financial assets unless Manage- ment intends to dispose of the investment within 12 months of the end of the reporting period. If that is the case, the current part is included as Other receivables and prepayments. Unrealised gains and losses arising from changes in the fair value of finan- cial assets classified as available for sale are recognised in Other compre- hensive income. When financial assets classified 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. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or deter- minable payments that are not quoted in an active market. If collection is expected within one year (or in the normal operating cycle of the business if longer), they are classified as Current assets. If not, they are presented as Non-current assets. Trade receivables and Other receivables and prepayments are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for allowances. Provision for allowances is made for trade receivables when there is objective evidence that Novo Nordisk 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. Financial assets at fair value through the Income statement (derivatives) Novo Nordisk 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 sub- sidiaries in accordance with the specific rules of IAS 39 ‘Financial Instru- ments: Recognition and Measurement’. Upon initiation of the contract, Novo Nordisk designates each derivative financial contract that qualifies for hedge accounting as one of: • Hedges of the fair value of a recognised asset or liability or a firm commit- ment (fair value hedge) • Hedges of the fair value of a forecast financial transaction (cash flow hedge) • 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 reclassification 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, Novo Nordisk 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, which is the intrinsic value of the options, is transferred from Other comprehensive income to the Income statement as a reclassification 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 fair value of financial assets and liabilities is measured on the basis of quoted market prices of financial 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 financial instrument is quoted in a market that is not active, Novo Nordisk bases its valuation on the most recent transaction price. Adjust- ment is made for subsequent changes in market conditions, for instance by including transactions in similar financial 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 financial instruments, such as foreign exchange forward contracts, interest rate swaps, currency swaps and unlisted bonds, is measured according to generally accepted valuation techniques. Market-based parameters are used to measure fair value. Novo Nordisk Annual Report 2011 63 Pension assets are only recognised to the extent that Novo Nordisk is able to derive future economic benefits such as refunds from the plan or reductions of future contributions. Novo Nordisk’s contributions to the defined contribution plans are charged to the Income statement in the year to which they relate. Share-based compensation Novo Nordisk 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 fixed 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, Novo Nordisk 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 state- ment and in 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 otherwise specified. Loans are recognised initially at fair value, net of transaction costs incurred. Loans are subsequently stated at amortised cost; any dif ference between the proceeds (net of transaction costs) and the redemption value is re cognised in the Income statement over the period of the loans using the effective interest method. Loans are classified as Current debt unless Novo Nordisk 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 disputes, are recognised where a legal or con- structive obligation has been incurred as a result of past events and it is probable that there will be an outflow 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. Disputes 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 reflects current market assessments of the time value of money and the risks specific to the obligation. The increase in the provision due to the passage of time is recognised as interest expense. Product returns Novo Nordisk has recorded provisions for expected product returns. Provisions are based on an analysis of the estimated rate of return, which is determined based on historical experience of customer returns and con- sidering any other relevant factors. 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 flows The Statement of cash flows and financial resources is presented in accord- ance with the indirect method commencing with Net profit 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. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 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. Inventories Inventories are stated at the lower of cost and net realisable value. Cost is determined using the first-in, first-out method. Cost comprises direct production 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 amount to its recoverable amount and recorded as R&D costs. At the point when a high probability of regulatory approval is obtained, the provision recorded is reversed, up to no more than 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 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 benefits Wages, salaries, social security contributions, annual leave and sick leave, bonuses and non-monetary benefits are recognised in the year in which the associated services are rendered by employees of Novo Nordisk. Where Novo Nordisk provides long-term employee benefits, the costs are accrued to match the rendering of the services by the employees concerned. Pensions Novo Nordisk operates a number of defined contribution plans throughout the world. In a few countries, Novo Nordisk still operates defined benefit plans. The costs for the year for defined benefit plans are determined using the projected unit credit method. This reflects services rendered by employees to the dates of valuation and is based on actuarial assumptions primarily regarding discount rates used in determining the present value of benefits, projected rates of remuneration growth and long-term expected rates of return for plan assets. Discount rates are based on the market yields of high-rated corporate bonds in the country concerned. 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 defined benefit 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 benefits vest. 64 Novo Nordisk Annual Report 2011 Non-IFRS financial measures In the Annual Report 2011, Novo Nordisk discloses certain financial measures of the Group’s financial performance, financial position and cash flows that reflect adjustments to the most directly comparable measures calculated and presented in accordance with IFRS. These non-IFRS financial measures may not be defined and calculated by other companies in the same manner, and may thus not be comparable with such measures. The non-IFRS financial measures presented in the Annual Report 2011 are: • Cash to earnings • Financial resources at the end of the year • Free cash flow • Operating profit after tax to net operating assets. Cash to earnings Cash to earnings is defined as ‘free cash flow as a percentage of net profit’. Financial resources at the end of the year Financial resources at the end of the year is defined as the sum of cash and cash equivalents at the end of the year, bonds with original term to maturity exceeding three months and undrawn committed credit facilities. Free cash flow Novo Nordisk defines free cash flow as ‘net cash generated from operating activities less net cash used in investing activities’ excluding ‘Net change in marketable securities’. Operating profit after tax to net operating assets Operating profit after tax to net operating assets is defined as ‘operating profit after tax (using the effective tax rate) as a percentage of average inventories, receivables, property, plant and equipment, intangible assets and deferred tax assets less non-interest bearing liabilities including provisions and deferred tax liabilities (where average is the sum of above assets and liabilities at the beginning of the year and at year-end divided by two)’. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Financial definitions ADRs An American Depositary Receipt (or ADR) represents ownership in the shares of a non-US company and trades in US financial markets. Basic earnings per share (EPS) Net profit divided by the average number of shares outstanding. Diluted earnings per share Net profit divided by the sum of average number of shares outstanding, including the dilutive effect of share options ‘in the money’. 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 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 profit before income taxes. Equity ratio Total equity at year-end as a percentage of total assets at year-end. Gross margin Gross profit as a percentage of sales. Net profit margin Net profit as a percentage of sales. Number of shares outstanding The total number of shares, excluding the holding of treasury shares. Operating profit margin Operating profit as a percentage of sales. Other comprehensive income (OCI) Other comprehensive income comprises all items recognised in equity for the year other than those related to transactions with owners of the com- pany. Examples of items that are required to be presented in OCI are: • Foreign exchange rate adjustments in foreign subsidiaries • Actuarial gains and losses arising on defined benefit plans • Changes in fair value of financial instruments in a cash flow hedge. Payout ratio Total dividends for the year as a percentage of net profit. Return on equity (ROE) Net profit for the year as a percentage of shareholders’ equity (average). Novo Nordisk Annual Report 2011 65 2 Segment information Operating segments are reported in a manner consistent with the internal reporting provided to Management and the Board of Directors. Business segments Novo Nordisk 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, oral antidiabetic products (OAD) and obesity. The Biopharmaceuticals business segment includes research, development, manufacturing and marketing of products within the areas of haemophilia, growth hormone therapy, hormone replacement therapy, inflammation therapy and other therapy areas. Management monitors the operating results of its business segments sepa- rately for the purpose of making decisions about resource allocation and performance assessment. Segment performance is evaluated on the basis of operating profit consistent with the Consolidated financial statements. Financial income and expenses 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 specific 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, other financial assets, inventories, trade receivables, and other receivables and prepayments. No single customer represents more than 10% of the total sales and no operating segments have been aggregated to form the reported business segments. Business segments DKK million Segment sales NovoRapid® / NovoLog® NovoMix® / NovoLog®Mix Levemir® Total modern insulins Human insulins Victoza® Protein-related products Oral antidiabetic products (OAD) 2011 2010 2009 2011 2010 2009 2011 2010 2009 Diabetes care Biopharmaceuticals Total 12,804 8,278 7,683 28,765 10,785 5,991 2,309 2,575 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 Diabetes care total sales 50,425 45,710 37,502 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N NovoSeven® Norditropin® Hormone replacement therapy Other products Biopharmaceuticals total sales Total business segments – other key figures 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 profit Depreciation, amortisation and impairment losses included in costs Additions to non-current assets (other than financial assets and deferred tax assets) Assets allocated to business segments Assets not allocated to business segments1 Total assets 8,347 5,047 2,054 473 8,030 4,803 1,892 341 7,072 4,401 1,744 359 15,921 15,066 13,576 50,425 10.3% 12.6% 10,762 16,476 6,402 2,485 285 14,585 45,710 21.9% 15.7% 10,131 14,815 6,744 2,260 342 12,102 37,502 12.4% 11.1% 9,001 12,877 5,257 2,044 187 8,510 15,921 5.7% 7.6% 1,827 2,528 3,226 760 209 7,789 15,066 11.0% 5.4% 1,549 3,380 2,858 805 315 6,789 13,576 11.3% 9.3% 1,437 2,543 2,607 720 154 6,423 66,346 9.2% 11.4% 12,589 19,004 9,628 3,245 494 22,374 60,776 19.0% 13.0% 11,680 18,195 9,602 3,065 657 18,891 51,078 12.1% 10.6% 10,438 15,420 7,864 2,764 341 14,933 2,051 1,887 1,973 686 580 578 2,737 2,467 2,551 2,654 3,068 2,129 678 795 896 3,332 3,863 3,025 34,853 34,947 29,703 8,998 7,906 8,984 43,851 42,853 38,687 20,847 64,698 18,549 61,402 16,055 54,742 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 financial instruments and tax assets etc. 66 Novo Nordisk Annual Report 2011 2 Segment information (continued) Geographical segments Novo Nordisk operates in five geographical regions: • North America: the US and Canada • Europe: the EU, EFTA, Albania, Bosnia-Hercegovina, Croatia, Macedonia, Serbia, Montenegro and Kosovo • Japan & Korea: Japan and Korea • Region China: China, Hong Kong and Taiwan • International Operations: all other countries 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 Novo Nordisk’s activities in terms of geographical 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 total sales. Sales to the US represent more than 90% of sales in Region North America. Geographical segments DKK million 2011 2010 2009 2011 2010 2009 North America Sales Change in DKK (%) Change in local currencies (%) Property, plant and equipment Trade receivables Hereof allowance for trade receivables Total assets 26,586 12.6% 17.9% 1,329 2,081 (22) 5,465 23,609 29.2% 22.4% 987 1,689 (19) 3,680 18,279 20.6% 15.2% 905 1,255 (22) 3,232 19,168 2.7% 2.4% 15,681 3,652 (333) 47,202 Europe 18,664 6.4% 4.6% 15,669 3,437 (200) 46,654 17,540 1.9% 5.2% 15,445 3,243 (187) 42,933 DKK million 2011 2010 2009 2011 2010 2009 International Operations2 Japan & Korea Sales Change in DKK (%) Change in local currencies (%) Property, plant and equipment Trade receivables Hereof allowance for trade receivables Total assets 9,367 12.4% 17.1% 1,672 2,052 (535) 6,419 8,335 21.9% 22.3% 1,929 1,995 (408) 6,327 6,835 7.6% 14.9% 1,785 1,555 (391) 5,439 6,223 9.9% 5.1% 207 377 (2) 1,388 5,660 15.8% 3.3% 213 446 0 1,158 4,888 16.5% 1.8% 188 361 0 1,003 DKK million 2011 2010 2009 2011 2010 2009 Region China2 Sales Change in DKK (%) Change in local currencies (%) Property, plant and equipment Trade receivables Hereof allowance for trade receivables Total assets 5,002 11.0% 11.7% 2,042 1,187 0 4,224 4,508 27.5% 19.9% 1,709 933 0 3,583 3,536 25.6% 26.4% 903 649 0 2,135 66,346 9.2% 11.4% 20,931 9,349 (892) 64,698 Total 60,776 19.0% 13.0% 20,507 8,500 (627) 61,402 51,078 12.1% 10.6% 19,226 7,063 (600) 54,742 2. As of 1 January 2011, Region China is reported as a separate geographical region. Before 2011, Region China was part of International Operations. The historical figures for 2010 and 2009 have been restated and are comparable with the 2011 regional set-up. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Novo Nordisk Annual Report 2011 67 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 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 2011 2010 2009 DKK million 2011 2010 2009 84,386 75,811 62,459 (5,075) (2,551) (5,894) (4,124) (2,494) (4,994) (2,447) (2,121) (3,720) (695) (3,825) (543) (2,880) (431) (2,662) Statutory audit Audit-related services Tax advisory services Other services Total fee to statutory auditors 24 5 13 3 45 25 6 15 4 50 25 6 13 3 47 Total gross-to-net sales adjustments (18,040) (15,035) (11,381) 6 Depreciation, amortisation and impairment losses Total net sales 66,346 60,776 51,078 DKK million 2011 2010 2009 4 Employee costs DKK million 2011 2010 2009 Wages and salaries Share-based payment costs (note 29) Pensions – defined contribution plans Pensions – retirement benefit obligations (note 21) Other social security contributions Other employee costs 16,127 319 1,155 14,520 463 1,052 (2) 1,189 1,491 210 1,067 1,510 13,231 259 958 152 898 1,332 Total employee costs for the year 20,279 18,822 16,830 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, net 1,880 95 633 58 1,832 60 460 56 1,851 43 528 55 71 59 74 Total depreciation, amortisation and impairment losses 2,737 2,467 2,551 Refer to notes 11 and 12 for the split between Intangible assets and Property, plant and equipment. Change in employee costs included in assets under construction Change in employee costs included in inventories Total employee costs expensed in the Income statement 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, net 7 Financial income (496) (559) (485) DKK million (37) 76 (21) 19,746 18,339 16,324 4,302 7,961 3,980 1,993 4,006 7,240 3,697 2,059 3,952 6,063 3,218 1,811 Interest income Foreign exchange gain (net) Foreign exchange gain on derivatives (net) Total financial income 8 Financial expenses 2011 2010 2009 274 – 240 514 235 86 61 382 313 62 – 375 1,510 1,337 1,280 DKK million 2011 2010 2009 Interest expenses1 Foreign exchange loss (net) Foreign exchange loss on derivatives (net) Loss on currency options (net) Capital loss on investments etc Other financial expenses Foreign exchange loss on derivatives transferred from Other comprehensive income (net) Total financial expenses 275 256 – 200 27 95 106 959 500 – – 82 23 46 384 – 95 56 16 52 1,406 662 2,057 1,265 1. Interest expenses include interest on tax cases ongoing or settled during the year. Total included in the Income statement 19,746 18,339 16,324 Average number of full-time employees Year-end number of full-time employees 31,499 32,136 29,423 30,014 27,985 28,809 DKK million 2011 2010 2009 Remuneration to Executive Management: Salary Pension Other benefits Total Fee to Board of Directors 35 9 1 45 9 32 8 1 41 7 30 8 1 39 7 Share-based payments are allocated in the joint pool with other members of the Senior Management Board. Please refer to note 29 and ‘Remunera tion report’ in ‘Corporate governance, remuneration and leadership,’ pp 44 – 47, for further information on remuneration to the Board of Directors and Executive Management. 68 Novo Nordisk Annual Report 2011 9 Taxes DKK million Current tax on profit for the year Deferred tax on profit for the year (note 20) Tax on profit for the year Adjustments related to previous years – current tax Adjustments related to previous years – deferred tax Income taxes in the Income statement Computation of effective tax rate: Statutory corporate income tax rate in Denmark Deviation in foreign subsidiaries’ tax rates compared with the Danish tax rate (net) Non-taxable income less non-tax-deductible expenses (net) Other Effective tax rate 2011 2010 4,534 257 4,791 277 (240) 3,477 495 3,972 504 (593) 4,828 3,883 2009 2,382 840 3,222 (54) 52 3,220 25.0% (3.0%) (0.2%) 0.2% 25.0% (2.5%) (1.2%) (0.1%) 25.0% (2.2%) 0.2% 0.0% 22.0% 21.2% 23.0% Tax on other comprehensive income for the year, (income)/expense (note 20) (190) (346) 25 Tax on other comprehensive income for the year relates to tax on deferred (gains)/losses on cash flow hedges and internal profit (note 20). Income taxes paid Income taxes paid in Denmark Income taxes paid outside Denmark Total income taxes paid 10 Earnings per share and dividend DKK million Net profit for the year 2,825 2,566 5,391 1,826 1,610 3,436 792 1,206 1,998 2011 2010 2009 17,097 14,403 10,768 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 565,433 4,699 580,438 5,039 599,197 5,126 Average number of shares outstanding, including dilutive effect of options ‘in the money’ in 1,000 shares 570,132 585,477 604,323 Basic earnings per share1 Diluted earnings per share1 DKK DKK 30.24 29.99 24.81 24.60 17.97 17.82 1. For further information on outstanding share bonus pool and options, refer to notes 29 and 30. Dividend At the end of 2011, proposed dividends (not yet declared) of DKK 7,742 million (DKK 14.00 per share) are included in Retained earnings. The declared dividend included in Retained earnings was DKK 5,700 million (DKK 10.00 per share) in 2010 and DKK 4,400 million (DKK 7.50 per share) in 2009. No dividend is declared on treasury shares. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Novo Nordisk Annual Report 2011 69 11 Intangible assets DKK million Cost at the beginning of the year Additions during the year Disposals during the year Effect of exchange rate adjustment 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 exchange rate adjustment Amortisation and impairment losses at the end of the year 2011 2010 2,277 259 (1) 3 2,538 819 107 125 (1) (1) 1,049 1,794 487 (46) 42 2,277 757 80 – (41) 23 819 Carrying amount at the end of the year 1,489 1,458 Intangible assets primarily relate to patents and licences DKK 696 million (DKK 795 million in 2010), internally developed software DKK 518 million (DKK 412 million in 2010) and other intangible assets DKK 275 million (DKK 251 million in 2010). Historically Novo Nordisk’s growth has been organic without material acquisition of rights. Intangible assets not yet available for use amounts to DKK 980 million (DKK 978 million in 2010). Impairment tests in 2011 and 2010 of assets not yet available for use were based upon Management’s projections and anticipated net present value of future cash flows from cash-generating units. Management has used a pre-tax discount rate (WACC) of 8% 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, forecasted life cycle and cash flow over that period, and the useful life of the underlying assets. In 2011, an impairment loss of DKK 125 million (DKK 0 in 2010) related to patents has been recognised due to discontinuation of development projects. Amortisation and impairment losses for the year are presented in the Income statement as follows: DKK million Cost of goods sold Sales and distribution costs Research and development costs Licence fees and other operating income, net Total amortisation and impairment losses for the year 2011 2010 47 35 139 11 232 42 13 19 6 80 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 70 Novo Nordisk Annual Report 2011 12 Property, plant and equipment DKK million 2011 Cost at the beginning of the year Additions during the year Disposals during the year Transfer from/(to) other items Effect of exchange rate adjustment 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 13,598 312 (228) 982 (64) 17,243 262 (522) 937 (75) 2,861 293 (167) 85 8 4,516 2,206 – (2,004) 97 38,218 3,073 (917) – (34) 14,600 17,845 3,080 4,815 40,340 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 exchange rate adjustment 5,048 623 29 (165) (10) 10,806 1,471 93 (462) (20) 1,857 289 – (157) 7 Depreciation and impairment losses at the end of the year 5,525 11,888 1,996 – – – – – – 17,711 2,383 122 (784) (23) 19,409 Carrying amount at the end of the year 9,075 5,957 1,084 4,815 20,931 2010 Cost at the beginning of the year Additions during the year Disposals during the year Transfer from/(to) other items Effect of exchange rate adjustment Cost at the end of the year 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 exchange rate adjustment 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 Depreciation and impairment losses for the year are presented in the Income statement as follows: s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N DKK million Cost of goods sold Sales and distribution costs Research and development costs Administrative expenses Licence fees and other operating income, net Total depreciation and impairment losses for the year 13 Investments in associated companies 2011 1,833 60 494 58 60 2,505 2010 1,790 47 441 56 53 2,387 Investments in associated companies relates to Harno Invest A/S (formerly Dako A/S) only. The carrying amount at 31 December 2011 amounts to DKK 39 million (DKK 43 million in 2010) based on the 2010 annual report of Harno Invest A/S. Public accounting information for 2011 is not yet available. There have not been any changes related to investments in associated companies during the year. 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 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 financial assets as Novo Nordisk no longer holds any significant influence in the company. Novo Nordisk Annual Report 2011 71 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 14 Financial assets and liabilities DKK million 2011 Other financial assets Trade receivables (note 16) Other receivables (note 17) – less prepayments (note 17) Marketable securities (bonds)1 Derivative financial instruments (note 28) Cash at bank and in hand Available- for-sale financial assets at fair value Financial assets measured at fair value through the Income statement Loans and receivables Cash and cash equivalents Total 191 4,094 43 9,349 2,376 (935) 48 13,408 234 9,349 2,376 (935) 4,094 48 13,408 Total financial assets at the end of the year 4,285 48 10,833 13,408 28,574 DKK million Loans (note 19) Current debt (note 19) Trade payables Other liabilities (note 23) – less taxes and duties payable (note 23) Derivative financial instruments (note 28) Total financial liabilities at the end of the year DKK million 2010 Other financial assets Trade receivables (note 16) Other receivables (note 17) – less prepayments (note 17) Marketable securities (bonds) Derivative financial instruments (note 28) Cash at bank and in hand Financial liabilities measured at fair value through the Income statement Financial liabilities measured at amortised cost Financial liabilities measured at fair value through Other comprehensive income Total 502 351 3,291 8,534 (537) 1,492 502 351 3,291 8,534 (537) 1,308 12,141 1,308 13,633 Loans and receivables Cash and cash equivalents Total 184 184 Available- for-sale financial assets at fair value Financial assets measured at fair value through the Income statement 216 3,926 38 8,500 2,403 (617) 108 12,017 254 8,500 2,403 (617) 3,926 108 12,017 Total financial assets at the end of the year 4,142 108 10,324 12,017 26,591 DKK million Loans (note 19) Current debt (note 19) Trade payables Other liabilities (note 23) – less taxes and duties payable (note 23) Derivative financial instruments (note 28) Total financial liabilities at the end of the year Financial liabilities measured at fair value through the Income statement Financial liabilities measured at amortised cost Financial liabilities measured at fair value through Other comprehensive income 504 562 2,906 7,954 (318) 11,608 446 446 712 712 Total 504 562 2,906 7,954 (318) 1,158 12,766 1. Danish AAA-rated mortgage bonds issued by Danish credit institutions governed by the Danish Financial Supervisory Authority of DKK 4,083 million (DKK 3,857 million in 2010), refer to note 27. Redemption yield on the bond portfolio is 1.18%. In addition Novo Nordisk owns nominal EUR 1.5 million (EUR 9 million in 2010) corresponding to DKK 11 million (DKK 69 million in 2010) of Greek zero-coupon state bonds related to the settlement in 2010 of overdue hospital accounts receivable. For a description of the credit quality of financial assets such as Trade receivables, Cash at bank and in hand, Marketable securities, and Current debt and Derivative financial instruments, refer to notes 27 and 28. 72 Novo Nordisk Annual Report 2011 14 Financial assets and liabilities (continued) Maturity analysis DKK million 2011 Other financial assets Trade receivables (note 16) Other receivables (note 17) – less prepayments (note 17) Marketable securities (bonds) Derivative financial instruments (note 28) Cash at bank and in hand Equity investments Maturity < 1 year Maturity > 1 year < 5 years Maturity > 5 years Total 191 43 9,349 2,376 (935) 2,311 48 13,408 1,783 234 9,349 2,376 (935) 4,094 48 13,408 Total assets at the end of the year by maturity 191 26,557 1,783 43 28,574 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 196 306 351 3,291 8,534 (537) 1,400 13,039 8,500 2,403 (617) 3,174 108 12,017 92 288 752 216 145 359 562 2,906 7,954 (318) 1,020 12,124 138 283 502 351 3,291 8,534 (537) 1,492 306 13,633 38 254 8,500 2,403 (617) 3,926 108 12,017 504 562 2,906 7,954 (318) 1,158 359 12,766 Loans (note 19) Current debt (note 19) Trade payables Other liabilities (note 23) – less taxes and duties payable (note 23) Derivative financial instruments (note 28) Total liabilities at the end of the year by maturity 2010 Other financial assets Trade receivables (note 16) Other receivables (note 17) – less prepayments (note 17) Marketable securities (bonds) Derivative financial instruments (note 28) Cash at bank and in hand Loans (note 19) Current debt (note 19) Trade payables Other liabilities (note 23) – less taxes and duties payable (note 23) Derivative financial instruments (note 28) Total liabilities at the end of the year by maturity Total assets at the end of the year by maturity 216 25,585 752 38 26,591 Fair value measurement hierarchy Financial assets and liabilities measured in the Balance sheet at fair value can be categorised using the fair value measurement hierarchy below. There have not been any transfers between the categories ’Active market data’ and ’Directly or indirectly observable market data’ during 2011 or 2010. DKK million 2011 Total financial assets Total financial liabilities 2010 Total financial assets Total financial liabilities Active market data Directly or indirectly observable market data Not based on observable market data 4,153 48 – 1,492 3,983 108 – 1,158 132 – 159 – Total 4,333 1,492 4,250 1,158 Novo Nordisk Annual Report 2011 73 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 15 Inventories DKK million Raw materials Work in progress Finished goods Total inventories (gross) Inventory write-downs at year-end Total inventories (net) 17 Other receivables and prepayments 2011 2010 DKK million 2011 2010 1,432 5,035 3,781 1,378 6,344 3,268 10,248 10,990 815 1,301 9,433 9,689 Prepayments1 Interest receivable Amounts owed by related parties Deposit VAT receivable Other receivables2 935 113 88 558 122 560 617 97 111 455 474 649 Total other current assets 2,376 2,403 1. Comprises prepayments to ongoing research and development activities and payments made concerning subsequent financial years etc. 2. Other receivables comprise miscellaneous duties and work in progress for third parties etc. Indirect production costs included in work in progress and finished goods (net) 5,125 5,090 The movements in the inventory write-downs can be specified as follows: Inventory write-downs at the beginning of the year Inventory write-downs during the year Utilisation of inventory write-downs Reversal of inventory write-downs 1,301 303 (500) (289) 724 832 (139) (116) Inventory write-downs at the end of the year 815 1,301 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 (51 days in 2010). Trade receivables can be specified 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 Allowances for trade receivables1 2011 2010 10,241 892 9,127 627 9,349 8,500 8,503 712 134 0 7,425 727 128 220 9,349 8,500 892 627 Trade receivables (gross) 10,241 9,127 Allowances for doubtful receivables can be specified as follows: Carrying amount at the beginning of the year Confirmed losses Reversal of allowances for possible losses Allowances for possible losses during the year Effect of exchange rate adjustment Carrying amount at the end of the year 627 (66) (18) 361 (12) 892 600 (14) (141) 164 18 627 1. Refer to segment note on p 67 for disclosure of Trade receivables and allowance for trade receivables per region. For further description of credit risk in the Eurozone, please refer to note 27 p 80. 74 Novo Nordisk Annual Report 2011 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 18 Share capital DKK million Development in share capital: 2007 2008 2009 2010 At the beginning of the year 2011 At the end of the year A share capital B share capital Total share capital 107 – – – 107 – 107 540 (13) (14) (20) 493 (20) 473 647 (13) (14) (20) 600 (20) 580 At the end of 2011, the share capital amounted to DKK 107 million in A share capital (equal to 107 million A shares of DKK 1) and DKK 473 million in B share capital (equal to 473 million B shares of DKK 1). Treasury shares Holding at the beginning of the year Cancellation of treasury shares Holding of treasury shares, adjusted for cancellation Purchase during the year Sale during the year Value adjustment Holding at the end of the year Market value DKK million As % of share capital before cancellation As % of share capital after cancellation 4.7% (3.3%) 1.4% 17,742 (12,580) 5,162 10,839 (244) 374 16,131 1.4% 3.2% (0.4%) 4.2% 2011 Number of B Shares of DKK 1 (million) 2010 Number of B Shares of DKK 1 (million) 28 (20) 8 18 (2) – 24 32 (20) 12 20 (4) – 28 Purchase of treasury shares during the year relates to the DKK 12 billion share repurchase programme for 2011 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, long-term share-based incentive programme, employee share savings programmes and employee shares. In addition to the purchased treasury shares during 2011 totalling DKK 10,839 million, share transactions with a value of DKK 98 million in late December were due in early January 2012. At the end of the year 4.7 million shares of the treasury B shareholding are regarded as hedges for the long-term share-based incentive programme and share options to employees. 19 Debt DKK million Loans1 Current debt (bank overdrafts) Derivative financial instruments Total debt The debt is denominated in the following currencies: DKK EUR USD JPY Other currencies Total debt 20 Deferred income tax assets and liabilities 2011 2010 DKK million 502 351 1,492 1,009 57 1,158 2,345 2,224 At the beginning of the year Deferred tax on profit for the year Adjustment relating to previous years Deferred tax on items recognised in Other comprehensive income Exchange rate adjustments 2011 2010 (1,018) (257) 240 (1,555) (495) 593 190 53 346 93 Total deferred tax assets/(liabilities), net (792) (1,018) 82 501 983 404 375 76 506 1,022 582 38 2,345 2,224 1. Terms to maturity between 2016 and 2022 and with a weighted average interest rate of 0.97%. Novo Nordisk Annual Report 2011 75 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 20 Deferred income tax assets and liabilities (continued) DKK million 2011 Net deferred tax asset/(liability) at 1 January 2011 Income/(charge) to the Income statement Income/(charge) to Other comprehensive income Exchange rate adjustment Net deferred tax asset/(liability) at 31 December 2011 Specified as follows: Deferred tax asset at 31 December 2011 Deferred tax liability at 31 December 2011 2010 Net deferred tax asset/(liability) at 1 January 2010 Income/(charge) to the Income statement Income/(charge) to Other comprehensive income Exchange rate adjustment Net deferred tax asset/(liability) at 31 December 2010 Specified as follows: Deferred tax asset at 31 December 2010 Deferred tax liability at 31 December 2010 Property, plant and equipment Intangible Indirect assets production costs Internal profit Trade receivables Tax-loss carry- forward Other Offset within countries Total (1,279) 227 545 (316) (1,272) (9) (8) 15 0 2,703 136 41 0 49 70 (2) 113 (21) (5) (1,877) (104) 149 53 – (1,018) (17) 190 53 (1,060) 244 (1,281) 2,880 117 87 (1,779) – (792) 173 (1,233) 550 (306) – (1,281) 2,880 – 117 – 87 – 863 (2,642) (2,256) 2,256 2,414 (3,206) (1,267) (14) 470 (15) (1,262) (10) 2 90 0 2,106 426 171 0 101 (54) 2 44 61 8 (1,747) (296) 175 (9) – (1,555) 98 346 93 (1,279) 545 (1,272) 2,703 49 113 (1,877) – (1,018) 189 (1,468) 549 (4) 0 (1,272) 2,703 0 49 0 113 0 478 (2,355) (2,234) 2,234 1,847 (2,865) Tax-loss carry-forward Further to the above, the tax value of tax-loss carry-forward of DKK 221 million (DKK 176 million in 2010) has not been recognised in the Balance sheet due to the likelihood that the tax losses will not be realised in the future. Of the unrecognised tax-loss carry-forward, DKK 2 million expires within one year, DKK 3 million between two to five years and DKK 216 million after more than five years. 21 Retirement benefit obligations Most employees in the Group are covered by post-employment retirement plans, primarily in the form of defined contribution plans but in a few cases in the form of defined benefit plans. Group companies sponsor these plans either directly or by contributing to independently administered funds. The nature of such plans varies according to the legal regulations, fiscal requirements and economic conditions of the countries in which the employees are employed, and the benefits are generally based on the employees’ remuneration and years of service. The obligations relate both to existing retirees’ pensions and to pension entitlements of future retirees. The Group’s defined benefit plans are primarily located in Japan, Germany, the US and Switzerland. Post-employment benefit plans are usually funded by payments from Group companies and by employees to funds independent of the Group. Where a plan is unfunded, a liability for the retirement obligation is recognised in the Balance sheet. In accordance with the Accounting policies, the costs recognised for post-employment benefits are included in Cost of goods sold, Sales and distribution costs, Research and development costs, and Administrative expenses. Other post-employment benefits consist mostly of post-retirement healthcare plans, principally in the US. The following shows a five-year summary reflecting 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 benefit obligations Fair value of plan assets Net unfunded retirement benefit obligations Unrecognised actuarial gains/(losses)1 Net retirement benefit obligations recognised in the Balance sheet 2011 2010 2009 2008 2007 1,363 (859) 504 (65) 439 1,452 (766) 686 (117) 569 1,063 (620) 443 13 456 1,103 (649) 454 (35) 419 885 (566) 319 43 362 1. Actuarial gains/(losses) on plan assets and plan liabilities for the year are predominantly related to actuarial adjustments while experience adjustments are immaterial. 76 Novo Nordisk Annual Report 2011 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 21 Retirement benefit obligations (continued) DKK million 2011 2010 2009 DKK million 2011 2010 Pension plans Medical benefits Total Total Retirement benefit obligations At the beginning of the year Current service costs Interest costs Actuarial (gains)/losses Past service costs Benefits paid Curtailments1 Exchange rate adjustment Other 1,138 115 36 (65) 0 (71) (97) 36 33 314 40 16 36 (27) (4) (144) 7 0 1,452 155 52 (29) (27) (75) (241) 43 33 1,063 137 50 107 (1) (32) – 115 13 At the end of the year 1,125 238 1,3632 1,452 Costs recognised in the Income statement for the year Current service costs Interest costs Expected return on plan assets1 Actuarial (gains)/losses Curtailment Past service costs Other 155 52 (28) 17 (241) (1) 21 137 50 (26) (11) – – 7 Total charge to Income statement (25) 157 118 45 (20) 30 (20) (1) – 152 Costs recognised in Other comprehensive income for the year Effect of exchange rate adjustment Total charge to the Statement of comprehensive income 23 53 – (2) 210 152 1. Curtailment relates to changes in defined benefit plans in Japan and US in 2011. 2. Present value of partly funded retirement benefit obligations amounts to DKK 1,071 million (DKK 1,070 million in 2010). Present value of unfunded retirement benefit obligations amounts to DKK 292 million (DKK 382 million in 2010). The costs are recognised in the Income statement as employee costs by function and consist of: DKK million 2011 2010 Fair value of plan assets At the beginning of the year Expected return on plan assets Actuarial gains/(losses) Employer contributions Benefits paid to employees Exchange rate adjustment Other At the end of the year 766 28 (20) 128 (75) 20 12 859 620 26 (13) 84 (19) 62 6 766 DKK million 2011 2010 Net retirement benefit obligations recognised in the Balance sheet Net unfunded retirement benefit obligations Unrecognised actuarial gains/(losses) on pension plans (net) Unrecognised actuarial gains/(losses) on post-employment medical benefits (net) Unrecognised past service costs At the end of the year 504 686 (82) (144) (12) 29 24 3 439 569 Amount recognised in the Balance sheet is reported as Non-current liabilities. DKK million 2011 2010 Net retirement benefit obligations At the beginning of the year Recognised in the Statement of comprehensive income Employer contributions Benefit paid to employees (net) At the end of the year 569 (2) (128) – 439 456 210 (84) (13) 569 Defined benefit pension plans Post-employment medical benefits 80 (82) 137 73 107 45 1. Actual return on plan assets was a gain of DKK 8 million in 2011 (a gain of DKK 13 million in 2010). Novo Nordisk expects to contribute approximately DKK 90 million to its defined benefit plans in 2012 (actual DKK 128 million in 2011). 2011 DKK million % DKK million 575 49 152 75 8 67% 5% 18% 9% 1% 522 83 88 63 10 2010 % 68% 11% 12% 8% 1% Weighted average asset allocation of funded retirement obligations Coverage insurance1 Equities Bonds Cash at bank Property Total 859 100% 766 100% 1. Novo Nordisk’s defined benefit payments in Germany and Switzerland are reimbursed by the international insurer Allianz regardless of the value of the plan assets. The only risk related to the pension in these countries is therefore counter- party risk against Allianz. The assumptions used for valuation of defined benefit plans and post-employment medical benefits are as follows Discount rate Projected return on plan assets Projected future remuneration increases Medical cost trend rate Inflation rate 2011 2010 4% 3% 2% 3% 2% 4% 3% 2% 5% 2% Actuarial valuations are performed annually for all major defined benefit 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 would have an effect of below DKK 10 million (DKK 22 million in 2010) on the service costs and the defined benefit obligation for the Group. Novo Nordisk Annual Report 2011 77 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 22 Provisions 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 exchange rate adjustment At the end of the year Non-current Current Total provisions Provisions for sales rebates Provisions for product returns1 Provision for legal disputes2 Other provisions3 2011 Total 4,364 9,314 (7,787) (328) 103 5,666 – 5,666 5,666 534 241 (247) 22 5 555 333 222 555 1,371 795 (151) (445) (16) 1,554 1,554 – 1,554 398 161 (43) (31) 4 489 437 52 489 2010 Total 4,398 8,121 (5,914) (221) 283 6,667 10,511 (8,228) (782) 96 8,264 6,667 2,324 5,940 8,264 2,023 4,644 6,667 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. Provisions for legal disputes represent Management’s best estimate. Please refer to note 31 for further information on commitments and contingencies. 3. Other provisions consist of various types of provisions including employee benefits such as jubilee benefits etc. 23 Other liabilities DKK million Employee costs payable Accruals Taxes and duties payable R&D clinical trials Other payables1 Total other liabilities 1. Other payables primarily consist of accruals related to royalty payments, deferred income and interest accruals etc. 24 Adjustments for non-cash items DKK million Reversals of non-cash income statement items Income taxes (note 9) Depreciation, amortisation and impairment losses (note 6) Interest income and interest expenses, net (notes 7, 8) Share-based payment costs (note 29) Share of (profit)/loss in associated companies Changes in non-cash balance sheet items Increase/(decrease) in provisions and retirement benefit obligations (notes 21, 22) Other adjustments (Gains)/losses from sale of property, plant and equipment Unrealised (gain)/loss from marketable securities Other, including difference between average and year-end exchange rate, unrealised exchange (gain)/loss etc Total adjustments for non-cash items 2011 3,369 2,992 537 211 1,425 8,534 2010 3,042 3,059 318 354 1,181 7,954 2011 2010 2009 4,828 2,737 1 319 4 3,883 2,467 265 463 (1,070) 3,220 2,551 71 259 55 1,467 2,382 649 (3) 28 (264) 71 (43) 31 (3) 21 (122) 9,117 8,449 6,701 25 Change in working capital 26 Cash and cash equivalents DKK million 2011 2010 2009 DKK million 2011 2010 2009 Trade receivables Other receivables and prepayments Inventories Trade payables Other liabilities Exchange rate adjustments (849) 27 256 385 580 35 (1,437) (441) 327 664 1,141 43 Total change in working capital 434 297 (482) (258) (405) (39) 960 (55) (279) Cash at bank and in hand Bank overdrafts (note 19) Cash and cash equivalents at the end of the year 13,408 (351) 12,017 (57) 11,296 (262) 13,057 11,960 11,034 78 Novo Nordisk Annual Report 2011 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 27 Financial risk Novo Nordisk has centralised the management of the Group’s financial risks. The overall objectives and policies for the company’s financial 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 permitted financial instruments and risk limits. Novo Nordisk only hedges commercial exposures and consequently does not enter into derivative transactions for trading or speculative purposes. Novo Nordisk uses a fully integrated Treasury Management System to manage all financial positions. All positions are marked-to-market based on real-time quotes and risk is assessed using generally accepted standards. Foreign exchange risk Foreign exchange risk is the principal financial risk for Novo Nordisk and as such has a significant impact on the Income statement and Other com- prehensive income, the Balance sheet and the Statement of cash flows. The majority of Novo Nordisk’s sales are in EUR, USD, JPY, CNY and GBP. Consequently, Novo Nordisk’s foreign exchange risk is most significant in USD, JPY, CNY and GBP, while the EUR exchange rate risk is regarded as low due to the Danish fixed-rate policy towards EUR. The overall objective of foreign exchange risk management is to limit the short-term negative impact on earnings and cash flow from exchange rate fluctuations, thereby increasing the predictability of the financial results. Novo Nordisk hedges existing assets and liabilities in key currencies as well as future expected cash flows up to a maximum of 24 months forward. During 2011, the hedging horizon has varied between 10 and 15 months for USD, JPY, CNY and GBP. Currency hedging is based upon expectations of future exchange rates and mainly uses foreign exchange forwards and foreign exchange options matching the due dates of the hedged items. Expected cash flows are continually assessed using historical inflows, budgets and monthly sales forecasts. Hedge effectiveness is assessed on a regular basis. Key currencies: Exchange rate DKK per 100 2011 Average End of year Year-end change 2010 Average End of year Year-end change USD JPY CNY GBP 536 575 2.5% 6.73 7.42 7.7% 83 91 7.1% 562 561 8.1% 6.42 6.89 22.6% 83 85 11.8% 859 890 2.7% 869 867 5.3% The financial contracts existing at the end of the year cover the expected future cash flow for the following number of months: DKK million 2011 2010 USD JPY CNY1 GBP 12 months 12 months 12 months 12 months 15 months 14 months 12 months 10 months 1. USD used as proxy when hedging Novo Nordisk’s CNY currency exposure. Foreign exchange sensitivity analysis: A 5% increase/decrease in the following currencies will impact Novo Nordisk’s operating profit as outlined in the table below: DKK million USD JPY CNY GBP Estimated for 2012 775 170 100 75 2011 620 155 120 85 A 5% increase/decrease in all other currencies versus EUR and DKK would affect the hedging instruments’ impact on Other comprehensive income and Income statement as outlined in the table below: DKK million 2011 Other comprehensive income Income statement Total 2010 Other comprehensive income Income statement Total 5% increase in all currencies against DKK and EUR 5% decrease in all currencies against DKK and EUR (1,011) 54 (957) (862) 93 (769) 1,026 (38) 988 893 (38) 855 The higher foreign exchange sensitivities in 2011, compared with 2010, are primarily a result of higher expected future cash flow, which outweighs the lower covers for USD and JPY as described above. The financial instruments included in the foreign exchange sensitivity analysis are the Group’s Cash, Trade receivables and Trade payables, Current and non-current loans, Current and non-current financial investments, Foreign exchange forwards and Foreign exchange options hedging trans- action exposure, Interest rate swaps and Cross-currency swaps. Not included are anticipated currency transactions, Investments and Non- current assets. Novo Nordisk only hedges invested equity in major foreign affiliates to a very limited extent. Equity hedging takes place using long-term cross- currency swaps. At the end of 2011, hedged equity represented 13% of the Group’s JPY equity. At the end of 2010, 15% of the Group’s JPY equity was hedged. Interest rate risk In general, DKK and EUR interest rates declined in 2011. The Danish two- year interest rate was 1.08% at the end of 2011, down from 1.85% at the end of 2010. The three-month Cibor interest rate was 1.00% at the end of 2011, down from 1.21% at the end of 2010. Changes in interest rates affect Novo Nordisk’s financial instruments. At the end of 2011, an increase in the interest rate level of 1 percentage point would, all else being equal, result in a decrease in the fair value of Novo Nordisk’s financial instruments of DKK 17 million (a decrease in the fair value of DKK 8 million in 2010). The financial 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. Novo Nordisk Annual Report 2011 79 27 Financial risk (continued) Credit exposure on Cash at bank or in hand, Marketable securities and Derivative financial instruments (market value) Liquidity risk Novo Nordisk ensures availability of required liquidity through a com- bination of cash management, highly liquid investment portfolios and uncommitted as well as committed facilities. Novo Nordisk uses cash pools for optimisation and centralisation of cash management. For non-cash pool affiliates, surplus cash above the balance required for working capital management is deposited centrally. Credit risk Credit risk arises from the possibility that counterparties to transactions may default on their obligations causing financial losses for the Group. Novo Nordisk considers its maximum credit risk on financial assets to be DKK 17,550 million (2010: DKK 16,051 million) and DKK 11,024 million (2010: DKK 10,540 million) on Trade receivables, Other receivables less prepayments and Other financial assets (refer to note 14 for details of the Group’s total financial assets). To manage credit risk on financial counterparties, Novo Nordisk only enters into derivative financial contracts and money market deposits with financial counterparties possessing a satisfactory long-term credit rating from both Standard and Poor’s and Moody’s. Furthermore, maximum credit lines de- fined for each counterparty diversify the overall counterparty risk. The credit risk on bonds is limited as investments are made in highly liquid bonds with solid credit ratings. The table to the right shows Novo Nordisk’s credit exposure on cash, fixed income marketable securities and financial derivatives. DKK million 2011 AAA-range AA-range A-range Not rated or below A-range Cash at bank or in hand Marketable securities Derivative financial instruments 4,083 6,223 7,156 29 11 16 32 Total 4,083 6,239 7,188 40 Total 13,408 4,094 48 17,550 2010 AAA-range AA-range A-range Not rated or below A-range 3,857 4,739 7,233 45 69 44 64 3,857 4,783 7,297 114 Total 12,017 3,926 108 16,051 Credit risk on Trade receivables and Other receivables and prepayments is less material as Novo Nordisk has no significant concentration of credit risk, with exposure being spread over a large number of counterparties and customers. However, due to the troubled economic climate in the Eurozone, the group has increased its focus on the development in the outstanding trade receivables from this region (please refer to note 2 for split on allow- ance for trade receivables by geographical segments). 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 pharmaceutical industry and reflects 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 57.9% at the end of the year (60.2% at the end of 2010). s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 28 Derivative financial 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 flow hedges), hedging of assets and liabilities (fair value hedges), and hedging of net investments. None of the derivatives are held for trading. However, not all derivatives are designated for hedge accounting. Total hedging activities The table below summarises the fair values of all the hedging activities of Novo Nordisk. Negative fair value at year-end Contract amount at year-end DKK million Currency-related instruments Forward contracts, cash flow hedges Currency options, cash flow hedges Cross-currency swaps, cash flow hedges Forward contracts, fair value hedges Cross-currency swaps, net investment hedges 2011 Positive fair value at year-end 116 Contract amount at year-end 18,906 4,805 2,534 166 1,256 176 56 Total currency-related instruments 26,411 116 1,488 Interest-related instruments Interest rate swaps, cash flow hedges Total interest-related instruments Total derivatives included in: Derivative financial instruments (current assets) Derivative financial instruments (current liabilities) Equity, Other reserves 250 250 4 4 1,492 – 48 68 2010 Positive fair value at year-end 108 Negative fair value at year-end 658 20 411 40 108 1,129 – 108 29 29 1,158 16,538 5,929 818 2,318 166 25,769 561 561 Total hedging activities 26,661 116 1,492 26,330 108 1,158 80 Novo Nordisk Annual Report 2011 28 Derivative financial instruments (continued) Hedging of forecast transactions (cash flow hedge) The table below shows the fair value of cash flow-hedging activities for 2011 and 2010 specified by hedging instrument and the major currencies. The fair value of the financial instruments qualifying for hedge accounting is recognised directly in Other comprehensive income until the hedged items affect the Income statement. At year-end, a loss of DKK 1,184 million is deferred via Other comprehensive income (a net loss of DKK 672 million in 2010). The fair values of the financial instruments not qualifying for hedge accounting are recognised directly in the Income statement. DKK million Hedging of forecast transactions qualifying for hedge accounting USD JPY GBP Other Total forward contracts (forecasted cash flow) USD JPY Total currency options1 (forecasted cash flow) EUR / USD Total cross-currency swaps (variable payments on debt instruments) EUR / EUR Total interest rate swaps (variable payments on debt instruments) Total cash flow hedges for which hedge accounting is applied DKK million Other forecast transaction hedges for which hedge accounting is not applied USD2 JPY2 Total currency options EUR / USD3 JPY/ DKK Total cross-currency swaps DKK / DKK EUR / EUR3 Total interest rate swaps Total cash flow hedges for which hedge accounting is not applied s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Contract amount at year-end 2011 Positive fair value at year-end Negative fair value at year-end Contract amount at year-end 2010 Positive fair value at year-end Negative fair value at year-end 14,250 2,763 1,314 579 18,906 4,007 798 4,805 – 250 250 896 276 59 25 1,256 11,264 3,605 1,063 606 16,538 4,103 – 4,103 504 504 251 251 – (4) (4) – 66 2 68 – – 23,961 68 1,252 21,396 292 355 11 658 – 4 4 10 10 672 – – – – – Contract amount at year-end 2011 Positive fair value at year-end Negative fair value at year-end Contract amount at year-end 2010 Positive fair value at year-end Negative fair value at year-end 46 2 48 – – 48 – – – – 1,826 1,826 314 314 310 310 2,450 – – 8 8 8 108 108 – – 108 108 – 3 13 16 11 8 19 35 707 Total contracts of forecast transactions 23,961 116 1,260 23,846 1. A positive value of DKK 68 million qualifying for hedge accounting has been realised during 2011 and is recognised directly under Other comprehensive income until the hedged items affect the Income statement. Contract amount at year-end relates to options not yet realised. As the time value of options does not qualify for hedge accounting that part is presented in the table below. 2. The positive value represents the time value of the options for which hedge accounting cannot be applied. 3. The contract value is disclosed in the table above. The negative fair value is related to the period before hedge accounting was applied. The maturity of the swaps existing at the end of 2011 is December 2012 (December 2011 and December 2012 at the end of 2010). Novo Nordisk Annual Report 2011 81 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 28 Derivative financial instruments (continued) Hedging of assets and liabilities (fair value hedge) The table below shows the fair value of fair value-hedging activities for 2011 and 2010 specified by hedging instrument and the major currencies. All changes in fair values are recognised in the Income statement, amounting to a loss of DKK 176 million in 2011 (a net loss of DKK 411 million in 2010). 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 2011 Positive fair value at year-end Negative fair value at year-end Contract amount at year-end 2010 Positive fair value at year-end Negative fair value at year-end 478 731 376 949 2,534 2,534 81 72 7 16 176 176 – – 890 647 262 519 2,318 2,318 225 166 7 13 411 411 – – The financial contracts existing at the end of the year hedge the currency exposure on assets and liabilities in the Group’s major currencies other than DKK and EUR, ie primarily assets and liabilities in USD, JPY and GBP. Other comprises AUD at DKK 399 million (DKK 161 million in 2010), CAD at DKK 170 million (DKK 0 in 2010) and PLN at DKK 380 million (DKK 358 million in 2010). 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 2011 and 2010 specified by hedging instrument and the major currencies. All changes in fair values relating to currency are recognised directly in Other comprehensive income. DKK million Total cross-currency swap JPY/DKK Total hedging of net investments in foreign subsidiaries Contract amount at year-end 166 166 2011 Positive fair value at year-end Negative fair value at year-end Contract amount at year-end 56 56 – 166 166 2010 Positive fair value at year-end – Negative fair value at year-end 40 40 The maturity of the swap existing at the end of 2011 is November 2012 (November 2012 at the end of 2010). The financial contract existing at the end of the year hedge 13% (15% in 2010) of the net investments in JPY. No other net investments have been hedged. Presentation in the Income statement and Other comprehensive income The fair value adjustments are recognised as follows: DKK million Fair value through the Income statement Cash flow 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 flow hedges for which hedge accounting is applied Net investment hedges (included in exchange rate adjustment) Total fair value adjustments through Other comprehensive income Total fair value adjustments Contract amount at year-end 2011 Positive fair value at year-end Negative fair value at year-end Contract amount at year-end 2010 Positive fair value at year-end Negative fair value at year-end 48 48 68 8 176 184 1,252 56 68 1,308 116 1,492 – – – 108 108 – 35 411 446 672 40 712 108 1,158 – – – 82 Novo Nordisk Annual Report 2011 29 Share-based payment schemes The total number of shares in the joint pools relating to the years 2009, 2010 and 2011 is as follows: DKK million 2011 2010 2009 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 96 57 241 64 49 54 166 158 156 Share-based payment expensed in the Income statement 319 463 259 1. Includes long-term share-based incentive programme for 2007–2011 and share option programme for 2006. Employee shares In 2010, a general employee share programme was implemented in Denmark with exercise in 2010. Outside Denmark the programme was structured as share options with the same initial benefit per employee as in Denmark. The cost of the programme outside Denmark is amortised over the period 2010 –2013. 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 44 – 47. On 1 February 2012, The Board of Directors approved the establishment of a joint pool, for members of the Senior Management Board, for the financial year 2011 by allocating a total of 89,712 Novo Nordisk B shares. This allocation amounts on average to 6.5 months fixed base salary plus pension contribution per participant, corresponding to a value at launch of the programme of DKK 57 million. This amount was expensed in 2011. The share price used for the conversion was the average share price (DKK 634) for Novo Nordisk B shares on NASDAQ OMX Copenhagen in the period 2–16 February 2011. Based on the split of participants when the joint pool was established, approximately 30% of the pool will be allocated to members of Executive Management and 70% to other members of the Senior Management Board. The shares allocated to the joint pool for 2008 (166,302 shares), corresponding to a value at launch of the programme of DKK 55 million expensed in 2008, were released to the individual participants subsequent to the approval of the Annual Report 2011 by the Board of Directors and after the announcement on 2 February 2012 of the 2011 full year financial results. 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 2008 (508,944 shares), corre- sponding to a value at launch of the programme of DKK 181 million amortised over the period 2008 –2011, were released to the individual participants subsequent to the approval of the Annual Report 2011 by the Board of Directors and after the announcement on 2 February 2012 of the 2011 full year financial results. The number of shares to be transferred is lower than the original number of shares allocated to the share pool as some participants had left the company before the release conditions of the programme were met. 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. For 2011, this group consisted of about 740 employees. The allocation to the joint pool was DKK 188 million, corresponding to 297,133 shares. The cost of this allocation will be amortised over the period 2011–2014. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Year allocated to pool Senior Management Board 2009 2010 2011 Management group below Senior Management Board 2009 2010 2011 Cancelled Total Number of shares 177,066 168,576 89,712 435,354 605,218 548,936 297,133 (51,534) 1,399,753 1,835,107 Vesting 2013 2014 2015 2013 2014 2015 For the service entities NNIT and NNE Pharmaplan, separate share-based incentive programmes have been set up which are similar to the general Novo Nordisk programme but operate with entity-specific targets. In 2011, a general employee share programme was implemented in NNIT. In Denmark approximately 965 employees have purchased 38,600 Novo Nordisk shares at a price of DKK 310 per share equal to a cost of DKK 12 million. Outside Denmark the programme was structured as share options. Share options Novo Nordisk established share option schemes in 1998 –2006 with the purpose of motivating and retaining a qualified management group and ensuring 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 perform- ance targets for the financial years 2000 –2006 was equal to the market price of the Novo Nordisk B share at the time 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 (in DKK) 2011 2010 2009 2 23% 14.00 4 21% 10.00 6 26% 7.50 0.20% 2.00% 2.00% 660 629 332 Novo Nordisk Annual Report 2011 83 29 Share-based payment schemes (continued) Outstanding share options in Novo Nordisk Average exercise price per option DKK Share options Fair value DKK million Calculated fair value per option DKK Outstanding at the end of 2009 5,599,447 135 1,056 Employee share options granted in 20101 Exercised in 2010 – ordinary share option plans Exercised in 2010 – employee share options Expired in 2010 Cancelled in 2010 Value adjustment2 273,000 (2,363,122) (2,170) (57,708) (12,553) 155 0 166 135 163 (446) 0 (11) (2) 950 Outstanding at the end of 2010 3,436,894 110 1,710 Exercised in 2011 – ordinary share option plans Exercised in 2011 – employee share options Cancelled in 2011 Value adjustment2 (624,760) (506,300) (126,500) 74 0 0 (311) (252) (63) 15 Outstanding at the end of 2011 2,179,334 153 1,099 1. Granted to all employees outside Denmark under the 2010 employee share option programme, with a benefit equal to the benefit 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. 189 597 189 189 189 189 498 498 498 498 504 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Management’s share options Share options in Novo Nordisk Executive Management: Lars Rebien Sørensen Jesper Brandgaard Lise Kingo Kåre Schultz Mads Krogsgaard Thomsen At the beginning of the year Exercised during the year Additions during the year3 At the end of the year Fair value4 DKK million 39,000 18,500 – – 18,500 (39,000) (18,500) – – (18,500) – – – – – – – – – – – – 49.7 49.7 Executive Management in total 76,000 (76,000) – Other members of the Senior Management Board in total 125,350 (60,350) 36,325 101,325 Total 201,350 (136,350) 36,325 101,325 3. Additions during the year cover the holdings of share options by the Senior Management Board members appointed in 2011. 4. The fair value has been calculated using the Black-Scholes model with the parameters existing at year-end of the respective year. 84 Novo Nordisk Annual Report 2011 29 Share-based payment schemes (continued) Exercisable and outstanding share options in Novo Nordisk 2003 Ordinary share option plan 2004 Ordinary share option plan 2005 Ordinary share option plan 2006 Ordinary share option plan Issued share options Exercised share options 2,185,000 1,618,832 1,640,468 2,229,084 (1,898,550) (1,112,916) (1,045,050) (1,166,547) Outstanding/ exercisable share options 203,784 387,916 439,800 875,484 Cancelled (82,666) (118,000) (155,618) (187,053) Exercise price DKK 98 134 153 175 Exercise period 6/2/07 – 5/2/12 31/1/08 – 30/1/13 31/1/09 – 30/1/14 31/1/10 – 30/1/15 Exercisable at the end of 2011 7,673,384 (5,223,063) (543,337) 1,906,984 2008 Employee share options 2010 Employee share options 694,500 273,000 (509,350) (650) (185,150) – 0 272,350 0 0 1/11/11 1/12/13 Outstanding at the end of 20115 8,640,884 (5,733,063) (728,487) 2,179,334 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 2011 2 February – 16 February 27 April – 11 May 5 August – 19 August 27 October – 10 November Total exercised options Average market price DKK 634 640 568 586 Exercised share options 367,710 68,550 47,700 647,100 1,131,060 30 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 during the year Sold/transferred during the year At the end of the year Market value1 DKK million s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Board of Directors: Sten Scheibye Göran A Ando Bruno Angelici Henrik Gürtler Ulrik Hjulmand-Lassen Thomas Paul Koestler Anne Marie Kverneland Kurt Anker Nielsen Søren Thuesen Pedersen Hannu Ryöppönen Stig Strøbæk Jørgen Wedel Board of Directors in total Executive Management: Lars Rebien Sørensen Jesper Brandgaard Lise Kingo Kåre Schultz Mads Krogsgaard Thomsen 800 1,600 – – 844 – 2,591 81,704 309 1,600 490 11,000 100,938 10,920 4,959 259 62,569 26,427 800 1,600 500 – 1,057 1,600 2,475 81,704 324 2,250 390 15,000 (151) (400) (120) (100) (771) 107,700 (9,851) (5,500) (9,893) (21,330) (8,000) 54,970 27,937 344 51,217 48,605 500 213 1,600 35 400 135 650 4,000 7,533 53,901 28,478 9,978 9,978 30,178 0.5 1.1 0.3 – 0.7 1.1 1.6 53.9 0.2 1.5 0.3 9.9 71.1 36.3 18.4 0.2 33.8 32.1 Executive Management in total 105,134 132,513 (54,574) 183,073 120.8 Other members of Senior Management Board in total 91,355 151,542 (98,447) 144,450 95.3 Joint pool for Executive Management and other members of the Senior Management Board2 637,455 89,712 (160,155) 567,0123 374.3 Total 934,882 381,300 (313,947) 1,002,235 661.5 1. Calculation of the market value is based on the quoted share price of DKK 660 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 when the joint pool was established, 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 the event of lower-than-planned value creation in subsequent years. 3. Excludes 34,644 shares currently assigned to five retired Senior Management Board members. Novo Nordisk Annual Report 2011 85 31 Commitments and contingencies The latest interest rate fixing has been used to compute the contractual obligation for interest on variable-rate debt instruments. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N Commitments The total contractual obligations and recognised non-current debt as at 31 December 2011 can be specified as follows: Payments due by period DKK million Loans Retirement benefit obligations Total non-current liabilities recognised in the Balance sheet Interest payments related to loans Operating leases1 Purchase obligations Research and develop- ment obligations Total obligations not recognised in the Balance sheet Total contractual obligations Less than 1 year – 13 1–3 years 3 –5 years 97 26 99 24 More than 5 years 306 376 Total 502 439 13 123 123 682 941 6 848 1,920 11 1,283 1,975 9 882 4 13 1,999 0 39 5,012 3,899 1,241 1,448 85 0 2,774 4,015 4,717 980 2,012 11,724 4,028 4,840 1,103 2,694 12,665 As at 31 December 2010, the contractual obligations and recognised non-current debt can be specified as follows: Less than 1 year – 17 1–3 years 3 –5 years 48 33 97 31 More than 5 years 359 488 Total 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 Payments due by period DKK million Loans Retirement benefit obligations Total non-current liabilities recognised in the Balance sheet Interest payments related to loans Operating leases1 Purchase obligations Research and develop- ment obligations Total obligations not recognised in the Balance sheet Total contractual obligations 1. No material finance lease obligations exist in 2011 and 2010. 86 Novo Nordisk Annual Report 2011 The operating lease commitments are related to non-cancellable operating leases primarily related to premises, company cars and office equipment. Approximately 68% of the commitments are related to leases outside Denmark. The lease costs for 2011 and 2010 were DKK 1,059 million and DKK 933 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 flows from operations. Research and development obligations contain uncertainties in relation to the period in which payments are due because a proportion of the obliga- tions 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 relate to 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 2011 2010 589 555 1,385 1,366 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 (WDF), obligating 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 financial year. At the Annual General Meeting in 2008, a new donation in addition to the existing obligation was agreed to 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 financial year. The annual donation for the period 2011–2017 will not exceed the lower of DKK 80 million or 15% of the taxable income of Novo Nordisk A/S in the financial year in question. In 2011, the donation amounts to DKK 65 million (DKK 69 and 68 million in 2010 and 2009), which is recognised in Administrative expenses in the Income statement. The 2011 donation includes an extra donation of DKK 14 million to support predetermined WDF activities. Futhermore Novo Nordisk has committed to pay an additional amount of DKK 11 million in 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 that Management deems to be reasonable or appropriate have been made for probable losses, there are uncertainties connected with these estimates. Novo Nordisk does not expect the pending litigations, claims and investigations, individually and in the aggregate, to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow in addition to the amounts accrued. See note 1 for the principles for making accounting estimates and judge- ments about pending and potential future litigation outcomes. 3,257 3,366 2,531 1,105 10,259 Contingencies 3,274 3,447 2,659 1,952 11,332 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 product liability lawsuits related to hormone therapy products. There are currently 48 cases against Novo Nordisk involving individuals who allege to have used a Novo Nordisk hormone therapy product. These products (Activella® and Vagifem®) have been sold and marketed in the US since 2000. Until July 2003, the products were sold and marketed exclusively in the US by Pharmacia & Upjohn Company (now Pfizer Inc.). According to information received from Pfizer, 66 individuals (compared with 72 individuals in 2010) currently allege, in relation to similar lawsuits against Pfizer Inc., that they too have used a Novo Nordisk hormone therapy product. Novo Nordisk has one case listed for trial in 2012. Novo Nordisk does not expect the pending claims to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. In November 2006, Novo Nordisk A/S and the Italian affiliate 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 claims that Novo Nordisk breached an alleged contract with Menarini for the sale and distribution of insulin and insulin analogues in the Italian market or, alternatively, 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 July 2012. Novo Nordisk cannot predict how long the litigation will take or when it will be able to provide additional informa- tion. Novo Nordisk does not expect the pending claim to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. Novo Nordisk Inc. is currently a defendant in a case filed in the US alleging that Novo Nordisk and a number of other pharmaceutical companies provided a false Average Wholesale Price for certain drugs covered by Medicaid. This case has been brought by the State of Louisiana. A similar case brought by the State of Alabama has been resolved. Novo Nordisk does not expect the pending claim to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. Novo Nordisk Inc. is one of more than 20 pharmaceutical companies that have been named as defendants in putative class action lawsuits alleging that their sales representatives have been denied overtime compensation by being improperly classified under state and federal laws. Three cases were filed against Novo Nordisk in 2011 in US District Courts in California, New York and Georgia. The plaintiffs claim that Novo Nordisk owes them and other purported class members back wages, as well as penalties, interest, and attorneys’ fees. Novo Nordisk believes these lawsuits are without merit and will defend against them vigorously. In mid-June 2012 it is expected that the US Supreme Court will announce its decision in an appeal in a similar case brought against another pharmaceutical company. The Court’s ruling in that case could potentially influence the outcome of one or more of the cases pending against Novo Nordisk. Novo Nordisk does not expect the pending claim to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. 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 financial position, operating profit or cash flow. Pending claims against Novo Nordisk and investigations involving Novo Nordisk 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. Under the terms of the DPA Novo Nordisk must comply with the DPA (including US regulation 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 in 2010 identified and self-reported certain US Foreign Assets Control concerns to the US authorities. Novo Nordisk does not expect the DPA to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N In February 2011, the office of the US Attorney for the District of Massa- chusetts served Novo Nordisk with a subpoena calling for the production of documents regarding potential criminal offences relating to the company’s marketing and promotion practices for the following products: NovoLog®, Levemir®, and Victoza®. This matter is now being conducted by the US Attorney for the District of Columbia. Novo Nordisk is cooperating with the US Attorney in this investigation. Novo Nordisk does not expect the pend- ing claims to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. In June 2005 Novo Nordisk filed a patent infringement lawsuit against Caraco Pharmaceutical Laboratories, Ltd. (‘Caraco’), a generic pharmaceuti- cal company, and its Indian parent, Sun Pharmaceutical Industries, Ltd., in the US District Court for the Eastern District of Michigan regarding Caraco’s abbreviated new drug application (‘ANDA’) for a generic version of Prandin® (repaglinide). In January 2011, the District Court ruled that Novo Nordisk’s US Patent No. 6,677,358 (the ‘358 patent’), which is directed toward the use of repaglinide in combination with metformin for the treatment of type 2 diabetes, is invalid and unenforceable. Novo Nordisk immediately appealed this decision on the merits to the US Court of Appeals for the Federal Circuit; the appeal is stayed pending a decision by the US Supreme Court in a related issue. In December 2011, following Caraco’s request for review, the US Supreme Court heard oral argument pertaining to the Federal Circuit’s reversal of an interlocutory decision by the District Court in Michigan regarding availability of a counterclaim to correct the FDA Orange Book use code narrative for Prandin®; a decision by the Supreme Court on this issue is expected in 2012. Novo Nordisk is involved in patent infringement litigation with two ad- ditional ANDA applicants for generic versions of Prandin®: Paddock Labo- ratories and Sandoz Inc. The collateral estoppel decision in the Paddock case has been appealed to the Federal Circuit and is stayed pending the decision by the US Supreme Court. Cases involving Sandoz are pending in the US District Courts for the Eastern District of Michigan and New Jersey. Additionally, Novo Nordisk is involved in a patent infringement lawsuit with Lupin Ltd. in the US District Court for the Southern District of New York in which Novo Nordisk asserts that Lupin’s ANDA for a generic version of PrandiMet® (repaglinide/metformin HCl) infringes Novo Nordisk’s ‘358 patent’. This case is stayed pending the Federal Circuit appeal of the decision on the merits in the Caraco case. Also pending before the District Court for the Eastern District of Michigan is a consolidated class action where a putative class of direct purchasers of Prandin® asserts that Novo Nordisk has violated US antitrust laws in delay- ing the entry of generic versions of Prandin®. At present, it is unclear whether or when a generic version of Prandin® or PrandiMet® will be available in the US market. Novo Nordisk does not expect the pending claims related to Prandin® to have a material impact on Novo Nordisk’s financial position, operating profit or cash flow. 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 financial position, operating profit or cash flow. 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 52– 54. For information on change of control clauses in share option programmes, please refer to note 29, ‘Share-based payment schemes’ on pp 83 – 85 and in relation to employee contracts of Executive Management of Novo Nordisk, please refer to the ‘Remuneration report’ in the section Governance, remuneration and leader- ship, pp 44 – 47. In addition, Novo Nordisk discloses that the Group has significant 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 4% of Novo Nordisk’s sales, corresponding to approximately 4% of Novo Nordisk‘s gross profit. Novo Nordisk Annual Report 2011 87 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 73.2% 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 officers of these entities, and Management of Novo Nordisk A/S. In 2011, Novo Nordisk A/S acquired 5,100,000 B shares, worth DKK 2.9 billion, from Novo A/S as part of the DKK 12.0 billion share repurchase pro- gramme. The transaction price was DKK 571 per share and was calculated as the average market price from 4 to 10 August 2011 in the open window following the announcement of the financial results for the second quarter of 2011. 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 to 19 August 2010 in the open window following the announcement of the financial 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 to 7 August 2009 in the open window following the announcement of the financial results for the second quarter of 2009. s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N The Group has had the following material transactions with related parties, (income)/expense: DKK million 2011 2010 2009 Novo Nordisk Foundation Donations to Steno Diabetes Center A/S via 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 and fees and royalties etc paid to associated companies by Novo Nordisk Received intangible assets and fees and royalties etc paid by associated companies to Novo Nordisk (45) (38) (32) (2) 2,912 (3) 2,567 (8) 1,111 – (2) (2) (268) 73 (395) 83 (357) 118 – – 16 184 (4) – 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 officer 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 ‘Remuneration report’ in ‘Corporate governance, remuneration and leadership’, pp 44 – 47, and note 4. There have not been and are no loans to the Board of Directors or Executive Man- agement in 2011, 2010 or 2009. There are no material unsettled transactions with related parties at the end of the year. 88 Novo Nordisk Annual Report 2011 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 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 m d n a l s e a S n o i t c u d o r P • • • • Parent company Novo Nordisk A/S Subsidiaries by region Denmark 1931 DKK 580,000,000 – • • • • Austria Belgium Bosnia-Hercegovina Bulgaria Croatia Czech Republic Denmark Denmark 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. FeF Chemicals A/S Novo Nordisk Region Europe A/S Steno Diabetes Center A/S Novo Nordisk Farma OY Novo Nordisk 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 Farmacêuticos 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 II A/S Novo Nordisk US Holdings Inc. Novo Nordisk Pharmaceutical Industries Inc. Novo Nordisk Inc. Japan & Korea Novo Nordisk Region Japan & Korea A/S Novo Nordisk Pharma Ltd. Novo Nordisk Pharma Korea Ltd. Canada Denmark United States United States United States Denmark Japan South Korea 1974 1974 2009 2005 2004 1997 1989 2002 2008 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 2011 2007 1991 1982 2002 1980 1994 EUR EUR BAM BGN HRK CZK DKK DKK 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 10,000,000 108,370,500 1,000,000 420,500 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 6,108,400,000 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Novo Nordisk Annual Report 2011 89 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 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 m d n a l s e a S n o i t c u d o r P • • • • DZD ARS AUD BDT BRL BRL CLP DKK DKK EGP INR IDR IRR ILS LBP MYR MXN MAD NZD NGN PKR PHP RUB RUB SGD SGD ZAR THB TND TRY AED VEF 1,742,650,000 7,465,150 500,001 17,500,000 896,834,727 32,995,945 758,271,200 500,000 113,303,310 50,000 265,000,000 827,900,000 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 15,500,000 400,000 25,296,300 100,000 6,182,957 USD 374,800,000 USD HKD TWD 13,200,000 500,000 9,000,000 DKK DKK 1,000,000 500,000 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 100 49 100 100 100 100 100 100 100 100 100 100 • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • • Denmark 1992 DKK 70,419,910 30 s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C s t n e m e t a t s l i a c n a n fi d e t a d i l o s n o C – s e t o N 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 Pharma Operations A/S Novo Nordisk Region International Operations A/S Novo Nordisk Egypt LLC 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 Pharma Limited 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 (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 1994 Algeria 1997 Argentina 1985 Australia 2007 Bangladesh 2002 Brazil 1990 Brazil 2006 Chile 2009 Denmark 2002 Denmark 2004 Egypt 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 1983 Thailand 2004 Tunisia 1993 Turkey United Arab Emirates 2005 2004 Region China Novo Nordisk (China) Pharmaceuticals Co., Ltd. Beijing Novo Nordisk Pharmaceuticals Science & Technology Co., Ltd. Novo Nordisk Hong Kong Limited Novo Nordisk Pharma (Taiwan) Ltd. Other subsidiaries NNIT A/S1 NNE Pharmaplan A/S1 Associated companies Harno Invest A/S China China Hong Kong Taiwan Denmark Denmark 1994 2006 2001 1990 1998 1989 1. In addition to the listed companies, NNIT A/S and NNE Pharmaplan A/S have their own subsidiaries. 90 Novo Nordisk Annual Report 2011 Statement of social performance for the year ended 31 December Patients People with diabetes using Novo Nordisk injectable products (million) (estimate) Healthcare professionals trained or educated in diabetes (1,000) People with diabetes trained (1,000) Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy Donations to the World Diabetes Foundation (DKK million) Donations to the Novo Nordisk Haemophilia Foundation (DKK million) Animals purchased for research People participating in clinical trials Active patent families New patent families (first filings) Employees Employees (total) Average of full-time employees Employee turnover Engaging culture (employee engagement) (scale of 1– 5) Diverse senior management teams Annual training costs per employee (DKK) Frequency of occupational injuries (number/million working hours) Absence Employment impact worldwide (direct and indirect) Assurance Relevant employees trained in business ethics Fulfilment of action points from facilitations of the Novo Nordisk Way Supplier audits Product recalls Warning Letters and re-inspections Company reputation with external key stakeholders (scale of 1–7) Note 2011 2010 2009 2 3 3 4 5 6 7 7 8 8 8 8 8 9 9 10 11 12 13 24 835 626 75% 65 16 66,401 22,445 807 80 32,632 31,499 9.8% 4.3 62% 10,479 3.4 2.3% 118,716 99% 93% 177 5 0 5.6 N/A 373 494 67% 69 15 62,927 19,361 817 62 30,483 29,423 9.1% 4.3 54% 14,207 4.9 2.5% 108,248 98% 93% 192 5 0 N/A N/A 425 416 73% 68 15 57,315 11,130 905 55 29,329 27,985 8.3% 4.3 50% 13,283 4.3 2.4% 96,468 N/A 93% 196 2 0 N/A t n e m e t a t s l a i c o s d e t a d i l o s n o C r e b m e c e D 1 3 d e d n e r a e y e h t r o f e c n a m r o f r e p l a i c o s f o t n e m e t a t S – n o i t a m r o f n i y r a t n e m e p p u S l Novo Nordisk Annual Report 2011 91 t n e m e t a t s l a i c o s d e t a d i l o s n o C t n e m e t a t s l i a c o s d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l Notes to the Consolidated social statement 1 Basis of preparation of the Consolidated social statement The Consolidated social 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 relating to social respons ibility, reporting on business strategies and activities in the areas of human rights, labour standards, environment and anti-corruption. Com- panies 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 available. Novo Nordisk’s Communication on Progress 2011 can be found at annualreport2011.novonordisk.com and on UN Global Compact’s website at unglobalcompact.org/COP. Novo Nordisk adheres to the following internationally recognised voluntary standards and principles: • AA1000 framework for accountability. The framework (AA1000APS(2008) and AA1000AS(2008)) states that reporting 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). • UN Global Compact. As a signatory to the UN Global Compact, a stra tegic policy initiative for businesses that are committed to aligning their operations and strategies with 10 universally accepted principles in the areas of human rights, labour, environment and anti-corruption, Novo Nordisk reports on actions during 2011 to align with the 10 principles in the Communication on Progress, which can be found at annualreport2011.novonordisk.com. • Global Reporting Initiative’s (GRI) Sustainability Reporting Guidelines. The guidelines (G3) include an internationally recognised set of indicators for economic, environmental and social aspects of business performance that enables stakeholders to compare companies’ performance. Novo Nordisk’s reporting according to the reporting principles and guidance, including required disclosures, can be found at annualreport2011.novonordisk.com. In addition, Novo Nordisk reports with reference to the content elements and guiding principles of the Inaugural Integrated Reporting Framework developed by the International Integrated Reporting Committee. The framework is currently in a pilot phase. 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 social and environmental data. Novo Nordisk’s assurance process has been designed to ensure that the qualitative and quantitative information that documents the social and environmental dimensions of performance as well as the systems that underpin the data and performance are assured. The principles outlined in AA1000APS(2008) have been applied as described below. Inclusivity As a pharmaceutical company with global reach, Novo Nordisk is commit- ted to being accountable to those the organisation impacts. Novo Nordisk 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. Materiality Key issues are identified 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 significant impact on the company’s future business performance and may support stakeholders in their decision-making, and are therefore regarded as Novo Nordisk’s material issues. Responsiveness The report reaches out to a wide range of stakeholders, each with their specific needs and interests. To most stakeholders, however, the annual report is just one element of interaction and communication with the com- pany. The annual report reflects how the company is managing operations in ways that respond to and consider stakeholder concerns and interests. 92 Novo Nordisk Annual Report 2011 Defining materiality It is Novo Nordisk’s responsibility to ensure that those areas in which the company has significant impact are addressed. Issues for the social and environmental reporting are prioritised to be reported either in the printed annual report (most material) or online (material, often catering to specific stakeholder interests), or not reported (not material). In assessing which information to include in the annual report, legal require- ments and disclosure commitments made by Novo Nordisk are considered. Furthermore, it is assessed whether information is tied directly or indirectly to Novo Nordisk’s ability to create value. Short- and long-term value creation is taken into consideration. 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 assures whether the social and environmental performance data included in the annual report cover the material aspects. The conclusion is available in the Independent assurance report on p 111. Principles of social disclosures The Consolidated social statement and disclosures cover Novo Nordisk A/S and entities controlled by Novo Nordisk A/S. New disclosures have been added to the statement: • People with diabetes using Novo Nordisk injectable products (million) • Product recalls Social accounting policies The accounting policies set out below have been applied consistently in the preparation of the consolidated social statement for all the years presented, with the following exceptions: The accounting policy for ‘Company reputation with external key stake- holders’ was previously reported on a scale of 0 –100 but is now reported on a scale of 1–7 with 7 being the best. Furthermore, the number will be reported as a two-year average for the top seven markets and weighted by sales. The change in accounting policy is due to changes in the data col lection, hence no historical data exists. The following accounting policies have been adjusted: • ‘Healthcare professionals trained or educated in diabetes’ was previously reported as an accumulated number but will from this year be reported as the actual number of healthcare professionals trained or educated in diabetes within the year. This adjustment is reflected in the historical data. • ‘Absence’ was previously calculated based on the actual number of working hours in the year but is now calculated using a regional standard average number of working days in a year. Historical data have been restated to reflect this change. Please refer to the accounting policies below for further information on the social disclosures. People with diabetes using Novo Nordisk injectable products The number of people with diabetes using Novo Nordisk injectable products is an estimate, calculated by reconciling Novo Nordisk’s annual sales volume by product, annual product consumption per patient following different treatment regimes and recommended country-specific daily dose, and the total number of patients in the market by treatment regime. The Novo Nordisk annual sales volume by product is obtained from the financial accounts and estimates of volume market share. Information regarding the annual product consumption per patient following different treatment regimes is collected from multiple sources (Roper reports, observational studies and internal market research). The total number of patients in the market by treatment regime is estimated using information on population (UN World Population), prevalence rate (IDF Diabetes Atlas, US Centers for Disease Control and Prevention estimates and government surveys), diagnosis rate (IDF Diabetes Atlas, journal articles), and treatment rates for insulin or GLP-1, including concomitant use (US Centers for Disease Control, Roper reports, market research, data from the independent data provider IMS health). Healthcare professionals trained or educated in diabetes Healthcare professionals trained or educated in diabetes is measured as an estimate based on registrations by affiliates and corporate functions in Novo Nordisk. The number reflects the total number of health care providers participating in Novo Nordisk-sponsored training and education activities during the year. Diverse senior management teams Diverse senior management teams is measured as the percentage of teams that are diverse in terms of both gender and nationality. A senior manage- ment team includes all managers and executive assistants reporting directly to an executive vice president/senior vice president. In 2011, there were 29 senior management teams and 28 in 2009 and 2010. People with diabetes trained People with diabetes trained is measured as an estimate based on registra- tions by affiliates and corporate functions in Novo Nordisk. The number reflects the total number of people with diabetes with whom Novo Nordisk has engaged during the year for educational purposes. Training is recognised as activities conducted, organised or funded by Novo Nordisk. Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy Novo Nordisk has formulated a differential pricing policy for the least developed countries (LDCs). The purpose of the policy is to offer insulin to the world’s LDCs at or below a price of 20% of the average prices for insulin in the western world. The western world is defined as Europe (EU, Switzerland and Norway), the United States, Canada and Japan. The number of LDCs where Novo Nordisk sells insulin according to the differen- tial 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. In 2011, 48 countries were on the UN’s LDC list. For 2009 –2010, the number of countries on the list was 49. Donations to the World Diabetes Foundation The amount includes donations in DKK and is recognised when paid out by Novo Nordisk to the World Diabetes Foundation during the fiscal year. Annual training costs per employee Training costs cover internal and external training posted in the financial accounts and are calculated per employee. Frequency of occupational injuries The frequency of occupational injuries is measured as 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. Absence The rate of absence is measured as absence due to the employee’s own illness, pregnancy-related sick leave, and occupational injuries and illnesses compared with a regional standard average of working days in the year, adjusted for holidays. Employment impact worldwide (direct and indirect) Employment impact worldwide is measured as an estimate of the direct and indirect jobs created by Novo Nordisk, calculated using financial records and general statistics from public sources such as Statistics Denmark, Updated Economic Multipliers for the US Economy (the Economic Policy Institute), OECD and the China Statistical Yearbook. Donations to the Novo Nordisk Haemophilia Foundation The amount includes donations in DKK and is recognised when allocated by Novo Nordisk to the Novo Nordisk Haemophilia Foundation during the fiscal year. Animals purchased for research Animals purchased for research is recorded as the number of animals purchased for all research undertaken at Novo Nordisk either in-house or by external contractors. The number of animals purchased is based on internal registration of purchased animals and yearly reports from external contractors. Relevant employees trained in business ethics The business ethics training is based on globally applicable Standard Operating Procedures (SOPs) released by the Business Ethics Compliance Office annually. The target groups for the individual SOPs vary in size but cover all employees present in Novo Nordisk at the time of the new releases except employees on leave and student assistants. The percentage of employees completing the training is calculated as the average percentage of completion of the SOPs. The calculation of the percentage of employees trained in business ethics is based on registrations in training databases and local archives of employees completing the relevant annual business ethics training. People participating in clinical trials The number of people participating in clinical research (phase 1– 4, excluding observational studies) is recorded as active participants in clinical research during the year. Active patent families Active patent families is recorded as the total number of single inventions covered by at least one pending or issued patent in one or more countries. Fulfilment of action points from facilitations of the Novo Nordisk Way For 2011, the percentage of fulfilment of action points arising from facilita- tions, or values audits, of the Novo Nordisk Way is measured as an average of timely closure of action points issued in the current year and the two pre- vious years. 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. For 2009 and 2010, the closure of action points is based on the Novo Nordisk Way of Management. t n e m e t a t s l a i c o s d e t a d i l o s n o C t n e m e t a t s l i a c o s d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l New patent families (first filings) New patent families (first filings) is recorded as the number of new patent applications that were filed during the year. Employees (total) The number of employees is recorded as all employees except externals, employees on unpaid leave, interns, bachelor and master thesis employees, and substitutes. Employee turnover The rate of turnover is measured as the number of employees, excluding temporary employees, who left the Novo Nordisk Group during the financial year compared with the average number of employees, excluding temporary employees. Engaging culture (employee engagement) For 2011, the employee engagement is measured on a scale of 1– 5, with 5 being the best, and is an average of respondents’ answers to eight selected questions related to employees’ engagement in the annual employee survey, eVoice, covering the Novo Nordisk Way. Employee engagement is a simple average of answers given by the employees. For 2009 and 2010, the average was calculated using 10 selected questions related to the Novo Nordisk Way of Management. Supplier audits The number of supplier audits concluded (audit reports received) includes responsible sourcing audits and quality audits conducted in the areas of direct spend materials and indirect spend materials. Product recalls The number of actual product recalls is recorded as the number of times Novo Nordisk has instituted an actual recall and includes recalls in con- nection with clinical trials. An actual recall can affect various countries but only counts as one recall. 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 Administration in connection with GxP-regulated and ISO-certified areas, and the number of significant re-inspections issued to Novo Nordisk by any health authority globally. A significant re-inspection occurs following a failed inspection with global reach and high business impact, and involving top-level management in the containment and corrective actions. Novo Nordisk Annual Report 2011 93 5 Animals purchased for research The number of animals purchased for research in 2011 increased by 6% compared with 2010 and 97% of the animals purchased in 2011 were rodents. The increase in number of animals is due to the increased research activities within the discovery and development of new pharmaceuticals for diagnosis, care and treatment. Most significantly, the number of purchased mice increased from 27,773 in 2010 to 31,363 in 2011 due to an overall increase in the studies within diabetes care and biopharmaceuticals. Number Mice and rats Pigs Rabbits Dogs Other rodents1 Non-human primates Other vertebrates2 2011 2010 2009 64,056 953 535 344 327 186 0 60,441 1,196 543 328 86 330 3 54,714 1,170 559 240 90 540 2 Total 66,401 62,927 57,315 1. Other rodents are gerbils, guinea pigs and hamsters. 2. Other vertebrates are fish, chickens, goats and frogs. 6 People participating in clinical trials The number of people participating in clinical trials increased by 16% in 2011 compared with 2010. The increase reflects the initiation of the phase 3 programme evaluating liraglutide as an antiobesity agent and the LEADER® programme, a post-approval commitment to the European Medicines Agency and the US Food and Drug Administration following approval of liraglutide for type 2 diabetes. Number by region 2011 2010 2009 North America Europe International Operations Japan & Korea Region China 7,741 7,683 5,407 742 872 6,750 6,947 3,215 1,367 1,082 3,334 4,453 1,844 239 1,260 Total 22,445 19,361 11,130 t n e m e t a t s l a i c o s d e t a d i l o s n o C t n e m e t a t s l i a c o s d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l Company reputation with external key stakeholders Company reputation with external key stakeholders is measured as the mean corporate brand score in the top seven markets (the US, Canada, China, Japan, Germany, the UK and France) weighted in accordance with actual sales of diabetes products. The mean corporate brand score is based on company ratings (on a scale of 1–7, with 7 being the best) collected through interviews with primary and secondary healthcare professionals who are current prescribers of Novo Nordisk injectable diabetes products. Each market is surveyed every second year, so the score is based on a two- year rolling average. The survey is carried out by an independent external consultancy firm. 2 People with diabetes using Novo Nordisk injectable products The estimated number of people with diabetes using Novo Nordisk inject- able pro ducts in 2011 was 24 million. This is the first year of reporting this number hence no historical data are reported. At a regional level it is estimated that of the people with diabetes using Novo Nordisk products 14% are in North America, 23% in Europe, 42% in International Opera- tions, 5% in Japan and Korea, and 16% in Region China. 3 Healthcare professionals trained or educated in diabetes and people with diabetes trained In 2011, 835,000 healthcare professionals are estimated to have been trained, educated, interacted with or reached through awareness cam- paigns compared with 373,000 in 2010. Furthermore, 626,000 people with diabetes are estimated to have been trained in 2011 compared with 494,000 in 2010. The significant increases are due to increased activities in several markets and particularly in the US. The aim is to continue activities to educate healthcare professionals to im- prove diagnosis and treatment and to train people with diabetes to improve self-care. 4 Least developed countries where Novo Nordisk sells insulin according to the differential pricing policy The differential pricing policy is part of the global initiatives to promote access to health for all least developed countries (LDCs) as defined by the UN. In 2011, Novo Nordisk offered the differential price to all of the 48 LDCs. Novo Nordisk operates in 38 of these countries and sold insulin to either governments or the private market in 75% (36 of 48 countries) of the countries according to the dif ferential pricing policy compared with 67% (33 of 49 countries) in 2010. In 2011, Novo Nordisk operated in Mozambique and Angola but did not sell insulin at the differential price. The governments in these two countries were offered the opportunity to buy insulin at the differential price but the insulin sold here in 2011 was sold to the private market. In a total of 10 LDCs Novo Nordisk had no sales in 2011 for various reasons. In several cases, the government has not responded to the offer, there are no private wholesalers or other partners to work with, or war or political unrest makes it impossible to do business. While Novo Nordisk prefers to sell insulin at the differential price through government tenders, the com- pany 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 reflected in the final price to the consumer. 94 Novo Nordisk Annual Report 2011 7 Active patent families and new patent families (first filings) The number of patent families remained relatively stable at 807 in 2011 compared with 817 in 2010. A total of 80 new patent families were established in 2011, which is an increase of 29% compared with the filing activity in 2010, when 62 patent families were established. The increase in patent filings was primarily driven by injection devices and the inflammation therapy area. The patent expiry dates for the product portfolio are shown in the table below. The dates provided are for expiry in the US, major European markets (Germany, France and the UK), China and Japan of patents on the active ingredient, unless otherwise indicated, and include extensions of patent term (including for paediatric extension where applicable). 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 Diabetes care: NovoRapid ® (NovoLog ®) NovoMix ® 30 (NovoLog ® Mix 70/30) Levemir ® NovoNorm® (Prandin®) PrandiMet ® Victoza® Biopharmaceuticals: Norditropin® (Norditropin® SimpleXx ®) NovoSeven® US Europe China Japan 20141 2014 2019 Expired 20183 2022 Expired1 2014 –15 2018 Expired Pending 2022 Expired1 Expired 2014 Expired N/A 2017 Expired1 2014 2019 Expired4 Pending 2022 20152 Expired5 20172 Expired5 20172 Expired5 20172 Expired5 1. Formulation patent until 2017. 2. Formulation patent providing exclusivity to the composition of excipients used in the drug products. 3. Combination patent providing exclusivity to the combined use of two or more different medicines for treatment of a particular disease. 4. Possibly extendable by five years. 5. Room temperature-stable formulation patent until 2024. 8 Employees Of the 32,632 people employed in 2011, 14,064 were employed in Denmark compared with 13,535 in 2010. In 2011 the total number of employees increased by 2,149 (7%) compared with an increase of 1,154 (4%) in 2010. Employee turnover increased from 9.1% in 2010 to 9.8% in 2011. Number by region 2011 2010 2009 North America Europe International Operations Japan & Korea Region China 4,870 18,215 4,549 1,010 3,988 4,457 17,752 3,768 995 3,511 4,076 17,686 3,657 978 2,932 Total 32,632 30,483 29,329 Employee turnover 9.8% 9.1% 8.3% Engaging culture (employee engagement) In 2011, the score for engaging culture (employee engagement) remained stable at 4.3 with a response rate in the annual eVoice survey of 92%. Diverse senior management teams Diversity in the company’s senior management teams increased from 54% (15 of 28 teams) in 2010 to 62% (18 of 29 teams) in 2011. Among all employees, diversity in terms of gender was at 50%, which is the same as in 2010. Annual training costs per employee Annual training costs per employee decreased from DKK 14,207 in 2010 to DKK 10,479 in 2011 due to overall reductions in the spend on training, with the US in particular reducing spend significantly. In 2010 the US incurred signficantly higher expenses on training due to expansion of the sales force. t n e m e t a t s l a i c o s d e t a d i l o s n o C t n e m e t a t s l i a c o s d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l Novo Nordisk Annual Report 2011 95 9 Frequency of occupational injuries and absence 11 Supplier audits In 2011, a sales representative in Bangladesh died in a car accident. Prior to this tragic accident Novo Nordisk had not had any fatal occupational injuries since 2004. In 2011, 177 supplier audits were completed and no critical findings were issued. The table below shows the split between responsible sourcing audits and audits related to quality. In 2011, the number of occupational accidents with absence decreased by more than 25% compared with 2010. This develop ment significantly reduced the frequency of occupational injuries, which decreased from 4.9 per million working hours in 2010 to 3.4 in 2011. The decrease is due to a continuous focus on occupational health and safety at Novo Nordisk. The rate of absence also decreased slightly in 2011 to 2.3% from 2.5% in 2010. Number 2011 2010 2009 Responsible sourcing audits Quality audits Total 32 145 177 26 166 192 20 176 196 10 Employment impact (direct and indirect) 12 Product recalls In 2011, Novo Nordisk created an estimated 118,716 direct and indirect jobs compared with 108,248 direct and indirect jobs in 2010. The employ- ment impact in 2011 translates into an estimated 86,580 indirect global jobs in the supply chain from production needs and employees’ private consumption. The majority of indirect jobs created are due to production (60,373), but the effect of private consumption by Novo Nordisk employees is also significant (26,207). In 2010, the total number of estimated indirect jobs created was 78,218. The distribution of cash value remained roughly the same compared with 2010. Cash value distribution ■ Suppliers ■ Employees ■ Investors/funders ■ Public sector (taxes) ■ Re-invested in the group % 2011 2010 2009 0 20 40 60 80 100 In 2011, as in 2010, Novo Nordisk had five instances of product recalls involving different countries.Three recalls were implemented in single countries due to products defects originating from the local distribution chains and two recalls were effectuated in several countries due to product defects relating to production. None of the products recalled has caused any harm to patients. 13 Warning Letters and re-inspections In 2011, as in 2010, no Warning Letters were issued to Novo Nordisk by the US Food and Drug Administration in connection with Good Manu- facturing Practice, Good Clinical Practice or Good Laboratory Practice inspections. Nor were any significant re-inspections issued to Novo Nordisk by any authority. In total, 76 inspections were concluded in 2011, compared with 2010, when 105 inspections were concluded. t n e m e t a t s l a i c o s d e t a d i l o s n o C t n e m e t a t s l i a c o s d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l 96 Novo Nordisk Annual Report 2011 Statement of environmental performance for the year ended 31 December 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 Note 2011 2010 2009 2 3 4 4 4 5 5 6 6 7 2,187 2,136 71 93 3 53 2,036 446 41,376 70% 22 2,234 2,047 65 95 6 57 1,935 555 25,627 54% 18 2,246 2,149 79 146 6 N/A 2,062 617 26,362 51% 10 t n e m e t a t s l a t n e m n o r i v n e d e t a d i l o s n o C r e b m e c e D 1 3 d e d n e r a e y e h t r o f e c n a m r o f r e p l a t n e m n o r i v n e f o t n e m e t a t S – n o i t a m r o f n i y r a t n e m e p p u S l Novo Nordisk Annual Report 2011 97 t n e m e t a t s l a t n e m n o r i v n e d e t a d i l o s n o C t n e m e t a t s l a t n e m n o r i v n e d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l Notes to the Consolidated environmental statement 1 Basis of preparation of the Consolidated environmental statement CO2 emissions from refrigerants CO2 emissions from refrigerants is calculated by converting to metric tons using standard factors. CO2 emissions from transport CO2 emissions from transport is calculated as the estimated emissions from product distribution in metric tons. It is calculated as the worldwide distribution of semi-finished and finished products, raw materials and com- ponents by air, sea and road between production sites and from production sites to affiliates, direct customers and importing distributors. CO2 emis- sions from product distribution from affiliates to pharmacies, hospitals and wholesalers are not included. Wastewater The volume of wastewater is measured as process wastewater, sanitary waste water and drainage water from fortified 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 water of the site minus registered evaporation from cooling systems (including cooling towers and other plants from which evaporation occurs) and any large amount of wastewater collected and treated as waste. Chemical oxygen demand (COD) in wastewater COD is a measure of the level 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 disposed of based on weight receipts. Due to a change in accounting policy for calculation of ethanol waste, the amount of waste disposed of as hazardous has increased significantly. Historical figures have been restated accordingly. Non-hazardous waste (of total waste) Non-hazardous waste is calculated as the waste disposed of as non- hazardous as a percentage of the total amount of waste disposed of. Due to the change in the accounting policy for ethanol waste, the historical figures for the percentage of non-hazardous waste have been restated accordingly. Breaches of regulatory limit values Breaches of regulatory limit values are all breaches reported to the authorities. The Consolidated environmental statement is prepared in accordance with the same standards as those for the Consolidated social statement. For a description of these standards, please refer to note 1 Basis of preparation of the Consolidated social statement on p 92. Principles of environmental disclosures The Consolidated environmental statement and disclosures cover Novo Nordisk A/S and entities controlled by Novo Nordisk A/S. The environmental disclosures cover the impact from the production of Novo Nordisk’s products. CO2 emissions also include transportation. See accounting policies for details. Environmental accounting policies The accounting policies set out below have been consistently applied in preparation of the Consolidated environmental statement for all the years presented, with the following exception ‘Ethanol waste’, reported as part of the total waste, was previously reported as 100% ethanol, meaning the actual waste amount was converted to 100% ethanol. This was done to make it transparent how much ethanol was recycled/incinerated rather than how much waste was actually pro- duced. Going forward it will be the actual amount of waste produced and not only the amount of ethanol that is reported. Historical data have been restated accordingly. Please refer to the accounting policies below for information on the environ mental disclosures. Energy consumption Energy consumption (direct and indirect supply) is measured as both direct supply of energy (internally produced energy), which is energy Novo Nordisk produces from natural gas, fuel oil and other types, and indirect supply of external energy (externally produced energy), which is 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 measured based on meter readings and invoices. It includes drinking water, industrial water and steam. Raw materials and packaging materials Raw materials and packaging materials comprise materials for production and related processes, and packaging of products, and is recorded based on registrations in the procurement system. The consumption of raw materials and packaging is converted to metric tons. CO2 emissions from energy consumption The amount of CO2 emissions from energy consumption covers consump- tion related to production measured in metric tons. 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 own fuel consumption, and for energy supplied from external energy suppliers on a three-year average of available emission factors. Hence, emis- sion factors for 2011 are the three-year average of 2008 –2010. 98 Novo Nordisk Annual Report 2011 2 Energy consumption In 2011, the consumption of energy decreased by 2% compared with 2010 even though production increased. The decrease was obtained through con tinuous process optimisations and energy management. 1,000 GJ Diabetes care Biopharmaceuticals Other1 Total 2011 2010 2009 1,515 280 392 1,513 298 423 1,544 292 410 2,187 2,234 2,246 1. ‘Other’ consists of consumption that cannot directly be linked to the production of either diabetes care or biopharmaceuticals. 3 Water consumption The consumption of water increased by 4% in 2011 compared with 2010, reflecting increased production. The increase is relatively small compared with the increase in production due to continuous process optimisations and water-saving projects at sites with high water consumption. 1,000 m3 Diabetes care Biopharmaceuticals Other1 Total 2011 2010 2009 1,853 142 141 1,719 142 186 1,817 143 189 2,136 2,047 2,149 5 Wastewater and chemical oxygen demand (COD) in wastewater The total volume of wastewater increased by 5% from 1,935,000 m3 in 2010 to 2,036,000 m3 in 2011, primarily due to increased water consump- tion. The quantity of discharged COD in the wastewater decreased by 20% due to changes in the wastewater handling at a pilot facility and production variance in general. 6 Waste In 2011, the total amount of waste increased by 61% from 25,691 tons in 2010 to 41,376 tons. This significant increase was solely due to the disposal of a large amount of yeast slurry. This waste fraction was previously used as pig feed, but due to changes in regulatory requirements from 2011 the yeast slurry is now sent to a biogas plant. This change impacts the quantity of non-hazardous waste recycled, which increased significantly. Excluding the yeast slurry, the amount of waste disposed of in 2011 remained stable compared with 2010 even though production increased. Tons Non-hazardous waste – Recycled (%) – Incinerated (%)1 – Landfill (%) – Special treatment (%) Hazardous waste2 – Recycled ethanol (%)3 – Incinerated ethanol (%)4 – Other (%) 2011 2010 2009 29,131 79 11 3 7 12,245 48 27 25 13,911 53 20 7 20 11,716 48 29 23 13,432 57 21 5 17 12,930 51 26 23 1. ‘Other’ consists of consumption that cannot be directly linked to the production of diabetes care or biopharmaceuticals. Total2 41,376 25,627 26,362 4 CO2 emissions The reduction of CO2 emissions from refrigerants was due to the con- tinuous focus on eliminating refrigerants with a high global warming potential and a high focus on maintenance and servicing of cooling systems. 1,000 tons 2011 2010 2009 CO2 emissions from energy consumption – Diabetes care – Biopharmaceuticals – Other1 CO2 emissions from refrigerants CO2 emissions from transport 93 69 8 16 3 53 95 68 9 18 6 57 Total 149 158 146 99 19 28 6 N/A N/A 1. ‘Other’ consists of consumption that cannot directly be linked to the production of either diabetes care or biopharmaceuticals. Recycling percentage of total waste 70% 51% 55% 1. Of which 94% with energy recovery. 2. Due to a change in the accounting policy for calculation of ethanol waste, the amount of waste disposed of as hazardous has increased significantly. Historical figures have been restated accordingly. 3. Ethanol recycled in eg biogas or wastewater treatment plants. 4. Incinerated at combined heat and power plants or at plants for special treatment of hazardous waste with energy recovery. 7 Breaches of regulatory limit values The number of breaches of regulatory limit values increased by 22% from 18 breaches in 2010 to 22 in 2011, mainly due to breaches related to pH in wastewater. All breaches were short-term events with no impact on the environment. t n e m e t a t s l a t n e m n o r i v n e d e t a d i l o s n o C t n e m e t a t s l a t n e m n o r i v n e d e t a d i l o s n o C – s e t o N – n o i t a m r o f n i y r a t n e m e p p u S l Novo Nordisk Annual Report 2011 99 Summary of financial data 2007–2011 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 Operations1 Japan & Korea Region China1 Depreciation, amortisation and impairment losses Operating profit Net financials Profit before income taxes Income taxes Net profit for the year Total assets Total current liabilities Total non-current liabilities Equity Capital expenditure, net Free cash flow2 Net cash flow 2007 2008 2009 2010 2011 5,614 6,109 6,860 8,161 8,905 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 1,524 1,635 1,824 1,845 2,194 708 596 271 404 1,200 272 1,472 328 1,144 6,401 1,427 658 4,316 304 1,210 220 2,032 2,309 777 638 353 328 1,660 43 1,703 409 1,294 6,792 1,739 627 4,426 235 1,478 552 2,454 2,356 917 657 476 343 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 1,119 760 606 331 2,537 (82) 2,455 521 1,934 8,237 2,521 757 4,959 444 2,284 118 3,861 1,448 804 310 346 6,769 1,120 677 276 63 2,136 3,569 2,573 1,257 835 671 367 3,003 (60) 2,943 648 2,295 8,703 2,795 871 5,037 403 2,431 149 1. As of 1 January 2011, Region China is reported as a separate geographical region. Before 2011, Region China was part of International Operations. The historical figures for 2007–2010 have been restated and are comparable with the 2011 regional set-up. 2. For definitions, please refer to p 65. The translation of Income statement items is based on the average exchange rate in 2011 (EUR 1 = DKK 7.45) and the translation of Balance sheet items is based on the exchange rate at the end of 2011 (EUR 1 = DKK 7.43). The figures in DKK reflect the economic substance of the underlying events and circumstances of the Group. R U E n i 1 1 0 2 – 7 0 0 2 a t a d l a i c n a n fi f o y r a m m u S R U E n i s e r u g fi e v i t a r a p m o c s r a e y e v i F – w e i v e r s ’ t n e m e g a n a M f o t r a P 100 Novo Nordisk Annual Report 2011 Quarterly financial figures 2010 and 2011 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 Operations1 Japan & Korea Region China1 Gross profit Sales and distribution costs Research and development costs Administrative expenses Licence fees and other operating income (net) Operating profit Net financials Profit before income taxes Income taxes 2010 2011 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 13,674 15,394 15,584 16,124 15,693 16,001 16,532 18,120 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 6,705 2,655 1,098 639 711 6,972 2,642 1,250 527 653 7,232 2,698 1,547 574 562 7,856 2,790 2,096 569 649 10,153 11,474 11,786 12,297 11,808 12,044 12,613 13,960 1,914 1,083 443 81 2,155 1,245 450 70 1,965 1,233 517 83 1,996 1,242 482 107 2,032 1,252 492 109 2,140 1,180 513 124 2,044 1,275 501 99 2,131 1,340 548 141 3,521 3,920 3,798 3,827 3,885 3,957 3,919 4,160 5,221 4,432 1,835 1,156 1,030 10,984 3,984 2,131 711 224 4,382 (65) 4,317 993 5,988 4,671 2,213 1,439 1,083 12,425 4,364 2,434 745 159 5,041 (433) 4,608 1,060 6,114 4,675 2,127 1,454 1,214 12,648 4,573 2,302 759 110 5,124 (468) 4,656 1,071 6,286 4,886 2,160 1,611 1,181 13,039 5,274 2,735 850 164 4,344 361 4,705 759 6,035 4,595 2,203 1,484 1,376 12,576 4,260 2,290 756 148 5,418 (128) 5,290 1,217 6,165 4,847 2,415 1,423 1,151 12,902 4,633 2,323 778 97 5,265 103 5,368 1,234 6,804 4,728 2,286 1,539 1,175 13,281 4,724 2,263 788 104 5,610 (154) 5,456 1,255 7,582 4,998 2,463 1,777 1,300 14,998 5,387 2,752 923 145 6,081 (270) 5,811 1,122 Net profit 3,324 3,548 3,585 3,946 4,073 4,134 4,201 4,689 Depreciation, amortisation and impairment losses 581 595 607 684 605 825 615 692 1 1 0 2 d n a 0 1 0 2 s e r u g fi l a i c n a n fi y l r e t r a u Q s e r u g fi y l r e t r a u Q – w e i v e r s ’ t n e m e g a n a M f o t r a P Total assets Total equity Financial ratios As percentage of sales Sales and distribution costs Research and development costs Administrative expenses Gross margin2 Operating profit margin2 Equity ratio2 Share ratios 54,155 32,916 57,048 33,635 57,162 34,264 61,402 36,965 59,001 34,768 61,528 36,966 62,013 35,428 64,698 37,448 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% 27.1% 14.6% 4.8% 80.1% 34.5% 58.9% 29.0% 14.5% 4.9% 80.6% 32.9% 60.1% 28.6% 13.7% 4.8% 80.3% 33.9% 57.1% 29.7% 15.2% 5.1% 82.8% 33.6% 57.9% Basic earnings per share/ADR (in DKK) Diluted earnings per share/ADR (in DKK) 5.66 5.61 6.07 6.02 6.21 6.15 6.87 6.82 7.13 7.06 7.26 7.21 7.45 7.39 8.40 8.33 Average number of shares outstanding (million) – basic Average number of shares outstanding (million) – diluted 587.6 593.0 584.0 588.9 577.6 582.3 572.7 577.5 571.6 576.7 569.1 573.8 563.5 568.1 557.6 561.9 Employees Number of full-time employees at the end of the period 29,154 29,364 29,515 30,014 30,867 31,549 32,016 32,136 1. As of 1 January 2011, Region China is reported as a separate geographical region. Before 2011, Region China was part of International Operations. The historical figures for Q1– Q4 2010 have been restated and are comparable with the 2011 regional set-up. 2. For definitions, please refer to p 65. Novo Nordisk Annual Report 2011 101 y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F Financial statements of the Parent company 2011 103 Income statement 104 Balance sheet 105 Notes to the financial statements 102 Novo Nordisk Annual Report 2011 Income statement for the year ended 31 December DKK million Sales Cost of goods sold Gross profit Sales and distribution costs Research and development costs Administrative expenses Licence fees and other operating income (net) Operating profit Profit in subsidiaries, net of tax Share of profit in associated companies, net of tax Financial income Financial expenses Profit before income taxes Income taxes Net profit for the year Proposed appropriation of net profit: 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 9 2011 2010 40,452 11,861 37,261 11,609 28,591 25,652 10,655 7,851 1,531 651 9,205 10,494 – 437 882 10,196 7,998 1,385 691 6,764 9,475 1,089 437 1,884 19,254 15,881 2,200 1,466 17,054 14,415 7,742 (1,767) 11,079 5,700 1,573 7,142 17,054 14,415 y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F r e b m e c e D 1 3 d e d n e r a e y e h t r o f t n e m e t a t s e m o c n I Novo Nordisk Annual Report 2011 103 Balance sheet at 31 December y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F r e b m e c e D 1 3 t a t e e h s e c n a a B l DKK million Assets Intangible assets Property, plant and equipment Financial assets Total non-current assets Raw materials Work in progress Finished goods Inventories Trade receivables Amounts owed by affiliates Tax receivables Other receivables Receivables Deferred income tax assets Marketable securities Derivative financial 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 Loans Non-current liabilities Current debt Derivative financial instruments Trade payables Amounts owed to affiliates Tax payables Other liabilities Current liabilities Total liabilities Total equity and liabilities 104 Novo Nordisk Annual Report 2011 Note 2011 2010 7 8 10 12 9 12 13 11 1,159 14,257 17,443 1,083 14,418 19,314 32,859 34,815 1,262 3,941 1,967 7,170 1,392 7,312 764 756 10,224 222 4,082 48 12,399 1,231 4,896 1,551 7,678 1,388 6,748 518 879 9,533 – 3,872 108 11,418 34,145 32,609 67,004 67,424 580 8,225 28,643 600 10,149 26,207 37,448 36,956 – 631 631 502 502 25 1,492 1,582 22,384 1 2,939 204 561 765 504 504 511 1,158 1,479 23,186 – 2,865 28,423 29,199 28,925 29,703 67,004 67,424 Notes to the Financial 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 from the last financial year and are the same as for the Consolidated financial 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 financial statements’, pp 60 – 64. Supplementary accounting policies for the Parent company Financial assets In the Financial 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 profit of subsidiaries less unrealised intra-Group profits 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 financial assets categorised as Available for sale in the Parent company are recognised in the Income statement. 3 Employee costs DKK million Wages and salaries Share-based payment costs Pensions Other social security contributions Other employee costs Total employee costs 2011 2010 6,725 126 620 177 257 6,038 329 576 155 250 7,905 7,348 Included in the Balance sheet as change in employee costs included in Inventories (91) (276) For information regarding remuneration to the Board of Directors and Executive Management, please refer to ‘Remuneration report’ in ‘Corporate governance, remuneration and leadership’, pp 44 – 47, and note 4 to the Consolidated financial statements, p 68. 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 2011 2010 11,559 11,052 2011 2010 8 2 8 18 8 4 7 19 y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F s t n e m e t a t s l i a c n a n i F – s e t o N Profits in subsidiaries and associated companies are disclosed as profit after tax. Total fee to statutory auditors 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. Statement of cash flows No separate statement of cash flows has been prepared for the Parent com- pany; please refer to the Consolidated statement of cash flows on p 58. 2 Sales DKK million Sales by business segment1 Diabetes care total Biopharmaceuticals total Total sales Sales by geographical segment1 Europe North America International Operations Japan & Korea Region China Total sales 2011 2010 39,978 474 36,943 318 40,452 37,261 12,308 14,018 6,796 3,699 3,631 12,134 13,373 5,701 2,862 3,191 40,452 37,261 Sales are attributed to geographical segment based on location of the customer. 1. For definitions of the segments, please refer to note 2 to the Consolidated financial statements, pp 66 – 67. 5 Financial income and financial expenses DKK million 2011 2010 Interest income relating to subsidiaries Foreign exchange gain (net) Other financial income Total financial income Interest expenses relating to subsidiaries Foreign exchange loss (net) Other financial expenses Total financial expenses 17 – 420 437 163 337 382 882 14 206 217 437 122 – 1,762 1,884 6 Income taxes The Parent company paid income taxes of DKK 3,075 million related to the current year (DKK 1,838 million in 2010). In 2011, Novo Nordisk A/S received DKK 269 million in refund from prior year’s taxable income (a payment of DKK 12 million in 2010). Furthermore DKK 19 million has been paid by Danish subsidiaries (a refund of DKK 24 million in 2010). Novo Nordisk Annual Report 2011 105 y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F s t n e m e t a t s l i a c n a n i F – s e t o N 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 2011 2010 1,694 179 (1) 1,872 611 66 36 – 713 1,331 405 (42) 1,694 550 61 – – 611 1,159 1,083 Intangible assets primarily relate to patents and licences and internally developed software and costs related to major IT projects. 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 Land and buildings Plant and machinery Other equipment 2011 2010 Payments on account and assets in course of construction 10,139 143 (146) 372 14,050 165 (512) 594 1,833 88 (123) 55 2,339 1,331 (1,021) 28,361 1,727 (781) 0 27,306 1,898 (843) 0 Cost at the end of the year 10,508 14,297 1,853 2,649 29,307 28,361 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 3,863 437 28 (137) 8,874 1,132 65 (453) 1,206 156 (121) – 13,943 1,725 93 (711) 12,925 1,679 68 (729) Depreciation and impairment losses at the end of the year 4,191 9,618 1,241 – 15,050 13,943 Carrying amount at the end of the year 6,317 4,679 612 2,649 14,257 14,418 106 Novo Nordisk Annual Report 2011 9 Statement of changes in equity DKK million Balance at the beginning of the year Appropriated from Net profit for the year Proposed dividends Appropriated from Net profit for the year to Net revaluation reserve Effect of hedged forecast transactions transferred to the Income statement Fair value adjustments of cash flow hedges for the year Dividends paid Share-based payments (note 3) Purchase of treasury shares Sale of treasury shares Reduction of the B share capital Exchange rate adjustments of investments in subsidiaries Tax on own shares Other adjustments Share capital Net revaluation reserve 600 10,149 (1,767) (20) (157) Retained earnings 26,207 11,079 7,742 658 (1,118) (5,700) 126 (10,839) 244 20 (16) (123) 363 2011 2010 36,956 11,079 7,742 (1,767) 658 (1,118) (5,700) 126 (10,839) 244 0 (173) (123) 363 35,705 7,142 5,700 1,573 (422) (635) (4,400) 329 (9,498) 678 0 300 – 484 Balance at the end of the year 580 8,225 28,643 37,448 36,956 Please refer to note 10 to the Consolidated financial statements, p 69, regarding average number of shares. Please refer to note 18 to the Consolidated financial statements, p 75, regarding total number of A and B shares in Novo Nordisk A/S and treasury shares. 10 Financial assets DKK million Investments in subsidiaries Amounts owed by affiliates Investments in associated companies Cost at the beginning of the year Investments during the year Divestments during the year Transferred from associated companies to Other securities 8,741 64 134 88 55 (42) Other securities and investments 560 (31) Cost at the end of the year 8,805 101 134 529 9,569 – (95) (358) y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F s t n e m e t a t s l i a c n a n i F – s e t o N Value adjustments at the beginning of the year Profit/(loss) before tax Income taxes on profit for the year Amortisation and impairment of goodwill Dividends received Transferred from associated companies to Other securities Divestments during the year Effect of exchange rate adjustment 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 24,821 13,621 (2,629) (12,041) 11 (224) 23,559 (1) (1) 31 1 (24) (95) (350) 23,113 24,368 2011 2010 9,523 119 (73) – 24,368 13,621 (2,629) – (12,041) – 31 11 (248) 9,378 677 (532) – 9,523 21,379 13,106 (2,417) (58) (7,903) – (808) 1,030 39 102 (102) 0 At the end of the year – – – – – Unrealised internal profit at the beginning of the year Change for the year – charged to Income statement Change for the year – charged to Equity Effect of exchange rate adjustment At the end of the year Carrying amount at the end of the year (14,577) (498) (164) (15,239) 17,125 (14,577) (498) – (164) (13,459) (82) (348) (688) – 100 – 39 – (15,239) (14,577) 179 17,443 19,314 Carrying amount of investments in subsidiaries and associated companies does not include capitalised goodwill at the end of the year. A list of companies in the Novo Nordisk Group is found in note 33 to the Consolidated financial statements, pp 89 –90. Novo Nordisk Annual Report 2011 107 11 Non-current liabilities 14 Commitments and contingencies y n a p m o c t n e r a P e h t f o s t n e m e t a t s l a i c n a n i F s t n e m e t a t s l i a c n a n i F – s e t o N Non-current liabilities due more than five years from the balance sheet date amount to DKK 306 million of the total of DKK 502 million (DKK 359 million of the total of DKK 504 million in 2010). 12 Deferred income tax assets/(liabilities) DKK million 2011 2010 The deferred tax assets/liabilities are allocated to the various balance sheet items as follows: Property, plant and equipment Indirect production costs Unrealised profit on intra-Group sales Other (1,018) (874) 1,945 169 (1,233) (956) 1,780 205 Total income tax assets/(liabilities) 222 (204) The deferred income tax has been calculated using a tax rate of 25%. For a specification of deferred income tax posted directly in equity, please refer to note 9 to the Consolidated financial statements, p 69. 13 Other provisions DKK million Non-current Current Total other provisions 2011 2010 474 157 631 401 160 561 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 product returns statistics. DKK million 2011 2010 Commitments Lease commitments Contractual obligations relating to investments in property, plant and equipment Guarantees given for subsidiaries Obligations relating to research and development projects Other guarantees and commitments Lease commitments expiring within the following periods from the balance sheet date Within one year Between one and five years After five years Total lease commitments The lease costs for 2011 and 2010 were DKK 308 million and DKK 279 million respectively. Security for debt Land, buildings and equipment etc at carrying amount 987 865 11 4,217 2,774 3,352 88 1,601 2,510 3,518 196 490 301 987 157 402 306 865 1,374 1,277 For information on pending litigation and other contingencies, please refer to note 31 to the Consolidated financial statements, pp 86 – 87. 15 Related party transactions For information on transactions with related parties, please refer to note 32 to the Consolidated financial statements, p 88. 108 Novo Nordisk Annual Report 2011 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 2011. The Consolidated financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB), and 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 financial 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 financial statements and the Financial statements of the Parent company give a true and fair view of the financial position at 31 December 2011, the results of the Group and Parent company operations and consolidated cash flows for the financial year 2011. Furthermore, in our opinion, Management’s Review includes a true and fair account of the development in the operations and financial circumstances, of the results for the year and of the financial position of the Group and the Parent company as well as a description of the most significant risks and elements of uncertainty facing the Group and the Parent company. Novo Nordisk’s Consolidated social and environmental statements have been prepared in accordance with the reporting principles of materiality, inclusivity and responsiveness of AA1000APS(2008). They give a balanced and reasonable presentation of the organisation’s social and environmental performance. We recommend that the Annual Report be adopted at the Annual General Meeting. Bagsværd, 1 February 2012 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 Bruno Angelici s t n e m e t a t s l a i c n a n fi d e t a d i l o s n o C t n e m e t a t s t n e m e g a n a M Henrik Gürtler Ulrik Hjulmand-Lassen Thomas Paul Koestler 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 2011 109 t r o p e r s ’ r o t i d u a t n e d n e p e d n I Independent Auditor’s Reports To the Shareholders of Novo Nordisk A/S Report on Consolidated financial statements and Financial statements of the Parent Company We have audited the Consolidated financial statements and the Financial statements of Novo Nordisk A/S for the financial year 2011, pp 55 – 90 and pp 102–108, which comprise Income Statement, Statement of Compre- hensive Income, Balance Sheet, Statement of Changes in Equity and Notes including accounting policies for the Group as well as for the Parent Com- pany 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, both the Consolidated financial statements and the Finan- cial statements of the Parent Company are prepared in accordance with additional Danish disclosure requirements for listed companies. Management’s Responsibility for the Consolidated financial statements and the Financial statements of the Parent Company The Management is responsible for the preparation of the Consolidated financial statements and the Financial statements of the Parent Company that give a true and fair view in accordance with the above legislation and accounting standards, and for such internal control as Management determines is necessary to enable preparation of Consolidated financial statements and Financial statements of the Parent Company that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on the Consolidated financial statements and the Financial statements of the Parent Company based on our audit. We conducted our audit in accordance with International standards on Auditing and additional requirements under Danish Audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the Consolidated financial statements and the Financial statements of the Parent Company are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the Consolidated financial statements and the Financial statements of the Parent Company. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the Consolidated financial statements and the Financial statements of the Parent Company, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Company’s preparation of Consolidated financial state- ments and Financial statements of the Parent Company that give a true and fair view 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 the Management, as well as evaluating the overall presentation of the Consolidated financial statements and the Financial statements of the Parent Company. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the Consolidated financial statements give a true and fair view of the financial position at 31 December 2011 of the Group and of the results of the Group’s operations and consolidated cash flows for the financial year 2011 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 and additional Danish disclosure requirements for listed companies. Moreover, in our opinion the Financial statements of the Parent Company give a true and fair view of the financial position at 31 December 2011 and of the results of the Parent Company’s operations for the financial year 2011 in accordance with the Danish Financial Statements Act and additional Danish disclosure requirements for listed companies. Statement on Management’s Review We have read Management’s Review, pp 2– 54 and pp 100 –101 in accordance with the Danish Financial Statements Act. On this basis, it is our opinion that the information provided in the Manage- ment’s Review is consistent with the Consolidated financial statements and the Financial statements of the Parent Company. Bagsværd, 1 February 2012 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Lars Baungaard Danish State Authorised Public Accountant 110 Novo Nordisk Annual Report 2011 Independent Assurance Report on the social and environmental reporting for 2011 To the Stakeholders of Novo Nordisk We have reviewed the Consolidated social and environmental informa- tion in the Annual Report of Novo Nordisk A/S for the financial year 2011, which comprises Management’s Review, the social accounting policies and environmental accounting policies for social and environmental information and the Consolidated social and environmental statement on pp 2– 54 and pp 91– 99. The assurance engagement has furthermore covered the nature and extent of Novo Nordisk 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 Consolidated social and environmental information is prepared in ac- cordance with the social accounting policies and environmental accounting policies described on pp 92– 94 and p 98. Management’s responsibility The Management is responsible for preparing the Consolidated social and environmental information, including for establishing data collection and registration, 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 Management. Assurance provider’s responsibility Our responsibility is, on the basis of our work, to express a conclusion on the reliability of the Consolidated social and environmental information in the Annual Report. Furthermore, our responsibility is, by applying the AA1000 Assurance Standard (AA100AS(2008)), to express a conclusion on as well as to make recommendations for the nature and extent of Novo Nordisk’s adherence to the AA1000APS(2008) principles. Our team of experts have competences in respect of assurance engage- ments related to Consolidated social and environmental information. In addition, our team have competences in assessing social and environmental information and sustainability management, and thus qualify to conduct this inde pendent assurance engagement. During 2011 we have not per- formed any tasks or services to Novo Nordisk or other clients that would conflict with our independence, nor have we been responsible for the preparation of any part of the report; and therefore qualify as independent as defined 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 Consolidated social and environ- mental information in the Annual Report is free of material misstatements and that the information has been presented in accordance with the social accounting policies and environmental accounting policies here for. The assurance obtained is limited, as our work compared to that of an engage- ment with reasonable assurance has been limited to, principally, inquiries, interviews and analytical procedures related to registra tion and communica- tion 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’s adherence to the principles of inclusivity, materiality and responsiveness. t r o p e r e c n a r u s s a t n e d n e p e d n I 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 social and environmental reporting include data from the Group’s Business Unit operations, and that these data have been incorporated in compliance with the social accounting policies and environmental accounting policies. Through site visits to Bagsværd, Gentofte, Kalund borg and Clayton and based on requests and selected documentation, we have furthermore assessed the existing systems for data collection and registration, and procedures to ensure reliable reporting; (ii) Inquiries and interviews with members of Executive Management, the Board and staff from the sustainability development department, as well as Management representing different functions in the Group, regarding Novo Nordisk’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 Consolidated social and environmental information presented in the Annual Report of Novo Nordisk A/S for 2011 (on pp 2– 54 and pp 91– 99) is free of material misstatements and has been stated in accordance with the social accounting policies and environmental account- ing policies here for. Furthermore, nothing has come to our attention causing us to believe that Novo Nordisk 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’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 continue to work on ensuring a systematic and structured approach to the AA1000APS(2008) principles at a local level, and that the company in general continue to communicate and guide on stakeholder involvement internally. Finally, we recommend that Novo Nordisk increasingly engage in expanding social and environ- mental competences at the company’s strategic suppliers. Regarding materiality Novo Nordisk’s Management systematically takes the principle of material- ity into consideration when making decisions regarding sustainability at manage ment 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 have no recommendations regarding materiality. Regarding responsiveness Novo Nordisk is committed to being responsive to stakeholders as is evident from the wide range of media, forums and communication channels used by Novo Nordisk to communicate on sustainability issues. We have no recommendations regarding responsiveness. Bagsværd, 1 February 2012 PricewaterhouseCoopers Statsautoriseret Revisionspartnerselskab Lars Baungaard Danish State Authorised Public Accountant Novo Nordisk Annual Report 2011 111 n o i t a m r o f n i l a n o i t i d d A Index In addition to the information reported in this integrated annual report, we report information for specific stakeholder groups at annualreport2011.novonordisk.com. To help you find information, this index is arranged according to the categories used online. An explanation of where you can find information reported in accordance with voluntary reporting standards is also included in below. Topic Financial Page(s) in this report Global Reporting Initiative Indicator UN Global Compact Principles Financial performance 5–9, 14, 56–59, 100–101 Socioeconomics Tax contribution Social – patients Access to health Donation Support and advocacy Clinical research Bioethics Animal ethics Gene technology Stem cell research Safety and quality Public affairs Social – employees Our employees Wages and benefits Workplace statistics Diversity Health and safety Employee health programmes Employee volunteering Social – assurance Business ethics Responsible sourcing Environmental Environmental approach Environmental priorities Governance Novo Nordisk Way Boards and committees Managing risks Corporate governance Stakeholders and reporting Stakeholder engagement Memberships Partnerships Our reporting Additional reporting SEC Form 20-F – EC1, EC9 8, 14, 23–24, 56–61, 69 9–10, 21, 31–32, 34–35, 38–39 9–10, 34–35, 38–39, 86, 93 20, 38–39 10, 26–27, 93–94 EC8 SO1 PR3 – 94 – 19 10, 23, 93, 96 31–35, 37 10, 17, 20, 95 44–47, 68 95 9–10, 95 10, 20, 96 – 20 11, 21, 24 11, 96 – PR1–4 SO5–6 EC7, LA11–12 EC5, LA3–4, LA12 LA13 LA7 LA8 SO1 SO2–3, PR6–7 EC6, HR1–2 EN13, 30 11–12, 21–22, 99 EN1, 3–5, 7–9, 11, 16, 18, 20–23, 26, 30 1–2 1–2 1–2, 7–9 1–2, 3–6 3–6 3–6 3–6 3–6 10 1–2, 3–6, 10 7–9 7–9 10–11, 17–18 41–43 22–24 41–43 21, 34, 92 – 34–35, 38–39 60–64, 92–96, 98–99 13, 43, 53 UN Global Compact – Communication on Progress 92 Global Reporting Initiative International Integrated Reporting Framework 92 92 112 Novo Nordisk Annual Report 2011 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 . 2 1 0 2 y r a u r b e F i , s a O R P g n d r o B : g n i t n i r P . y e l s e W r e p s e J d n a n e s n a H i l l i W , s n o F n n i F , d l i g g ø B s r e d n A : y h p a r g o t o h P . s c i h p a r G 2 m a e T : s e t o n d n a s t n u o c c A . s n o i t a c i n u m m o C c i m o t D A : n o i t c u d o r p d n a n g i s e D n o i t a m r o f n i l a n o i t i d d A Trade name Generic name Levemir® NovoRapid® NovoMix® 30 NovoMix® 50 NovoMix® 70 Victoza® Insulatard® Actrapid® Mixtard® 30 FlexTouch® FlexPen® NovoPen® 4 Insulin detemir Insulin aspart Biphasic insulin aspart Biphasic insulin aspart Biphasic insulin aspart Liraglutide Insulin human Insulin human Insulin human Prefilled insulin delivery system Prefilled insulin delivery system Durable insulin delivery system NovoPen Echo® Durable insulin delivery system InnoLet® NovoFine® NovoTwist® GlucaGen® NovoNorm® PrandiMet® NovoSeven® Norditropin® Prefilled insulin delivery system Needle Needle Glucagon Repaglinide Repaglinide/metformin Recombinant factor VIIa Somatropin (rDNA origin) Norditropin® FlexPro® Prefilled multidose delivery system FlexPro® PenMate® Automatic needle insertion accessory Norditropin® NordiFlex® Prefilled multidose delivery system NordiFlex PenMate® Automatic needle insertion accessory NordiPen® Durable multidose delivery system NordiPenMate® Automatic needle insertion accessory 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 31 is from IMS Health, IMS MIDAS Customized Insights (November 2011). Market definition for retail: Algeria, Argentina, Australia, Austria, Belgium, Brazil, Bulgaria, Canada, Czech Republic, 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, the UK and the US. Market definition for hospitals: Australia, Bulgaria, Canada, China, Czech Republic, Denmark, Finland, Germany, Hungary, Italy, Japan, Latvia, Lithuania, New Zealand, Norway, Poland, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland, the UK and the US. Novo Nordisk Annual Report 2011 113 Headquarters Novo Nordisk A/S Novo Allé 2880 Bagsværd, Denmark Tel +45 4444 8888 annualreport@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 KELLY HECTOR At the age of two-and-a-half, Kelly was diagnosed with type 1 diabetes. The news came as a major shock to her parents. Since that day, they have had constant concern about their daughter’s health. Now seven years old, Kelly can not remember a time when she did not have diabetes. She is a first-grader in elementary school in New Jersey, US, and makes every effort to live a normal life. She loves sports, especially baseball, as well as reading and art. Kelly would love to inject insulin fewer times every day – and to eventually benefit from research to find a cure for type 1 diabetes. Her father has raised over 10,000 US dollars for research through fundraising bike rides to benefit JDRF (formerly known as the Juvenile Diabetes Research Foundation). At Novo Nordisk’s Hagedorn Research Institute in Denmark, we are conducting research to tackle the roots of diabetes, in the hope of finding a cure for people like Kelly. In the meantime, we are raising awareness of the impact of diabetes and improving treatment so that the millions of people who must live with diabetes can live life to the fullest. 

Continue reading text version or see original annual report in PDF format above